NewMarket Q4 2024 Earnings Report

NewMarket EPS Results

• Actual EPS: $11.56
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

NewMarket Revenue Results

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

NewMarket Announcement Details

• Quarter: Q4 2024
• Date: 2/3/2025
• Time: After Market Closes
• Conference Call Date: Tuesday, February 4, 2025
• 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 Q4 2024 Earnings Call Transcript

Key Takeaways

• Q4 net income rose to $111 M ($11.56/share) from $80 M ($8.38/share) last year, and full-year net income increased to $462 M ($48.22/share) from $389 M ($40.44/share).
• Petroleum Additives operating profit improved to $136 M in Q4 (from $110 M) and $592 M for the full year (from $514 M), driven by lower operating and raw material costs despite slight sales declines.
• The acquisition of American Pacific Corporation was completed on January 16, adding $141 M in Specialty Materials sales for the year and delivering operating profit above expectations.
• Strong cash flow enabled $373 M in debt paydowns and $128 M returned to shareholders through $96 M in dividends and $32 M in share repurchases, reducing net debt/EBITDA to 1.2x from 1.9x.
• Management cautioned that the ongoing inflationary environment continues to pressure costs, prompting ongoing efficiency measures and technology investments.

Presentation

[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, 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, 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, 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, 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, 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, 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, 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, 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.

Participants

Executives

• Tim Fitzgerald, VP & CFO