NewMarket Corporation Reports First Quarter 2024 Results
- Net income increased to $107.7 million compared to $97.6 million in the first quarter of 2023.
- Earnings per share rose to $11.23 from $10.09 year-over-year.
- Petroleum additives sales totaled $677.3 million in the first quarter of 2024.
- Operating profit for petroleum additives was $150.9 million, up from $132.1 million in the first quarter of 2023.
- Acquisition of American Pacific (AMPAC) for approximately $700 million completed in January 2024.
- Specialty materials segment sales were $17.0 million with an operating loss of $5.0 million due to the sale of acquired inventory.
- Solid cash flows from operations, funding of capital expenditures, and an 11% increase in quarterly dividend rate.
- Net Debt to EBITDA ratio of 1.9 as of March 31, 2024, within the target operating range of 1.5 to 2.0.
- None.
Insights
Reviewing the first quarter financials of NewMarket Corporation reveals a company achieving commendable performance amidst market challenges. A notable increase in net income from
Investors should take note of the acquisition of American Pacific Corporation (AMPAC), a strategic move that diversifies NewMarket's portfolio into the specialty materials space. The operating loss reported in the new segment, however, raises questions about integration efficacy and the short-term profitability impact. The long-term perspective, as presented by NewMarket's management, posits that AMPAC’s integration is a strategic growth avenue, yet the short-term variability in quarterly results due to the nature of AMPAC’s business could introduce volatility to NewMarket's stock. It’s important for investors to monitor subsequent quarters for signs of successful integration and profitability traction in the specialty materials segment.
Furthermore, the company's proactive capital management via an 11% dividend increase and establishment of a new credit facility demonstrates financial strength and commitment to shareholder returns. The Net Debt to EBITDA ratio of 1.9 is well within the target operating range, indicating a healthy balance sheet. Investors considering NewMarket should balance the strong cash flow performance and conservative leverage against the potential risks associated with the newly acquired AMPAC business and the sales dip in the core petroleum additives market.
From a market perspective, NewMarket's 4.7% increase in petroleum additives shipments is a signal of underlying demand resilience, particularly noting the growth in lubricant and fuel additives across multiple regions. This indicates that despite a dip in sales revenue, volume growth remains intact, which could be a sign of strategic pricing or product mix shifts designed to capture greater market share or to penetrate new markets. This dynamic deserves attention as it may influence the company's market position and its competitive dynamics within the additives industry.
Latin America and North America's reported decrease in certain shipments might hint at regional market challenges or competitive encroachments. Investors should watch these markets closely, evaluating whether these are temporary setbacks or indicative of a trend that could influence long-term performance. Moreover, the increase in the quarterly dividend amidst these market fluctuations speaks to NewMarket's confidence in its ability to maintain strong cash flow, an important factor for income-focused investors.
-
Net Income of
$107.7 Million $11.23
-
Petroleum Additives Shipments Up
4.7%
- Acquisition of American Pacific Corporation Completed in January
Net income for the first quarter of 2024 was
Petroleum additives sales for the first quarter of 2024 were
We are pleased with the strong performance of our petroleum additives business during the first quarter of 2024 – the sixth consecutive quarter with operating profit over
We completed the acquisition of American Pacific Corporation (AMPAC) on January 16, 2024, for approximately
We generated solid cash flows from operations during the quarter, we funded capital expenditures of
The acquisition of AMPAC was funded by cash on hand and borrowings of approximately
We anticipate continued strength in our petroleum additives segment. We also look forward to the ongoing integration of AMPAC into the NewMarket family of companies. 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
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
As a reminder, a conference call and webcast is scheduled for 3:00 p.m. ET on Thursday, April 25, 2024, to review first quarter 2024 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 2, 2024, at 3:00 p.m. ET by dialing 1-877-481-4010 (domestic) or 1-919-882-2331 (international). The replay passcode number is 50270. 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/2001/50270. A webcast replay will be available for 30 days.
NewMarket Corporation is a holding company operating through its subsidiaries, Afton Chemical Corporation (Afton), Ethyl Corporation (Ethyl), and American Pacific Corporation (AMPAC). The Afton and Ethyl companies develop, manufacture, blend, and deliver chemical additives that enhance the performance of petroleum products. AMPAC is a manufacturer of specialty materials primarily used in solid rocket motors for the aerospace and defense industries. The NewMarket family of companies has a long-term commitment to its people, to safety, to providing innovative solutions for its customers, and to making the world a better place.
