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EXHIBIT 99.1

NEWMARKET CORPORATION REPORTS SECOND QUARTER AND FIRST HALF 2014 RESULTS

 

    NewMarket Posts Second Quarter Net Income of $66.8 Million and Earnings Per Share of $5.24

 

    Petroleum Additives Second Quarter Operating Profit of $109 Million

 

    222,200 Shares Repurchased in Second Quarter

 

    Ground Broken for New Manufacturing Facility in Singapore

Richmond, VA, July 29, 2014 – NewMarket Corporation (NYSE:NEU) President and Chief Executive Officer, Thomas E. Gottwald, released the following earnings report of the Company’s operations for the second quarter and first half of 2014.

Net income for the second quarter of 2014 was $66.8 million, or $5.24 per share, compared to net income of $64.0 million, or $4.81 per share, for the second quarter of 2013. For the first half of 2014, net income was $124.3 million, or $9.66 per share, compared to net income of $131.8 million, or $9.88 per share, for the first half of last year.

Net income for all periods included the impact of valuing an interest rate swap at fair value, while both periods last year included the results from operations of a discontinued business. Excluding these items, second quarter 2014 earnings were $68.2 million, or $5.35 per share, compared to $61.3 million, or $4.61 per share, last year. On the same basis, earnings for the first half of this year were $127.0 million, or $9.87 per share, compared to $127.8 million, or $9.58 per share, last year (see Summary of Earnings table below).

In our petroleum additives segment, sales for this year’s second quarter were $617.5 million compared to sales for the same period last year of $581.3 million, with shipments up a strong 7.2% to record levels. Operating profit reached $109.1 million, an 11.6% improvement over second quarter operating profit last year of $97.8 million. For the first half of this year, petroleum additives operating profit was $205.3 million compared to operating profit for the same period last year of $199.8 million. Sales for the first half of this year were $1.2 billion compared to sales in the first half of last year of $1.1 billion, with shipments up 6.6%.

In late June, we broke ground on the site of our previously announced manufacturing facility in Jurong Island, Singapore. Our initial investment of over $100 million demonstrates the Company’s commitment to serving the Asia Pacific and Middle East markets. This facility will help improve our security of supply, reduce customer lead-times for the delivery of our products, and help us grow in support of our customers. We expect the plant to become operational during the fourth quarter of 2015.

During the second quarter, we repurchased 222,200 shares of our stock at a cost of $85.8 million. At the end of June, we had $337.9 million remaining on our stock repurchase authorization, and we had 12.6 million shares outstanding.


We are pleased with the results of our petroleum additives segment and the overall performance of our business during the first half of this year. We are making the investments necessary to support our customers around the world, both now and in the future, and we expect these investments to allow us to continue to provide solid returns for our shareholders.

 

     Summary of Earnings  
     (In millions, except per-share amounts)  
     Second Quarter Ended     Six Months Ended  
     June 30     June 30  
     2014      2013     2014      2013  

Net Income:

          

Net income

   $ 66.8       $ 64.0      $ 124.3       $ 131.8   

Loss (income) from operations of discontinued business

     —           0.4        —           (0.5

Loss (gain) on interest rate swap agreement

     1.4         (3.1     2.7         (3.5
  

 

 

    

 

 

   

 

 

    

 

 

 

Income excluding discontinued operations and special items

   $ 68.2       $ 61.3      $ 127.0       $ 127.8   
  

 

 

    

 

 

   

 

 

    

 

 

 

Diluted Earnings Per Share:

          

Net income

   $ 5.24       $ 4.81      $ 9.66       $ 9.88   

Loss (income) from operations of discontinued business

     —           0.03        —           (0.04

Loss (gain) on interest rate swap agreement

     0.11         (0.23     0.21         (0.26
  

 

 

    

 

 

   

 

 

    

 

 

 

Income excluding discontinued operations and special items

   $ 5.35       $ 4.61      $ 9.87       $ 9.58   
  

 

 

    

 

 

   

 

 

    

 

 

 

Please read our second quarter Form 10-Q for more details on operations of the Company.

