NewMarket Q3 2023 Earnings Call Transcript

Quartr
Provided by Quartr
October 26, 2023

Key Takeaways

  • Net income jumped to $111 million ($11.60/share) in Q3 2023 from $63 million ($6.32/share) a year ago, reflecting strong earnings growth.
  • While petroleum additive sales dipped to $664 million, operating profit rose to $140 million from $83 million, driven by higher selling prices, favorable mix and lower raw material costs.
  • Shipments fell 8% year-over-year, with declines in lubricant and fuel additives across most regions due to global economic weakness and inventory rationalization.
  • The company generated solid cash flow, improving working capital by $19 million, paying down $137 million of debt, and reducing net debt/EBITDA from 2.0× to 1.1× while returning $22 million in dividends.
  • Management reaffirmed its long-term focus on cost control, technology investment, inventory management and a customer-centric, technology-driven strategy to drive future value.
AI Generated. May Contain Errors.
Earnings Conference Call
NewMarket Q3 2023
00:00 / 00:00

There are 2 speakers on the call.

Operator

Good day, and welcome to the Newmarket Corporation Conference Call and Webcast to review the Q3 2023 financial results. At this time, all participants are placed on a listen only mode. I would now like to turn the floor over to your host, Bill Skroebak. The floor is yours.

Speaker 1

Thank you, Kelly, and thanks to everyone for joining me this afternoon. Q3. As a reminder, some of the statements made during this conference call may be forward looking. Relevant factors that could cause actual results to and discuss the financial results that differ materially from those forward looking statements are contained in our earnings release and in our SEC filings, including our most recent Form 10 ks. During this call, I may also discuss the non GAAP financial measures included in our earnings release.

Speaker 1

Earnings release, which can be found on our website, includes a reconciliation of the non GAAP financial measures to the comparable GAAP financial measures. We filed our 10 Q this morning. It contains significantly more details on the operations and performance of our company. Please take time to review it. I will be reviewing referring to the data that was included in last night's earnings release.

Speaker 1

Net income was $111,000,000 or $11.60 a share compared to net income of 63,000,000 or $6.32 a share for the Q3 last year. Petroleum additive sales for the Q3 of 2023 were $664,000,000 compared to $693,000,000 for the same period in 2022. Petroleum Additives operating profit for the quarter was $140,000,000 which is higher than the 3rd quarter operating profit last year of $83,000,000 The operating profit increase 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 between quarterly periods were down 8% with decreases in both lubricant additives and fuel additive shipments. When comparing the Q3 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 additive shipments.

Speaker 1

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 inflationary environment impacting us, including our raw material and operating costs. During this period, we have remained focused on controlling our operating costs, continuing our investment in technology and managing our inventory levels as well as our customer portfolio. Overall, we're very pleased with the strong performance of our petroleum additives business during the Q3 of 2023. We generated solid cash flows during the quarter and continue to operate with low leverage.

Speaker 1

Our working capital improved by $19,000,000 we paid dividends of $22,000,000 and we made payments of $137,000,000 on our revolving credit facility. Our net debt to EBITDA was 1.1 times as of September 30, 2023, a significant improvement over our 2 times we reported at the end of 2022. 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. Thank you for joining me for the call today.

Speaker 1

We appreciate your support. Kelly, that concludes our planned comments. We are available for questions via email or by phone, so please feel free to contact me directly. Thank you all again and we will talk to you next quarter.

Operator

Thank you. This does conclude today's conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.

Powered by Quartr