- Petroleum Additives Operating Profit
of $87.9 Million, Up 4.4% versus First Quarter 2018
- First Quarter Net Income of $62.2
Million, Up 2.7%
- First Quarter Earnings Per Share of
$5.57, Up 8.4%
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 2019.
Net income for the first quarter of 2019 was $62.2 million, an
increase of 2.7% compared to net income of $60.6 million for the
first quarter of 2018. Earnings per share increased 8.4% to $5.57
per share from $5.14 per share in the prior year period.
Sales for the petroleum additives segment for the first quarter
of 2019 were $532.7 million, down 9.2% versus the same period last
year. Petroleum additives operating profit for the first quarter of
2019 was $87.9 million, or 4.4% higher than first quarter operating
profit last year of $84.1 million. The increase was due to changes
in selling prices and raw material costs, partially offset by lower
shipments, changes in foreign currency rates and higher conversion
costs. Shipments were down 12.5% from the same period last year,
with decreases in both lubricant additives and fuel additives
shipments across all regions except for Asia Pacific, which
reported an increase in fuel additives shipments. Shipments have
been lower than our expectations over the last two quarters,
primarily due to a softening of demand for petroleum additives
products in the global marketplace, which we expect will be a
short-term trend. We continue to believe that the fundamentals of
our industry as a whole remain unchanged, with the petroleum
additives market growing at 1% to 2% annually for the foreseeable
future. We continue to believe that we will exceed that growth rate
over the long term.
Petroleum additives operating margin was 14.1% for the rolling
four quarters including the first quarter of 2019. While we saw
some improvement in the first quarter, we are continuing to
experience downward pressure on our margins caused by raw material
price increases over the past two years, mainly because of the lag
between when we raise our selling prices and when margins begin to
improve and stabilize. Margin improvement will continue to be a
priority in 2019 until we see margins consistently within our
historical ranges.
During the quarter, we funded capital expenditures of $10.4
million and paid dividends of $19.6 million through a combination
of borrowing under our revolving credit facility and cash from
operations.
We have faced a challenging economic environment over the past
two years, marked by sustained increases in raw material costs and
changes in the global economy, and we have continued to manage our
business to satisfy our customers’ needs while generating solid
operating results. We will continue to make decisions we believe
will promote the greatest long-term value for our shareholders,
customers and employees, and will remain focused on our long-term
objectives.
Sincerely,
Thomas E. Gottwald
The Company has disclosed the non-GAAP financial measure EBITDA
and the related calculation 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 and amortization. The Company believes
that even though this item is not required by or presented in
accordance with United States generally accepted accounting
principles (GAAP), this additional measure enhances understanding
of the Company’s performance and period to period comparability.
The Company believes that this item should not be considered an
alternative to net income determined under GAAP.
As a reminder, a conference call and Internet webcast is
scheduled for 3:00 p.m. EDT on Thursday, April 25, 2019, to review
first quarter 2019 financial results. You can access the conference
call live by dialing 1-844-369-8770 (domestic) or 1-862-298-0840
(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 25,
2019 at 3:00 p.m. EDT by dialing 1-877-481-4010 (domestic) or
1-919-882-2331 (international). The replay ID number is 45777. The
call will also be broadcast via the Internet and can be accessed
through the Company’s website at www.NewMarket.com or www.investornetwork.com/event/presentation/45777.
A webcast replay will be available for 30 days.
NewMarket Corporation, through its subsidiaries Afton Chemical
Corporation and Ethyl Corporation, develops, manufactures, blends,
and delivers chemical additives that enhance the performance of
petroleum products. From custom-formulated additive packages to
market-general additives, the NewMarket family of companies
provides the world with the technology to make engines run
smoother, machines last longer, and fuels burn cleaner.
