- Net Income of $85.5 Million and Earnings Per Share of
$7.67
- Petroleum Additives Operating Profit of $113.7
Million
- Petroleum Additives Shipments Up 5.9%
- 252,383 Shares Repurchased
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 2020.
Net income for the first quarter of 2020 was $85.5 million, or
$7.67 per share, compared to net income of $62.2 million, or $5.57
per share, for the first quarter of 2019.
Sales for the petroleum additives segment for the first quarter
of 2020 were $557.4 million, up 4.6% compared to the same period
last year. Petroleum additives operating profit for the first
quarter of 2020 was $113.7 million compared to $87.9 million for
the first quarter of 2019. The increase was primarily due to higher
shipments and lower conversion costs, with lower raw material costs
offset by decreased selling prices. Petroleum additives operating
margin was 17.5% for the rolling four quarters including the first
quarter of 2020 which is in line with the historical ranges for our
business. Shipments increased 5.9% between periods, with increases
in lubricant additives shipments, partially offset by a slight
decrease in fuel additives shipments. Europe, North America and
Latin America were the drivers for the lubricant additive
increases, partially offset by a decrease in Asia Pacific.
We are very pleased with the strong performance of our petroleum
additives business in the first quarter, but we are expecting to
see our operations for the remainder of the year impacted by the
current economic environment. We are currently experiencing what we
believe will be a short-term decrease in demand for lubricant and
fuel additives due to the economic downturn resulting from
government restrictions on the movement of people, goods and
services in response to COVID-19. We expect to see a sizeable
decline in shipments in the second quarter of 2020. While we do not
know how long this downturn will last, we are encouraged by the
recovery we have seen in our China business, which saw a reduction
in shipments in the first quarter but has already shown signs of
recovery. We expect the rest of the global market will also begin
to recover when government restrictions on the movement of people
are eased. The rate of recovery will depend heavily on the rate at
which these restrictions are lifted. Our global business will see
varying effects on demand that will differ by region based on our
product portfolio and geographic coverage.
During the quarter, we funded capital expenditures of $20.1
million, paid dividends of $21.2 million, and repurchased 252,383
shares of our common stock for a total of $94.3 million, through a
combination of borrowing under our revolving credit facility and
cash from operations. In March, we entered into a new five-year,
$900 million revolving credit facility that replaced our prior $850
million facility.
As we face the challenging economic environment ahead of us in
2020, we expect all our global operations, manufacturing plants and
research and development centers will continue to be operational,
and we will stay the course. The chemical industry and our products
are recognized as essential for the transportation of goods and
services. We are mindful first and foremost of our responsibility
to protect the health and safety of our employees and have
procedures in place at each of our operating facilities to help
ensure their well-being. We are grateful for their hard work and
dedication during these difficult times. We are working diligently
with our customers to ensure their supply demands are met and will
continue to work with them throughout this period as inventory
needs will be fluctuating due to demands of the changing
environment.
We will continue to focus on our long-term objectives and will
remain well-positioned for the future with a strong balance sheet
and conservative fiscal policy, even as we navigate the current
economic downturn.
