• Full Year Net Income of $389 Million and Earnings Per Share of $40.44
  • $134 Million Working Capital Improvement in 2023
  • $361 Million Repaid on Revolving Credit Facility in 2023
  • Acquired American Pacific Corporation (AMPAC) in January 2024

NewMarket Corporation (NYSE:NEU) Chairman and Chief Executive Officer, Thomas E. Gottwald, released the following earnings report of the Company’s operations for the fourth quarter and full year of 2023.

Net income for the fourth quarter of 2023 was $80.4 million, or $8.38 per share, compared to net income of $90.5 million, or $9.26 per share, for the fourth quarter of 2022. Net income for 2023 was $388.9 million, or $40.44 per share, compared to net income of $279.5 million, or $27.77 per share, for 2022.

Petroleum additives sales for the fourth quarter of 2023 were $642.0 million, compared to $680.3 million for the same period in 2022. Petroleum additives operating profit for the fourth quarter of 2023 was $110.4 million, compared to $117.1 million for the fourth quarter of 2022. The decrease in operating profit was mainly due to higher operating costs and lower shipments, partially offset by lower raw material costs. We also experienced lower selling prices offset by favorable product mix.

Sales for the petroleum additives segment for 2023 were $2.7 billion, compared to $2.8 billion in 2022. Petroleum additives operating profit for 2023 was $514.4 million, compared to $378.2 million for 2022. The increase in operating profit was a result of selling prices, including favorable product mix, partially offset by lower shipments and higher raw material and operating costs. Shipments decreased 10.7% when comparing 2023 to 2022, with decreases in both lubricant additives and fuel additives shipments in all regions except Europe, which reported a small increase in fuel additives shipments.

During 2023, our shipments were impacted by the overall global economic weakness and inventory rationalization which persists in the chemical industry. We remain challenged by the ongoing inflationary environment and continue to experience increased operating costs. We are maintaining our focus on managing our operating costs, our inventory levels, and our portfolio profitability, while continuing our investment in technology.

We are very pleased with the performance of our petroleum additives business during 2023 and the work done by our team to achieve four quarters of strong operating profit. We generated solid cash flows throughout the year, our working capital improved by $134.3 million, and we made payments of $361.0 million on our revolving credit facility. We returned $127.9 million to our shareholders through dividends of $85.0 million and share repurchases of $42.9 million (119,075 shares of our common stock). As of December 31, 2023, our Net Debt to EBITDA ratio was 0.9, which was a significant improvement over the December 31, 2022 ratio of 2.0.

On January 16, 2024, we completed the acquisition of AMPAC, for approximately $700 million. AMPAC is the leading North American manufacturer of critical performance additives used in solid rocket motors for space launch and military defense applications. The acquisition was funded by cash on hand and borrowings under our revolving credit facility. We expect that AMPAC will be accretive to our net income in 2024. The additional borrowing associated with the AMPAC acquisition increased our Net Debt to EBITDA ratio, but we remain within our target operating range of 1.5 to 2.0.

On January 22, 2024, we entered into a new five-year, $900 million revolving credit facility that replaced our prior $900 million facility and also entered into a two-year, $250 million unsecured term loan. This term loan gave us additional flexibility to repay borrowings under our revolving credit facility and support our business needs.

As we look ahead to 2024 and beyond, we anticipate continued strength in our petroleum additives segment. We also look forward to the integration of AMPAC into the NewMarket family of companies. We continue to make decisions to promote long-term value for our shareholders and customers, and we remain focused on our long-term objectives. We believe the fundamentals of how we run our business - a long-term view, safety-first culture, customer-focused solutions, technology-driven product offerings, and world-class supply chain capability - will continue to be beneficial for all our stakeholders.

Sincerely,

Thomas E. Gottwald

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

The Company has disclosed the non-GAAP financial measures EBITDA, Net Debt, and Net Debt to EBITDA, as well as the related calculations in the schedules included with this earnings release. EBITDA is defined as income from continuing operations before the deduction of interest and financing expenses, income taxes, depreciation (on property, plant, and equipment) and amortization (on intangibles and lease right-of-use assets). Net Debt is defined as long-term debt, including current maturities, less cash and cash equivalents and marketable securities. Net Debt to EBITDA is defined as Net Debt divided by EBITDA for the rolling four quarters ended as of the specified date. The Company believes that even though these items are not required by or presented in accordance with United States generally accepted accounting principles (GAAP), these additional measures enhance understanding of the Company’s performance and period to period comparability. The Company believes that these items should not be considered an alternative to our results determined under GAAP.

As a reminder, a conference call and Internet webcast is scheduled for 3:00 p.m. ET on Thursday, February 1, 2024, to review fourth quarter and full year 2023 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 February 8, 2024, at 3:00 p.m. ET by dialing 1-877-481-4010 (domestic) or 1-919-882-2331 (international). The replay passcode number is 49638. 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/2001/49638. A webcast replay will be available for 30 days.