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 industries; 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; termination or changes to contracts with contractors and subcontractors of the
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 us. 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, |
||||||
|
|
|
2024 |
|
|
|
2023 |
|
Net Sales: |
|
|
|
|
||||
Petroleum additives |
|
$ |
677,264 |
|
|
$ |
699,991 |
|
Specialty materials |
|
|
17,047 |
|
|
|
0 |
|
All other |
|
|
2,425 |
|
|
|
2,798 |
|
Total |
|
$ |
696,736 |
|
|
$ |
702,789 |
|
Segment operating profit: |
|
|
|
|
||||
Petroleum additives |
|
$ |
150,909 |
|
|
$ |
132,068 |
|
Specialty materials |
|
|
(4,967 |
) |
|
|
0 |
|
All other |
|
|
(81 |
) |
|
|
(975 |
) |
Segment operating profit |
|
|
145,861 |
|
|
|
131,093 |
|
Corporate unallocated expense |
|
|
(5,557 |
) |
|
|
(6,491 |
) |
Interest and financing expenses |
|
|
(15,654 |
) |
|
|
(10,773 |
) |
Other income (expense), net |
|
|
13,043 |
|
|
|
11,319 |
|
Income before income tax expense |
|
$ |
137,693 |
|
|
$ |
125,148 |
|
Net income |
|
$ |
107,732 |
|
|
$ |
97,583 |
|
Earnings per share - basic and diluted |
|
$ |
11.23 |
|
|
$ |
10.09 |
|
NEWMARKET CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per-share amounts, unaudited)
|
||||||||
|
|
Three Months Ended March 31, |
||||||
|
|
|
2024 |
|
|
|
2023 |
|
Net sales |
|
$ |
696,736 |
|
$ |
702,789 |
||
Cost of goods sold |
|
|
480,371 |
|
|
|
504,745 |
|
Gross profit |
|
|
216,365 |
|
|
|
198,044 |
|
Selling, general, and administrative expenses |
|
|
44,365 |
|
|
|
39,847 |
|
Research, development, and testing expenses |
|
|
31,200 |
|
|
|
33,156 |
|
Operating profit |
|
|
140,800 |
|
|
|
125,041 |
|
Interest and financing expenses, net |
|
|
15,654 |
|
|
|
10,773 |
|
Other income (expense), net |
|
|
12,547 |
|
|
|
10,880 |
|
Income before income tax expense |
|
|
137,693 |
|
|
|
125,148 |
|
Income tax expense |
|
|
29,961 |
|
|
|
27,565 |
|
Net income |
|
$ |
107,732 |
|
|
$ |
97,583 |
|
Earnings per share - basic and diluted |
|
$ |
11.23 |
|
|
$ |
10.09 |
|
Cash dividends declared per share |
|
$ |
2.50 |
|
|
$ |
2.10 |
|
NEWMARKET CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except share amounts, unaudited)
|
||||||||
|
|
March 31, 2024 |
|
December 31, 2023 |
||||
ASSETS |
|
|
|
|
||||
Current assets: |
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
117,066 |
|
|
$ |
111,936 |
|
Trade and other accounts receivable, less allowance for credit losses |
|
|
464,687 |
|
|
|
432,349 |
|
Inventories |
|
|
493,554 |
|
|
|
456,234 |
|
Prepaid expenses and other current assets |
|
|
44,013 |
|
|
|
39,051 |
|
Total current assets |
|
|
1,119,320 |
|
|
|
1,039,570 |
|
Property, plant, and equipment, net |
|
|
761,685 |
|
|
|
654,747 |
|
Intangibles (net of amortization) and goodwill |
|
|
768,918 |
|
|
|
124,642 |
|
Prepaid pension cost |
|
|
377,941 |
|
|
|
370,882 |
|
Operating lease right-of-use assets, net |
|
|
76,186 |
|
|
|
70,823 |
|
Deferred charges and other assets |
|
|
53,449 |
|
|
|
48,207 |
|
Total assets |
|
$ |
3,157,499 |
|
|
$ |
2,308,871 |
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
||||
Current liabilities: |
|
|
|
|
||||
Accounts payable |
|
$ |
260,451 |
|
|
$ |
231,137 |
|
Accrued expenses |
|
|
72,668 |
|
|
|
76,546 |
|
Dividends payable |
|
|
21,365 |
|
|
|
19,212 |
|
Income taxes payable |
|
|
15,403 |
|
|
|
6,131 |
|
Operating lease liabilities |
|
|
15,505 |
|
|
|
15,074 |
|
Other current liabilities |
|
|
5,402 |
|
|
|
16,064 |
|
Total current liabilities |
|
|
390,794 |
|
|
|
364,164 |
|
Long-term debt |
|
|
1,279,457 |
|
|
|
643,622 |
|
Operating lease liabilities - noncurrent |
|
|
59,713 |
|
|
|
55,058 |
