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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission File Number 1-32190
NEWMARKET CORPORATION
(Exact name of registrant as specified in its charter)
 
Virginia   20-0812170
(State or other jurisdiction of
incorporation or organization)
  (I.R.S. Employer
Identification No.)
330 South Fourth Street 23219-4350
Richmond, Virginia  
(Address of principal executive offices)   (Zip Code)
Registrant’s telephone number, including area code - (804) 788-5000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, with no par value NEU New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
x
Accelerated filer
¨
Non-accelerated filer
¨
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes  ☐ No  x
Number of shares of common stock, with no par value, outstanding as of September 30, 2021: 10,637,047


NEWMARKET CORPORATION

INDEX
  Page
Number
4
5
6
7
8
9
9
9
3

PART I.    FINANCIAL INFORMATION
ITEM 1.     Financial Statements

NEWMARKET CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
 
(in thousands, except per-share amounts) Third Quarter Ended
September 30,
Nine Months Ended
September 30,
  2021 2020 2021 2020
Net sales $ 622,207  $ 512,869  $ 1,779,543  $ 1,483,150 
Cost of goods sold 483,986  346,262  1,338,570  1,038,898 
Gross profit 138,221  166,607  440,973  444,252 
Selling, general, and administrative expenses 39,729  34,690  111,379  105,837 
Research, development, and testing expenses 35,387  33,113  107,241  102,168 
Operating profit 63,105  98,804  222,353  236,247 
Interest and financing expenses, net 9,345  6,466  24,557  20,575 
Other income (expense), net 7,393  25,280  19,785  39,292 
Income before income tax expense 61,153  117,618  217,581  254,964 
Income tax expense 9,115  21,824  43,879  51,280 
Net income $ 52,038  $ 95,794  $ 173,702  $ 203,684 
Earnings per share - basic and diluted $ 4.80  $ 8.77  $ 15.94  $ 18.52 
Cash dividends declared per share $ 2.10  $ 1.90  $ 5.90  $ 5.70 
See accompanying Notes to Condensed Consolidated Financial Statements

4


NEWMARKET CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 (in thousands) Third Quarter Ended
September 30,
Nine Months Ended
September 30,
  2021 2020 2021 2020
Net income $ 52,038  $ 95,794  $ 173,702  $ 203,684 
Other comprehensive income (loss):
Pension plans and other postretirement benefits:
Prior service credit (cost) arising during the period, net of income tax expense (benefit) of $8 in third quarter and nine months 2021, $(7) in third quarter and nine months 2020
27  (23) 27  (23)
Amortization of prior service cost (credit) included in net periodic benefit cost (income), net of income tax expense (benefit) of $(157) in third quarter 2021, $(169) in third quarter 2020, $(472) in nine months 2021, and $(510) in nine months 2020
(496) (528) (1,481) (1,590)
Actuarial net gain (loss) arising during the period, net of income tax expense (benefit) of $(433) in third quarter 2021, $977 in third quarter 2020, $(652) in nine months 2021, and $977 in nine months 2020
(1,363) 3,008  (2,020) 3,008 
Amortization of actuarial net loss (gain) included in net periodic benefit cost (income), net of income tax expense (benefit) of $593 in third quarter 2021, $297 in third quarter 2020, $1,697 in nine months 2021, and $1,090 in nine months 2020
1,806  941  5,345  3,468 
Total pension plans and other postretirement benefits
(26) 3,398  1,871  4,863 
Foreign currency translation adjustments, net of income tax expense (benefit) of $(535) in third quarter 2021,$(118) in third quarter 2020, $(214) in nine months 2021, and $(1,110) in nine months 2020
(7,401) 10,356  (1,081) (5,013)
Other comprehensive income (loss) (7,427) 13,754  790  (150)
Comprehensive income $ 44,611  $ 109,548  $ 174,492  $ 203,534 
See accompanying Notes to Condensed Consolidated Financial Statements

5


NEWMARKET CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except share amounts) September 30,
2021
December 31,
2020
ASSETS
Current assets:
Cash and cash equivalents $ 59,613  $ 125,172 
Marketable securities 378,902 
Trade and other accounts receivable, less allowance for credit losses
414,847  336,395 
Inventories 479,039  401,031 
Prepaid expenses and other current assets 34,459  35,480 
Total current assets 1,366,860  898,078 
Property, plant, and equipment, net 677,481  665,147 
Intangibles (net of amortization) and goodwill 128,125  129,944 
Prepaid pension cost 139,760  137,069 
Operating lease right-of-use assets 67,586  61,329 
Deferred charges and other assets 57,404  42,308 
Total assets $ 2,437,216  $ 1,933,875 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 250,658  $ 189,937 
Accrued expenses 86,677  78,422 
Dividends payable 20,600  15,184 
Income taxes payable 5,202  3,760 
Operating lease liabilities 15,231  13,410 
Other current liabilities 13,029  11,742 
Total current liabilities 391,397  312,455 
Long-term debt 991,919  598,848 
Operating lease liabilities-noncurrent 52,319  48,324 
Other noncurrent liabilities 228,808  214,424 
Total liabilities 1,664,443  1,174,051 
Commitments and contingencies (Note 10)
Shareholders’ equity:
Common stock and paid-in capital (with no par value; authorized shares - 80,000,000; issued and outstanding shares - 10,637,047 at September 30, 2021 and 10,921,377 at December 31, 2020)
717 
Accumulated other comprehensive loss (172,374) (173,164)
Retained earnings 945,147  932,271 
Total shareholders' equity 772,773  759,824 
Total liabilities and shareholders’ equity $ 2,437,216  $ 1,933,875 
See accompanying Notes to Condensed Consolidated Financial Statements

