- Second Quarter Net Income of $66.5 Million and Earnings Per
Share of $6.54
- Petroleum Additives Record First Half Sales of $1.4 Billion,
Up 20% versus First Half of 2021
- Petroleum Additives First Half Operating Profit of $178.1
Million, Up 5.8% versus First Half of 2021
- Focus Remains on Margin Recovery and Cost Control as
Inflationary Environment Continues
NewMarket Corporation (NYSE:NEU) Chairman and Chief Executive
Officer, Thomas E. Gottwald, released the following earnings report
of the Company’s operations for the second quarter and first half
of 2022.
Net income for the second quarter of 2022 was $66.5 million,
compared to net income of $52.0 million for the second quarter of
2021. Earnings per share increased to $6.54 per share from $4.75
per share in the prior year period. For the first half of 2022, net
income was $125.8 million, or $12.28 per share, compared to net
income of $121.7 million, or $11.13 per share, for the first half
of last year.
Sales for the petroleum additives segment for the second quarter
of 2022 were $721.0 million, up from $586.6 million in the second
quarter of 2021. Petroleum additives operating profit for the
second quarter of 2022 was $91.2 million, compared to $74.2 million
for the same period last year. The increase was mainly due to
increased selling prices and shipments partially offset by higher
raw material and operating costs. Shipments between quarterly
periods were up 2.6%, with increases in lubricant additives
shipments partially offset by decreases in fuel additives
shipments. All regions except Latin America contributed to the
increase in lubricant additives shipments. All regions except North
America contributed to the decrease in fuel additives
shipments.
Petroleum additives sales for the first half of the year were a
record $1.4 billion, compared to sales in the first half of last
year of $1.2 billion. Petroleum additives operating profit for the
first half of the year was $178.1 million compared to $168.3
million for the first half of 2021. The drivers for this increase
were similar to those affecting the quarterly comparison of
operating profit. Shipments increased 2.5% between periods, with
increases in lubricant additives shipments partially offset by
decreases in fuel additives shipments. All regions except Asia
Pacific contributed to the increase 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 encouraged by the sequential improvement in our petroleum
additives operating profit since the fourth quarter of 2021. Our
efforts to recover margins and control costs are beginning to take
hold, but we are still being challenged by the ongoing inflationary
environment. Margin recovery and cost control will remain
priorities throughout 2022 so that we can return to our historical
profit margin range. In addition, worldwide supply chain
disruptions continue to negatively impact our business. We are
working to resolve continuing supply chain issues to meet our
customers’ growing needs, and we expect to see improvement in the
supply chain and in our performance as the year unfolds.
During the first half of 2022, we paid dividends of $42.9
million, repurchased 289,737 shares of our common stock for a total
of $92.8 million, and funded capital expenditures of $27.8
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 Wednesday, August 3, 2022 to review
second quarter 2022 financial results. You can access the
conference call live by dialing 1-877-545-0523 (domestic) or
1-973-528-0016 (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 August 10, 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 46033. 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/2001/46033. 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)
Second Quarter Ended
June 30,
Six Months Ended
June 30,
2022
2021
2022
2021
Revenue:
Petroleum additives
$
721,021
$
586,587
$
1,381,325
$
1,151,485
All other
2,618
4,134
4,866
5,851
Total
$
723,639
$
590,721
$
1,386,191
$
1,157,336
Segment operating profit:
Petroleum additives
$
91,185
$
74,200
$
178,107
$
168,271
All other
(262
)
17
(164
)
(647
)
Segment operating profit
90,923
74,217
177,943
167,624
Corporate unallocated expense
(7,332
)
(3,548
)
(11,222
)
(7,860
)
Interest and financing expenses
(7,084
)
(8,869
)
(16,490
)
(15,212
)
Loss on early extinguishment of debt
0
0
(7,545
)
0
