- Full Year Net Income of $270.6 Million and Earnings Per
Share of $24.64
- Petroleum Additives Full Year Operating Profit of $333.2
Million
- Focus Remains on Investing in the Long-Term Success of the
Company
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
2020.
Net income for the fourth quarter of 2020 was $66.9 million, or
$6.12 per share, compared to net income of $50.1 million, or $4.48
per share, for the fourth quarter of 2019. Net income for 2020 was
$270.6 million, or $24.64 per share compared to net income of
$254.3 million, or $22.73 per share. Net income for the year
benefited from a gain of $16.5 million related to the sale of a
non-operating parcel of real estate, along with a reduced effective
tax rate compared to 2019.
Sales for the petroleum additives segment for the fourth quarter
of 2020 were $525.2 million, down 1.2% compared to the same period
last year. Petroleum additives operating profit for the fourth
quarter of 2020 was $84.3 million, compared to $73.6 million for
the fourth quarter of 2019. For the year, petroleum additives sales
were $2.0 billion compared to sales in 2019 of $2.2 billion. This
decrease was due mainly to lower shipments and decreased selling
prices. Petroleum additives operating profit for 2020 was $333.2
million, a 7.2% decrease compared to 2019 operating profit of
$359.2 million. This decrease was mainly due to changes in selling
prices, lower shipments and higher conversion costs, partially
offset by lower raw material costs and selling, general, and
administrative costs. Shipments decreased 5.2% between the
full-year periods, with decreases in both lubricant additives and
fuel additives shipments.
Petroleum additives operating results for 2020 have been marked
by economic uncertainty resulting from the ongoing effects of the
COVID-19 pandemic and the related restrictions on the movement of
people, goods and services. While we have continued to operate
throughout the year in each of our regions, we have at various
times seen significant changes in some of the key drivers that
affect the performance of our business. During the second quarter
of 2020, government and business shutdowns in North America and
Europe led to a precipitous drop in vehicle miles driven and auto
production, with gasoline consumption in the United States dropping
to its lowest point in over 50 years. With less travel and fewer
miles driven, combined with automobile plant closures, global
demand for our products declined substantially, except in our Asia
Pacific region where demand remained relatively stable throughout
the year. As restrictions eased and economies reopened in the
second half of 2020, global production of automobiles began to
rebound and gasoline consumption and miles driven showed steady
improvement in most countries, including the United States. Late in
the fourth quarter, renewed restrictions on travel and work in
certain countries had a negative effect on our business. The pace
and stability of improvement in demand for our products will
continue to depend heavily on economic recovery and the rate at
which government restrictions are lifted and remain lifted.
The effective tax rate for 2020 was 18.3% compared to 23.3% for
2019. The decrease in the tax rate in 2020 was mainly the result of
finalizing prior year tax filings and releasing certain tax
reserves.
Our business continues to generate strong cash flow. During the
year we funded capital expenditures of $93.3 million, paid
dividends of $83.4 million, and repaid $44.7 million of borrowings
on our revolving credit facility. We also repurchased 270,963
shares of our common stock for a cost of $101.4 million.
As we look back at our results for the year, we are extremely
proud of the operational performance we achieved given the
volatility the COVID-19 pandemic introduced into the global
economy. Throughout the economic downturn, the chemical industry
and our products have been recognized as essential for the
transportation of goods and services, and our facilities have
continued to operate and function safely. I want to sincerely thank
our employees for their continued determination and commitment to
do what is necessary to support our customers and ensure their
supply demands are met. I am very proud of them.
As we look forward to 2021, we will continue to monitor
government restrictions on the movement of people, goods and
services as well as the status of vaccination programs that are
being implemented globally. We are hopeful the vaccinations will
help provide more stability in the global economy in 2021. Our
business decisions will continue to be focused 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 and people first culture, customer-focused
solutions, technology-driven product offerings, and a 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. EST on Thursday, February 4, 2021, to
review fourth quarter and full year 2020 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 March 4, 2021 at 3:00 p.m. EST by dialing
1-877-481-4010 (domestic) or 1-919-882-2331 (international). The
replay passcode number is 39452. 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/2001/39452.