6


NEWMARKET CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(Unaudited)
(in thousands, except share and per-share amounts) Common Stock and
Paid-in Capital
Accumulated Other Comprehensive Loss Retained Earnings Total
Shareholders’ Equity
Shares Amount
Balance at June 30, 2020 10,923,999  $ 281  $ (176,652) $ 811,656  $ 635,285 
Net income 95,794  95,794 
Other comprehensive income (loss) 13,754  13,754 
Cash dividends ($1.90 per share)
(20,751) (20,751)
Repurchases of common stock (3,835) (870) (564) (1,434)
Stock-based compensation 1,225  876  878 
Balance at September 30, 2020 10,921,389  $ 287  $ (162,898) $ 886,137  $ 723,526 
Balance at June 30, 2021 10,928,129  $ 1,748  $ (164,947) $ 1,012,409  $ 849,210 
Net income 52,038  52,038 
Other comprehensive income (loss) (7,427) (7,427)
Cash dividends ($2.10 per share)
(22,590) (22,590)
Repurchases of common stock (292,392) (2,748) (96,712) (99,460)
Stock-based compensation 1,310  1,000  1,002 
Balance at September 30, 2021 10,637,047  $ $ (172,374) $ 945,147  $ 772,773 
Balance at December 31, 2019 11,188,549  $ 1,965  $ (162,748) $ 843,881  $ 683,098 
Net income 203,684  203,684 
Other comprehensive income (loss) (150) (150)
Cash dividends ($5.70 per share)
(62,667) (62,667)
Repurchases of common stock (270,963) (2,630) (98,804) (101,434)
Tax withholdings related to stock-based compensation
(1,547) (641) (641)
Stock-based compensation 5,350  1,593  43  1,636 
Balance at September 30, 2020 10,921,389  $ 287  $ (162,898) $ 886,137  $ 723,526 
Balance at December 31, 2020 10,921,377  $ 717  $ (173,164) $ 932,271  $ 759,824 
Net income 173,702  173,702 
Other comprehensive income (loss) 790  790 
Cash dividends ($5.90 per share)
(64,116) (64,116)
Repurchases of common stock (292,392) (2,748) (96,712) (99,460)
Stock-based compensation 8,062  2,031  2,033 
Balance at September 30, 2021 10,637,047  $ $ (172,374) $ 945,147  $ 772,773 
See accompanying Notes to Condensed Consolidated Financial Statements

7


NEWMARKET CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 (in thousands) Nine Months Ended
September 30,
  2021 2020
Cash and cash equivalents at beginning of year $ 125,172  $ 144,397 
Cash flows from operating activities:
Net income 173,702  203,684 
Adjustments to reconcile net income to cash flows from operating activities:
Depreciation and amortization 63,075  63,045 
Deferred income tax expense 6,205  5,405 
Gain on sale of land (16,483)
Unrealized (gain) loss on marketable securities 3,414 
Working capital changes (98,426) (33,493)
Cash pension and postretirement contributions (7,820) (7,717)
Other, net 4,868  1,879 
Cash provided from (used in) operating activities 145,018  216,320 
Cash flows from investing activities:
Capital expenditures (64,025) (60,133)
Purchases of marketable securities (391,429)
Proceeds from sales and maturities of marketable securities 9,894 
Proceeds from sale of land 20,000 
Other, net (927)
Cash provided from (used in) investing activities (445,560) (41,060)
Cash flows from financing activities:
Net borrowings (repayments) under revolving credit facility 1,000  (34,678)
Issuance of 2.70% senior notes
395,052 
Dividends paid (64,116) (62,667)
Repurchases of common stock (91,711) (101,434)
Debt issuance costs (3,897) (1,349)
Other, net (581) (82)
Cash provided from (used in) financing activities 235,747  (200,210)
Effect of foreign exchange on cash and cash equivalents (764) (1,746)
Decrease in cash and cash equivalents (65,559) (26,696)
Cash and cash equivalents at end of period $ 59,613  $ 117,701 
See accompanying Notes to Condensed Consolidated Financial Statements

8

NEWMARKET CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1.    Financial Statement Presentation
In the opinion of management, the accompanying consolidated financial statements of NewMarket Corporation and its subsidiaries contain all necessary adjustments for the fair presentation of, in all material respects, our consolidated financial position as of September 30, 2021 and December 31, 2020, and our consolidated results of operations, comprehensive income, and changes in shareholders' equity for the third quarter and nine months ended September 30, 2021 and September 30, 2020, and our cash flows for the nine months ended September 30, 2021 and September 30, 2020. All adjustments are of a normal, recurring nature, unless otherwise disclosed. These financial statements should be read in conjunction with the consolidated financial statements and related notes included in the NewMarket Corporation Annual Report on Form 10-K for the year ended December 31, 2020 (2020 Annual Report), as filed with the Securities and Exchange Commission (SEC). The results of operations for the nine month period ended September 30, 2021 are not necessarily indicative of the results to be expected for the full year ending December 31, 2021. The December 31, 2020 condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America.
Unless the context otherwise indicates, all references to “we,” “us,” “our,” the “company,” and “NewMarket” are to NewMarket Corporation and its consolidated subsidiaries.

2.    Net Sales
Our revenues are primarily derived from the manufacture and sale of petroleum additives products. We sell petroleum additives products across the world to customers located in the North America, Latin America, Asia Pacific, and Europe/Middle East/Africa/India (EMEAI) regions. Our customers primarily consist of global, national, and independent oil companies. Our contracts generally include one performance obligation, which is providing petroleum additives products. The performance obligation is satisfied at a point in time when products are shipped, delivered, or consumed by the customer, depending on the underlying contracts.
In limited cases, we collect funds in advance of shipping product to our customers and recognizing the related revenue. These prepayments from customers are recorded as a contract liability to our customer until we recognize the revenue. Some of our contracts include variable consideration in the form of rebates or business development funds. We regularly review both rebates and business development funds and make adjustments when necessary, recognizing the full amount of any adjustment in the period identified.

The following table provides information on our net sales by geographic area. Information on net sales by segment is in Note 3.
Third Quarter Ended
September 30,
Nine Months Ended
September 30,
(in thousands) 2021 2020 2021 2020
Net sales
United States $ 219,912  $ 175,086  $ 580,799  $ 476,858 
China 56,470  56,531  202,523  159,771 
Europe, Middle East, Africa, India 188,603  161,484  533,732  483,051 
Asia Pacific, except China 81,174  64,498  247,575  210,670 
Other foreign 76,048  55,270  214,914  152,800 
Net sales $ 622,207  $ 512,869  $ 1,779,543  $ 1,483,150 
9

NEWMARKET CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
3. Segment Information
The tables below show our consolidated segment results. The “All other” category includes the operations of the antiknock compounds business, as well as certain contracted manufacturing and services associated with Ethyl Corporation (Ethyl).
Net Sales by Segment
Third Quarter Ended
September 30,
Nine Months Ended
September 30,
(in thousands) 2021 2020 2021 2020
Petroleum additives
     Lubricant additives $ 527,142  $ 432,938  $ 1,520,475  $ 1,240,042 
     Fuel additives 91,928  77,342  250,080  236,313 
          Total 619,070  510,280  1,770,555  1,476,355 
All other 3,137  2,589  8,988  6,795 
Net sales $ 622,207  $ 512,869  $ 1,779,543  $ 1,483,150 

