NEU NewMarket Corporation

• Net Income of $107.7 Million and Earnings Per Share of $11.23

• Petroleum Additives Shipments Up 4.7%

• Acquisition of American Pacific Corporation Completed in January

NewMarket Corporation (NYSE:NEU) Chairman and Chief Executive Officer, Thomas E. Gottwald, released the following earnings report of the Company’s operations for the first quarter of 2024.

Net income for the first quarter of 2024 was $107.7 million, or $11.23 per share, compared to net income of $97.6 million, or $10.09 per share, for the first quarter of 2023.

Petroleum additives sales for the first quarter of 2024 were $677.3 million, compared to $700.0 million for the same period in 2023. Petroleum additives operating profit for the first quarter of 2024 was $150.9 million, compared to $132.1 million for the first quarter of 2023. The increase in petroleum additives operating profit was mainly due to lower raw material and operating costs, partially offset by lower selling prices and product mix. Shipments between quarterly periods were up 4.7% with increases in both lubricant additives and fuel additives across all regions except Latin America, which reported a decrease in lubricant additives shipments, and North America, which reported a decrease in fuel additives shipments.

We are pleased with the strong performance of our petroleum additives business during the first quarter of 2024 – the sixth consecutive quarter with operating profit over $100 million. We are seeing evidence that our efforts to control operating costs are taking hold. Managing our operating costs, our inventory levels, and our portfolio profitability will remain priorities throughout 2024.

We completed the acquisition of American Pacific Corporation (AMPAC) on January 16, 2024, for approximately $700 million. Our first quarter results include 76 days of AMPAC operations. The financial results of our AMPAC business are included in our new specialty materials segment. Specialty materials sales for the first quarter of 2024 were $17.0 million and we reported an operating loss of $5.0 million. The loss primarily results from the sale of the AMPAC finished goods inventory that we acquired. This inventory was recorded at fair market value on the acquisition date and sold during the first quarter, generating no margin. We may see substantial variation in quarterly results for AMPAC on an ongoing basis due to the nature of its business, and we anticipate full year results to be consistent with our pre-acquisition expectations.

We generated solid cash flows from operations during the quarter, we funded capital expenditures of $13.6 million and we paid dividends of $24.0 million. In February, our Board approved an 11% increase in our quarterly dividend rate.

The acquisition of AMPAC was funded by cash on hand and borrowings of approximately $690 million under our then existing revolving credit facility. On January 22, 2024, we replaced that facility with a new $900 million revolving credit facility and entered into a $250 million unsecured term loan. As of March 31, 2024, our Net Debt to EBITDA ratio was 1.9, which is within our target operating range of 1.5 to 2.0.

We anticipate continued strength in our petroleum additives segment. We also look forward to the ongoing 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 specialty materials segment, which consists of the AMPAC business, operates primarily in North America.

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 webcast is scheduled for 3:00 p.m. ET on Thursday, April 25, 2024, to review first quarter 2024 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 May 2, 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 50270. 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/2001/50270. 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 manufacturer of specialty materials primarily 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 industries; 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; termination or changes to contracts with contractors and subcontractors of the U.S. government or directly with the U.S. government; 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; 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, 2023, which is available to shareholders at www.newmarket.com.

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)

 

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

 

2023

 

Net Sales:

 

 

 

 

Petroleum additives

 

$

677,264

 

 

$

699,991

 

Specialty materials

 

 

17,047

 

 

 

0

 

All other

 

 

2,425

 

 

 

2,798

 

Total

 

$

696,736

 

 

$

702,789

 

Segment operating profit:

 

 

 

 

Petroleum additives

 

$

150,909

 

 

$

132,068

 

Specialty materials

 

 

(4,967

)

 

 

0

 

All other

 

 

(81

)

 

 

(975

)

Segment operating profit

 

 

145,861

 

 

 

131,093

 

Corporate unallocated expense

 

 

(5,557

)

 

 

(6,491

)

Interest and financing expenses

 

 

(15,654

)

 

 

(10,773

)

Other income (expense), net

 

 

13,043

 

 

 

11,319

 

Income before income tax expense

 

$

137,693

 

 

$

125,148

 

Net income

 

$

107,732

 

 

$

97,583

 

Earnings per share - basic and diluted

 

$

11.23

 

 

$

10.09

 

 

NEWMARKET CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per-share amounts, unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

 

2023

 

Net sales

 

$

696,736

 

$

702,789

Cost of goods sold

 

 

480,371

 

 

 

504,745

 

Gross profit

 

 

216,365

 

 

 

198,044

 

Selling, general, and administrative expenses

 

 

44,365

 

 

 

39,847

 

Research, development, and testing expenses

 

 

31,200

 

 

 

33,156

 

Operating profit

 

 

140,800

 

 

 

125,041

 

Interest and financing expenses, net

 

 

15,654

 

 

 

10,773

 

Other income (expense), net

 

 

12,547

 

 

 

10,880

 

Income before income tax expense

 

 

137,693

 

 

 

125,148

 

Income tax expense

 

 

29,961

 

 

 

27,565

 

Net income

 

$

107,732

 

 

$

97,583

 

Earnings per share - basic and diluted

 

$

11.23

 

 

$

10.09

 

Cash dividends declared per share

 

$

2.50

 

 

$

2.10

 

 

NEWMARKET CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts, unaudited)

 

 

 

March 31,

2024

 