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 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 (on property, plant and equipment) and
amortization (on intangibles and lease right-of-use assets). 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 23, 2020, to review
first quarter 2020 financial results. You can access the conference
call live by dialing 1-844-407-9500 (domestic) or 1-862-298-0850
(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 April 30,
2020 at 3:00 p.m. EDT by dialing 1-877-481-4010 (domestic) or
1-919-882-2331 (international). The replay ID number is 33966. 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/2001/33966. 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; current and future
governmental regulations; the gain or 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 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 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 2019 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 Ended March
31,
2020
2019
Revenue:
Petroleum additives
$
557,372
$
532,679
All other
2,045
3,937
Total
$
559,417
$
536,616
Segment operating profit:
Petroleum additives
$
113,671
$
87,863
All other
335
511
Segment operating profit
114,006
88,374
Corporate unallocated expense
(4,231
)
(5,094
)
Interest and financing expenses
(7,104
)
(8,012
)
Other income (expense), net
7,407
5,540
Income before income tax
expense
$
110,078
$
80,808
Net income
$
85,541
$
62,205
Earnings per share - basic and
diluted
$
7.67
$
5.57
NEWMARKET CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (In thousands, except
per-share amounts, unaudited)
Three Months Ended March
31,
2020
2019
Net sales
$
559,417
$
536,616
Cost of goods sold
378,510
383,747
Gross profit
180,907
152,869
Selling, general, and administrative
expenses
35,715
36,773
Research, development, and testing
expenses
35,506
33,224
Operating profit
109,686
82,872
Interest and financing expenses, net
7,104
8,012
Other income (expense), net
7,496
5,948
Income before income tax
expense
110,078
80,808
Income tax expense
24,537
18,603
Net income
$
85,541
$
62,205
Earnings per share - basic and
diluted
$
7.67
$
5.57
Cash dividends declared per
share
$
1.90
$
1.75
NEWMARKET CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (In thousands except share amounts,
unaudited)
March 31, 2020
December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents
$
178,662
$
144,397
Trade and other accounts receivable, less
allowance for credit losses
347,155
335,826
Inventories
371,002
365,938
Prepaid expenses and other current
assets
34,115
33,237
Total current assets
930,934
879,398
Property, plant, and equipment, net
633,873
635,439
Intangibles (net of amortization) and
goodwill
131,012
131,880
Prepaid pension cost
136,346
133,848
Operating lease right-of-use assets
57,437
60,505
Deferred charges and other assets
44,083
44,062
Total assets
$
1,933,685
$
1,885,132
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Accounts payable
$
178,457
$
178,773
Accrued expenses
89,819
77,350
Dividends payable
19,020
19,217
Income taxes payable
7,460
10,632
Operating lease liabilities
13,060
14,036
Other current liabilities
5,096
8,887
Total current liabilities
312,912
308,895
Long-term debt
740,511
642,941
Operating lease liabilities -
noncurrent
43,585
46,792
Other noncurrent liabilities
197,428
203,406
Total liabilities
1,294,436
1,202,034
Shareholders' equity:
Common stock and paid-in capital (without
par value; issued and outstanding shares - 10,938,744 at March 31,
2020 and 11,188,549 at December 31, 2019)
0
1,965
Accumulated other comprehensive loss
(176,343
)
(162,748
)
Retained earnings
815,592
843,881
Total shareholders' equity
639,249
683,098
Total liabilities and shareholders'
equity
$
1,933,685
$
1,885,132
NEWMARKET CORPORATION AND SUBSIDIARIES
SELECTED CONSOLIDATED CASH FLOW DATA (In thousands,
unaudited)
Three Months Ended March
31,
2020
2019
Net income
$
85,541
$
62,205
Depreciation and amortization
21,369
21,939
Cash pension and postretirement
contributions
(2,557
)
(2,425
)
Working capital changes
(42,058
)
(63,426
)
Deferred income tax expense
3,379
2,156
Capital expenditures
(20,106
)
(10,353
)
Net borrowings under revolving credit
facility
97,424
16,072
Repurchases of common stock
(79,473
)
0
Dividends paid
(21,160
)
(19,579
)
All other
(8,094
)
(1,382
)
Increase in cash and cash equivalents
$
34,265
$
5,207
NEWMARKET CORPORATION AND SUBSIDIARIES
NON-GAAP FINANCIAL INFORMATION (In thousands, unaudited)
Three Months Ended March
31,
2020
2019
Net Income
$
85,541
$
62,205
Add:
Interest and financing expenses, net
7,104
8,012
Income tax expense
24,537
18,603
Depreciation and amortization
20,859
21,654
EBITDA
$
138,041
$
110,474
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200422005852/en/
FOR INVESTOR INFORMATION CONTACT: Brian D. Paliotti
Investor Relations Phone: 804.788.5555 Fax:
804.788.5688 Email: investorrelations@newmarket.com
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