- Full Year Net Income of $389 Million and Earnings Per Share
of $40.44
- $134 Million Working Capital Improvement in 2023
- $361 Million Repaid on Revolving Credit Facility in
2023
- Acquired American Pacific Corporation (AMPAC) in January
2024
NewMarket Corporation (NYSE:NEU) Chairman and Chief Executive
Officer, Thomas E. Gottwald, released the following earnings report
of the Company’s operations for the fourth quarter and full year of
2023.
Net income for the fourth quarter of 2023 was $80.4 million, or
$8.38 per share, compared to net income of $90.5 million, or $9.26
per share, for the fourth quarter of 2022. Net income for 2023 was
$388.9 million, or $40.44 per share, compared to net income of
$279.5 million, or $27.77 per share, for 2022.
Petroleum additives sales for the fourth quarter of 2023 were
$642.0 million, compared to $680.3 million for the same period in
2022. Petroleum additives operating profit for the fourth quarter
of 2023 was $110.4 million, compared to $117.1 million for the
fourth quarter of 2022. The decrease in operating profit was mainly
due to higher operating costs and lower shipments, partially offset
by lower raw material costs. We also experienced lower selling
prices offset by favorable product mix.
Sales for the petroleum additives segment for 2023 were $2.7
billion, compared to $2.8 billion in 2022. Petroleum additives
operating profit for 2023 was $514.4 million, compared to $378.2
million for 2022. The increase in operating profit was a result of
selling prices, including favorable product mix, partially offset
by lower shipments and higher raw material and operating costs.
Shipments decreased 10.7% when comparing 2023 to 2022, with
decreases in both lubricant additives and fuel additives shipments
in all regions except Europe, which reported a small increase in
fuel additives shipments.
During 2023, our shipments were impacted by the overall global
economic weakness and inventory rationalization which persists in
the chemical industry. We remain challenged by the ongoing
inflationary environment and continue to experience increased
operating costs. We are maintaining our focus on managing our
operating costs, our inventory levels, and our portfolio
profitability, while continuing our investment in technology.
We are very pleased with the performance of our petroleum
additives business during 2023 and the work done by our team to
achieve four quarters of strong operating profit. We generated
solid cash flows throughout the year, our working capital improved
by $134.3 million, and we made payments of $361.0 million on our
revolving credit facility. We returned $127.9 million to our
shareholders through dividends of $85.0 million and share
repurchases of $42.9 million (119,075 shares of our common stock).
As of December 31, 2023, our Net Debt to EBITDA ratio was 0.9,
which was a significant improvement over the December 31, 2022
ratio of 2.0.
On January 16, 2024, we completed the acquisition of AMPAC, for
approximately $700 million. AMPAC is the leading North American
manufacturer of critical performance additives used in solid rocket
motors for space launch and military defense applications. The
acquisition was funded by cash on hand and borrowings under our
revolving credit facility. We expect that AMPAC will be accretive
to our net income in 2024. The additional borrowing associated with
the AMPAC acquisition increased our Net Debt to EBITDA ratio, but
we remain within our target operating range of 1.5 to 2.0.
On January 22, 2024, we entered into a new five-year, $900
million revolving credit facility that replaced our prior $900
million facility and also entered into a two-year, $250 million
unsecured term loan. This term loan gave us additional flexibility
to repay borrowings under our revolving credit facility and support
our business needs.
As we look ahead to 2024 and beyond, we anticipate continued
strength in our petroleum additives segment. We also look forward
to the integration of AMPAC into the NewMarket family of companies.
We continue to make decisions to promote long-term value for our
shareholders and customers, and we remain focused on our long-term
objectives. We believe the fundamentals of how we run our business
- a long-term view, safety-first culture, customer-focused
solutions, technology-driven product offerings, and world-class
supply chain capability - will continue to be beneficial for all
our stakeholders.
Sincerely,
Thomas E. Gottwald
The petroleum additives segment consists of the North America
(the United States and Canada), Latin America (Mexico, Central
America, and South America), Asia Pacific, and Europe/Middle
East/Africa/India (Europe or EMEAI) regions.
The Company has disclosed the non-GAAP financial measures
EBITDA, Net Debt, and Net Debt to EBITDA, as well as the related
calculations in the schedules included with this earnings release.
EBITDA is defined as income from continuing operations before the
deduction of interest and financing expenses, income taxes,
depreciation (on property, plant, and equipment) and amortization
(on intangibles and lease right-of-use assets). Net Debt is defined
as long-term debt, including current maturities, less cash and cash
equivalents and marketable securities. Net Debt to EBITDA is
defined as Net Debt divided by EBITDA for the rolling four quarters
ended as of the specified date. The Company believes that even
though these items are not required by or presented in accordance
with United States generally accepted accounting principles (GAAP),
these additional measures enhance understanding of the Company’s
performance and period to period comparability. The Company
believes that these items should not be considered an alternative
to our results determined under GAAP.
