- Net Income of $69.7 Million and Earnings Per Share of
$6.38
- Petroleum Additives Operating Profit of $94.1
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 first quarter of 2021.
Net income for the first quarter of 2021 was $69.7 million, or
$6.38 per share, compared to net income of $85.5 million, or $7.67
per share, for the first quarter of 2020.
Sales for the petroleum additives segment for the first quarter
of 2021 were $564.9 million, up 1.4% compared to the same period
last year. Petroleum additives operating profit for the first
quarter of 2021 was $94.1 million, a 17.2% decrease compared to
record first quarter operating profit last year of $113.7 million.
This decrease was due mainly to lower selling prices and higher
conversion and raw material costs, partially offset by increased
shipments. Shipments increased 2.6% between periods, with increases
in lubricant additives shipments partially offset by decreases in
fuel additives shipments. All regions except Europe contributed to
the increase in lubricant additives shipments, and Asia Pacific was
the only region reporting an increase in fuel additives
shipments.
We are pleased with our petroleum additives operating results
for the first quarter, but are mindful of the negative impact that
our increasing raw material costs have on our operating margins. We
will focus on margin improvement during 2021 to help ensure our
operating margins remain at the historical ranges our shareholders
have come to expect. Government restrictions on travel and work
related to COVID-19 have 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 restrictions are lifted and remain lifted. We will continue
to monitor the government restrictions as well as the status of
vaccination programs that are being implemented globally. We expect
successful vaccination efforts will help provide more stability in
the global economy in 2021.
During the quarter we funded capital expenditures of $20.5
million, and paid dividends of $20.8 million. In March 2021, we
issued $400 million 2.70% senior notes that are due in 2031. The
proceeds will be used for the repayment of our $350 million 4.10%
senior notes that are due in 2022 and for general corporate
purposes.
We remain 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. EDT on Thursday, April 22, 2021 to review
first quarter results. You can access the conference call live by
dialing 1-844-369-8770 (domestic) or 1-862-298-0840 (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 April 29, 2021 at 3:00 p.m. EDT
by dialing 1-877-481-4010 (domestic) or 1-919-882-2331
(international). The replay passcode number is 40638. 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/2001/40638. 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 2020 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)
Three Months Ended
March 31,
2021
2020
Revenue:
Petroleum additives
$
564,898
$
557,372
All other
1,717
2,045
Total
$
566,615
$
559,417
Segment operating profit:
Petroleum additives
$
94,071
$
113,671
All other
(664
)
335
Segment operating profit
93,407
114,006
Corporate unallocated expense
(4,312
)
(4,231
)
Interest and financing expenses
(6,343
)
(7,104
)
Other income (expense), net
6,618
7,407
Income before income tax
expense
$
89,370
$
110,078
Net income
$
69,712
$
85,541
Earnings per share - basic and
diluted
$
6.38
$
7.67
NEWMARKET CORPORATION AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
INCOME
(In thousands, except per-share amounts,
unaudited)
Three Months Ended
March 31,
2021
2020
Net sales
$
566,615
$
559,417
Cost of goods sold
404,862
378,510
Gross profit
161,753
180,907
Selling, general, and administrative
expenses
36,915
35,715
Research, development, and testing
expenses
36,337
35,506
Operating profit
88,501
109,686
Interest and financing expenses, net
6,343
7,104
Other income (expense), net
7,212
7,496
Income before income tax
expense
89,370
110,078
Income tax expense
19,658
24,537
Net income
$
69,712
$
85,541
Earnings per share - basic and
diluted
$
6.38
$
7.67
Cash dividends declared per
share
$
1.90
$
1.90
NEWMARKET CORPORATION AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands except share amounts,
unaudited)
March 31,
2021
December 31,
2020
ASSETS
Current assets:
Cash and cash equivalents
$
522,405
$
125,172
Trade and other accounts receivable, less
allowance for credit losses
373,655
336,395
Inventories
414,737
401,031
Prepaid expenses and other current
assets
41,670
35,480
Total current assets
1,352,467
898,078
Property, plant, and equipment, net
671,955
665,147
Intangibles (net of amortization) and
goodwill
129,248
129,944
Prepaid pension cost
139,104
137,069
Operating lease right-of-use assets
65,307
61,329
Deferred charges and other assets
41,308
42,308
Total assets
$
2,399,389
$
1,933,875
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Accounts payable
$
218,211
$
189,937
Accrued expenses
73,264
78,422
Dividends payable
18,612
15,184
Income taxes payable
5,949
3,760
Operating lease liabilities
14,307
13,410
Other current liabilities
5,510
11,742
Total current liabilities
335,853
312,455
Long-term debt
990,189
598,848
Operating lease liabilities -
noncurrent
50,928
48,324
Other noncurrent liabilities
212,064
214,424
Total liabilities
1,589,034
1,174,051
Shareholders' equity:
Common stock and paid-in capital (with no
par value; issued and outstanding shares - 10,928,154 at March 31,
2021 and 10,921,377 at December 31, 2020)
1,190
717
Accumulated other comprehensive loss
(172,055
)
(173,164
)
Retained earnings
981,220
932,271
Total shareholders' equity
810,355
759,824
Total liabilities and shareholders'
equity
$
2,399,389
$
1,933,875
NEWMARKET CORPORATION AND
SUBSIDIARIES
SELECTED CONSOLIDATED CASH FLOW
DATA
(In thousands, unaudited)
Three Months Ended
March 31,
2021
2020
Net income
$
69,712
$
85,541
Depreciation and amortization
20,631
21,369
Cash pension and postretirement
contributions
(2,577
)
(2,557
)
Working capital changes
(41,421
)
(42,058
)
Deferred income tax expense
2,455
3,379
Capital expenditures
(20,524
)
(20,106
)
Issuance of 2.70% senior notes
395,052
0
Debt issuance costs
(2,932
)
(1,308
)
Net borrowings under revolving credit
facility
0
97,424
Repurchases of common stock
0
(79,473
)
Dividends paid
(20,763
)
(21,160
)
All other
(2,400
)
(6,786
)
Increase in cash and cash equivalents
$
397,233
$
34,265
NEWMARKET CORPORATION AND
SUBSIDIARIES
NON-GAAP FINANCIAL INFORMATION
(In thousands, unaudited)
Three Months Ended
March 31,
2021
2020
Net Income
$
69,712
$
85,541
Add:
Interest and financing expenses, net
6,343
7,104
Income tax expense
19,658
24,537
Depreciation and amortization
20,324
20,859
EBITDA
$
116,037
$
138,041
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210421005706/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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