|
Other noncurrent liabilities |
|
|
275,247 |
|
|
|
168,966 |
|
Total liabilities |
|
|
2,005,211 |
|
|
|
1,231,810 |
|
Shareholders' equity: |
|
|
|
|
||||
Common stock and paid-in capital (with no par value; issued and outstanding shares - 9,594,250 at March 31, 2024 and 9,590,086 at December 31, 2023) |
|
|
1,406 |
|
|
|
2,130 |
|
Accumulated other comprehensive loss |
|
|
(28,874 |
) |
|
|
(21,071 |
) |
Retained earnings |
|
|
1,179,756 |
|
|
|
1,096,002 |
|
Total shareholders' equity |
|
|
1,152,288 |
|
|
|
1,077,061 |
|
Total liabilities and shareholders' equity |
|
$ |
3,157,499 |
|
|
$ |
2,308,871 |
|
NEWMARKET CORPORATION AND SUBSIDIARIES SELECTED CONSOLIDATED CASH FLOW DATA (In thousands, unaudited)
|
||||||||
|
|
Three Months Ended March 31, |
||||||
|
|
|
2024 |
|
|
|
2023 |
|
Net income |
|
$ |
107,732 |
|
|
$ |
97,583 |
|
Depreciation and amortization |
|
|
25,807 |
|
|
|
20,313 |
|
Cash pension and postretirement contributions |
|
|
(2,727 |
) |
|
|
(2,290 |
) |
Working capital changes |
|
|
(21,434 |
) |
|
|
9,795 |
|
Deferred income tax benefit |
|
|
(3,899 |
) |
|
|
(4,932 |
) |
Capital expenditures |
|
|
(13,564 |
) |
|
|
(11,881 |
) |
Acquisition of business, net of cash acquired |
|
|
(683,924 |
) |
|
|
0 |
|
Net borrowings (repayments) under revolving credit facility |
|
|
386,000 |
|
|
|
(46,000 |
) |
Proceeds from term loan |
|
|
250,000 |
|
|
|
0 |
|
Dividends paid |
|
|
(23,986 |
) |
|
|
(20,292 |
) |
Debt issuance costs |
|
|
(2,251 |
) |
|
|
0 |
|
Repurchases of common stock |
|
|
0 |
|
|
|
(28,479 |
) |
All other |
|
|
(12,624 |
) |
|
|
(12,414 |
) |
Increase in cash and cash equivalents |
|
$ |
5,130 |
|
|
$ |
1,403 |
|
NEWMARKET CORPORATION AND SUBSIDIARIES NON-GAAP FINANCIAL INFORMATION (In thousands, unaudited)
|
||||||||
Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) |
||||||||
|
|
|
||||||
|
|
Three Months Ended March 31, |
||||||
|
|
|
2024 |
|
|
|
2023 |
|
Net Income |
|
$ |
107,732 |
|
$ |
97,583 |
||
Add: |
|
|
|
|
||||
Interest and financing expenses, net |
|
|
15,654 |
|
|
|
10,773 |
|
Income tax expense |
|
|
29,961 |
|
|
|
27,565 |
|
Depreciation and amortization |
|
|
25,255 |
|
|
|
19,966 |
|
EBITDA |
|
$ |
178,602 |
|
|
$ |
155,887 |
|
|
|
|
|
|
||||
Net Debt to EBITDA |
|
|
|
|
||||
|
|
March 31, |
|
December 31, |
||||
|
|
|
2024 |
|
|
|
2023 |
|
Long-term debt, including current maturities |
|
$ |
1,279,457 |
|
|
$ |
643,622 |
|
Less: Cash and cash equivalents |
|
|
117,066 |
|
|
|
111,936 |
|
Net Debt |
|
$ |
1,162,391 |
|
|
$ |
531,686 |
|
|
|
|
|
|
||||
|
|
Rolling Four Quarters Ended |
||||||
|
|
March 31, |
|
December 31, |
||||
|
|
|
2024 |
|
|
|
2023 |
|
Net Income |
|
$ |
399,013 |
|
|
$ |
388,864 |
|
Add: |
|
|
|
|
||||
Interest and financing expenses, net |
|
|
42,240 |
|
|
|
37,359 |
|
Income tax expense |
|
|
102,494 |
|
|
|
100,098 |
|
Depreciation and amortization |
|
|
81,909 |
|
|
|
76,620 |
|
EBITDA-Rolling Four Quarters |
|
$ |
625,656 |
|
|
$ |
602,941 |
|
|
|
|
|
|
||||
Net Debt to EBITDA |
|
|
1.9 |
|
|
|
0.9 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20240423392276/en/
FOR INVESTOR INFORMATION CONTACT:
William J. Skrobacz
Investor Relations
Phone: 804.788.5555
Fax: 804.788.5688
Email: investorrelations@newmarket.com
Source: NewMarket Corporation
FAQ
What was NewMarket 's net income in the first quarter of 2024?
How did earnings per share change from the first quarter of 2023 to the first quarter of 2024 for NewMarket ?
What was the operating profit for petroleum additives in the first quarter of 2024?
When was the acquisition of American Pacific completed by NewMarket ?
What was the specialty materials segment sales for NewMarket in the first quarter of 2024?