Segment Operating Profit
Third Quarter Ended
September 30,
Nine Months Ended
September 30,
(in thousands) 2021 2020 2021 2020
Petroleum additives $ 72,128  $ 102,186  $ 240,399  $ 248,918 
All other (151) 2,015  (798) 1,951 
Segment operating profit 71,977  104,201  239,601  250,869 
Corporate, general, and administrative expenses (8,731) (5,565) (16,591) (15,263)
Interest and financing expenses, net (9,345) (6,466) (24,557) (20,575)
Other income (expense), net 7,252  25,448  19,128  39,933 
Income before income tax expense
$ 61,153  $ 117,618  $ 217,581  $ 254,964 
 
10

NEWMARKET CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
4.    Pension Plans and Other Postretirement Benefits
The table below shows cash contributions made during the nine months ended September 30, 2021, as well as the remaining cash contributions we expect to make during the year ending December 31, 2021, for our domestic and foreign pension plans and domestic postretirement benefit plan.
(in thousands) Actual Cash Contributions for Nine Months Ended September 30, 2021 Expected Remaining Cash Contributions for Year Ending December 31, 2021
Domestic plans
Pension benefits $ 2,140  $ 713 
Postretirement benefits 872  291 
Foreign plans
Pension benefits 4,808  1,537 

The tables below present information on net periodic benefit cost (income) for our domestic and foreign pension plans and domestic postretirement benefit plan. The service cost component of net periodic benefit cost (income) is reflected in cost of goods sold; selling, general, and administrative expenses; or research, development, and testing expenses, according to where other compensation costs arising from services rendered by the pertinent employee are recorded on the Consolidated Statements of Income. The remaining components of net periodic benefit cost (income) are recorded in other income (expense), net on the Consolidated Statements of Income.
  Domestic
  Pension Benefits Postretirement Benefits
Third Quarter Ended September 30,
(in thousands) 2021 2020 2021 2020
Service cost $ 4,858  $ 4,012  $ 310  $ 250 
Interest cost 3,282  3,311  285  314 
Expected return on plan assets (9,666) (9,309) (213) (222)
Amortization of prior service cost (credit) 66  70  (757) (757)
Amortization of actuarial net (gain) loss 1,502  874 
Net periodic benefit cost (income) $ 42  $ (1,042) $ (373) $ (415)
  Domestic
  Pension Benefits Postretirement Benefits
Nine Months Ended September 30,
(in thousands) 2021 2020 2021 2020
Service cost $ 14,486  $ 12,407  $ 810  $ 684 
Interest cost 9,764  10,328  868  1,005 
Expected return on plan assets (29,006) (27,920) (680) (704)
Amortization of prior service cost (credit) 203  203  (2,271) (2,271)
Amortization of actuarial net (gain) loss 4,282  3,506  27 
Net periodic benefit cost (income) $ (271) $ (1,476) $ (1,246) $ (1,286)

11

NEWMARKET CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
  Foreign
  Pension Benefits
Third Quarter Ended September 30, Nine Months Ended September 30,
(in thousands) 2021 2020 2021 2020
Service cost $ 2,748  $ 2,153  $ 8,274  $ 6,360 
Interest cost 829  967  2,490  2,880 
Expected return on plan assets (2,674) (2,426) (8,031) (7,221)
Amortization of prior service cost (credit) 38  (12) 114  (33)
Amortization of actuarial net (gain) loss 901  355  2,709  1,047 
Net periodic benefit cost (income) $ 1,842  $ 1,037  $ 5,556  $ 3,033 

5.    Earnings Per Share
We had 26,618 shares of nonvested restricted stock at September 30, 2021 and 19,963 shares of nonvested restricted stock at September 30, 2020 that were excluded from the calculation of diluted earnings per share, as their effect on earnings per share would be anti-dilutive.
The nonvested restricted stock is considered a participating security since the restricted stock contains nonforfeitable rights to dividends. As such, we use the two-class method to compute basic and diluted earnings per share for all periods presented since this method yields the most dilutive result. The following table illustrates the earnings allocation method utilized in the calculation of basic and diluted earnings per share.
Third Quarter Ended
September 30,
Nine Months Ended
September 30,
(in thousands, except per-share amounts) 2021 2020 2021 2020
Earnings per share numerator:
Net income attributable to common shareholders before allocation of earnings to participating securities
$ 52,038  $ 95,794  $ 173,702  $ 203,684 
Earnings allocated to participating securities
129  172  412  326 
Net income attributable to common shareholders after allocation of earnings to participating securities
$ 51,909  $ 95,622  $ 173,290  $ 203,358 
Earnings per share denominator:
Weighted-average number of shares of common stock outstanding - basic and diluted
10,821  10,903  10,875  10,981 
Earnings per share - basic and diluted $ 4.80  $ 8.77  $ 15.94  $ 18.52 















12

NEWMARKET CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
6. Marketable Securities
During May 2021, NewMarket invested in both debt and equity marketable securities. The debt securities are designated as trading. The marketable securities are recorded on a settlement date basis at estimated fair value and are classified as current assets in the Consolidated Balance Sheets. Unrealized gains and losses, as well as the investment income attributable to the debt and equity securities, are reported in Other income (expense), net in the Consolidated Statements of Income. The debt securities have a cost basis of $50 million and the equity securities have a cost basis of $332 million at September 30, 2021. The fair value of both the debt and equity securities are shown in the second table below.

The portion of unrealized gains and losses for the period related to both the debt and equity securities still held at the reporting date are as follows:
Third Quarter Ended
September 30,
Nine Months Ended
September 30,
(in thousands) 2021 2021
Unrealized gains and (losses) recognized during the reporting period on debt securities still held at the reporting date $ (287) $ (231)
Unrealized gains and (losses) recognized during the reporting period on equity securities still held at the reporting date $ (813) $ (3,183)

The following table provides information on the fair value of the marketable securities, as well as the related level within the fair value hierarchy. The estimated fair value of debt securities is based on reported trades of the debt security adjusted for other observable market data including, but not limited to, benchmark yield curves, market-based quotes of similar assets, and other market-corroborated inputs. The estimated fair value of equity securities is based on actively quoted market prices.