As a reminder, a conference call and Internet webcast is
scheduled for 3:00 p.m. ET on Thursday, February 1, 2024, to review
fourth quarter and full year 2023 financial results. You can access
the conference call live by dialing 1-888-506-0062 (domestic) or
1-973-528-0011 (international) and requesting the NewMarket
conference call. To avoid delays, callers should dial in five
minutes early. A teleconference replay of the call will be
available until February 8, 2024, at 3:00 p.m. ET by dialing
1-877-481-4010 (domestic) or 1-919-882-2331 (international). The
replay passcode number is 49638. The call will also be broadcast
via the Internet and can be accessed through the Company’s website
at www.NewMarket.com or www.webcaster4.com/Webcast/Page/2001/49638. A
webcast replay will be available for 30 days.
NewMarket Corporation is a holding company operating through its
subsidiaries, Afton Chemical Corporation (Afton), Ethyl Corporation
(Ethyl), and American Pacific Corporation (AMPAC). The Afton and
Ethyl companies develop, manufacture, blend, and deliver chemical
additives that enhance the performance of petroleum products. AMPAC
is a leading manufacturer of specialty chemicals used in solid
rocket motors for the aerospace and defense industries. The
NewMarket family of companies has a long-term commitment to its
people, to safety, to providing innovative solutions for its
customers, and to making the world a better place.
Some of the information contained in this press release
constitutes forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Although
NewMarket’s management believes its expectations are based on
reasonable assumptions within the bounds of its knowledge of its
business and operations, there can be no assurance that actual
results will not differ materially from expectations.
Factors that could cause actual results to differ materially
from expectations include, but are not limited to, the availability
of raw materials and distribution systems; disruptions at
production facilities, including single-sourced facilities; hazards
common to chemical businesses; the ability to respond effectively
to technological changes in our industry; failure to protect our
intellectual property rights; sudden, sharp, or prolonged raw
material price increases; competition from other manufacturers;
current and future governmental regulations; the loss of
significant customers; failure to attract and retain a
highly-qualified workforce; an information technology system
failure or security breach; the occurrence or threat of
extraordinary events, including natural disasters, terrorist
attacks, wars and health-related epidemics such as the COVID-19
pandemic; risks related to operating outside of the United States;
political, economic, and regulatory factors concerning our
products; the impact of substantial indebtedness on our operational
and financial flexibility; the impact of fluctuations in foreign
exchange rates; resolution of environmental liabilities or legal
proceedings; limitation of our insurance coverage; our inability to
realize expected benefits from investment in our infrastructure or
from acquisitions, or our inability to successfully integrate
acquisitions into our business; the underperformance of our pension
assets resulting in additional cash contributions to our pension
plans; and other factors detailed from time to time in the reports
that NewMarket files with the Securities and Exchange Commission,
including the risk factors in Item 1A. “Risk Factors” of our Annual
Report on Form 10-K for the year ended December 31, 2022, which is
available to shareholders upon request.
You should keep in mind that any forward-looking statement made
by NewMarket in the foregoing discussion speaks only as of the date
on which such forward-looking statement is made. New risks and
uncertainties arise from time to time, and it is impossible for us
to predict these events or how they may affect us. We have no duty
to, and do not intend to, update or revise the forward-looking
statements in this discussion after the date hereof, except as may
be required by law. In light of these risks and uncertainties, you
should keep in mind that the events described in any
forward-looking statement made in this discussion, or elsewhere,
might not occur.
NEWMARKET CORPORATION AND
SUBSIDIARIES
SEGMENT RESULTS AND OTHER FINANCIAL
INFORMATION
(In thousands, except per-share amounts,
unaudited)
Fourth Quarter Ended
December 31,
Twelve Months Ended
December 31,
2023
2022
2023
2022
Net Sales:
Petroleum additives
$
642,030
$
680,292
$
2,689,709
$
2,754,310
All other
1,320
2,267
8,710
10,489
Total
$
643,350
$
682,559
$
2,698,419
$
2,764,799
Segment operating profit:
Petroleum additives
$
110,402
$
117,114
$
514,428
$
378,244
All other
(2,225
)
(1,577
)
(4,986
)
(1,782
)
Segment operating profit
108,177
115,537
509,442
376,462
Corporate unallocated expense
(6,457
)
(6,190
)
(26,147
)
(21,579
)
