NEU NewMarket Corporation

• Net Income of $97.6 Million and Earnings Per Share of $10.09
• Petroleum Additives Operating Profit of $132.1 Million
• Continued Focus on Cost Control and Margin Recovery

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

Net income for the first quarter of 2023 was $97.6 million, or $10.09 per share, compared to net income of $59.3 million, or $5.75 per share, for the first quarter of 2022.

Petroleum additives sales for the first quarter of 2023 were $700.0 million, compared to $660.3 million for the same period in 2022. Petroleum additives operating profit for the first quarter of 2023 was $132.1 million, compared to $86.9 million for the first quarter of 2022. The increase in operating profit was mainly due to increased selling prices, partially offset by higher raw material and operating costs and lower shipments. Shipments between quarterly periods were down 15.4%, with decreases in both lubricant additives and fuel additives across all regions except North America, which reported a small increase in fuel additives shipments. Shipments have been lower than our expectations over the last few quarters, due to a general economic slowdown and customer destocking.

During the first quarter of 2023, we funded capital expenditures of $11.9 million and returned $48.8 million to our shareholders through dividends of $20.3 million and share repurchases of $28.5 million (82,486 shares of our common stock). Our Net Debt to EBITDA ratio was 1.7 as of March 31, 2023.

We are encouraged by the sequential improvement in our petroleum additives operating profit the last two quarters. After being below our historical norms for the past six quarters, our operating margin for the rolling four quarters ended March 31, 2023 was 15.2%, which is at the lower end of the range of our long-term expectations. We have seen improvements in the supply chain disruptions which have impacted the petrochemicals industry and our company over the past several years. Inflation continues to be a concern, and cost control and margin recovery will remain high priorities.

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. EDT on Thursday, April 27, 2023, to review first quarter 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 May 4, 2023, at 3:00 p.m. EDT by dialing 1-877-481-4010 (domestic) or 1-919-882-2331 (international). The replay passcode number is 48134. 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/2001/48134. 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 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 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 the Company. We have no duty to, and do not intend to, update or revise the forward-looking statements in this discussion after the date hereof, except as may be required by law. In light of these risks and uncertainties, you should keep in mind that the events described in any forward-looking statement made in this discussion, or elsewhere, might not occur.

NEWMARKET CORPORATION AND SUBSIDIARIES

SEGMENT RESULTS AND OTHER FINANCIAL INFORMATION

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

 

 

 

Three Months Ended March 31,

 

 

2023

 

2022

Revenue:

 

 

 

 

Petroleum additives

 

$

699,991

 

 

$

660,304

 

All other

 

 

2,798

 

 

 

2,248

 

Total

 

$

702,789

 

 

$

662,552

 

Segment operating profit:

 

 

 

 

Petroleum additives

 

$

132,068

 

 

$

86,922

 

All other

 

 

(975

)

 

 

98

 

Segment operating profit

 

 

131,093

 

 

 

87,020

 

Corporate unallocated expense

 

 

(6,491

)

 

 

(3,890

)

Interest and financing expenses

 

 

(10,773

)

 

 

(9,406

)

Loss on early extinguishment of debt

 

 

0

 

 

 

(7,545

)

Other income (expense), net

 

 

11,319

 

 

 

7,328

 

Income before income tax expense

 

$

125,148

 

 

$

73,507

 

Net income

 

$

97,583

 

 

$

59,318

 

Earnings per share - basic and diluted

 

$

10.09

 

 

$

5.75

 

NEWMARKET CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

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

 

 

 

Three Months Ended March 31,

 

 

2023

 

2022

Net sales

 

$

702,789

 

$

662,552

Cost of goods sold

 

 

504,745

 

 

507,389

Gross profit

 

 

198,044

 

 

155,163

Selling, general, and administrative expenses

 

 

39,847

 

 

35,622

Research, development, and testing expenses

 

 

33,156

 

 

36,251

Operating profit

 

 

125,041

 

 

83,290

Interest and financing expenses, net

 

 

10,773

 

 

9,406

Loss on early extinguishment of debt

 

 

0

 

 

7,545

Other income (expense), net

 

 

10,880

 

 

7,168

Income before income tax expense

 

 

125,148

 

 

73,507

Income tax expense

 

 

27,565

 

 

14,189

Net income

 

$

97,583

 

$

59,318

Earnings per share - basic and diluted

 

$

10.09

 

$

5.75

Cash dividends declared per share

 

$

2.10

 

$

2.10

NEWMARKET CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts, unaudited)

 

 

 

March 31, 2023

 

December 31, 2022

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

70,115

 

 

$

68,712

 

Trade and other accounts receivable, less allowance for credit losses

 

 

457,203

 

 

 

453,692

 

Inventories

 

 

566,136

 

 

 

631,383

 

Prepaid expenses and other current assets

 

 

38,107

 

 

 

38,338

 

Total current assets

 

 

1,131,561

 

 

 

1,192,125

 

Property, plant, and equipment, net

 

 

658,092

 

 

 

