- Third Quarter Net Income of $67.8 Million and Earnings Per
Share of $6.06
- Petroleum Additives Third Quarter Operating Profit of $94.8
Million
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 2019.
Net income for the third quarter of 2019 was $67.8 million,
compared to net income of $58.5 million for the third quarter of
2018. Earnings per share increased to $6.06 per share from $5.12
per share in the prior year period. For the first nine months of
2019, net income was $204.2 million, or $18.26 per share, compared
to net income of $171.9 million, or $14.78 per share, for the first
nine months of last year.
Sales for the petroleum additives segment for the third quarter
of 2019 were $550.6 million, compared to sales in the third quarter
of 2018 of $560.5 million. This decrease was due mainly to lower
shipments partially offset by increased selling prices. Petroleum
additives operating profit for the third quarter of 2019 was $94.8
million, compared to $75.8 million for the same period last year.
The increase was primarily due to lower raw material and conversion
costs, partially offset by lower shipments. Shipments decreased
1.6% between the periods, mainly due to decreases in lubricant
additive shipments, with Asia Pacific and Latin America being the
primary drivers for the decrease.
Petroleum additives sales for the first nine months of the year
were $1.6 billion, compared to sales in the first nine months of
last year of $1.7 billion. This decrease was due mainly to lower
shipments and changes in foreign currency rates, partially offset
by increased selling prices. Petroleum additives operating profit
for the first nine months of the year was $285.6 million compared
to $231.5 million for the first nine months of 2018. The increase
was mainly due to changes in selling prices, lower selling, general
and administrative expenses, and lower raw material and conversion
costs, partially offset by lower shipments. Shipments decreased
7.6% between periods, with decreases in both lubricant additives
and fuel additives shipments across all regions except Asia
Pacific, which reported an increase in fuel additives shipments.
While shipments have been lower in recent quarters as compared to
prior years, we have started to see evidence that this trend is
beginning to stabilize.
We are encouraged by the strong operating profit results of our
petroleum additives business in 2019 compared to last year, though
we must acknowledge that our 2018 results were disappointing. Our
operations for the previous two years were adversely affected by a
challenging economic environment marked by a sustained increase in
raw material costs and softening global demand. While we are seeing
evidence that this trend is improving, we will continue to make
margin improvement a priority until we see more stability.
Petroleum additives operating margin for the rolling four quarters
ended September 30, 2019 was 16.7% which is more indicative of the
historical ranges our shareholders have come to expect.
During the first nine months of 2019, we funded capital
expenditures of $37.1 million, paid dividends of $60.4 million, and
repaid $126.3 million of borrowings on our revolving credit
facility.
We make business decisions that focus on the long-term success
of our company, including emphasis on satisfying customer needs,
generating solid operating results, and promoting the greatest
long-term value for our shareholders, customers and employees. 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 Thursday, October 24, 2019, to
review third quarter 2019 financial results. You can access the
conference call live by dialing 1-844-407-9500 (domestic) or
1-862-298-0850 (international) and requesting the NewMarket
conference call. To avoid delays, callers should dial in five
minutes early. A teleconference replay of the call will be
available until October 31, 2019 at 3:00 p.m. EDT by dialing
1-877-481-4010 (domestic) or 1-919-882-2331 (international). The
replay ID number is 53860. The call will also be broadcast via the
Internet and can be accessed through the Company’s website at
www.NewMarket.com or www.investornetwork.com/event/presentation/53860.
A webcast replay will be available for 30 days.
NewMarket Corporation, through its subsidiaries Afton Chemical
Corporation and Ethyl Corporation, develops, manufactures, blends,
and delivers chemical additives that enhance the performance of
petroleum products. From custom-formulated additive packages to
market-general additives, the NewMarket family of companies
provides the world with the technology to make engines run
smoother, machines last longer, and fuels burn cleaner.
Some of the information contained in this press release
constitutes forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Although
NewMarket’s management believes its expectations are based on
reasonable assumptions within the bounds of its knowledge of its
business and operations, there can be no assurance that actual
results will not differ materially from expectations.
Factors that could cause actual results to differ materially
from expectations include, but are not limited to, the availability
of raw materials and distribution systems; disruptions at
production facilities, including single-sourced facilities; hazards
common to chemical businesses; the ability to respond effectively
to technological changes in our industry; failure to protect our
intellectual property rights; sudden or sharp raw material price
increases; competition from other manufacturers; the gain or loss
of significant customers; current and future governmental
regulations; failure to attract and retain a highly-qualified
workforce; the occurrence or threat of extraordinary events,
including natural disasters and terrorist attacks; risks related to
operating outside of the United States; the impact of substantial
indebtedness on our operational and financial flexibility; the
impact of fluctuations in foreign exchange rates; an information
technology system failure or security breach; resolution of
environmental liabilities or legal proceedings; political,
economic, and regulatory factors concerning our products;
limitation of our insurance coverage; our inability to realize
expected benefits from investment in our infrastructure or from
recent or future acquisitions, or our inability to successfully
integrate recent or future acquisitions into our business; the
underperformance of our pension assets resulting in additional cash
contributions to our pension plans; and other factors detailed from
time to time in the reports that NewMarket files with the
Securities and Exchange Commission, including the risk factors in
Item 1A. “Risk Factors” of our 2018 Annual Report on Form 10-K,
which is available to shareholders upon request.
You should keep in mind that any forward-looking statement made
by NewMarket in the foregoing discussion speaks only as of the date
on which such forward-looking statement is made. New risks and
uncertainties arise from time to time, and it is impossible for us
to predict these events or how they may affect the Company. We have
no duty to, and do not intend to, update or revise the
forward-looking statements in this discussion after the date
hereof, except as may be required by law. In light of these risks
and uncertainties, you should keep in mind that the events
described in any forward-looking statement made in this discussion,
or elsewhere, might not occur.