September 30, 2021
Fair Value Measurements Using
(in thousands) Fair Value Level 1 Level 2 Level 3
Debt securities:
Corporate bonds $ 49,847  $ $ 49,847  $
Equity securities:
U.S. government income mutual fund 329,055  329,055 
Total marketable securities $ 378,902  $ 329,055  $ 49,847  $

7.        Inventories
  September 30, December 31,
(in thousands)
2021 2020
Finished goods and work-in-process $ 376,319  $ 325,588 
Raw materials 85,161  59,413 
Stores, supplies, and other 17,559  16,030 
$ 479,039  $ 401,031 







13

NEWMARKET CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
8.    Intangibles (Net of Amortization) and Goodwill
The net carrying amount of intangibles and goodwill was $128 million at September 30, 2021 and $130 million at December 31, 2020. The gross carrying amount and accumulated amortization of each type of intangible asset and goodwill are presented in the table below.
  September 30, 2021 December 31, 2020
(in thousands) Gross
Carrying
Amount
Accumulated
Amortization
Gross
Carrying
Amount
Accumulated
Amortization
Amortizing intangible assets
Formulas and technology $ 6,200  $ 4,392  $ 6,200  $ 3,617 
Contract 2,000  950  2,000  800 
Customer bases 5,440  4,112  14,240  12,037 
Goodwill 123,939  123,958 
$ 137,579  $ 9,454  $ 146,398  $ 16,454 

All of the intangibles relate to the petroleum additives segment. The change in the gross carrying amount between December 31, 2020 and September 30, 2021 is due to a customer base becoming fully amortized and foreign currency fluctuation. There is no accumulated goodwill impairment.
Amortization expense was (in thousands):
Third quarter ended September 30, 2021 $ 356 
Nine months ended September 30, 2021 1,800 
Third quarter ended September 30, 2020 586 
Nine months ended September 30, 2020 2,322 
Estimated amortization expense for the remainder of 2021, as well as estimated annual amortization expense related to our intangible assets for the next five years, is expected to be (in thousands):
2021 $ 356 
2022 1,423 
2023 907 
2024 390 
2025 390 
2026 390 
We amortize the contract over 10 years; the customer base over 20 years; and formulas and technology over 6 years.














14

NEWMARKET CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
9.    Long-term Debt
(in thousands) September 30,
2021
December 31,
2020
Senior notes - 2.70% due 2031 (net of related deferred financing costs)
$ 391,632  $
Senior notes - 4.10% due 2022 (net of related deferred financing costs)
349,287  348,848 
Senior notes - 3.78% due 2029
250,000  250,000 
Revolving credit facility 1,000 
$ 991,919  $ 598,848 
Senior Notes - On March 18, 2021, we issued $400 million aggregate principal amount of 2.70% senior notes due 2031. The 2.70% senior notes are general unsecured senior obligations and rank equally with our other unsecured senior indebtedness. The offer and sale of the notes were registered under the Securities Act of 1933, as amended. We incurred financing costs in 2021 of approximately $4 million related to the 2.70% senior notes, which are being amortized over the term of the notes.
The indenture governing the 2.70% senior notes includes certain customary covenants that, among other things and subject to certain qualifications and exceptions, limit our ability and the ability of our subsidiaries to:
grant liens to secure indebtedness;
engage in sale and lease back transactions;
merge or consolidate with, or convey, transfer or lease all or substantially all of our assets to a third party.
The outstanding 4.10% senior notes are unsecured, with an aggregate principal amount of $350 million and are registered under the Securities Act of 1933, as amended. The outstanding 3.78% senior notes are unsecured and were issued in a 2017 private placement with The Prudential Insurance Company of America and certain other purchasers.
We were in compliance with all covenants under all issuances of outstanding senior notes as of September 30, 2021 and December 31, 2020.
Revolving Credit Facility - The revolving credit facility has a borrowing capacity of $900 million, a term of five years, and matures on March 5, 2025. The obligations under the revolving credit facility are unsecured and are fully and unconditionally guaranteed by NewMarket.
The average interest rate for borrowings under the credit agreement was 2.7% during the first nine months of 2021.
Outstanding letters of credit amounted to approximately $2 million at both September 30, 2021 and December 31, 2020. The unused portion of the credit facility amounted to $897 million as of September 30, 2021 and $898 million at December 31, 2020.
We were in compliance with all covenants under the revolving credit facility as of September 30, 2021 and December 31, 2020.












15

NEWMARKET CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
10.    Commitments and Contingencies
Legal Matters
We are involved in legal proceedings that are incidental to our business and may include administrative or judicial actions. Some of these legal proceedings involve governmental authorities and relate to environmental matters. For further information, see Environmental below.
While it is not possible to predict or determine with certainty the outcome of any legal proceeding, we believe the outcome of any of these proceedings, or all of them combined, will not result in a material adverse effect on our consolidated results of operations, financial condition, or cash flows.
Environmental
We are involved in environmental proceedings and potential proceedings relating to soil and groundwater contamination, disposal of hazardous waste, and other environmental matters at several of our current or former facilities, or at third-party sites where we have been designated as a potentially responsible party (PRP). While we believe we are currently adequately accrued for known environmental issues, it is possible that unexpected future costs could have a significant impact on our consolidated financial position, results of operations, and cash flows. Our total accruals for environmental remediation, dismantling, and decontamination were approximately $9 million at September 30, 2021 and $10 million at December 31, 2020. Of the total accrual, the current portion is included in accrued expenses and the noncurrent portion is included in other noncurrent liabilities on the Condensed Consolidated Balance Sheets.
Our more significant environmental sites include a former plant site in Louisiana and a Houston, Texas plant site. Together, the amounts accrued on a discounted basis related to these sites represented approximately $7 million of the total accrual above at September 30, 2021 and $8 million at December 31, 2020, using discount rates ranging from 3% to 9% for both periods. The aggregate undiscounted amount for these sites was $9 million at both September 30, 2021 and December 31, 2020.

11.    Other Comprehensive Income (Loss) and Accumulated Other Comprehensive Loss
The balances of, and changes in, the components of accumulated other comprehensive loss, net of tax, consist of the following:
(in thousands) Pension Plans
and Other Postretirement Benefits
Foreign Currency Translation Adjustments Accumulated Other
Comprehensive (Loss) Income
Balance at December 31, 2019 $ (69,795) $ (92,953) $ (162,748)
Other comprehensive income (loss) before reclassifications
2,985  (5,013) (2,028)
Amounts reclassified from accumulated other comprehensive loss (a)
1,878  1,878 
Other comprehensive income (loss)
4,863  (5,013) (150)
Balance at September 30, 2020 $ (64,932) $ (97,966) $ (162,898)
Balance at December 31, 2020 $ (92,771) $ (80,393) $ (173,164)
Other comprehensive income (loss) before reclassifications
(1,993) (1,081) (3,074)
Amounts reclassified from accumulated other comprehensive loss (a)
3,864  3,864 
Other comprehensive income (loss)
1,871  (1,081) 790 
Balance at September 30, 2021 $ (90,900) $ (81,474) $ (172,374)
(a) The pension plan and other postretirement benefit components of accumulated other comprehensive loss are included in the computation of net periodic benefit cost (income). See Note 4 in this Quarterly Report on Form 10-Q and Note 17 in our 2020 Annual Report for further information.