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 or sharp raw material price
increases; competition from other manufacturers; the gain or loss
of significant customers; current and future governmental
regulations; failure to attract and retain a highly-qualified
workforce; the occurrence or threat of extraordinary events,
including natural disasters and terrorist attacks; risks related to
operating outside of the United States; the impact of substantial
indebtedness on our operational and financial flexibility; the
impact of fluctuations in foreign exchange rates; an information
technology system failure or security breach; resolution of
environmental liabilities or legal proceedings; political,
economic, and regulatory factors concerning our products;
limitation of our insurance coverage; our inability to realize
expected benefits from investment in our infrastructure or from
recent or future acquisitions, or our inability to successfully
integrate recent or future 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 2018 Annual Report on Form 10-K,
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 the Company. 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 EndedMarch 31, 2019
2018 Revenue: Petroleum additives $ 532,679 $
586,908 All other 3,937 2,337
Total $ 536,616 $ 589,245
Segment operating profit: Petroleum additives $
87,863 $ 84,140 All other 511 (77 )
Segment
operating profit 88,374 84,063 Corporate
unallocated expense (5,094 ) (5,664 ) Interest and financing
expenses (8,012 ) (5,164 ) Other income (expense), net 5,540
8,076
Income before income tax expense
$ 80,808 $ 81,311 Net
income $ 62,205 $ 60,565
Earnings per share - basic and diluted $
5.57 $ 5.14
NEWMARKET CORPORATION AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
INCOME
(In thousands, except per-share amounts,
unaudited)
Three Months EndedMarch 31, 2019
2018 Net sales $ 536,616 $ 589,245 Cost of goods sold
383,747 432,462 Gross profit 152,869 156,783 Selling,
general, and administrative expenses 36,773 40,913 Research,
development, and testing expenses 33,224 34,295
Operating profit 82,872 81,575 Interest and financing expenses, net
8,012 5,164 Other income (expense), net 5,948 4,900
Income before income tax expense 80,808 81,311
Income tax expense 18,603 20,746
Net income
$ 62,205 $ 60,565 Earnings per share
- basic and diluted $ 5.57 $ 5.14
Cash dividends declared per share $ 1.75
$ 1.75
NEWMARKET CORPORATION AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands except share amounts,
unaudited)
March 31, 2019 December 31, 2018
ASSETS Current assets: Cash and cash equivalents $ 78,247 $
73,040 Trade and other accounts receivable, less allowance for
doubtful accounts ($274 - 2019; $178 - 2018) 351,405 314,860
Inventories 395,660 396,341 Prepaid expenses and other current
assets 30,834 29,179
Total current
assets 856,146 813,420
Property, plant, and equipment, net 633,009 644,138
Intangibles (net of amortization) and goodwill 135,059 136,039
Prepaid pension cost 92,208 88,705 Operating lease right-of-use
assets 57,758 0 Deferred income taxes 5,044 5,094 Deferred charges
and other assets 18,967 9,878
Total
assets $ 1,798,191 $
1,697,274 LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities: Accounts payable $ 135,473 $ 151,631 Accrued
expenses 78,231 91,202 Dividends payable 17,880 17,923 Income taxes
payable 10,382 6,431 Operating lease liabilities 13,484 0 Other
current liabilities 4,523 4,114
Total current liabilities 259,973
271,301 Long-term debt 782,024 770,999
Operating lease liabilities - noncurrent 43,931 0 Other noncurrent
liabilities 174,067 165,067
Total
liabilities 1,259,995
1,207,367 Shareholders' equity: Common stock and
paid-in capital (without par value; issued and outstanding shares -
11,188,126 at March 31, 2019 and 11,184,482 at December 31, 2018)
431 0 Accumulated other comprehensive loss (176,130 ) (181,316 )
Retained earnings 713,895 671,223
Total shareholders' equity 538,196
489,907 Total liabilities and shareholders'
equity $ 1,798,191 $
1,697,274
NEWMARKET CORPORATION AND
SUBSIDIARIES
SELECTED CONSOLIDATED CASH FLOW
DATA
(In thousands, unaudited)
Three Months EndedMarch 31, 2019
2018 Net income $ 62,205 $ 60,565 Depreciation and
amortization 21,939 17,665 Cash pension and postretirement
contributions (2,425 ) (6,713 ) Working capital changes (63,426 )
(63,655 ) Deferred income tax expense 2,156 2,714 Capital
expenditures (10,353 ) (22,797 ) Net borrowings under revolving
credit facility 16,072 22,000 Repurchases of common stock 0 (632 )
Dividends paid (19,579 ) (20,629 ) All other (1,382 )
146 Increase (decrease) in cash and cash equivalents
$ 5,207 $ (11,336 )
NEWMARKET CORPORATION AND
SUBSIDIARIES
NON-GAAP FINANCIAL INFORMATION
(In thousands, unaudited)
Three Months EndedMarch 31, 2019
2018 Net Income $ 62,205
$ 60,565 Add: Interest and financing expenses, net
8,012 5,164 Income tax expense 18,603 20,746 Depreciation and
amortization 21,654 17,379
EBITDA $
110,474 $ 103,854
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190424005967/en/
FOR INVESTOR INFORMATION CONTACT:Brian D.
PaliottiInvestor RelationsPhone:
804.788.5555Fax: 804.788.5688Email:
investorrelations@newmarket.com
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