NewMarket Q3 2024 Earnings Report

NewMarket EPS Results

• Actual EPS: $13.79
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

NewMarket Revenue Results

• Actual Revenue: $724.95 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

NewMarket Announcement Details

• Quarter: Q3 2024
• Date: 10/23/2024
• Time: N/A
• Conference Call Date: Thursday, October 24, 2024
• Conference Call Time: 3:00PM ET

NewMarket (NYSE:NEU) is a specialty chemicals and lubricants company headquartered in Richmond, Virginia. Through its Valvoline business, the company markets a broad portfolio of automotive aftermarket products, including engine oils, transmission fluids, greases and vehicle care solutions. Valvoline products are distributed through retail and commercial channels as well as a network of quick-lube service centers that provide oil changes, preventive maintenance and related services.

In its chemical additives segment, NewMarket develops, manufactures and sells performance additives for fuels, lubricants and industrial fluids. These additives are engineered to improve fuel economy, reduce emissions, extend equipment life and enhance engine cleanliness across on-road, off-road and marine applications. The division serves customers in transportation, energy, manufacturing and other heavy-duty industrial markets worldwide.

Founded in 1919, NewMarket has expanded its global footprint through strategic acquisitions and internal growth. The company operates manufacturing and technical centers in North America, Europe, Asia Pacific and Latin America to support local market needs and regulatory requirements. NewMarket’s leadership team emphasizes investment in research and development to advance formulation technologies that meet evolving environmental standards and performance expectations.

NewMarket Q3 2024 Earnings Call Transcript

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.

Presentation

[Operator]

Good day, and welcome to the NewMarket Corporation's scheduled conference call and webcast to review the third quarter 2024.

[William Skrobacz, VP and CFO at NewMarket Corporation]

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-K. 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. 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.

[William Skrobacz, VP and CFO at NewMarket Corporation]

Net income for the third quarter of 2024 was $132 million or $13.79 per share, compared to net income of $111 million or $11.60 per share for the same period last year. Petroleum additives sales for the third quarter of 2024 were $663 million, compared to $664 million for the same period in 2023. Petroleum additives operating profit for the third quarter of 2024 was $157 million, compared to $140 million for the third quarter 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.

[William Skrobacz, VP and CFO at NewMarket Corporation]

We remain pleased with the strong performance of our petroleum additives business during the first nine 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. We completed the acquisition of American Pacific Corporation, AMPAC, on January sixteenth, 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 million for the third quarter of 2024, and $114 million for the first nine months of 2024. Specialty materials operating profit for the third quarter and first nine months of 2024 were $16 million.

[William Skrobacz, VP and CFO at NewMarket Corporation]

The specialty materials third quarter and first nine 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 first nine months of 2024, generating no margin. 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 million and funded capital expenditures of $14 million. Since the AMPAC acquisition, we have made net payments of $259 million on our revolving credit facility.

[William Skrobacz, VP and CFO at NewMarket Corporation]

As of September 30th, 2024, our net debt-to-EBITDA ratio was 1.4, which is slightly below our target operating range of 1.5x to 2 times. For 2024, we expect to see capital expenditures in the $50 million-$70 million range. We want to thank our dedicated employees for their hard work in welcoming and integrating AMPAC into our family of companies. 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.

[William Skrobacz, VP and CFO at NewMarket Corporation]

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, 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.

Participants

Executives

• William Skrobacz, VP and CFO