NewMarket Corporation is a holding company operating through its subsidiaries, Afton Chemical Corporation (Afton), Ethyl Corporation (Ethyl), and American Pacific Corporation (AMPAC). The Afton and Ethyl companies develop, manufacture, blend, and deliver chemical additives that enhance the performance of petroleum products. AMPAC is a leading manufacturer of specialty chemicals used in solid rocket motors for the aerospace and defense industries. The NewMarket family of companies has a long-term commitment to its people, to safety, to providing innovative solutions for its customers, and to making the world a better place.

Some of the information contained in this press release constitutes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although NewMarket’s management believes its expectations are based on reasonable assumptions within the bounds of its knowledge of its business and operations, there can be no assurance that actual results will not differ materially from expectations.

Factors that could cause actual results to differ materially from expectations include, but are not limited to, the availability of raw materials and distribution systems; disruptions at production facilities, including single-sourced facilities; hazards common to chemical businesses; the ability to respond effectively to technological changes in our 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 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 acquisitions, or our inability to successfully integrate acquisitions into our business; the underperformance of our pension assets resulting in additional cash contributions to our pension plans; and other factors detailed from time to time in the reports that NewMarket files with the Securities and Exchange Commission, including the risk factors in Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2022, 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 us. We have no duty to, and do not intend to, update or revise the forward-looking statements in this discussion after the date hereof, except as may be required by law. In light of these risks and uncertainties, you should keep in mind that the events described in any forward-looking statement made in this discussion, or elsewhere, might not occur.

NEWMARKET CORPORATION AND SUBSIDIARIES

SEGMENT RESULTS AND OTHER FINANCIAL INFORMATION

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

 

 

 

Fourth Quarter Ended December 31,

 

Twelve Months Ended December 31,

 

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Net Sales:

 

 

 

 

 

 

 

 

Petroleum additives

 

$

642,030

 

 

$

680,292

 

 

$

2,689,709

 

 

$

2,754,310

 

All other

 

 

1,320

 

 

 

2,267

 

 

 

8,710

 

 

 

10,489

 

Total

 

$

643,350

 

 

$

682,559

 

 

$

2,698,419

 

 

$

2,764,799

 

Segment operating profit:

 

 

 

 

 

 

 

 

Petroleum additives

 

$

110,402

 

 

$

117,114

 

 

$

514,428

 

 

$

378,244

 

All other

 

 

(2,225

)

 

 

(1,577

)

 

 

(4,986

)

 

 

(1,782

)

Segment operating profit

 

 

108,177

 

 

 

115,537

 

 

 

509,442

 

 

 

376,462

 

Corporate unallocated expense

 

 

(6,457

)

 

 

(6,190

)

 

 

(26,147

)

 

 

(21,579

)

Interest and financing expenses

 

 

(7,110

)

 

 

(10,343

)

 

 

(37,359

)

 

 

(35,202

)

Loss on early extinguishment of debt

 

 

0

 

 

 

0

 

 

 

0

 

 

 

(7,545

)

Other income (expense), net

 

 

10,012

 

 

 

9,286

 

 

 

43,026

 

 

 

35,598

 

Income before income tax expense

 

$

104,622

 

 

$

108,290

 

 

$

488,962

 

 

$

347,734

 

Net income

 

$

80,410

 

 

$

90,522

 

 

$

388,864

 

 

$

279,538

 

Earnings per share - basic and diluted

 

$

8.38

 

 

$

9.26

 

 

$

40.44

 

 

$

27.77

 

NEWMARKET CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

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

 

 

 

Fourth Quarter Ended December 31,

 

Twelve Months Ended December 31,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

Net sales

 

$

643,350

 

$

682,559

 

$

2,698,419

 

$

2,764,799

Cost of goods sold

 

 

466,224

 

 

503,008

 

 

1,925,906

 

 

2,124,302

Gross profit

 

 

177,126

 

 

179,551

 

 

772,513

 

 

640,497

Selling, general, and administrative expenses

 

 

36,799

 

 

35,803

 

 

151,470

 

 

145,106

Research, development, and testing expenses

 

 

38,990

 

 

34,217

 

 

137,998

 

 

140,252

Operating profit

 

 

101,337

 

 

109,531

 

 

483,045

 

 

355,139

Interest and financing expenses, net

 

 

7,110

 

 

10,343

 

 

37,359

 

 

35,202

Loss on early extinguishment of debt

 

 

0

 

 

0

 

 

0

 

 

7,545

Other income (expense), net

 

 

10,395

 

 

9,102

 

 

43,276

 

 

35,342

Income before income tax expense

 

 

104,622

 

 

108,290

 

 

488,962

 

 

347,734

Income tax expense

 

 

24,212

 

 

17,768

 

 

100,098

 

 

68,196

Net income

 

$

80,410

 

$

90,522

 

$

388,864

 

$

279,538

Earnings per share - basic and diluted

 

$

8.38

 

$

9.26

 

$

40.44

 

$

27.77

Cash dividends declared per share

 

$

2.25

 

$

2.10

 

$

8.85

 

$

8.40

NEWMARKET CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts, unaudited)

 

 

 

December 31, 2023

 

December 31, 2022

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

111,936

 

 

$

68,712

 

Trade and other accounts receivable, less allowance for credit losses

 

 

432,349

 

