- Third Quarter Net Income of $111.2 Million and Earnings Per
Share of $11.60
- Nine Months Petroleum Additives Operating Profit of $404.0
Million
- Year-to-date $71.9 Million Working Capital
Improvement
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 2023.
Net income for the third quarter of 2023 was $111.2 million,
compared to net income of $63.2 million for the third quarter of
2022. Third quarter 2023 earnings per share increased to $11.60, up
from $6.32 per share in the same period last year. For the first
nine months of 2023, net income was $308.5 million, or $32.05 per
share, compared to net income of $189.0 million, or $18.60 per
share, for the first nine months of 2022.
Petroleum additives sales for the third quarter of 2023 were
$663.7 million, compared to $692.7 million for the same period in
2022. Petroleum additives operating profit for the third quarter of
2023 was $139.8 million, compared to $83.0 million for the third
quarter of 2022. The increase in operating profit was mainly due to
selling prices, including favorable mix, as well as lower raw
material costs, partially offset by lower shipments and higher
operating costs. Shipments were down 7.7% between quarterly
periods, with decreases in both lubricant additives and fuel
additives shipments. When comparing the third quarter of 2023 to
the same period in 2022, lubricant additives shipments were down in
all regions except North America, while all regions except Europe
reported decreases in fuel additives shipments.
Sales for the petroleum additives segment for the first nine
months of 2023 were $2.0 billion, compared to $2.1 billion in 2022.
Petroleum additives operating profit for the first nine months of
2023 was $404.0 million, compared to $261.1 million for the same
period in 2022. The increase in operating profit was a result of
selling prices, including favorable mix, partially offset by lower
shipments and higher operating costs. Shipments decreased 13.5%
when comparing the first nine months of 2023 to the same period in
2022, with decreases in both lubricant additives and fuel additives
shipments in all regions except Europe, which reported an increase
in fuel additives shipments.
Our shipments have been impacted the last several quarters by
the overall global economic weakness and inventory rationalization
that is affecting the chemical industry. We continue to be
challenged by the ongoing inflationary environment impacting us,
including our raw material and operating costs. During this period,
we have remained focused on controlling operating costs, continuing
our investment in technology, and managing our inventory levels, as
well as our customer portfolio.
Overall, we are very pleased with the strong performance of our
petroleum additives business during the first nine months of 2023.
We continue to operate with low leverage and generated solid cash
flows during this period. Our working capital improved by $71.9
million, we paid dividends of $63.5 million, and we made payments
of $225.0 million on our revolving credit facility. In addition, we
repurchased 119,075 shares of our common stock for $42.9 million.
Our Net Debt to EBITDA ratio decreased to 1.1 as of September 30,
2023, a significant improvement over the December 31, 2022 ratio of
2.0.
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, October 26, 2023, to
review third 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 November 2, 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 49169. 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/2001/49169.
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)
Third Quarter Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
Net Sales:
Petroleum additives
$
663,719
$
692,693
$
2,047,679
$
2,074,018
All other
3,431
3,356
7,390
8,222
Total
$
667,150
$
696,049
$
2,055,069
$
2,082,240
Segment operating profit:
Petroleum additives
$
139,820
$
83,023
$
404,026
$
261,130
All other
(764
)
(41
)
(2,761
)
(205
)
Segment operating profit
139,056
82,982
401,265
260,925
Corporate unallocated expense
(6,389
)
(4,167
)
(19,690
)
(15,389
)
Interest and financing expenses
(9,221
)
(8,369
)
(30,249
)
(24,859
)
Loss on early extinguishment of debt
0
0
0
(7,545
)
Other income (expense), net
11,036
9,883
33,014
26,312
Income before income tax
expense
$
134,482
$
80,329
$
384,340
$
239,444
Net income
$
111,247
$
63,226
$
308,454
$
189,016
Earnings per share - basic and
diluted
$
11.60