Sincerely,

Thomas E. Gottwald

The results for all periods include the impact of valuing an interest rate swap at fair value, while both periods last year include the results from operations of a discontinued business. The Company is reporting net income including these items, as well as income excluding them, and related per share amounts in the Summary of Earnings included in the earnings release. The Company has also included the non-GAAP financial measure EBITDA in this earnings release. A schedule following the financial statements included in this earnings release is provided reflecting the calculation of EBITDA, defined as income from continuing operations, before the deduction of interest and financing expenses, income taxes, depreciation and amortization. EBITDA is shown on the schedule both including and excluding the interest rate swap agreement. The Company believes that even though these items are not required by or presented in accordance with United States generally accepted accounting principles (GAAP), these additional measures enhance understanding of the Company’s performance and period to period comparability. The Company believes that these items should not be considered an alternative to net income determined under GAAP.

As a reminder, a conference call and Internet webcast is scheduled for 10:00 a.m. EDT on Wednesday, July 30, 2014, to review second quarter and first half 2014 financial results. You can access the conference call live by dialing 1-877-407-9210 (domestic) or 1-201-689-8049 (international) and requesting the NewMarket conference call. To avoid delays, callers should dial in five minutes early. The call will also be broadcast via the Internet and can be accessed through the Company’s website at www.NewMarket.com or www.investorcalendar.com. A teleconference replay of the call will be available until August 6, 2014 at 11:59 p.m. EDT by dialing 1-877-660-6853 (domestic) and 1-201-612-7415 (international). The conference ID number is 13585986. A webcast replay will be available for 30 days.


NewMarket Corporation through its subsidiaries, Afton Chemical Corporation and Ethyl Corporation, develops, manufactures, blends, and delivers chemical additives that enhance the performance of petroleum products. From custom-formulated additive packages to market-general additives, the NewMarket family of companies provides the world with the technology to make engines run smoother, machines last longer and fuels burn cleaner.

Some of the information contained in this press release constitutes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although NewMarket’s management believes its expectations are based on reasonable assumptions within the bounds of its knowledge of its business and operations, there can be no assurance that actual results will not differ materially from expectations.

Factors that could cause actual results to differ materially from expectations include, but are not limited to: availability of raw materials and transportation systems; supply disruptions at single sourced facilities; ability to respond effectively to technological changes in our industry; failure to protect our intellectual property rights; hazards common to chemical businesses; occurrence or threat of extraordinary events, including natural disasters and terrorist attacks; competition from other manufacturers; sudden or sharp raw materials price increases; gain or loss of significant customers; risks related to operating outside of the United States; the impact of fluctuations in foreign exchange rates; political, economic, and regulatory factors concerning our products; future governmental regulation; resolution of environmental liabilities or legal proceedings; inability to complete future acquisitions or successfully integrate future acquisitions into our business and other factors detailed from time to time in the reports that NewMarket files with the Securities and Exchange Commission, including the risk factors in Item 1A, “Risk Factors” of our 2013 Annual Report on Form 10-K, which is available to shareholders upon request.

You should keep in mind that any forward-looking statement made by NewMarket in the foregoing discussion speaks only as of the date on which such forward-looking statement is made. New risks and uncertainties come up from time to time, and it is impossible for us to predict these events or how they may affect the company. We have no duty to, and do not intend to, update or revise the forward-looking statements in this discussion after the date hereof, except as may be required by law. In light of these risks and uncertainties, you should keep in mind that the events described in any forward-looking statement made in this discussion, or elsewhere, might not occur.

FOR INVESTOR INFORMATION CONTACT:

David A. Fiorenza

Investor Relations

Phone:   804.788.5555
Fax:   804.788.5688
Email:   investorrelations@newmarket.com


NEWMARKET CORPORATION AND SUBSIDIARIES

SEGMENT RESULTS AND OTHER FINANCIAL INFORMATION

(In thousands, except per-share amounts, unaudited)

 

     Second Quarter Ended     Six Months Ended  
     June 30,     June 30,  
     2014     2013     2014     2013  

Revenue:

        

Petroleum additives

   $ 617,504      $ 581,338      $ 1,191,549      $ 1,139,738   

All other (a)

