NewMarket Q3 2024 Earnings Call Transcript

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Provided by Quartr
October 24, 2024

Key Takeaways

  • Q3 net income of $132 million ($13.79 per share) increased from $111 million ($11.60 per share) in Q3 2023, driven by higher operating profits.
  • Petroleum additives sales remained stable at $663 million, while operating profit rose to $157 million from $140 million due to lower raw material and operating costs.
  • Since the January acquisition of American Pacific Corp (AMPAC), the Specialty Materials segment reported $59 million in Q3 sales and $16 million in operating profit, with acquired inventory sold at no margin and full‐year results expected to align with pre-acquisition forecasts.
  • The company generated strong cash flows, paying $24 million in dividends, funding $14 million in capex, and reducing net debt to achieve a 1.4× net debt/EBITDA ratio ahead of the 1.5–2× target range.
  • Management reaffirmed its focus on margin management, cost control, long‐term value creation, technology‐driven product offerings, and world‐class supply‐chain capabilities.
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Earnings Conference Call
NewMarket Q3 2024
00:00 / 00:00

There are 2 speakers on the call.

Operator

Good day, and welcome to the Newmarket Corporation's scheduled conference call and webcast to review the Q3 2024 Financial Results. At this time, all participants are on a listen only mode. I would now like to turn the call over to your host, Bill Skroback. Floor is yours.

Speaker 1

Thank you, Kelly, and thanks to everyone for joining me this afternoon. As a reminder, some of the statements made during this conference call may be forward looking. Relevant factors that could cause actual results to 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 will also discuss the non GAAP financial measures included in our earnings release. The earnings release, which can be found on our website, includes a reconciliation of the non GAAP financial measures to the comparable GAAP financial measures.

Speaker 1

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 referring to the data that was included in last night's earnings release. Net income for the Q3 of 2024 was $132,000,000 or $13.79 per share compared to net income of $111,000,000 or $11.60 per share for the same period last year.

Speaker 1

Petroleum additive sales for the Q3 of 2024 were $663,000,000 compared to $664,000,000 for the same period in 2023. Petroleum as is operating profit for the Q3 of 2024 was $157,000,000 compared to $140,000,000 for the Q3 of 2023. The increase in petroleum additives operating profit was mainly due to lower raw material and operating costs, partially offset by lower selling prices. We remain pleased with the strong performance of our petroleum additives business during the 1st 9 months of 2024. We continue to see the favorable results of our ongoing focus on margin management, Managing our operating costs, our inventory levels and our portfolio profitability will remain priorities throughout 2024.

Speaker 1

We completed the acquisition of American Pacific Corp, AMPAC on January 16, 2024. We report the financial results of our AMPAC business since the date of acquisition in our Specialty Materials segment. Specialty Materials sales were $59,000,000 for the Q3 of 2024 and $114,000,000 for the 1st 9 months of 2024. Specialty Materials operating profit for the 3rd quarter and 1st 9 months of 2024 were $16,000,000 The Specialty Materials 3rd quarter and 1st 9 months 2024 results reflect the sale of AMPAC finished goods inventory that we acquired at closing. The acquired inventory was recorded at fair value on the acquisition date and was sold during the 1st 9 months of 2024 generating no margin.

Speaker 1

We expect to see substantial variation in quarterly results for Ampac due to the nature of its business and we anticipate full year 2024 results to be consistent with our pre acquisition expectations. Our operations produced strong cash flows during the quarter. We paid dividends of $24,000,000 and funded capital expenditures of $14,000,000 Since the AMPAC acquisition, we have made net payments of $259,000,000 on our revolving credit facility. As of September 30, 2024, our net debt to EBITDA ratio was 1.4, which is slightly below our target operating range of 1.5 to 2 times. For 2024, we expect to see capital expenditures in the $50,000,000 to $70,000,000 We want to thank our dedicated employees for their hard work in welcoming and integrating AMPAC into our family of companies.

Speaker 1

Our team continues to make decisions to promote long term value for our shareholders and customers and 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. Thank you for joining me for the call today. Kelly, that concludes our planned comments. We are available for questions via email or by phone, so please feel free to contact me directly.

Speaker 1

Thank you all again and we will talk to you next quarter.

Operator

Thank you, everyone. 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.

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