- Third Quarter Net Income of $63.2 Million and Earnings Per
Share of $6.32
- Petroleum Additives Nine Months Operating Profit of $261.1
Million, Up 8.6% versus 2021
- 499,275 Shares Repurchased during First Nine Months of
2022
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 2022.
Net income for the third quarter of 2022 was $63.2 million,
compared to net income of $52.0 million for the third quarter of
2021. Earnings per share increased to $6.32 per share from $4.80
per share in the prior year period. For the first nine months of
2022, net income was $189.0 million, or $18.60 per share, compared
to net income of $173.7 million, or $15.94 per share, for the first
nine months of last year.
Sales for the petroleum additives segment for the third quarter
of 2022 were $692.7 million, up from $619.1 million in the third
quarter of 2021. Petroleum additives operating profit for the third
quarter of 2022 was $83.0 million, compared to $72.1 million for
the same period last year. The increase was mainly due to increased
selling prices partially offset by higher raw material and
operating costs and decreased shipments. Shipments between
quarterly periods were down 8.5%, with decreases in both lubricant
additives and fuel additives shipments across all regions except
Latin America, which reported an increase in fuel additives
shipments.
Petroleum additives sales for the first nine months of the year
were $2.1 billion, compared to sales in the first nine months of
last year of $1.8 billion. Petroleum additives operating profit for
the first nine months of the year was $261.1 million compared to
$240.4 million for the same period last year. The increase was due
mainly to increased selling prices partially offset by higher raw
material and operating costs. Shipments decreased 1.3% between
periods, with decreases in both lubricant additives and fuel
additives shipments. All regions except Europe contributed to the
decrease 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 pleased with our strong petroleum additives sales in
2022. However, our operating margin for the first nine months of
2022 was 12.6% compared to 13.6% in the prior-year nine month
period. We have seen progress in our efforts to recover margins and
control costs, but we are still being challenged by the ongoing
inflationary environment. Margin recovery and cost control will
continue to be a priority for the remainder of this year and into
2023, so that our margins will again be consistent with our
historical ranges. Worldwide supply chain disruptions continue to
negatively impact our business and we are working to resolve the
supply chain issues to meet our customers’ growing needs.
During the first nine months of 2022, we paid dividends of $63.8
million, repurchased 499,275 shares of our common stock for a total
of $155.2 million, and funded capital expenditures of $40.4
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 Tuesday, October 25, 2022 to review
third quarter 2022 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
1, 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
46748. 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/2001/46748. 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)
Third Quarter Ended
September 30,
Nine Months Ended
September 30,
2022
2021
2022
2021
Revenue:
Petroleum additives
$
692,693
$
619,070
$
2,074,018
$
1,770,555
All other
3,356
3,137
8,222
8,988
Total
$
696,049
$
622,207
$
2,082,240
$
1,779,543
Segment operating profit:
Petroleum additives
$
83,023
$
72,128
$
261,130
$
240,399
All other
(41
)
(151
)
(205
)
(798
)
Segment operating profit
82,982
71,977
260,925
239,601
Corporate unallocated expense
(4,167
)
(8,731
)
(15,389
)
(16,591
)
Interest and financing expenses
(8,369
)
(9,345
)
(24,859
)
(24,557
)
Loss on early extinguishment of debt
0
0
(7,545
)
0
Other income (expense), net
9,883
7,252
26,312
19,128
Income before income tax
expense
$
80,329
$
61,153
$
239,444
$
217,581
Net income
$
63,226
$
52,038
$
189,016
$
173,702
Earnings per share - basic and
diluted
