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8-K - FORM 8-K - NEWMARKET CORPd913725d8k.htm
EX-99.2 - EX-99.2 - NEWMARKET CORPd913725dex992.htm

Exhibit 99.1

NEWMARKET CORPORATION REPORTS FIRST QUARTER 2015 RESULTS

 

    Net Income of $63.9 Million, Up 11% Compared to First Quarter 2014

 

    Record First Quarter Shipments, Up 1.5% Over First Quarter 2014

 

    Petroleum Additives Operating Profit up 9% Over First Quarter 2014

Richmond, VA, April 22, 2015 – NewMarket Corporation (NYSE:NEU) Chairman and Chief Executive Officer, Thomas E. Gottwald, released the following earnings report of the Company’s operations for the first quarter of 2015.

Net income for the first quarter of 2015 increased to $63.9 million, or $5.14 per share, an improvement of 11.2% over net income for the first quarter of 2014 of $57.5 million, or $4.43 per share. Earnings for both the first quarter of this year and last year included an unfavorable impact from valuing an interest rate swap at fair value. Excluding this item, EPS for the first quarter of 2015 would have been $5.26 per share, compared to $4.54 per share for the first quarter of last year (see Summary of Earnings table below).

Petroleum additives began 2015 with quarterly operating profit of $105.0 million, representing an improvement of 9.2% over last year’s first quarter operating profit of $96.2 million. Lower raw material costs between the quarterly periods resulting from lower prices were the primary driver of the increase. Sales of petroleum additives for this year’s first quarter were $554.8 million, down 3.4% versus the same period last year, mainly due to changes in foreign currency rates. We had record first quarter shipments in 2015, which were up 1.5% over the prior year quarter.

During the quarter, we funded capital expenditures of $20.4 million primarily to support the construction of the Singapore plant. We also paid dividends of $17.4 million.

We are pleased with our performance and earnings results in the first quarter of this year. We have made significant investments in people, research and development activities, and technical and production facilities over the past several years, and expect to continue to do so in the future. Doing so will help to ensure that we are well-positioned to deliver goods and services our customers value while continuing to provide solid returns for our shareholders. We believe this long-term strategy will help us achieve our plan to exceed the industry growth rate, which is currently estimated to be 1% to 2% over the next five years.


     Summary of Earnings
(In millions, except per-share amounts)
 
     First Quarter Ended
March 31
 
     2015      2014  

Net Income:

     

Net income

   $ 63.9       $ 57.5   

Loss (gain) on interest rate swap agreement

     1.5         1.4   
  

 

 

    

 

 

 

Income excluding the above special items

$ 65.4    $ 58.9   
  

 

 

    

 

 

 

Diluted Earnings Per Share:

Net income

$ 5.14    $ 4.43   

Loss (gain) on interest rate swap agreement

  0.12      0.11   
  

 

 

    

 

 

 

Income excluding the above special items

$ 5.26    $ 4.54   
  

 

 

    

 

 

 

Sincerely,

Thomas E. Gottwald

The results for this year and last year include the impact of valuing an interest rate swap at fair value. The Company is reporting net income and related per share amounts including this item, as well as excluding it, in the Summary of Earnings included in the earnings release. The Segment Results and Other Financial Information table included in this earnings release includes a non-GAAP financial measure, Income before Special Items and Income Tax Expense, which is reconciled to a GAAP measure. 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 3:00 p.m. EDT on Thursday, April 23, 2015 to review first quarter 2015 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 April 30, 2015 at 11:59 p.m. EDT by dialing 1-877-660-6853 (domestic) and 1-201-612-7415 (international). The conference ID number is 13605985. 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 distribution systems; disruptions at manufacturing facilities, including single-sourced facilities; ability to respond effectively to technological changes in our industry; failure to protect our intellectual property rights; failure to attract and retain a highly-qualified workforce; hazards common to chemical businesses; competition from other manufacturers; sudden or sharp raw material price increases; gain or loss of significant customers; occurrence or threat of extraordinary events, including natural disasters and terrorist attacks; risks related to operating outside of the United States; the impact of fluctuations in foreign exchange rates; an information technology system failure; political, economic,


and regulatory factors concerning our products; future governmental regulation; resolution of environmental liabilities or legal proceedings; and 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 2014 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:

Brian D. Paliotti

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)

 

     Three Months Ended
March 31,
 
     2015     2014  

Revenue:

    

Petroleum additives

   $ 554,765      $ 574,045   

All other (a)

     4,801        2,377   
  

 

 

   

 

 

 

Total

$ 559,566    $ 576,422   
  

 

 

   

 

 

 

Segment operating profit:

Petroleum additives

$ 105,025    $ 96,179   

All other (a)

  2,099      535   
  

 

 

   

 

 

 

Segment operating profit

  107,124      96,714   

Corporate unallocated expense

  (7,015   (6,553

Interest and financing expenses

  (3,816   (4,164

Other (expense) income, net

  (248   31   
  

 

 

   

 

 

 

Income before special items and income tax expense

  96,045      86,028   

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

  (2,408   (2,233
  

 

 

   

 

 

 

Income before income tax expense

$ 93,637    $ 83,795   
  

 

 

   

 

 

 

Net income

$ 63,947    $ 57,523   
  

 

 

   

 

 

 

Earnings per share - basic and diluted

$ 5.14    $ 4.43   
  

 

 

   

 

 

 

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.


