NewMarket Q4 2024 Earnings Call Transcript

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February 4, 2025
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Operator

Good day, everyone, and welcome to the Newmarket Corporation Schedules Conference Call and Webcast to review the 4th Quarter 2024 Financial Results. At this time, all participants have been placed on a listen only mode. It is now my pleasure to turn the floor over to your host, Tim Fitzgerald. Sir, the floor is yours.

Tim Fitzgerald
Tim Fitzgerald
VP & CFO at NewMarket Corporation

Thank you, Matthew, 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, we 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.

Tim Fitzgerald
Tim Fitzgerald
VP & CFO at NewMarket Corporation

We intend to file our 2024 10 ks in the middle of February. It will contain significantly more details on the operations and performance of our company. Today, I will be referring to the data that was included in last night's release. Net income for the Q4 of 2024 was $111,000,000 or $11.56 per share compared to net income of $80,000,000 or $8.38 per share for the Q4 of 2023. Net income for the full year 2024 was $462,000,000 or $48.22 per share compared to net income of $389,000,000 or $40.44 per share for 2023.

Tim Fitzgerald
Tim Fitzgerald
VP & CFO at NewMarket Corporation

Petroleum additive sales for the Q4 of 2024 were $626,000,000 compared to $642,000,000 for the same period in 2023. Petroleum additives operating profit for the Q4 of 2024 was $136,000,000 compared to $110,000,000 for the Q4 of 2023. The increase in operating profit was mainly due to lower operating costs. We continue to focus on operational efficiency, while still making investments in technology to support our customers. These gains were partially offset by a decrease in shipments as customers managed year end inventory levels.

Tim Fitzgerald
Tim Fitzgerald
VP & CFO at NewMarket Corporation

For the full year 2024, sales for the Petroleum Additives segment were $2,600,000,000 compared to $2,700,000,000 in 2023. Petroleum Additives operating profit for 2024 was $592,000,000 compared to $514,000,000 for 2023. The increase in operating profit was a result of lower operating costs driven by our efficiency efforts as well as lower raw material costs offset by lower selling prices. Shipments were flat when comparing 2024 to 2023 with a small increase in lubricant additives offset by a decline in fuel additives. We are very pleased with the performance of our Petroleum Additives business during 2024 and the work done by our team to achieve 4 quarters of strong operating profit.

Tim Fitzgerald
Tim Fitzgerald
VP & CFO at NewMarket Corporation

However, we remain challenged by the ongoing inflationary environment despite our efforts to improve efficiency and manage our operating costs. We continue to focus on investing in technology to meet customer needs, optimizing our inventory levels and improving our portfolio profitability. On January 16, 2024, we completed the acquisition of American Pacific Corporation. AMPAC is the leading North American manufacturer of critical performance additives used in solid rocket motors for space launch and military defense applications. We report the financial results of our AMPAC business in our Specialty Materials segment.

Tim Fitzgerald
Tim Fitzgerald
VP & CFO at NewMarket Corporation

Specialty Materials sales were $27,000,000 for the Q4 of 2024 $141,000,000 for the full year, surpassing our pre acquisition expectations. Specialty Materials operating profit was 1,500,000 dollars for the Q4 of 2024 $17,500,000 for the full year. The Specialty Materials full year results include the sale of AMPACT finished goods inventory that we acquired at closing and it was recorded at fair value and sold during the year at no margin. We generated solid cash flows throughout the year and made payments of $373,000,000 on our revolving credit facility since the AMPAC acquisition. We returned $128,000,000 to our shareholders through dividends of $96,000,000 and share repurchases of $32,000,000 As of December 31, 2024, our net debt to EBITDA ratio was 1.2, which was a significant improvement over the 1.9 times we reported the end of Q1.

Tim Fitzgerald
Tim Fitzgerald
VP & CFO at NewMarket Corporation

As we look ahead to 2025 and beyond, we anticipate continued strength in our Petroleum Additives and Specialty Materials segments. We are committed to making decisions that promote long term value for our shareholders and customers, while staying focused on our long term objectives. We believe that the core principles guiding our business, a long term perspective, a safety first culture, customer focused solutions, technology driven products and a world class supply chain will continue to benefit all our stakeholders. Matthew, that concludes our planned comments. We are available for questions via email or by phone, so please feel free to contact me directly.

Tim Fitzgerald
Tim Fitzgerald
VP & CFO at NewMarket Corporation

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

Operator

Thank you. Everyone, this concludes today's event. You may disconnect at this time and have a wonderful day. Thank you for your participation.

Executives
    • Tim Fitzgerald
      Tim Fitzgerald
      VP & CFO
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Key Takeaways

  • Net income growth: Q4 2024 net income rose to $111 million ($11.56/share) versus $80 million ($8.38/share) in Q4 2023, and full‐year net income increased to $462 million ($48.22) from $389 million ($40.44).
  • Petroleum Additives performance: Q4 sales declined to $626 million but operating profit climbed to $136 million due to lower costs, while full‐year segment sales were $2.6 billion with operating profit of $592 million, up from $514 million on efficiency gains and reduced raw material costs.
  • Ampac acquisition impact: The January 2024 purchase of American Pacific (Ampac) delivered Specialty Materials sales of $27 million in Q4 and $141 million for the year, with operating profit of $1.5 million in Q4 and $17.5 million annually, surpassing expectations.
  • Balance sheet strengthening: The company generated strong cash flows, repaid $373 million on its revolving credit facility, returned $128 million to shareholders through dividends and buybacks, and cut net debt/EBITDA to 1.2× from 1.9×.
  • Strategic outlook: Management expects continued segment strength in 2025, focusing on long‐term value via customer-focused solutions, technology investments, operational efficiency, and supply chain excellence.
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Earnings Conference Call
NewMarket Q4 2024
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