$
6.32
$
4.80
$
18.60
$
15.94
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,
2022
2021
2022
2021
Net sales
$
696,049
$
622,207
$
2,082,240
$
1,779,543
Cost of goods sold
547,742
483,986
1,621,294
1,338,570
Gross profit
148,307
138,221
460,946
440,973
Selling, general, and administrative
expenses
35,192
39,729
109,303
111,379
Research, development, and testing
expenses
34,388
35,387
106,035
107,241
Operating profit
78,727
63,105
245,608
222,353
Interest and financing expenses, net
8,369
9,345
24,859
24,557
Loss on early extinguishment of debt
0
0
7,545
0
Other income (expense), net
9,971
7,393
26,240
19,785
Income before income tax
expense
80,329
61,153
239,444
217,581
Income tax expense
17,103
9,115
50,428
43,879
Net income
$
63,226
$
52,038
$
189,016
$
173,702
Earnings per share - basic and
diluted
$
6.32
$
4.80
$
18.60
$
15.94
Cash dividends declared per
share
$
2.10
$
2.10
$
6.30
$
5.90
NEWMARKET CORPORATION AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts,
unaudited)
September 30,
2022
December 31,
2021
ASSETS
Current assets:
Cash and cash equivalents
$
71,972
$
83,304
Marketable securities
0
375,918
Trade and other accounts receivable, less
allowance for credit losses
476,061
391,779
Inventories
592,222
498,539
Prepaid expenses and other current
assets
33,847
38,633
Total current assets
1,174,102
1,388,173
Property, plant, and equipment, net
653,231
676,770
Intangibles (net of amortization) and
goodwill
126,323
127,752
Prepaid pension cost
254,695
242,604
Operating lease right-of-use assets,
net
64,213
68,402
Deferred charges and other assets
64,280
54,735
Total assets
$
2,336,844
$
2,558,436
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Accounts payable
$
285,475
$
246,097
Accrued expenses
85,549
85,103
Dividends payable
19,357
16,648
Income taxes payable
10,887
4,442
Operating lease liabilities
15,742
15,709
Current portion of long-term debt
0
349,434
Other current liabilities
9,125
7,654
Total current liabilities
426,135
725,087
Long-term debt
1,008,516
789,853
Operating lease liabilities -
noncurrent
47,900
52,591
Other noncurrent liabilities
186,917
228,776
Total liabilities
1,669,468
1,796,307
Shareholders' equity:
Common stock and paid-in capital (with no
par value; issued and outstanding shares - 9,871,440 at September
30, 2022 and 10,362,722 at December 31, 2021)
0
0
Accumulated other comprehensive loss
(148,629
)
(82,227
)
Retained earnings
816,005
844,356
Total shareholders' equity
667,376
762,129
Total liabilities and shareholders'
equity
$
2,336,844
$
2,558,436
NEWMARKET CORPORATION AND
SUBSIDIARIES
SELECTED CONSOLIDATED CASH FLOW
DATA
(In thousands, unaudited)
Nine Months Ended
September 30,
2022
2021
Net income
$
189,016
$
173,702
Depreciation and amortization
62,160
63,075
Loss on early extinguishment of debt
7,545
0
Loss on marketable securities
2,977
3,414
Cash pension and postretirement
contributions
(7,111
)
(7,820
)
Working capital changes
(198,637
)
(98,426
)
Deferred income tax (benefit) expense
(33,685
)
6,205
Purchases of marketable securities
(787
)
(391,429
)
Proceeds from sales and maturities of
marketable securities
372,846
9,894
Capital expenditures
(40,402
)
(64,025
)
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
218,000
1,000
Repurchases of common stock
(150,754
)
(91,711
)
Dividends paid
(63,790
)
(64,116
)
All other
(11,611
)
3,523
(Decrease) increase in cash and cash
equivalents
$
(11,332
)
$
(65,559
)
NEWMARKET CORPORATION AND
SUBSIDIARIES
NON-GAAP FINANCIAL INFORMATION
(In thousands, unaudited)
Third Quarter Ended
September 30,
Nine Months Ended
September 30,
2022
2021
2022
2021
Net Income
$
63,226
$
52,038
$
189,016
$
173,702
Add:
Interest and financing expenses, net
8,369
9,345
24,859
24,557
Income tax expense
17,103
9,115
50,428
43,879
Depreciation and amortization
20,143
20,862
60,998
61,780
EBITDA
$
108,841
$
91,360
$
325,301
$
303,918
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221021005382/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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