NEU NewMarket Corporation

• Third Quarter Net Income of $63.2 Million and Earnings Per Share of $6.32

• Petroleum Additives Nine Months Operating Profit of $261.1 Million, Up 8.6% versus 2021

• 499,275 Shares Repurchased during First Nine Months of 2022

NewMarket Corporation (NYSE:NEU) Chairman and Chief Executive Officer, Thomas E. Gottwald, released the following earnings report of the Company’s operations for the third quarter and first nine months of 2022.

Net income for the third quarter of 2022 was $63.2 million, compared to net income of $52.0 million for the third quarter of 2021. Earnings per share increased to $6.32 per share from $4.80 per share in the prior year period. For the first nine months of 2022, net income was $189.0 million, or $18.60 per share, compared to net income of $173.7 million, or $15.94 per share, for the first nine months of last year.

Sales for the petroleum additives segment for the third quarter of 2022 were $692.7 million, up from $619.1 million in the third quarter of 2021. Petroleum additives operating profit for the third quarter of 2022 was $83.0 million, compared to $72.1 million for the same period last year. The increase was mainly due to increased selling prices partially offset by higher raw material and operating costs and decreased shipments. Shipments between quarterly periods were down 8.5%, with decreases in both lubricant additives and fuel additives shipments across all regions except Latin America, which reported an increase in fuel additives shipments.

Petroleum additives sales for the first nine months of the year were $2.1 billion, compared to sales in the first nine months of last year of $1.8 billion. Petroleum additives operating profit for the first nine months of the year was $261.1 million compared to $240.4 million for the same period last year. The increase was due mainly to increased selling prices partially offset by higher raw material and operating costs. Shipments decreased 1.3% between periods, with decreases in both lubricant additives and fuel additives shipments. All regions except Europe contributed to the decrease in lubricant additives shipments. Europe and Asia Pacific were the primary drivers for the decrease in fuel additives shipments, partially offset by increases in North America and Latin America.

We are pleased with our strong petroleum additives sales in 2022. However, our operating margin for the first nine months of 2022 was 12.6% compared to 13.6% in the prior-year nine month period. We have seen progress in our efforts to recover margins and control costs, but we are still being challenged by the ongoing inflationary environment. Margin recovery and cost control will continue to be a priority for the remainder of this year and into 2023, so that our margins will again be consistent with our historical ranges. Worldwide supply chain disruptions continue to negatively impact our business and we are working to resolve the supply chain issues to meet our customers’ growing needs.

During the first nine months of 2022, we paid dividends of $63.8 million, repurchased 499,275 shares of our common stock for a total of $155.2 million, and funded capital expenditures of $40.4 million.

Our views toward the fundamentals of our industry remain unchanged with the petroleum additives market growing at 1% to 2% for the foreseeable future, and we expect to exceed that growth rate.

We continue to make decisions to promote long-term value for our shareholders and customers, and we remain focused on our long-term objectives. This is evidenced by our ongoing investments in supply capability and our technology- driven initiatives. We believe the fundamentals of how we run our business - a long-term view, safety-first culture, customer-focused solutions, technology-driven product offerings, and world-class supply chain capability - will continue to be beneficial for all our stakeholders.

Sincerely,

Thomas E. Gottwald

The petroleum additives segment consists of the North America (the United States and Canada), Latin America (Mexico, Central America, and South America), Asia Pacific, and Europe/Middle East/Africa/India (Europe or EMEAI) regions.

The Company has disclosed the non-GAAP financial 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 Tuesday, October 25, 2022 to review third quarter 2022 financial results. You can access the conference call live by dialing 1-888-506-0062 (domestic) or 1-973-528-0011 (international) and requesting the NewMarket conference call. To avoid delays, callers should dial in five minutes early. A teleconference replay of the call will be available until November 1, 2022 at 3:00 p.m. EDT by dialing 1-877-481-4010 (domestic) or 1-919-882-2331 (international). The replay passcode number is 46748. 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/2001/46748. 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, sharp, or prolonged 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, wars and health-related epidemics such as the COVID-19 pandemic; risks related to operating outside of the United States; political, economic, and regulatory factors concerning our products; the impact of substantial indebtedness on our operational and financial flexibility; the impact of fluctuations in foreign exchange rates; resolution of environmental liabilities or legal proceedings; limitation of our insurance coverage; our inability to realize expected benefits from investment in our infrastructure or from future acquisitions, or our inability to successfully integrate 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 2021 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)