 

 

453,692

 

Inventories

 

 

456,234

 

 

 

631,383

 

Prepaid expenses and other current assets

 

 

39,051

 

 

 

38,338

 

Total current assets

 

 

1,039,570

 

 

 

1,192,125

 

Property, plant, and equipment, net

 

 

654,747

 

 

 

659,998

 

Intangibles (net of amortization) and goodwill

 

 

124,642

 

 

 

126,069

 

Prepaid pension cost

 

 

370,882

 

 

 

302,584

 

Operating lease right-of-use assets, net

 

 

70,823

 

 

 

62,417

 

Deferred charges and other assets

 

 

48,207

 

 

 

63,625

 

Total assets

 

$

2,308,871

 

 

$

2,406,818

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

231,137

 

 

$

273,289

 

Accrued expenses

 

 

76,546

 

 

 

89,508

 

Dividends payable

 

 

19,212

 

 

 

17,850

 

Income taxes payable

 

 

6,131

 

 

 

16,109

 

Operating lease liabilities

 

 

15,074

 

 

 

15,569

 

Other current liabilities

 

 

16,064

 

 

 

11,562

 

Total current liabilities

 

 

364,164

 

 

 

423,887

 

Long-term debt

 

 

643,622

 

 

 

1,003,737

 

Operating lease liabilities - noncurrent

 

 

55,058

 

 

 

46,968

 

Other noncurrent liabilities

 

 

168,966

 

 

 

169,819

 

Total liabilities

 

 

1,231,810

 

 

 

1,644,411

 

Shareholders' equity:

 

 

 

 

Common stock and paid-in capital (with no par value; issued and outstanding shares - 9,590,086 at December 31, 2023 and 9,702,147 at December 31, 2022)

 

 

2,130

 

 

 

0

 

Accumulated other comprehensive loss

 

 

(21,071

)

 

 

(71,995

)

Retained earnings

 

 

1,096,002

 

 

 

834,402

 

Total shareholders' equity

 

 

1,077,061

 

 

 

762,407

 

Total liabilities and shareholders' equity

 

$

2,308,871

 

 

$

2,406,818

 

NEWMARKET CORPORATION AND SUBSIDIARIES

SELECTED CONSOLIDATED CASH FLOW DATA

(In thousands, unaudited)

 

 

 

Twelve Months Ended December 31,

 

 

 

2023

 

 

 

2022

 

Net income

 

$

388,864

 

 

$

279,538

 

Depreciation and amortization

 

 

78,010

 

 

 

82,285

 

Cash pension and postretirement contributions

 

 

(10,219

)

 

 

(9,748

)

Working capital changes

 

 

134,280

 

 

 

(204,636

)

Deferred income tax benefit

 

 

(14,750

)

 

 

(42,645

)

Capital expenditures

 

 

(48,293

)

 

 

(56,169

)

Net (repayments) borrowings under revolving credit facility

 

 

(361,000

)

 

 

213,000

 

Repurchases of common stock

 

 

(42,864

)

 

 

(207,470

)

Dividends paid

 

 

(85,034

)

 

 

(84,263

)

Proceeds from sales and maturities of marketable securities

 

 

0

 

 

 

372,846

 

Redemption of 4.10% senior notes

 

 

0

 

 

 

(350,000

)

Loss on early extinguishment of debt

 

 

0

 

 

 

7,545

 

Cash costs of 4.10% senior notes redemption

 

 

0

 

 

 

(7,099

)

Loss on marketable securities

 

 

0

 

 

 

2,977

 

Purchases of marketable securities

 

 

0

 

 

 

(787

)

All other

 

 

4,230

 

 

 

(9,966

)

Increase (decrease) in cash and cash equivalents

 

$

43,224

 

 

$

(14,592

)

NEWMARKET CORPORATION AND SUBSIDIARIES

NON-GAAP FINANCIAL INFORMATION

(In thousands, unaudited)

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

Fourth Quarter Ended December 31,

 

Twelve Months Ended December 31,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

Net Income

 

$

80,410

 

$

90,522

 

$

388,864

 

$

279,538

Add:

 

 

 

 

 

 

 

 

Interest and financing expenses, net

 

 

7,110

 

 

10,343

 

 

37,359

 

 

35,202

Income tax expense

 

 

24,212

 

 

17,768

 

 

100,098

 

 

68,196

Depreciation and amortization

 

 

19,997

 

 

19,777

 

 

76,620

 

 

80,775

EBITDA

 

$

131,729

 

$

138,410

 

$

602,941

 

$

463,711

 

 

 

 

 

 

 

 

 

Net Debt to EBITDA

 

 

 

 

 

 

December 31,

 

 

 

 

 

 

 

2023

 

 

2022

Long-term debt, including current maturities

 

 

 

 

 

$

643,622

 

$

1,003,737

Less: Cash and cash equivalents

 

 

 

 

 

 

111,936

 

 

68,712

Net Debt

 

 

 

 

 

$

531,686

 

$

935,025

 

 

 

 

 

 

 

 

 

Net Debt to EBITDA

 

 

 

 

 

 

0.9

 

 

2.0

 

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

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