16

NEWMARKET CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
12.    Fair Value Measurements
The carrying amount of cash and cash equivalents in the Consolidated Balance Sheets, as well as the fair value, was $60 million at September 30, 2021 and $125 million at December 31, 2020. The fair value is classified as Level 1 in the fair value hierarchy.
No material events occurred during the nine months ended September 30, 2021 requiring adjustment to the recognized balances of assets or liabilities which are recorded at fair value on a nonrecurring basis.
Long-term debt – We record the carrying amount of our long-term debt at historical cost, less deferred financing costs related to our publicly traded senior notes. The estimated fair value of our long-term debt is shown in the table below and is based primarily on estimated current rates available to us for debt of the same remaining duration and adjusted for nonperformance risk and credit risk. The estimated fair value of our publicly-traded senior notes included in the table below is based on the last quoted price closest to September 30, 2021. The fair value of our debt instruments are classified as Level 2.
September 30, 2021 December 31, 2020
(in thousands) Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
Long-term debt $ 991,919  $ 1,044,278  $ 598,848  $ 648,671 
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ITEM 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
This report contains forward-looking statements about future events and expectations within the meaning of the Private Securities Litigation Reform Act of 1995. We have based these forward-looking statements on our current expectations and projections about future results. When we use words in this document such as “anticipates,” “intends,” “plans,” “believes,” “estimates,” “projects,” “expects,” “should,” “could,” “may,” “will,” and similar expressions, we do so to identify forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements we make regarding future prospects of growth in the petroleum additives market, other trends in the petroleum additives market, our ability to maintain or increase our market share, and our future capital expenditure levels.
We believe our forward-looking statements are based on reasonable expectations and assumptions, within the bounds of what we know about our business and operations. However, we offer no assurance that actual results will not differ materially from our expectations due to uncertainties and factors that are difficult to predict and beyond our control.
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 SEC, including the risk factors in Item 1A. “Risk Factors” of our 2020 Annual Report, which is available to shareholders upon request.
You should keep in mind that any forward-looking statement made by us in this report or elsewhere speaks only as of the date on which we make it. 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, any forward-looking statement made in this report or elsewhere, might not occur.

Overview
When comparing the results of the petroleum additives segment for the first nine months of 2021 with the first nine months of 2020, net sales increased 19.9% primarily due to higher lubricant additives product shipments, higher selling prices, and a favorable foreign currency impact. Petroleum additives operating profit was 3.4% lower when comparing the first nine months of 2021 with the first nine months of 2020, reflecting significantly higher raw material costs partially offset by improved product shipments and higher selling prices.
During the third quarter of 2021, we increased our quarterly dividend to $2.10 per share, and we repurchased 292,392 shares of our common stock for a total of $99.5 million.
Our operations generate cash that is in excess of the needs of the business. We continue to invest in and manage the business for the long-term with the intent of helping our customers succeed in their marketplaces. Our investments continue to be in organizational talent, technology development and processes, and global infrastructure, consisting of technical centers, production capability, and geographic expansion.
Impact of the Current Economic Environment and the COVID-19 Pandemic
The current economic environment in which we operate is characterized by steadily rising costs, including raw material costs, limitations on certain supply availability, and a challenging supply chain network and transportation system. Because of our active business continuity process and global network, we have substantially managed through these factors during the first nine months of the year and have delivered product to our customers. We do not currently expect the supply chain network disruptions to be long-term in nature, but we cannot predict how the current economic environment may evolve over the coming months. We will continue working with our customers to deliver product, but at the same time, we also expect to be challenged by these ongoing economic factors as we manage our business throughout the rest of the year.
18

In addition, but to a lesser extent than during 2020, petroleum additives operating results for the first nine months of 2021 include an unfavorable impact from the economic uncertainty resulting from the ongoing effects of the COVID-19 pandemic and the related restrictions on the movement of people, goods and services. The pace and stability of improvement in demand for our products will continue to depend heavily on economic recovery.
All of our locations around the world, including our manufacturing and research and development facilities, have continued to operate safely and without interruption during the pandemic, with only a very few government-ordered, short-term exceptions, and we expect them to continue to do so.
Our financial position remains strong. We have sufficient access to capital, if needed, and do not anticipate any issues with meeting the covenants for all our debt agreements. Our major capital projects are continuing to progress substantially as planned.
As we operate in the chemical industry, we continue to be focused on protecting the health and safety of our employees and have procedures in place at each of our operating facilities to help ensure their well-being.
The chemical industry and our products are recognized as essential for transportation of goods and services. Our business continuity planning process focuses our efforts on managing through this challenging time and helping our customers do the same. As we are a global company and can leverage the knowledge and experience of our personnel in facilities across the world, we do not expect to experience negative impacts related to short-term travel and border restrictions.

Results of Operations
Net Sales
Consolidated net sales for the third quarter of 2021 totaled $622.2 million, representing an increase of $109.3 million, or 21.3% from the third quarter of 2020. Consolidated net sales for the first nine months of 2021 totaled $1.8 billion, representing an increase of $296.4 million, or 20.0%, from the first nine months of 2020. The following table shows net sales by segment and product line.
Third Quarter Ended
September 30,
Nine Months Ended
September 30,
(in millions) 2021 2020 2021 2020
Petroleum additives
Lubricant additives $ 527.2  $ 432.9  $ 1,520.5  $ 1,240.1 
Fuel additives 91.9  77.4  250.1  236.3 
Total 619.1  510.3  1,770.6  1,476.4 
All other 3.1  2.6  8.9  6.8 
Net sales $ 622.2  $ 512.9  $ 1,779.5  $ 1,483.2 
Petroleum Additives Segment
The regions in which we operate include North America (the United States and Canada), Latin America (Mexico, Central America, and South America), Asia Pacific, and the EMEAI region. While there is some fluctuation, the percentage of net sales generated in the regions remained fairly consistent when comparing the first nine months of 2021 with the same period in 2020, as well as with the full year in 2020.
Petroleum additives net sales for the third quarter of 2021 were $619.1 million compared to $510.3 million for the third quarter of 2020, an increase of 21.3%. Petroleum additives net sales for the first nine months of 2021 were $1.8 billion compared to $1.5 billion for the first nine months of 2020, an increase of 19.9%. For both the third quarter and nine months comparative periods, the increases were across all regions with North America representing around 40% of the increase in both comparative periods. The EMEAI region contributed an approximate 25% increase in the third quarter comparison with the Latin America and Asia Pacific regions each contributing approximately equally for the remaining increase. For the nine month comparison, the Asia Pacific region reflected an approximate 25% increase with the EMEAI and Latin America regions reflecting the remaining increases in petroleum additives net sales. While 2021 results continue to include the economic impact of the COVID-19 pandemic to a lesser extent, the third quarter and nine months 2020 periods include a more significant economic impact from the pandemic.