Interest and financing expenses
(7,110
)
(10,343
)
(37,359
)
(35,202
)
Loss on early extinguishment of debt
0
0
0
(7,545
)
Other income (expense), net
10,012
9,286
43,026
35,598
Income before income tax
expense
$
104,622
$
108,290
$
488,962
$
347,734
Net income
$
80,410
$
90,522
$
388,864
$
279,538
Earnings per share - basic and
diluted
$
8.38
$
9.26
$
40.44
$
27.77
NEWMARKET CORPORATION AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
INCOME
(In thousands, except per-share amounts,
unaudited)
Fourth Quarter Ended
December 31,
Twelve Months Ended
December 31,
2023
2022
2023
2022
Net sales
$
643,350
$
682,559
$
2,698,419
$
2,764,799
Cost of goods sold
466,224
503,008
1,925,906
2,124,302
Gross profit
177,126
179,551
772,513
640,497
Selling, general, and administrative
expenses
36,799
35,803
151,470
145,106
Research, development, and testing
expenses
38,990
34,217
137,998
140,252
Operating profit
101,337
109,531
483,045
355,139
Interest and financing expenses, net
7,110
10,343
37,359
35,202
Loss on early extinguishment of debt
0
0
0
7,545
Other income (expense), net
10,395
9,102
43,276
35,342
Income before income tax
expense
104,622
108,290
488,962
347,734
Income tax expense
24,212
17,768
100,098
68,196
Net income
$
80,410
$
90,522
$
388,864
$
279,538
Earnings per share - basic and
diluted
$
8.38
$
9.26
$
40.44
$
27.77
Cash dividends declared per
share
$
2.25
$
2.10
$
8.85
$
8.40
NEWMARKET CORPORATION AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts,
unaudited)
December 31,
2023
December 31,
2022
ASSETS
Current assets:
Cash and cash equivalents
$
111,936
$
68,712
Trade and other accounts receivable, less
allowance for credit losses
432,349
453,692
Inventories
456,234
631,383
Prepaid expenses and other current
assets
39,051
38,338
Total current assets
1,039,570
1,192,125
Property, plant, and equipment, net
654,747
659,998
Intangibles (net of amortization) and
goodwill
124,642
126,069
Prepaid pension cost
370,882
302,584
Operating lease right-of-use assets,
net
70,823
62,417
Deferred charges and other assets
48,207
63,625
Total assets
$
2,308,871
$
2,406,818
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Accounts payable
$
231,137
$
273,289
Accrued expenses
76,546
89,508
Dividends payable
19,212
17,850
Income taxes payable
6,131
16,109
Operating lease liabilities
15,074
15,569
Other current liabilities
16,064
11,562
Total current liabilities
364,164
423,887
Long-term debt
643,622
1,003,737
Operating lease liabilities -
noncurrent
55,058
46,968
Other noncurrent liabilities
168,966
169,819
Total liabilities
1,231,810
1,644,411
Shareholders' equity:
Common stock and paid-in capital (with no
par value; issued and outstanding shares - 9,590,086 at December
31, 2023 and 9,702,147 at December 31, 2022)
2,130
0
Accumulated other comprehensive loss
(21,071
)
(71,995
)
Retained earnings
1,096,002
834,402
Total shareholders' equity
1,077,061
762,407
Total liabilities and shareholders'
equity
$
2,308,871
$
2,406,818
NEWMARKET CORPORATION AND
SUBSIDIARIES
SELECTED CONSOLIDATED CASH FLOW
DATA
(In thousands, unaudited)
Twelve Months Ended
December 31,
2023
2022
Net income
$
388,864
$
279,538
Depreciation and amortization
78,010
82,285
Cash pension and postretirement
contributions
(10,219
)
(9,748
)
Working capital changes
134,280
(204,636
)
Deferred income tax benefit
(14,750
)
(42,645
)
Capital expenditures
(48,293
)
(56,169
)
Net (repayments) borrowings under
revolving credit facility
(361,000
)
213,000
Repurchases of common stock
(42,864
)
(207,470
)
Dividends paid
(85,034
)
(84,263
)
Proceeds from sales and maturities of
marketable securities
0
372,846
Redemption of 4.10% senior notes
0
(350,000
)
Loss on early extinguishment of debt
0
7,545
Cash costs of 4.10% senior notes
redemption
0
(7,099
)
Loss on marketable securities
0
2,977
Purchases of marketable securities
0
(787
)
All other
4,230
(9,966
)
Increase (decrease) in cash and cash
equivalents
$
43,224
$
(14,592
)
NEWMARKET CORPORATION AND
SUBSIDIARIES
NON-GAAP FINANCIAL INFORMATION
(In thousands, unaudited)
Earnings Before
Interest, Taxes, Depreciation, and Amortization
(EBITDA)
Fourth Quarter Ended December
31,
Twelve Months Ended
December 31,
2023
2022
2023
2022
Net Income
$
80,410
$
90,522
$
388,864
$
279,538
Add:
Interest and financing expenses, net
7,110
10,343
37,359
35,202
Income tax expense
24,212
17,768
100,098
68,196
Depreciation and amortization
19,997
19,777
76,620
80,775
EBITDA
$
131,729
$
138,410
$
602,941
$
463,711
Net Debt to
EBITDA
December 31,
2023
2022
Long-term debt, including current
maturities
$
643,622
$
1,003,737
Less: Cash and cash equivalents
111,936
68,712
Net Debt
$
531,686
$
935,025
Net Debt to EBITDA
0.9
2.0
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240130765599/en/
FOR INVESTOR INFORMATION CONTACT: William J.
Skrobacz Investor Relations Phone: 804.788.5555 Fax:
804.788.5688 Email: investorrelations@newmarket.com
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