NEWMARKET CORPORATION AND
SUBSIDIARIES
SEGMENT RESULTS AND OTHER FINANCIAL
INFORMATION
(In thousands, except per-share amounts,
unaudited)
Third Quarter Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Revenue:
Petroleum additives
$
550,626
$
560,522
$
1,644,129
$
1,743,632
All other
5,191
2,644
11,721
7,731
Total
$
555,817
$
563,166
$
1,655,850
$
1,751,363
Segment operating profit:
Petroleum additives
$
94,765
$
75,824
$
285,620
$
231,494
All other
(77
)
(2,295
)
92
(1,966
)
Segment operating profit
94,688
73,529
285,712
229,528
Corporate unallocated expense
(6,473
)
(5,402
)
(15,842
)
(16,033
)
Interest and financing expenses
(6,987
)
(7,807
)
(22,740
)
(18,536
)
Other income (expense), net
6,230
7,994
17,827
24,231
Income before income tax
expense
$
87,458
$
68,314
$
264,957
$
219,190
Net income
$
67,805
$
58,481
$
204,184
$
171,931
Earnings per share - basic and
diluted
$
6.06
$
5.12
$
18.26
$
14.78
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,
2019
2018
2019
2018
Net sales
$
555,817
$
563,166
$
1,655,850
$
1,751,363
Cost of goods sold
393,090
422,283
1,169,421
1,307,838
Gross profit
162,727
140,883
486,429
443,525
Selling, general, and administrative
expenses
38,122
37,741
109,916
120,653
Research, development, and testing
expenses
36,387
34,994
106,748
106,018
Operating profit
88,218
68,148
269,765
216,854
Interest and financing expenses, net
6,987
7,807
22,740
18,536
Other income (expense), net
6,227
7,973
17,932
20,872
Income before income tax
expense
87,458
68,314
264,957
219,190
Income tax expense
19,653
9,833
60,773
47,259
Net income
$
67,805
$
58,481
$
204,184
$
171,931
Earnings per share - basic and
diluted
$
6.06
$
5.12
$
18.26
$
14.78
Cash dividends declared per
share
$
1.90
$
1.75
$
5.40
$
5.25
NEWMARKET CORPORATION AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands except share amounts,
unaudited)
September 30, 2019
December 31, 2018
ASSETS
Current assets:
Cash and cash equivalents
$
79,971
$
73,040
Trade and other accounts receivable, less
allowance for doubtful accounts
340,752
314,860
Inventories
370,934
396,341
Prepaid expenses and other current
assets
35,276
29,179
Total current assets
826,933
813,420
Property, plant, and equipment, net
623,961
644,138
Intangibles (net of amortization) and
goodwill
132,822
136,039
Prepaid pension cost
100,758
88,705
Operating lease right-of-use assets
58,377
0
Deferred income taxes
4,973
5,094
Deferred charges and other assets
23,171
9,878
Total assets
$
1,770,995
$
1,697,274
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Accounts payable
$
154,650
$
151,631
Accrued expenses
75,928
91,202
Dividends payable
19,441
17,923
Income taxes payable
12,348
6,431
Operating lease liabilities
13,811
0
Other current liabilities
4,300
4,114
Total current liabilities
280,478
271,301
Long-term debt
639,983
770,999
Operating lease liabilities -
noncurrent
44,398
0
Other noncurrent liabilities
176,798
165,067
Total liabilities
1,141,657
1,207,367
Shareholders' equity:
Common stock and paid-in capital (without
par value; issued and outstanding shares - 11,189,222 at September
30, 2019 and 11,184,482 at December 31, 2018)
1,914
0
Accumulated other comprehensive loss
(187,611
)
(181,316
)
Retained earnings
815,035
671,223
Total shareholders' equity
629,338
489,907
Total liabilities and shareholders'
equity
$
1,770,995
$
1,697,274
NEWMARKET CORPORATION AND
SUBSIDIARIES
SELECTED CONSOLIDATED CASH FLOW
DATA
(In thousands, unaudited)
Nine Months Ended September
30,
2019
2018
Net income
$
204,184
$
171,931
Depreciation and amortization
65,500
53,463
Cash pension and postretirement
contributions
(7,308
)
(61,860
)
Working capital changes
(35,997
)
(69,190
)
Deferred income tax expense
3,982
10,257
Capital expenditures
(37,132
)
(55,136
)
Net (repayments) borrowings under
revolving credit facility
(126,262
)
215,619
Repurchases of common stock
0
(148,649
)
Dividends paid
(60,418
)
(60,778
)
All other
382
8,112
Increase in cash and cash equivalents
$
6,931
$
63,769
NEWMARKET CORPORATION AND
SUBSIDIARIES
NON-GAAP FINANCIAL INFORMATION
(In thousands, unaudited)
Third Quarter Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Net Income
$
67,805
$
58,481
$
204,184
$
171,931
Add:
Interest and financing expenses, net
6,987
7,807
22,740
18,536
Income tax expense
19,653
9,833
60,773
47,259
Depreciation and amortization
21,500
17,958
64,646
52,607
EBITDA
$
115,945
$
94,079
$
352,343
$
290,333
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191023005603/en/
FOR INVESTOR INFORMATION CONTACT: Brian D. Paliotti
Investor Relations Phone: 804.788.5555 Fax:
804.788.5688 Email: investorrelations@newmarket.com
NewMarket (NYSE:NEU)
Historical Stock Chart
From Mar 2024 to Apr 2024
NewMarket (NYSE:NEU)
Historical Stock Chart
From Apr 2023 to Apr 2024