19



The following table details the approximate components of the increase in petroleum additives net sales between the third quarter and first nine months of 2021 and 2020.
(in millions) Third Quarter Nine Months
Period ended September 30, 2020 $ 510.3  $ 1,476.4 
Lubricant additives shipments 53.7  237.0 
Fuel additives shipments 4.3  2.9 
Selling prices 46.2  28.2 
Foreign currency impact, net 4.6  26.1 
Period ended September 30, 2021 $ 619.1  $ 1,770.6 
When comparing both the third quarter and the nine months periods of 2021 and 2020, petroleum additives shipments accounted for a $58.0 million increase in net sales for the third quarter comparison and a $239.9 million increase in net sales for the nine month comparison. Selling prices improved during both the third quarter and nine months comparison periods. The impact from selling prices was net of a favorable impact from foreign currency exchange rates in both comparative periods. The United States Dollar weakened against most of the major currencies in which we transact when comparing both the third quarter and nine months of 2021 and 2020 resulting in a favorable impact to petroleum additives net sales for both the third quarter and nine months comparative periods. The favorable impact was predominantly due to changes in the Euro and Chinese Renminbi exchange rates.
On a worldwide basis, the volume of product shipments for petroleum additives increased 11.9% when comparing the two third quarter periods and 16.6% when comparing the nine months of 2021 and 2020. For the third quarter comparison, lubricant additives improved across all regions by similar amounts and fuel additives increased across all regions except the EMEAI region. For the nine months comparison, the North America and Asia Pacific regions each contributed approximately one-third of the improvement in lubricant additives shipments, with the EMEAI and Latin America regions also improving. Fuel additives shipments for the nine months comparison improved across all regions, except for the EMEAI region. Similar to the discussion on net sales above, the volume of product shipments in the third quarter and nine months of 2020 include the impact from unusually low shipments due to the COVID-19 pandemic.

All Other
The “All other” category includes the operations of the antiknock compounds business and certain contracted manufacturing and services.

Segment Operating Profit
NewMarket evaluates the performance of the petroleum additives business based on segment operating profit. NewMarket Services Corporation expenses are charged to NewMarket and each subsidiary pursuant to services agreements between the companies. Depreciation on segment property, plant, and equipment, as well as amortization of segment intangible assets and lease right-of-use assets, is included in segment operating profit.
The following table reports segment operating profit for the third quarter and nine months ended September 30, 2021 and September 30, 2020.
Third Quarter Ended
September 30,
Nine Months Ended
September 30,
(in millions) 2021 2020 2021 2020
Petroleum additives $ 72.1  $ 102.2  $ 240.4  $ 248.9 
All other $ (0.1) $ 2.0  $ (0.8) $ 2.0 
Petroleum Additives Segment
The petroleum additives segment operating profit decreased $30.1 million when comparing the third quarter of 2021 to the third quarter of 2020 and $8.5 million when comparing the first nine months of 2021 to the first nine months of 2020. Both comparative periods included the impact of the same factors that affected gross profit (see discussion below).
20

The operating profit margin was 11.7% for the third quarter of 2021 as compared to 20.0% for the third quarter of 2020 and was 13.6% for the first nine months of 2021 as compared to 16.9% for the first nine months of 2020. For the rolling four quarters ended September 30, 2021, the operating profit margin for petroleum additives was 14.1%. Increasing costs during 2021, including primarily raw material costs, are having a negative impact on our operating profit margins. While we have made some progress in adjusting our selling prices, our costs have continued to rise. Operating profit margins remain a priority, and while they will fluctuate from quarter to quarter due to multiple factors, we believe the fundamentals of our business and industry as a whole are unchanged.
Petroleum additives gross profit decreased $25.9 million when comparing the two third quarter periods and was substantially unchanged when comparing the first nine months of 2021 and 2020. Cost of goods sold as a percentage of net sales was 77.7% for the third quarter of 2021, increasing from 67.9% for the third quarter of 2020, and 75.2% for the first nine months of 2021, increasing from 70.2% for the first nine months of 2020.
When comparing the third quarters of 2021 and 2020, the decrease in gross profit primarily resulted from significantly higher raw material costs, as well as a small unfavorable impact from conversion costs, which were partially offset by improved selling prices and product shipments. The same unfavorable effect from higher raw material costs impacted the nine months comparison, but was offset primarily by improved product shipments and improved selling prices.
Petroleum additives selling, general, and administrative expenses (SG&A) for the third quarter of 2021 were $1.9 million higher as compared to the third quarter of 2020, and $3.7 million higher when comparing the first nine months of 2021 to the same 2020 period. SG&A as a percentage of net sales was 4.9% for the third quarter of 2021, 5.6% for the third quarter of 2020, 5.2% for the first nine months of 2021, and 6.0% for the first nine months of 2020. Our SG&A costs are primarily personnel-related and include salaries, benefits, and other costs associated with our workforce, including travel expenses. While personnel-related costs fluctuate from period to period, there were no significant changes in the drivers of these costs when comparing the periods.
Our investment in petroleum additives research, development, and testing (R&D) increased $2.3 million when comparing the third quarter of 2021 with the third quarter of 2020 and $5.1 million when comparing the first nine months periods of 2021 and 2020. As a percentage of net sales, R&D was 5.7% for the third quarter of 2021, 6.5% for the third quarter of 2020, 6.1% for the first nine months of 2021, and 6.9% for the first nine months of 2020. Our R&D investments reflect our efforts to support the development of solutions that meet our customers' needs, meet new and evolving standards, and support our expansion into new product areas. Our approach to R&D investments, as it is with SG&A, is one of purposeful spending on programs to support our current product base and to ensure that we develop products to support our customers' programs in the future. R&D investments include personnel-related costs, as well as costs for internal and external testing of our products.