     2,934        2,441        5,311        3,791   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 620,438      $ 583,779      $ 1,196,860      $ 1,143,529   
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment operating profit:

        

Petroleum additives

   $ 109,089      $ 97,790      $ 205,268      $ 199,818   

All other (a)

     858        183        1,393        (218
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment operating profit

     109,947        97,973        206,661        199,600   

Corporate unallocated expense

     (5,575     (5,189     (12,128     (10,405

Interest and financing expenses

     (4,346     (4,573     (8,510     (9,355

Other income, net

     161        570        192        674   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations before special items and income tax expense

     100,187        88,781        186,215        180,514   

(Loss) gain on an interest rate swap agreement (b)

     (2,270     5,098        (4,503     5,775   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations before income tax expense

   $ 97,917      $ 93,879      $ 181,712      $ 186,289   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income:

        

Income from continuing operations

   $ 66,764      $ 64,384      $ 124,287      $ 131,325   

Discontinued operations (c)

     —          (374     —          520   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 66,764      $ 64,010      $ 124,287      $ 131,845   
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic and diluted earnings per share:

        

Income from continuing operations

   $ 5.24      $ 4.84      $ 9.66      $ 9.84   

Discontinued operations (c)

     —          (0.03     —          0.04   
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic and diluted earnings per share

   $ 5.24      $ 4.81      $ 9.66      $ 9.88   
  

 

 

   

 

 

   

 

 

   

 

 

 

Notes to Segment Results and Other Financial Information

 

(a) “All other” includes the results of our tetraethyl lead (TEL) business, as well as certain contract manufacturing performed by Ethyl Corporation.
(b) The (loss) gain on an interest rate swap agreement represents the change, since the beginning of the reporting period, in the fair value of an interest rate swap which we entered into on June 25, 2009. We are not using hedge accounting to record the changes to fair value of the interest rate swap, and accordingly, any change in the fair value is immediately recognized in earnings.
(c) On July 2, 2013, Foundry Park I completed the sale of its real estate assets which comprised the entire real estate development segment. The operations of the real estate development segment are reported as discontinued operations.


NEWMARKET CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per-share amounts, unaudited)

 

     Second Quarter Ended     Six Months Ended  
     June 30,     June 30,  
     2014     2013     2014     2013  

Net sales

   $ 620,438      $ 583,779      $ 1,196,860      $ 1,143,529   

Cost of goods sold

     439,692        414,351        854,184        805,694   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     180,746        169,428        342,676        337,835   

Selling, general, and administrative expenses

     40,913        39,921        80,461        80,862   

Research, development, and testing expenses

     35,367        36,429        67,574        67,450   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating profit

     104,466        93,078        194,641        189,523   

Interest and financing expenses

     4,346        4,573        8,510        9,355   

Other (expense) income, net (a)

     (2,203     5,374        (4,419     6,121   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations before income tax expense

     97,917        93,879        181,712        186,289   

Income tax expense

     31,153        29,495        57,425        54,964   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations

     66,764        64,384        124,287        131,325   

Income from operations of discontinued business (net of tax) (b)

     —          (374     —          520   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 66,764      $ 64,010      $ 124,287      $ 131,845   
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic and diluted earnings per share:

        

Income from continuing operations

   $ 5.24      $ 4.84      $ 9.66      $ 9.84   

Discontinued operations (b)

     —          (0.03     —          0.04   
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic and diluted earnings per share

   $ 5.24      $ 4.81      $ 9.66      $ 9.88   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash dividends declared per share

   $ 1.10      $ 0.90      $ 2.20      $ 1.80   
  

 

 

   

 

 

   

 

 

   

 

 

 

Notes to Consolidated Statements of Income

 

(a) On June 25, 2009, we entered into an interest rate swap. The loss on the interest rate swap was $2.3 million for the quarter ended June 30, 2014 and $4.5 million for the six months ended June 30, 2014. The gain on the interest rate swap was $5.1 million for the quarter ended June 30, 2013 and $5.8 million for the six months ended June 30, 2013. We are not using hedge accounting to record the changes to fair value of the interest rate swap, and accordingly, any change in the fair value is immediately recognized in earnings.
(b) On July 2, 2013, Foundry Park I completed the sale of its real estate assets which comprised the entire real estate development segment. The operations of the real estate development segment are reported as discontinued operations. The income from operations for the 2013 period represents the after tax earnings of the discontinued business.


