NewMarket Q3 Earnings Call Highlights

Key Points

• NewMarket’s Q3 net income rose 24% year over year to $124 million, or $13.50 per share, driven by higher operating profit and a lower effective tax rate. Nine-month net income increased to $376 million from $337 million.
• Petroleum additives sales remained essentially flat at $651 million despite an 8% shipment decline, while operating profit was unchanged at $131 million. Surcharges and cost controls helped offset supply-chain disruptions and weaker lubricant-additive demand.
• Specialty materials delivered strong growth, with third-quarter sales rising to $62 million and operating profit reaching $16 million, aided by product mix and the Calca Solutions acquisition. NewMarket also returned capital through dividends and share repurchases, while reducing net debt to 1.0 times EBITDA.

NewMarket NYSE: NEU reported third-quarter 2026 net income of $124 million, or $13.50 per share, up from $100 million, or $10.67 per share, in the prior-year quarter. Chief Financial Officer Tim Fitzgerald said higher operating profit and a lower effective tax rate drove the increase.

For the first nine months of 2026, net income rose to $376 million, or $40.64 per share, from $337 million, or $35.78 per share, during the same period of 2025.

Petroleum Additives Sales Hold Steady Despite Lower Shipments

NewMarket's petroleum additives segment generated third-quarter sales of $651 million, compared with $649 million a year earlier. Operating profit was $131 million, essentially unchanged from the third quarter of 2025.

Fitzgerald said lubricant-additive market softness contributed to an 8% decline in third-quarter shipments. However, the company implemented surcharges intended to offset higher costs tied to supply-chain disruptions in the Middle East.

For the first nine months of 2026, petroleum additives sales totaled $1.9 billion, unchanged from the comparable 2025 period. Operating profit increased to $415 million from $413 million. Shipments fell 6% year over year, reflecting both softer demand and the company's decision during the first half of the year to reduce low-margin business.

The company said its petroleum additives teams continued to operate in an environment marked by geopolitical uncertainty, supply-chain disruptions, changing trade relations, tariffs and weaker lubricant-additive demand. NewMarket said it remains focused on operational efficiency, cost control, margin management, and investments in technology and its global manufacturing and supply network.

Specialty Materials Segment Posts Higher Sales and Profit

Specialty materials sales increased to $62 million in the third quarter from $38 million a year earlier, while operating profit rose to $16 million from $6 million.

Fitzgerald attributed the gains to a shift in shipment mix and the inclusion of the Calca Solutions business, which NewMarket acquired on Oct. 1, 2025. He noted that quarterly specialty materials results are expected to continue varying because of the nature of the business.

For the first nine months of 2026, specialty materials sales reached $187 million, compared with $134 million in the year-earlier period. Operating profit rose to $51 million from $40 million.

NewMarket said it remains encouraged by the segment's performance and by capacity expansion projects for ammonium perchlorate and high-purity hydrazine. The company expects those projects to be completed by the end of 2026 and said they are intended to strengthen its ability to support aerospace and defense applications.

Capital Returns and Balance Sheet

During the first nine months of 2026, NewMarket funded $88 million in capital expenditures, paid $83 million in dividends, and repurchased more than 200,000 shares for approximately $126 million.

The company said its net debt-to-EBITDA ratio improved to 1 times as of Sept. 30, 2026.

Outlook

Looking toward the remainder of 2026, NewMarket said it is monitoring the Middle East conflict, the broader macroeconomic environment, and developments involving international trade relations and tariffs.

The company said surcharges and operational actions implemented earlier in the year remain in place, though management plans to adjust its approach as market conditions evolve. Fitzgerald said NewMarket believes those actions position it to continue producing solid results despite the dynamic operating environment.

About NewMarket (NYSE:NEU)

NewMarket Corporation NYSE: NEU is a holding company focused primarily on the development, manufacture and sale of petroleum additives. Its products are used to improve the performance, durability, efficiency and environmental characteristics of fuels, lubricants and other petroleum-based products.

NewMarket's principal operating businesses include Afton Chemical Corporation and Ethyl Corporation. Afton Chemical develops and supplies additive packages and components for engine oils, transmission fluids, hydraulic fluids, fuels and other industrial applications.

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