The following discussion references certain captions on the Consolidated Statements of Income.

Interest and Financing Expenses
Interest and financing expenses were $9.3 million for the third quarter of 2021, $6.5 million for the third quarter of 2020, $24.6 million for the first nine months of 2021 and $20.6 million for the first nine months of 2020. The increase for both the third quarter and the nine months comparison resulted primarily from higher outstanding debt during the 2021 periods. A slightly lower average interest rate resulted in a small favorable impact for the third quarter comparison, while a higher average interest rate resulted in a small unfavorable impact for the nine months comparison. Higher capitalized interest during the 2021 periods partially offset the average debt impact.

Other Income (Expense), Net
Other income (expense), net was income of $7.4 million for the third quarter of 2021, $25.3 million for the third quarter of 2020, $19.8 million for the first nine months of 2021 and $39.3 million for the first nine months of 2020. The amounts for both of the 2021 and 2020 periods primarily reflect the components of net periodic benefit cost (income), except for service cost, from defined benefit pension and postretirement plans. See Note 4 for further information on total periodic benefit cost (income). Both of the 2020 periods also included a gain of $16.5 million related to the sale of a non-operating parcel of real estate and both of the 2021 periods included the gains and losses on marketable securities.

Income Tax Expense
Income tax expense was $9.1 million for the third quarter of 2021 and $21.8 million for the third quarter of 2020. The effective income tax rate was 14.9% for the third quarter of 2021 and 18.6% for the third quarter of 2020. Income tax expense decreased $10.5 million due to lower income before income tax expense and $2.2 million resulting from the lower effective income tax rate.
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Income tax expense was $43.9 million for the first nine months of 2021 and $51.3 million for the first nine months of 2020. The effective tax rate was 20.2% for the first nine months of 2021 and 20.1% for the first nine months of 2020. Income tax expense decreased $7.5 million due to lower income before income tax expense with the remainder of the difference caused by the slightly higher effective tax rate.
The decrease in the tax rate for the third quarter comparison period is primarily driven by the impact from our foreign operations.

Cash Flows, Financial Condition, and Liquidity
Cash and cash equivalents at September 30, 2021 were $59.6 million, which was a decrease of $65.6 million since December 31, 2020.
Cash and cash equivalents held by our foreign subsidiaries amounted to $57.8 million at September 30, 2021 and $97.3 million at December 31, 2020. Periodically, we repatriate cash from our foreign subsidiaries to the United States through intercompany dividends and loans. We do not anticipate significant tax consequences from future distributions of foreign earnings.
A portion of our foreign cash balances is associated with earnings that we have asserted are indefinitely reinvested. We plan to use these indefinitely reinvested earnings to support growth outside of the United States through funding of operating expenses, research and development expenses, capital expenditures, and other cash needs of our foreign subsidiaries.
We expect that cash from operations, together with borrowing available under our revolving credit facility, will continue to be sufficient to cover our operating needs and planned capital expenditures for at least the next twelve months.
Cash Flows – Operating Activities
Cash flows provided from operating activities for the first nine months of 2021 were $145.0 million, adjusted for the use of $98.4 million to fund higher working capital requirements. The $98.4 million used for working capital excluded a favorable foreign currency impact to the components of working capital on the balance sheet.
The most significant changes in working capital included increases in accounts receivable, inventory, and accounts payable. The increase in accounts receivable balances when comparing September 30, 2021 with the end of 2020 was primarily the result of increased shipment volumes along with higher sales prices. The increase in inventory was primarily in response to higher forecasted demand in some regions, as well as increased raw material costs. The increase in accounts payable reflected higher raw material costs, increased purchases of raw materials to meet customer demand, and normal fluctuations across the regions due to timing.
Including cash and cash equivalents, as well as the impact of changes in foreign currency exchange rates on the balance sheet, we had total working capital of $975.5 million at September 30, 2021 and $585.6 million at December 31, 2020. The current ratio was 3.49 to 1 at September 30, 2021 and 2.87 to 1 at December 31, 2020.
Cash Flows – Investing Activities
Cash used in investing activities totaled $445.6 million during the first nine months of 2021 and represented the purchases (net of proceeds from sales and maturities) of marketable securities of $381.5 million and capital expenditures of $64.0 million. We currently expect that our total capital spending during 2021 will be in the $75 million to $85 million range and will include several improvements to our manufacturing and R&D infrastructure around the world. We expect to continue to finance capital spending through cash on hand and cash provided from operations, together with borrowing available under our revolving credit facility.
Cash Flows – Financing Activities
Cash provided from financing activities during the first nine months of 2021 amounted to $235.7 million. These cash flows included $395.1 million of proceeds from the issuance of our $400 million 2.70% senior notes, which were subsequently mostly invested in marketable securities. Cash flows from financing activities also included $91.7 million for repurchase of our common stock and cash dividend payments of $64.1 million.
Debt
Our long-term debt was $991.9 million at September 30, 2021 compared to $598.8 million at December 31, 2020.
On March 18, 2021, we issued $400 million aggregate principal amount of 2.70% senior notes due 2031 at an issue price of 98.763%. We intend to use the net proceeds from the offering for the repayment or redemption of our 4.10% senior notes and for general corporate purposes. We incurred financing costs in 2021 of approximately $4 million related to the 2.70% senior notes, which are being amortized over the term of the notes.
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See Note 9 for additional information on the 2.70% senior notes, 4.10% senior notes, 3.78% senior notes, and revolving credit facility, including the unused portion of our revolving credit facility.
All of our senior notes and the revolving credit facility contain covenants, representations, and events of default that management considers typical of credit arrangements of this nature. The covenants under the 3.78% senior notes include negative covenants, certain financial covenants, and events of default which are substantially similar to the covenants and events of default in our revolving credit facility.
The revolving credit facility contains financial covenants that require NewMarket to maintain a consolidated Leverage Ratio (as defined in the agreement) of no more than 3.75 to 1.00, except during an Increased Leverage Period (as defined in the agreement) at the end of each quarter. At September 30, 2021, the Leverage Ratio was 2.66 under the revolving credit facility.
At September 30, 2021, we were in compliance with all covenants under the 4.10% senior notes, 3.78% senior notes, 2.70% senior notes, and revolving credit facility.
As a percentage of total capitalization (total long-term debt and shareholders’ equity), our total long-term debt percentage increased from 44.1% at December 31, 2020 to 56.2% at September 30, 2021. The change in the percentage resulted primarily from the issuance of the 2.70% senior notes, partially offset by the increase in shareholders' equity. The change in shareholders’ equity primarily reflects our earnings offset by dividend payments, the repurchases of our common stock, and the impact of foreign currency translation adjustments along with the changes in the funded position of our defined benefit plans. Generally, we repay any outstanding long-term debt with cash from operations or refinancing activities.