NEWMARKET CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

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

 

     Three Months Ended
March 31,
 
     2015     2014  

Net sales

   $ 559,566      $ 576,422   

Cost of goods sold

     378,294        414,492   
  

 

 

   

 

 

 

Gross profit

  181,272      161,930   

Selling, general, and administrative expenses

  41,809      39,548   

Research, development, and testing expenses

  39,685      32,207   
  

 

 

   

 

 

 

Operating profit

  99,778      90,175   

Interest and financing expenses, net

  3,816      4,164   

Other income (expense), net

  (2,325   (2,216
  

 

 

   

 

 

 

Income before income tax expense

  93,637      83,795   

Income tax expense

  29,690      26,272   
  

 

 

   

 

 

 

Net income

$ 63,947    $ 57,523   
  

 

 

   

 

 

 

Earnings per share - basic and diluted

$ 5.14    $ 4.43   
  

 

 

   

 

 

 

Cash dividends declared per share

$ 1.40    $ 1.10   
  

 

 

   

 

 

 

Notes to Consolidated Statements of Income

On June 25, 2009, we entered into an interest rate swap. Other income (expense), net includes the loss on the interest rate swap of $2.4 million for the three months ended March 31, 2015 and $2.2 million for the three months ended March 31, 2014. 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.


NEWMARKET CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, unaudited)

 

     March 31,
2015
    December 31,
2014
 

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 119,243      $ 103,003   

Trade and other accounts receivable, less allowance for doubtful accounts ($467 - 2015; $443 - 2014)

     303,334        302,803   

Inventories

     345,414        348,420   

Deferred income taxes

     5,487        7,837   

Prepaid expenses and other current assets

     37,873        35,128   
  

 

 

   

 

 

 

Total current assets

  811,351      797,191   
  

 

 

   

 

 

 

Property, plant, and equipment, at cost

  1,025,540      1,016,868   

Less accumulated depreciation and amortization

  706,970      709,009   
  

 

 

   

 

 

 

Net property, plant, and equipment

  318,570      307,859   
  

 

 

   

 

 

 

Prepaid pension cost

  16,693      16,082   

Deferred income taxes

  50,544      48,499   

Intangibles (net of amortization) and goodwill

  15,260      16,859   

Deferred charges and other assets

  45,252      45,435   
  

 

 

   

 

 

 

Total assets

$ 1,257,670    $ 1,231,925   
  

 

 

   

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$ 136,325    $ 137,688   

Accrued expenses

  78,661      86,539   

Dividends payable

  15,738      15,721   

Income taxes payable

  21,237      6,462   

Other current liabilities

  5,173      13,264   
  

 

 

   

 

 

 

Total current liabilities

  257,134      259,674   
  

 

 

   

 

 

 

Long-term debt

  373,541      363,526   

Other noncurrent liabilities

  184,105      187,684   

Shareholders’ equity:

Common stock and paid-in capital (without par value); issued and outstanding - 12,443,241 in 2015 and 12,446,365 in 2014

  426      —     

Accumulated other comprehensive loss

  (163,467   (139,160

Retained earnings

  605,931      560,201   
  

 

 

   

 

 

 

Total shareholders’ equity

  442,890      421,041   
  

 

 

   

 

 

 

Total liabilities and shareholders’ equity

$ 1,257,670    $ 1,231,925   
  

 

 

   

 

 

 


NEWMARKET CORPORATION AND SUBSIDIARIES

SELECTED CONSOLIDATED CASH FLOW DATA

(In thousands, unaudited)

 

     Three Months Ended
March 31,
 
     2015     2014  

Net income

   $ 63,947      $ 57,523   

Depreciation and amortization

     10,186        10,258   

Cash pension and postretirement contributions

     (6,730     (5,202

Noncash pension and postretirement expense

     5,837        3,654   

Working capital changes

     (13,806     (66,764

Capital expenditures

     (20,424     (9,251

Net borrowings under revolving credit facility

     10,000        6,000   

Repurchases of common stock

     (1,042     (77,061

Dividends paid

     (17,421     (14,200

All other

     (14,307     2,997   
  

 

 

   

 

 

 

Increase (decrease) in cash and cash equivalents

$ 16,240    $ (92,046
  

 

 

   

 

 

 


NEWMARKET CORPORATION AND SUBSIDIARIES

NON-GAAP FINANCIAL INFORMATION

(In thousands, unaudited)

 

     Three Months Ended
March 31,
 
     2015      2014  

Net Income

   $ 63,947       $ 57,523   

Add:

     

Interest and financing expenses, net

     3,816         4,164   

Income tax expense

     29,690         26,272   

Depreciation and amortization

     9,914         9,903   
  

 

 

    

 

 

 

EBITDA

  107,367      97,862   

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

  2,408      2,233   
  

 

 

    

 

 

 

EBITDA, as adjusted

$ 109,775    $ 100,095