Other income (expense), net
9,101
5,258
16,429
11,876
Income before income tax
expense
$
85,608
$
67,058
$
159,115
$
156,428
Net income
$
66,472
$
51,952
$
125,790
$
121,664
Earnings per share - basic and
diluted
$
6.54
$
4.75
$
12.28
$
11.13
NEWMARKET CORPORATION AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
INCOME
(In thousands, except per-share amounts,
unaudited)
Second Quarter Ended
June 30,
Six Months Ended
June 30,
2022
2021
2022
2021
Net sales
$
723,639
$
590,721
$
1,386,191
$
1,157,336
Cost of goods sold
566,163
449,722
1,073,552
854,584
Gross profit
157,476
140,999
312,639
302,752
Selling, general, and administrative
expenses
38,489
34,735
74,111
71,650
Research, development, and testing
expenses
35,396
35,517
71,647
71,854
Operating profit
83,591
70,747
166,881
159,248
Interest and financing expenses, net
7,084
8,869
16,490
15,212
Loss on early extinguishment of debt
0
0
7,545
0
Other income (expense), net
9,101
5,180
16,269
12,392
Income before income tax
expense
85,608
67,058
159,115
156,428
Income tax expense
19,136
15,106
33,325
34,764
Net income
$
66,472
$
51,952
$
125,790
$
121,664
Earnings per share - basic and
diluted
$
6.54
$
4.75
$
12.28
$
11.13
Cash dividends declared per
share
$
2.10
$
1.90
$
4.20
$
3.80
NEWMARKET CORPORATION AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts,
unaudited)
June 30, 2022
December 31,
2021
ASSETS
Current assets:
Cash and cash equivalents
$
79,491
$
83,304
Marketable securities
0
375,918
Trade and other accounts receivable, less
allowance for credit losses
515,002
391,779
Inventories
530,186
498,539
Prepaid expenses and other current
assets
36,282
38,633
Total current assets
1,160,961
1,388,173
Property, plant, and equipment, net
663,462
676,770
Intangibles (net of amortization) and
goodwill
126,842
127,752
Prepaid pension cost
248,575
242,604
Operating lease right-of-use assets
66,821
68,402
Deferred charges and other assets
64,010
54,735
Total assets
$
2,330,671
$
2,558,436
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Accounts payable
$
320,930
$
246,097
Accrued expenses
76,177
85,103
Dividends payable
16,555
16,648
Income taxes payable
9,677
4,442
Operating lease liabilities
16,018
15,709
Current portion of long-term debt
0
349,434
Other current liabilities
7,277
7,654
Total current liabilities
446,634
725,087
Long-term debt
911,295
789,853
Operating lease liabilities -
noncurrent
50,468
52,591
Other noncurrent liabilities
200,939
228,776
Total liabilities
1,609,336
1,796,307
Shareholders' equity:
Common stock and paid-in capital (with no
par value; issued and outstanding shares - 10,079,643 at June 30,
2022 and 10,362,722 at December 31, 2021)
0
0
Accumulated other comprehensive loss
(114,413
)
(82,227
)
Retained earnings
835,748
844,356
Total shareholders' equity
721,335
762,129
Total liabilities and shareholders'
equity
$
2,330,671
$
2,558,436
NEWMARKET CORPORATION AND
SUBSIDIARIES
SELECTED CONSOLIDATED CASH FLOW
DATA
(In thousands, unaudited)
Six Months Ended
June 30,
2022
2021
Net income
$
125,790
$
121,664
Depreciation and amortization
41,670
41,719
Loss on early extinguishment of debt
7,545
0
Loss on marketable securities
2,977
2,314
Cash pension and postretirement
contributions
(4,863
)
(5,184
)
Working capital changes
(114,665
)
(59,484
)
Deferred income tax (benefit) expense
(21,036
)
6,654
Purchases of marketable securities
(787
)
(387,653
)
Proceeds from sales and maturities of
marketable securities
372,846
9,894
Capital expenditures
(27,807
)
(44,394
)
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
121,000
0
Repurchases of common stock
(90,782
)
0
Dividends paid
(42,860
)
(41,526
)
All other
(15,742
)
(6,467
)
(Decrease) increase in cash and cash
equivalents
$
(3,813
)
$
28,692
NEWMARKET CORPORATION AND
SUBSIDIARIES
NON-GAAP FINANCIAL INFORMATION
(In thousands, unaudited)
Second Quarter Ended
June 30,
Six Months Ended
June 30,
2022
2021
2022
2021
Net Income
$
66,472
$
51,952
$
125,790
$
121,664
Add:
Interest and financing expenses, net
7,084
8,869
16,490
15,212
Income tax expense
19,136
15,106
33,325
34,764
Depreciation and amortization
20,251
20,594
40,855
40,918
EBITDA
$
112,943
$
96,521
$
216,460
$
212,558
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220801005626/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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