Critical Accounting Policies and Estimates
This Form 10-Q and our 2020 Annual Report include discussions of our accounting policies, as well as methods and estimates used in the preparation of our financial statements. We also provided a discussion of Critical Accounting Policies and Estimates in our 2020 Annual Report.
There have been no significant changes in our critical accounting policies and estimates from those reported in our 2020 Annual Report.

Recent Accounting Pronouncements
There are no new significant recent accounting pronouncements which may materially impact our financial statements.

Outlook
Our stated goal is to provide a 10% compounded return per year for our shareholders over any five-year period (defined by earnings per share growth plus dividend yield), although we may not necessarily achieve a 10% return each year. We continue to have confidence in our customer-focused strategy and approach to the market. 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 of our stakeholders over the long term.
We expect our petroleum additives segment will continue to experience impacts to its operating performance due to the current economic environment. Our global business will see varying effects on demand that will differ by region based on our product portfolio and geographic coverage. The global market for our products should continue to stabilize as government restrictions on the movement of people, goods, and services are lifted, as modern transportation and machinery cannot function without our products. We expect that the petroleum additives market will grow in the 1% to 2% range annually for the foreseeable future. We plan to exceed that growth rate over the long-term.
Over the past several years we have made significant investments in our business as the industry fundamentals remain positive. These investments have been and will continue to be in organizational talent, technology development and processes, and global infrastructure, consisting of technical centers, production capability, and geographic expansion. We intend to utilize these investments to improve our ability to deliver the solutions that our customers value, expand our global reach, and enhance our operating results. We will continue to invest in our capabilities to provide even better value, service, technology, and customer solutions.
Our business generates significant amounts of cash beyond its operational needs. We regularly review our many internal opportunities to utilize excess cash from technological, geographic, production capability, and product line perspectives. We believe our capital spending is creating the capability we need to grow and support our customers worldwide, and our research and development investments are positioning us well to provide added value to our customers. Our primary focus in the acquisition area remains on the petroleum additives industry. It is our view that this industry segment will provide the greatest opportunity for solid returns on our investments while minimizing risk. We remain focused on this strategy and will evaluate
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any future opportunities. We will continue to evaluate all alternative uses of cash to enhance shareholder value, including stock repurchases and dividends.

ITEM 3.     Quantitative and Qualitative Disclosures About Market Risk
At September 30, 2021, there were no material changes in our market risk from the information provided in the 2020 Annual Report except for a change in interest rate risk due to the issuance of the $400 million 2.70% senior notes and the market risk associated with our investment in marketable securities. See Note 9 for information on the 2.70% senior notes and Note 6 for information on the marketable securities.
A hypothetical 100 basis point decrease in interest rates, holding all other variables constant, would have resulted in a change of $59 million in the fair value of our debt at September 30, 2021.
A hypothetical 10% decrease in the trading prices of our marketable securities would have resulted in a $38 million decrease in the fair market value of our marketable securities.

ITEM 4.     Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain a system of internal control over financial reporting to provide reasonable, but not absolute, assurance of the reliability of the financial records and the protection of assets. Under Rule 13a-15(b) of the Securities Exchange Act of 1934 (the Exchange Act), we carried out an evaluation, with the participation of our management, including our principal executive officer and our principal financial officer, of the effectiveness of our disclosure controls and procedures, as such term is defined in Rule 13a-15(e) of the Exchange Act, as of the end of the period covered by this report. Based upon that evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level.
There has been no change in our internal control over financial reporting, as such term is defined in Rule 13a-15(f) of the Exchange Act, that occurred during the quarter ended September 30, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II.     OTHER INFORMATION
ITEM 1.     Legal Proceedings
There have been no material changes to our legal proceedings as disclosed in "Legal Proceedings" in Item 3 of Part I of the 2020 Annual Report.

ITEM 2.     Unregistered Sales of Equity Securities and Use of Proceeds
On December 13, 2018, our Board of Directors approved a share repurchase program authorizing management to repurchase up to $500 million of NewMarket's outstanding common stock effective January 1, 2019 until December 31, 2021, as market conditions warrant and covenants under our existing debt agreements permit. We may conduct the share repurchases in the open market, in privately negotiated transactions, through block trades, or pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934. The repurchase program does not require NewMarket to acquire any specific number of shares and may be terminated or suspended at any time. At September 30, 2021, approximately $299 million remained available under the 2018 authorization. The following table outlines the purchases during the third quarter of 2021 under this authorization.

Issuer Purchases of Equity Securities
Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
July 1 to July 31 0 $ 0.00  0 $ 398,566,341 
August 1 to August 31 122,445 342.15  122,445 356,671,401 
September 1 to September 30 169,947 338.73  169,947 299,106,064 
Total 292,392 $ 340.16  292,392 $ 299,106,064 

ITEM 6.     Exhibits
 
Articles of Incorporation Amended and Restated effective April 27, 2012 (incorporated by reference to Exhibit 3.1 to Form 8-K (File No. 1-32190) filed April 30, 2012)
NewMarket Corporation Bylaws Amended and Restated effective August 6, 2015 (incorporated by reference to Exhibit 3.1 to Form 8-K (File No. 1- 32190) filed August 6, 2015)
Summary of Directors' Compensation*
Certification pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Thomas E. Gottwald
Certification pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Brian D. Paliotti
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Thomas E. Gottwald
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Brian D. Paliotti
Exhibit 101 Inline XBRL Instance Document and Related Items (the instance document does not appear in the Interactive Data File because its Inline XBRL tags are embedded within the Inline XBRL document)
Exhibit 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
* Indicates management contracts, compensatory plans or arrangements of the company required to be filed as an exhibit

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
NEWMARKET CORPORATION
(Registrant)
Date: October 26, 2021 By: /s/ Brian D. Paliotti
Brian D. Paliotti
Vice President and
Chief Financial Officer
(Principal Financial Officer)
Date: October 26, 2021 By: /s/ William J. Skrobacz
William J. Skrobacz
Controller
(Principal Accounting Officer)


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