NEWMARKET CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, unaudited)

 

     June 30,     December 31,  
     2014     2013  

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 113,644      $ 238,703   

Trade and other accounts receivable, less allowance for doubtful accounts ($508 - 2014; $564 - 2013)

     347,630        309,847   

Inventories

     329,383        307,518   

Deferred income taxes

     6,346        8,267   

Prepaid expenses and other current assets

     36,029        32,984   
  

 

 

   

 

 

 

Total current assets

     833,032        897,319   
  

 

 

   

 

 

 

Property, plant, and equipment, at cost

     1,003,519        985,196   

Less accumulated depreciation and amortization

     713,072        700,160   
  

 

 

   

 

 

 

Net property, plant, and equipment

     290,447        285,036   
  

 

 

   

 

 

 

Prepaid pension cost

     61,882        55,087   

Deferred income taxes

     21,730        22,961   

Intangibles (net of amortization) and goodwill

     20,338        23,319   

Deferred charges and other assets

     44,921        43,552   
  

 

 

   

 

 

 

Total assets

   $ 1,272,350      $ 1,327,274   
  

 

 

   

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

    

Current liabilities:

    

Accounts payable

   $ 137,479      $ 134,132   

Accrued expenses

     73,006        77,992   

Dividends payable

     12,578        12,996   

Income taxes payable

     11,972        11,419   

Other current liabilities

     11,023        11,075   
  

 

 

   

 

 

 

Total current liabilities

     246,058        247,614   
  

 

 

   

 

 

 

Long-term debt

     353,497        349,467   

Other noncurrent liabilities

     159,298        157,745   

Shareholders’ equity

    

Common stock and paid-in capital (without par value); issued and outstanding - 12,644,790 in 2014 and 13,099,356 in 2013

     —          —     

Accumulated other comprehensive loss

     (48,807     (60,086

Retained earnings

     562,304        632,534   
  

 

 

   

 

 

 
     513,497        572,448   
  

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 1,272,350      $ 1,327,274   
  

 

 

   

 

 

 

 


NEWMARKET CORPORATION AND SUBSIDIARIES

SELECTED CONSOLIDATED CASH FLOW DATA

(In thousands, unaudited)

 

     Six Months Ended  
     June 30,  
     2014     2013  

Net income

   $ 124,287      $ 131,845   

Depreciation and amortization

     20,719        25,884   

Cash pension and postretirement contributions

     (10,407     (16,557

Noncash pension and postretirement expense

     7,183        11,064   

Working capital changes

     (65,654     (35,496

Capital expenditures

     (20,654     (31,849

Net borrowings (repayments) under revolving credit agreement

     4,000        (60,000

Repurchases of common stock

     (162,867     (26,798

Dividends paid

     (28,155     (23,980

All other

     6,489        10,303   
  

 

 

   

 

 

 

Decrease in cash and cash equivalents

   $ (125,059   $ (15,584
  

 

 

   

 

 

 


NEWMARKET CORPORATION AND SUBSIDIARIES

NON-GAAP FINANCIAL INFORMATION

(In thousands, unaudited)

 

     Second Quarter Ended     Six Months Ended  
     June 30,     June 30,  
     2014      2013     2014      2013  

Income from continuing operations

   $ 66,764       $ 64,384      $ 124,287       $ 131,325   

Add:

          

Interest and financing expenses

     4,346         4,573        8,510         9,355   

Income tax expense

     31,153         29,495        57,425         54,964   

Depreciation and amortization

     10,106         10,364        20,009         20,509   
  

 

 

    

 

 

   

 

 

    

 

 

 

EBITDA from continuing operations

     112,369         108,816        210,231         216,153   

Plus (less): loss (gain) on interest rate swap agreement

     2,270         (5,098     4,503         (5,775
  

 

 

    

 

 

   

 

 

    

 

 

 

EBITDA from continuing operations, as adjusted

   $ 114,639       $ 103,718      $ 214,734       $ 210,378