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; 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 Securities and Exchange
Commission, including the risk factors in Item 1A. “Risk Factors”
of our 2019 Annual Report on Form 10-K and Part II. Item 1A. “Risk
Factors” of our Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 2020, which are 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)
Fourth Quarter Ended
December 31,
Twelve Months Ended
December 31,
2020
2019
2020
2019
Revenue:
Petroleum additives
$
525,212
$
531,775
$
2,001,567
$
2,175,904
All other
2,569
2,670
9,364
14,391
Total
$
527,781
$
534,445
$
2,010,931
$
2,190,295
Segment operating profit:
Petroleum additives
$
84,323
$
73,608
$
333,241
$
359,228
All other
(2,051
)
(1,654
)
(100
)
(1,562
)
Segment operating profit
82,272
71,954
333,141
357,666
Corporate unallocated expense
(6,481
)
(4,503
)
(21,744
)
(20,345
)
Interest and financing expenses
(5,753
)
(6,501
)
(26,328
)
(29,241
)
Other income (expense), net
6,285
5,683
46,218
23,510
Income before income tax
expense
$
76,323
$
66,633
$
331,287
$
331,590
Net income
$
66,884
$
50,102
$
270,568
$
254,286
Earnings per share - basic and
diluted
$
6.12
$
4.48
$
24.64
$
22.73
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,
2020
2019
2020
2019
Net sales
$
527,781
$
534,445
$
2,010,931
$
2,190,295
Cost of goods sold
377,001
391,005
1,415,899
1,560,426
Gross profit
150,780
143,440
595,032
629,869
Selling, general, and administrative
expenses
37,026
38,167
142,863
148,083
Research, development, and testing
expenses
38,199
37,717
140,367
144,465
Operating profit
75,555
67,556
311,802
337,321
Interest and financing expenses, net
5,753
6,501
26,328
29,241
Other income (expense), net
6,521
5,578
45,813
23,510
Income before income tax
expense
76,323
66,633
331,287
331,590
Income tax expense
9,439
16,531
60,719
77,304
Net income
$
66,884
$
50,102
$
270,568
$
254,286
Earnings per share - basic and
diluted
$
6.12
$
4.48
$
24.64
$
22.73
Cash dividends declared per
share
$
1.90
$
1.90
$
7.60
$
7.30
NEWMARKET CORPORATION AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands except share amounts,
unaudited)
December 31,
2020
December 31,
2019
ASSETS
Current assets:
Cash and cash equivalents
$
125,172
$
144,397
Trade and other accounts receivable, less
allowance for credit losses
336,395
335,826
Inventories
401,031
365,938
Prepaid expenses and other current
assets
35,480
33,237
Total current assets
898,078
879,398
Property, plant, and equipment, net
665,147
635,439
Intangibles (net of amortization) and
goodwill
129,944
131,880
Prepaid pension cost
137,069
133,848
Operating lease right-of-use assets
61,329
60,505
Deferred charges and other assets
42,308
44,062
Total assets
$
1,933,875
$
1,885,132
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Accounts payable
$
189,937
$
178,773
Accrued expenses
78,422
77,350
Dividends payable
15,184
19,217
Income taxes payable
3,760
10,632
Operating lease liabilities
13,410
14,036
Other current liabilities
11,742
8,887
Total current liabilities
312,455
308,895
Long-term debt
598,848
642,941
Operating lease liabilities -
noncurrent
48,324
46,792
Other noncurrent liabilities
214,424
203,406
Total liabilities
1,174,051
1,202,034
Shareholders' equity:
Common stock and paid-in capital (with no
par value; issued and outstanding shares - 10,921,377 at December
31, 2020 and 11,188,549 at December 31, 2019)
717
1,965
Accumulated other comprehensive loss
(173,164
)
(162,748
)
Retained earnings
932,271
843,881
Total shareholders' equity
759,824
683,098
Total liabilities and shareholders'
equity
$
1,933,875
$
1,885,132
NEWMARKET CORPORATION AND
SUBSIDIARIES
SELECTED CONSOLIDATED CASH FLOW
DATA
(In thousands, unaudited)
Twelve Months Ended
December 31,
2020
2019
Net income
$
270,568
$
254,286
Depreciation and amortization
84,002
87,560
Cash pension and postretirement
contributions
(10,655
)
(9,932
)
Working capital changes
(54,089
)
4,763
Deferred income tax expense
7,554
7,384
Capital expenditures
(93,316
)
(59,434
)
Net repayments under revolving credit
facility
(44,678
)
(123,451
)
Repurchases of common stock
(101,434
)
0
Dividends paid
(83,417
)
(81,676
)
Proceeds from sale of land
20,000
0
Gain on sale of land
(16,483
)
0
All other
2,723
(8,143
)
(Decrease) increase in cash and cash
equivalents
$
(19,225
)
$
71,357
NEWMARKET CORPORATION AND
SUBSIDIARIES
NON-GAAP FINANCIAL INFORMATION
(In thousands, unaudited)
Fourth Quarter Ended
December 31,
Twelve Months Ended
December 31,
2020
2019
2020
2019
Net Income
$
66,884
$
50,102
$
270,568
$
254,286
Add:
Interest and financing expenses, net
5,753
6,501
26,328
29,241
Income tax expense
9,439
16,531
60,719
77,304
Depreciation and amortization
20,684
21,775
82,666
86,421
EBITDA
$
102,760
$
94,909
$
440,281
$
447,252
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210203005723/en/
FOR INVESTOR INFORMATION CONTACT: Brian D. Paliotti Investor
Relations Phone: 804.788.5555 Fax: 804.788.5688 Email:
investorrelations@newmarket.com
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