 

 

Third Quarter Ended September 30,

 

Nine Months Ended September 30,

 

 

2022

 

2021

 

2022

 

2021

Revenue:

 

 

 

 

 

 

 

 

Petroleum additives

 

$

692,693

 

 

$

619,070

 

 

$

2,074,018

 

 

$

1,770,555

 

All other

 

 

3,356

 

 

 

3,137

 

 

 

8,222

 

 

 

8,988

 

Total

 

$

696,049

 

 

$

622,207

 

 

$

2,082,240

 

 

$

1,779,543

 

Segment operating profit:

 

 

 

 

 

 

 

 

Petroleum additives

 

$

83,023

 

 

$

72,128

 

 

$

261,130

 

 

$

240,399

 

All other

 

 

(41

)

 

 

(151

)

 

 

(205

)

 

 

(798

)

Segment operating profit

 

 

82,982

 

 

 

71,977

 

 

 

260,925

 

 

 

239,601

 

Corporate unallocated expense

 

 

(4,167

)

 

 

(8,731

)

 

 

(15,389

)

 

 

(16,591

)

Interest and financing expenses

 

 

(8,369

)

 

 

(9,345

)

 

 

(24,859

)

 

 

(24,557

)

Loss on early extinguishment of debt

 

 

0

 

 

 

0

 

 

 

(7,545

)

 

 

0

 

Other income (expense), net

 

 

9,883

 

 

 

7,252

 

 

 

26,312

 

 

 

19,128

 

Income before income tax expense

 

$

80,329

 

 

$

61,153

 

 

$

239,444

 

 

$

217,581

 

Net income

 

$

63,226

 

 

$

52,038

 

 

$

189,016

 

 

$

173,702

 

Earnings per share - basic and diluted

 

$

6.32

 

 

$

4.80

 

 

$

18.60

 

 

$

15.94

 

NEWMARKET CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

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

 

 

Third Quarter Ended September 30,

 

Nine Months Ended September 30,

 

 

2022

 

2021

 

2022

 

2021

Net sales

 

$

696,049

 

$

622,207

 

$

2,082,240

 

$

1,779,543

Cost of goods sold

 

 

547,742

 

 

483,986

 

 

1,621,294

 

 

1,338,570

Gross profit

 

 

148,307

 

 

138,221

 

 

460,946

 

 

440,973

Selling, general, and administrative expenses

 

 

35,192

 

 

39,729

 

 

109,303

 

 

111,379

Research, development, and testing expenses

 

 

34,388

 

 

35,387

 

 

106,035

 

 

107,241

Operating profit

 

 

78,727

 

 

63,105

 

 

245,608

 

 

222,353

Interest and financing expenses, net

 

 

8,369

 

 

9,345

 

 

24,859

 

 

24,557

Loss on early extinguishment of debt

 

 

0

 

 

0

 

 

7,545

 

 

0

Other income (expense), net

 

 

9,971

 

 

7,393

 

 

26,240

 

 

19,785

Income before income tax expense

 

 

80,329

 

 

61,153

 

 

239,444

 

 

217,581

Income tax expense

 

 

17,103

 

 

9,115

 

 

50,428

 

 

43,879

Net income

 

$

63,226

 

$

52,038

 

$

189,016

 

$

173,702

Earnings per share - basic and diluted

 

$

6.32

 

$

4.80

 

$

18.60

 

$

15.94

Cash dividends declared per share

 

$

2.10

 

$

2.10

 

$

6.30

 

$

5.90

NEWMARKET CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts, unaudited)

 

 

September 30, 2022

 

December 31, 2021

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

71,972

 

 

$

83,304

 

Marketable securities

 

 

0

 

 

 

375,918

 

Trade and other accounts receivable, less allowance for credit losses

 

 

476,061

 

 

 

391,779

 

Inventories

 

 

592,222

 

 

 

498,539

 

Prepaid expenses and other current assets

 

 

33,847

 

 

 

38,633

 

Total current assets

 

 

1,174,102

 

 

 

1,388,173

 

Property, plant, and equipment, net

 

 

653,231

 

 

 

676,770

 

Intangibles (net of amortization) and goodwill

 

 

126,323

 

 

 

127,752

 

Prepaid pension cost

 

 

254,695

 

 

 

242,604

 

Operating lease right-of-use assets, net

 

 

64,213

 

 

 

68,402

 