December 31,

2023

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

117,066

 

 

$

111,936

 

Trade and other accounts receivable, less allowance for credit losses

 

 

464,687

 

 

 

432,349

 

Inventories

 

 

493,554

 

 

 

456,234

 

Prepaid expenses and other current assets

 

 

44,013

 

 

 

39,051

 

Total current assets

 

 

1,119,320

 

 

 

1,039,570

 

Property, plant, and equipment, net

 

 

761,685

 

 

 

654,747

 

Intangibles (net of amortization) and goodwill

 

 

768,918

 

 

 

124,642

 

Prepaid pension cost

 

 

377,941

 

 

 

370,882

 

Operating lease right-of-use assets, net

 

 

76,186

 

 

 

70,823

 

Deferred charges and other assets

 

 

53,449

 

 

 

48,207

 

Total assets

 

$

3,157,499

 

 

$

2,308,871

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

260,451

 

 

$

231,137

 

Accrued expenses

 

 

72,668

 

 

 

76,546

 

Dividends payable

 

 

21,365

 

 

 

19,212

 

Income taxes payable

 

 

15,403

 

 

 

6,131

 

Operating lease liabilities

 

 

15,505

 

 

 

15,074

 

Other current liabilities

 

 

5,402

 

 

 

16,064

 

Total current liabilities

 

 

390,794

 

 

 

364,164

 

Long-term debt

 

 

1,279,457

 

 

 

643,622

 

Operating lease liabilities - noncurrent

 

 

59,713

 

 

 

55,058

 

Other noncurrent liabilities

 

 

275,247

 

 

 

168,966

 

Total liabilities

 

 

2,005,211

 

 

 

1,231,810

 

Shareholders' equity:

 

 

 

 

Common stock and paid-in capital (with no par value; issued and outstanding shares - 9,594,250 at March 31, 2024 and 9,590,086 at December 31, 2023)

 

 

1,406

 

 

 

2,130

 

Accumulated other comprehensive loss

 

 

(28,874

)

 

 

(21,071

)

Retained earnings

 

 

1,179,756

 

 

 

1,096,002

 

Total shareholders' equity

 

 

1,152,288

 

 

 

1,077,061

 

Total liabilities and shareholders' equity

 

$

3,157,499

 

 

$

2,308,871

 

 

NEWMARKET CORPORATION AND SUBSIDIARIES

SELECTED CONSOLIDATED CASH FLOW DATA

(In thousands, unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

 

2023

 

Net income

 

$

107,732

 

 

$

97,583

 

Depreciation and amortization

 

 

25,807

 

 

 

20,313

 

Cash pension and postretirement contributions

 

 

(2,727

)

 

 

(2,290

)

Working capital changes

 

 

(21,434

)

 

 

9,795

 

Deferred income tax benefit

 

 

(3,899

)

 

 

(4,932

)

Capital expenditures

 

 

(13,564

)

 

 

(11,881

)

Acquisition of business, net of cash acquired

 

 

(683,924

)

 

 

0

 

Net borrowings (repayments) under revolving credit facility

 

 

386,000

 

 

 

(46,000

)

Proceeds from term loan

 

 

250,000

 

 

 

0

 

Dividends paid

 

 

(23,986

)

 

 

(20,292

)

Debt issuance costs

 

 

(2,251

)

 

 

0

 

Repurchases of common stock

 

 

0

 

 

 

(28,479

)

All other

 

 

(12,624

)

 

 

(12,414

)

Increase in cash and cash equivalents

 

$

5,130

 

 

$

1,403

 

 

NEWMARKET CORPORATION AND SUBSIDIARIES

NON-GAAP FINANCIAL INFORMATION

(In thousands, unaudited)

 

Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)

 

 

 

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

 

2023

 

Net Income

 

$

107,732

 

$

97,583

Add:

 

 

 

 

Interest and financing expenses, net

 

 

15,654

 

 

 

10,773

 

Income tax expense

 

 

29,961

 

 

 

27,565

 

Depreciation and amortization

 

 

25,255

 

 

 

19,966

 

EBITDA

 

$

178,602

 

 

$

155,887

 

 

 

 

 

 

Net Debt to EBITDA

 

 

 

 

 

 

March 31,

 

December 31,

 

 

 

2024

 

 

 

2023

 

Long-term debt, including current maturities

 

$

1,279,457

 

 

$

643,622

 

Less: Cash and cash equivalents

 

 

117,066

 

 

 

111,936

 

Net Debt

 

$

1,162,391

 

 

$

531,686

 

 

 

 

 

 

 

 

Rolling Four Quarters Ended

 

 

March 31,

 

December 31,

 

 

 

2024

 

 

 

2023

 

Net Income

 

$

399,013

 

 

$

388,864

 

Add:

 

 

 

 

Interest and financing expenses, net

 

 

42,240

 

 

 

37,359

 

Income tax expense

 

 

102,494

 

 

 

100,098

 

Depreciation and amortization

 

 

81,909

 

 

 

76,620

 

EBITDA-Rolling Four Quarters

 

$

625,656

 

 

$

602,941

 

 

 

 

 

 

Net Debt to EBITDA

 

 

1.9

 

 

 

0.9

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240423392276/en/

FOR INVESTOR INFORMATION CONTACT: William J. Skrobacz Investor Relations Phone: 804.788.5555 Fax: 804.788.5688 Email: investorrelations@newmarket.com