$
6.32
$
32.05
$
18.60
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,
2023
2022
2023
2022
Net sales
$
667,150
$
696,049
$
2,055,069
$
2,082,240
Cost of goods sold
465,445
547,742
1,459,682
1,621,294
Gross profit
201,705
148,307
595,387
460,946
Selling, general, and administrative
expenses
37,386
35,192
114,671
109,303
Research, development, and testing
expenses
31,894
34,388
99,008
106,035
Operating profit
132,425
78,727
381,708
245,608
Interest and financing expenses, net
9,221
8,369
30,249
24,859
Loss on early extinguishment of debt
0
0
0
7,545
Other income (expense), net
11,278
9,971
32,881
26,240
Income before income tax
expense
134,482
80,329
384,340
239,444
Income tax expense
23,235
17,103
75,886
50,428
Net income
$
111,247
$
63,226
$
308,454
$
189,016
Earnings per share - basic and
diluted
$
11.60
$
6.32
$
32.05
$
18.60
Cash dividends declared per
share
$
2.25
$
2.10
$
6.60
$
6.30
NEWMARKET CORPORATION AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts,
unaudited)
September 30,
2023
December 31,
2022
ASSETS
Current assets:
Cash and cash equivalents
$
102,560
$
68,712
Trade and other accounts receivable, less
allowance for credit losses
427,764
453,692
Inventories
503,411
631,383
Prepaid expenses and other current
assets
31,859
38,338
Total current assets
1,065,594
1,192,125
Property, plant, and equipment, net
649,968
659,998
Intangibles (net of amortization) and
goodwill
124,620
126,069
Prepaid pension cost
323,055
302,584
Operating lease right-of-use assets,
net
64,272
62,417
Deferred charges and other assets
62,886
63,625
Total assets
$
2,290,395
$
2,406,818
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Accounts payable
$
215,108
$
273,289
Accrued expenses
72,301
89,508
Dividends payable
18,894
17,850
Income taxes payable
6,058
16,109
Operating lease liabilities
13,963
15,569
Other current liabilities
5,880
11,562
Total current liabilities
332,204
423,887
Long-term debt
779,401
1,003,737
Operating lease liabilities -
noncurrent
49,093
46,968
Other noncurrent liabilities
157,754
169,819
Total liabilities
1,318,452
1,644,411
Shareholders' equity:
Common stock and paid-in capital (with no
par value; issued and outstanding shares - 9,590,151 at September
30, 2023 and 9,702,147 at December 31, 2022)
1,557
0
Accumulated other comprehensive loss
(66,782
)
(71,995
)
Retained earnings
1,037,168
834,402
Total shareholders' equity
971,943
762,407
Total liabilities and shareholders'
equity
$
2,290,395
$
2,406,818
NEWMARKET CORPORATION AND
SUBSIDIARIES
SELECTED CONSOLIDATED CASH FLOW
DATA
(In thousands, unaudited)
Nine Months Ended
September 30,
2023
2022
Net income
$
308,454
$
189,016
Depreciation and amortization
57,665
62,160
Cash pension and postretirement
contributions
(7,132
)
(7,111
)
Working capital changes
71,900
(198,637
)
Deferred income tax benefit
(16,336
)
(33,685
)
Capital expenditures
(34,793
)
(40,402
)
Net (repayments) borrowings under
revolving credit facility
(225,000
)
218,000
Repurchases of common stock
(42,864
)
(150,754
)
Dividends paid
(63,457
)
(63,790
)
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
(14,589
)
(11,611
)
Increase (decrease) in cash and cash
equivalents
$
33,848
$
(11,332
)
NEWMARKET CORPORATION AND
SUBSIDIARIES
NON-GAAP FINANCIAL INFORMATION
(In thousands, unaudited)
Earnings Before Interest, Depreciation,
and Amortization (EBITDA)
Third Quarter Ended
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
Net Income
$
111,247
$
63,226
$
308,454
$
189,016
Add:
Interest and financing expenses, net
9,221
8,369
30,249
24,859
Income tax expense
23,235
17,103
75,886
50,428
Depreciation and amortization
16,760
20,143
56,623
60,998
EBITDA
$
160,463
$
108,841
$
471,212
$
325,301
Net Debt to EBITDA
September 30,
December 31,
2023
2022
Long-term debt, including current
maturities
$
779,401
$
1,003,737
Less: Cash and cash equivalents
102,560
68,712
Net Debt
$
676,841
$
935,025
Rolling Four Quarters
Ended
September 30,
December 31,
2023
2022
Net Income
$
398,976
$
279,538
Add:
Interest and financing expenses, net
40,592
35,202
Income tax expense
93,654
68,196
Depreciation and amortization
76,400
80,775
EBITDA-Rolling Four Quarters
$
609,622
$
463,711
Net Debt to EBITDA
1.1
2.0
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231024183075/en/
William J. Skrobacz Investor Relations
Phone: 804.788.5555 Fax: 804.788.5688
Email: investorrelations@newmarket.com
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