659,998

 

Intangibles (net of amortization) and goodwill

 

 

125,754

 

 

 

126,069

 

Prepaid pension cost

 

 

310,753

 

 

 

302,584

 

Operating lease right-of-use assets, net

 

 

60,350

 

 

 

62,417

 

Deferred charges and other assets

 

 

64,261

 

 

 

63,625

 

Total assets

 

$

2,350,771

 

 

$

2,406,818

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

212,277

 

 

$

273,289

 

Accrued expenses

 

 

72,336

 

 

 

89,508

 

Dividends payable

 

 

17,861

 

 

 

17,850

 

Income taxes payable

 

 

35,248

 

 

 

16,109

 

Operating lease liabilities

 

 

14,948

 

 

 

15,569

 

Other current liabilities

 

 

5,826

 

 

 

11,562

 

Total current liabilities

 

 

358,496

 

 

 

423,887

 

Long-term debt

 

 

957,958

 

 

 

1,003,737

 

Operating lease liabilities - noncurrent

 

 

45,588

 

 

 

46,968

 

Other noncurrent liabilities

 

 

166,929

 

 

 

169,819

 

Total liabilities

 

 

1,528,971

 

 

 

1,644,411

 

Shareholders' equity:

 

 

 

 

Common stock and paid-in capital (with no par value; issued and outstanding shares - 9,625,959 at March 31, 2023 and 9,702,147 at December 31, 2022)

 

 

0

 

 

 

0

 

Accumulated other comprehensive loss

 

 

(61,551

)

 

 

(71,995

)

Retained earnings

 

 

883,351

 

 

 

834,402

 

Total shareholders' equity

 

 

821,800

 

 

 

762,407

 

Total liabilities and shareholders' equity

 

$

2,350,771

 

 

$

2,406,818

 

NEWMARKET CORPORATION AND SUBSIDIARIES

SELECTED CONSOLIDATED CASH FLOW DATA

(In thousands, unaudited)

 

 

 

Three Months Ended March 31,

 

 

2023

 

2022

Net income

 

$

97,583

 

 

$

59,318

 

Depreciation and amortization

 

 

20,313

 

 

 

21,072

 

Loss on early extinguishment of debt

 

 

0

 

 

 

7,545

 

Loss on marketable securities

 

 

0

 

 

 

2,977

 

Cash pension and postretirement contributions

 

 

(2,290

)

 

 

(2,099

)

Working capital changes

 

 

9,795

 

 

 

(66,987

)

Deferred income tax benefit

 

 

(4,932

)

 

 

(12,135

)

Purchases of marketable securities

 

 

0

 

 

 

(787

)

Proceeds from sales and maturities of marketable securities

 

 

0

 

 

 

372,846

 

Capital expenditures

 

 

(11,881

)

 

 

(12,612

)

Redemption of 4.10% senior notes

 

 

0

 

 

 

(350,000

)

Cash costs of 4.10% senior notes redemption

 

 

0

 

 

 

(7,099

)

Net (repayments) borrowings under revolving credit facility

 

 

(46,000

)

 

 

51,000

 

Repurchases of common stock

 

 

(28,479

)

 

 

(37,347

)

Dividends paid

 

 

(20,292

)

 

 

(21,570

)

All other

 

 

(12,414

)

 

 

(2,876

)

Increase in cash and cash equivalents

 

$

1,403

 

 

$

1,246

 

NEWMARKET CORPORATION AND SUBSIDIARIES

NON-GAAP FINANCIAL INFORMATION

(In thousands, unaudited)

 

 

 

 

 

Earnings Before Interest, Depreciation, and Amortization

 

 

 

 

 

 

Three Months Ended March 31,

 

 

2023

 

2022

Net Income

 

$

97,583

 

$

59,318

Add:

 

 

 

 

Interest and financing expenses, net

 

 

10,773

 

 

9,406

Income tax expense

 

 

27,565

 

 

14,189

Depreciation and amortization

 

 

19,966

 

 

20,604

EBITDA

 

$

155,887

 

$

103,517

 

 

 

 

 

Net Debt to EBITDA

 

 

 

 

 

 

March 31,

 

December 31,

 

 

2023

 

2022

Long-term debt, including current maturities

 

$

957,958

 

$

1,003,737

Less: Cash and cash equivalents

 

 

70,115

 

 

68,712

Net Debt

 

$

887,843

 

$

935,025

 

 

 

 

 

 

 

Rolling Four Quarters Ended

 

 

March 31,

 

December 31,

 

 

2023

 

2022

Net Income

 

$

317,803

 

$

279,538

Add:

 

 

 

 

Interest and financing expenses, net

 

 

36,569

 

 

35,202

Income tax expense

 

 

81,572

 

 

68,196

Depreciation and amortization

 

 

80,137

 

 

80,775

EBITDA-Rolling Four Quarters

 

$

516,081

 

$

463,711

 

 

 

 

 

Net Debt to EBITDA

 

 

1.7

 

 

2.0

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230426005658/en/

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