Deferred charges and other assets

 

 

64,280

 

 

 

54,735

 

Total assets

 

$

2,336,844

 

 

$

2,558,436

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

285,475

 

 

$

246,097

 

Accrued expenses

 

 

85,549

 

 

 

85,103

 

Dividends payable

 

 

19,357

 

 

 

16,648

 

Income taxes payable

 

 

10,887

 

 

 

4,442

 

Operating lease liabilities

 

 

15,742

 

 

 

15,709

 

Current portion of long-term debt

 

 

0

 

 

 

349,434

 

Other current liabilities

 

 

9,125

 

 

 

7,654

 

Total current liabilities

 

 

426,135

 

 

 

725,087

 

Long-term debt

 

 

1,008,516

 

 

 

789,853

 

Operating lease liabilities - noncurrent

 

 

47,900

 

 

 

52,591

 

Other noncurrent liabilities

 

 

186,917

 

 

 

228,776

 

Total liabilities

 

 

1,669,468

 

 

 

1,796,307

 

Shareholders' equity:

 

 

 

 

Common stock and paid-in capital (with no par value; issued and outstanding shares - 9,871,440 at September 30, 2022 and 10,362,722 at December 31, 2021)

 

 

0

 

 

 

0

 

Accumulated other comprehensive loss

 

 

(148,629

)

 

 

(82,227

)

Retained earnings

 

 

816,005

 

 

 

844,356

 

Total shareholders' equity

 

 

667,376

 

 

 

762,129

 

Total liabilities and shareholders' equity

 

$

2,336,844

 

 

$

2,558,436

 

NEWMARKET CORPORATION AND SUBSIDIARIES

SELECTED CONSOLIDATED CASH FLOW DATA

(In thousands, unaudited)

 

 

Nine Months Ended September 30,

 

 

2022

 

2021

Net income

 

$

189,016

 

 

$

173,702

 

Depreciation and amortization

 

 

62,160

 

 

 

63,075

 

Loss on early extinguishment of debt

 

 

7,545

 

 

 

0

 

Loss on marketable securities

 

 

2,977

 

 

 

3,414

 

Cash pension and postretirement contributions

 

 

(7,111

)

 

 

(7,820

)

Working capital changes

 

 

(198,637

)

 

 

(98,426

)

Deferred income tax (benefit) expense

 

 

(33,685

)

 

 

6,205

 

Purchases of marketable securities

 

 

(787

)

 

 

(391,429

)

Proceeds from sales and maturities of marketable securities

 

 

372,846

 

 

 

9,894

 

Capital expenditures

 

 

(40,402

)

 

 

(64,025

)

Redemption of 4.10% senior notes

 

 

(350,000

)

 

 

0

 

Issuance of 2.70% senior notes

 

 

0

 

 

 

395,052

 

Cash costs of 4.10% senior notes redemption

 

 

(7,099

)

 

 

0

 

Debt issuance costs

 

 

0

 

 

 

(3,897

)

Net borrowings under revolving credit facility

 

 

218,000

 

 

 

1,000

 

Repurchases of common stock

 

 

(150,754

)

 

 

(91,711

)

Dividends paid

 

 

(63,790

)

 

 

(64,116

)

All other

 

 

(11,611

)

 

 

3,523

 

(Decrease) increase in cash and cash equivalents

 

$

(11,332

)

 

$

(65,559

)

NEWMARKET CORPORATION AND SUBSIDIARIES

NON-GAAP FINANCIAL INFORMATION

(In thousands, unaudited)

 

 

Third Quarter Ended September 30,

 

Nine Months Ended September 30,

 

 

2022

 

2021

 

2022

 

2021

Net Income

 

$

63,226

 

$

52,038

 

$

189,016

 

$

173,702

Add:

 

 

 

 

 

 

 

 

Interest and financing expenses, net

 

 

8,369

 

 

9,345

 

 

24,859

 

 

24,557

Income tax expense

 

 

17,103

 

 

9,115

 

 

50,428

 

 

43,879

Depreciation and amortization

 

 

20,143

 

 

20,862

 

 

60,998

 

 

61,780

EBITDA

 

$

108,841

 

$

91,360

 

$

325,301

 

$

303,918

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20221021005382/en/

FOR INVESTOR INFORMATION CONTACT: Brian D. Paliotti Investor Relations Phone: 804.788.5555 Fax: 804.788.5688 Email: investorrelations@newmarket.com