NewMarket Q1 2025 Earnings Call Transcript

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Provided by Quartr
April 24, 2025

Key Takeaways

  • Net income rose to $126 million ($13.26/share) in Q1 2025 from $108 million ($11.23/share) a year earlier, reflecting strong overall profitability.
  • Petroleum additive sales declined to $646 million from $677 million year-over-year, with operating profit down to $142 million as shipments fell across most regions amid macroeconomic and trade uncertainties.
  • Specialty Materials segment posted sales of $54 million and operating profit of $23 million, a turnaround from a $5 million loss in Q1 2024 following the Ampac acquisition.
  • The company plans a capital investment of up to $100 million in its Cedar City, Utah Ampac facility to boost production capacity by over 50% by 2026 for military and space programs.
  • Generated solid cash flow, returning $83 million to shareholders through $57 million of buybacks and $26 million in dividends, while improving net debt/EBITDA to 1.1x from 1.9x a year earlier.
AI Generated. May Contain Errors.
Earnings Conference Call
NewMarket Q1 2025
00:00 / 00:00

Transcript Sections

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Operator

Greetings, and welcome to today's Newmarket Corporation scheduled conference call and webcast to review first quarter twenty twenty five financial Results. Please note, this conference is being recorded. I will now turn the conference over to your host, Mr. Tim Fitzgerald. Sir, the floor is yours.

Tim Fitzgerald
Tim Fitzgerald
VP & CFO at NewMarket Corporation

Thank you, Ollie, and thanks, 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 filed our 10 Q for the first quarter of twenty twenty five yesterday, and it contains 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 press release. Net income for the first quarter of twenty twenty five was $126,000,000 or $13.26 per share compared to net income of $108,000,000 or $11.23 per share for the first quarter of twenty twenty four. Petroleum additive sales for the first quarter of twenty twenty five were $646,000,000 compared to $677,000,000 for the same period in 2024. Petroleum additives operating profit for the first quarter of twenty twenty five was $142,000,000 compared to a record first quarter operating profit of $151,000,000 in 2024.

Tim Fitzgerald
Tim Fitzgerald
VP & CFO at NewMarket Corporation

The decrease in operating profit was mainly due to lower shipments in the quarter. Lubricant additive shipments decreased in Asia Pacific and North America, while Europe and Latin America reported slight increases. Fuel additive shipments were lower in all regions except Asia Pacific, which reported a small increase. Despite the lower shipments, we continue to focus on operational efficiency, which has allowed us to maintain strong operating profit levels. We are very pleased with the performance of our petroleum additives business during the first quarter of twenty twenty five and the work done by our team to achieve these results.

Tim Fitzgerald
Tim Fitzgerald
VP & CFO at NewMarket Corporation

However, we remain challenged by the ongoing macroeconomic environment and are monitoring the uncertainty around international trade relations and tariffs. We remain committed to improving efficiency and managing operating costs. Our focus continues to be on investing in technology and our supply network to meet customer demands, enhancing our operational efficiency and improving our portfolio profitability. We report the financial results of our AMPAC business in our Specialty Materials segment. Specialty Materials sales were $54,000,000 for the first quarter of twenty twenty five compared to $17,000,000 for the first quarter of twenty twenty four.

Tim Fitzgerald
Tim Fitzgerald
VP & CFO at NewMarket Corporation

Specialty Materials operating profit was $23,000,000 for the first quarter of twenty twenty five compared to an operating loss of $5,000,000 for the first quarter of twenty twenty four. Specialty materials sales and operating profit for the first quarter of twenty twenty four reflect financial results since the acquisition of Ampak on 01/16/2024. As previously stated, we will see substantial variation in quarterly results for the Specialty Materials segment on an ongoing basis due to the nature of its business. As discussed in Ampact's April twenty first, twenty twenty five press release, and as approved earlier today by the New Market Board of Directors, we plan to make a capital investment of up to $100,000,000 at our AMPACT facility in Cedar City, Utah. This investment will allow AMPACT to construct an additional production line, increasing capacity by more than 50%.

Tim Fitzgerald
Tim Fitzgerald
VP & CFO at NewMarket Corporation

With a projected completion date in 2026, the increased production capacity will allow Ampak to meet the growing demand of solid rocket motors for US military and space launch programs while also addressing the needs of US allies in these critical areas. We view Ampak as a strategic national asset with a mission critical role in global safety, security, and space programs. This investment assures capacity to meet our customers' growing needs while adding additional redundancy and security of supply in our production system. Our company generated solid cash flows throughout the quarter, which allowed us to return $83,000,000 to our shareholders through share repurchases of $57,000,000 and dividends of $26,000,000 As of 03/31/2025, our net debt to EBITDA ratio was 1.1, which is a significant improvement over the 1.9 times we reported at the end of Q1 twenty twenty four. As we look ahead to 2025, we are committed to making decisions that promote long term value for our shareholders and customers while staying focused on our long term objectives.

Tim Fitzgerald
Tim Fitzgerald
VP & CFO at NewMarket Corporation

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. Ali, 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. Ladies and gentlemen, this does conclude today's call. You may disconnect your lines at this time. Have a wonderful day, and we thank you for your participation.

Executives
    • Tim Fitzgerald
      Tim Fitzgerald
      VP & CFO
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