Exhibit 99.1
NEWMARKET CORPORATION REPORTS FIRST QUARTER RESULTS
| | • | | Recurring First Quarter Income Up 41 Percent |
| | • | | $6.8 Million of Common Stock Repurchased Without Additional Borrowing |
Richmond, VA, April 23, 2008 – NewMarket Corporation (NYSE – NEU) President and Chief Executive Officer, Thomas E. Gottwald, released the following earnings report for the company’s operations for the first quarter 2008.
Income from continuing operations for the first quarter 2008 was $19.8 million, an increase of 41 percent over earnings on the same basis for the first quarter of 2007 of $14 million. Our earnings per share from continuing operations for the first quarter 2008, which includes the benefit of our share buyback activities, was $1.27, an increase of 59 percent over earnings per share on the same basis for the first quarter of 2007 of $0.80. While there was no income from discontinued operations in the first quarter of 2008, first quarter 2007 included income from discontinued operations of $2.2 million resulting in net income of $16.2 million, or $0.93 per share. The increase in first quarter 2008 results reflects the continuing strong performance of the petroleum additives business.
Petroleum additives sales in the first quarter 2008 grew to $380.6 million, an increase of 24 percent over sales for the first quarter of last year of $306.9 million. The growth in sales included the benefit of higher shipments in both the lubricant and fuels operations, favorable currency impacts and somewhat higher selling prices. Operating profit for petroleum additives for the first quarter of 2008 improved to $37.7 million, an increase of 30 percent over operating profit of $29 million in the first quarter of 2007. The improved results come from several of our product lines, favorable currency impacts, and also include the benefit of a $3.2 million gain on a legal settlement in the first quarter of this year. Excluding the benefit of this settlement gain, petroleum additives operating profit was up 19 percent. The continued improvement in petroleum additives reflects our success in delivering cost-effective products and services that support our customers’ needs. We continue to experience upward pricing pressure on several of our key raw materials and are pursuing pricing actions in the marketplace to recover these costs.
During the first quarter of 2008, the company purchased 124,855 shares of our common stock for $6.8 million, at an average price of $54.55 per share.
At the end of the first quarter of 2008, our cash position was $48 million, a decrease of $23.8 million from the year-end 2007 balance of $71.8 million. The major use of cash was a significant increase in working capital of approximately $39 million. Both inventory and receivable amounts have increased in line with the growth of the petroleum additives operations. They also have increased due to rising raw material costs and our raising prices to recover those costs. Cash outflows in the first quarter are normally high due to the required payments under certain of our supply agreements, timing of insurance premiums and payment of management incentives. The reduction in cash also included the $6.8 million repurchase of stock.
We are very pleased with the strong start made in the first quarter of 2008. Our petroleum additives business continues to deliver improved results by delivering products that bring value to our customers. Our financial position continues to grow stronger enhancing our capabilities for future growth and improving shareholder value.
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| Sincerely, |
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| Thomas E. Gottwald |
As a reminder, a conference call and Internet web cast is scheduled for 10 a.m. EDT on Friday, April 25, 2008, to review first quarter 2008 financial results. You can access the conference call live by dialing 1-877-407-8031 (domestic) or 1-201-689-8031 (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 atwww.NewMarket.com orwww.investorcalendar.com. A teleconference replay of the call will be available until May 2, 2008 at 11:59 p.m. EDT by dialing 1-877-660-6853 (domestic) and 1-201-612-7415 (international). The account number is 286. The conference ID number is 281601. 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 chemical blends to market-general additive components, the NewMarket family of companies provides the world with the technology to make fuels burn cleaner, engines run smoother and machines last longer.
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: timing of sales orders; gain or loss of significant customers; competition from other manufacturers; resolution of environmental liabilities; changes in the demand for our products; significant changes in new product introduction; increases in product cost and our ability to increase prices; the impact of fluctuations in foreign exchange rates on reported results of operations; changes in various markets; geopolitical risks in certain of the countries in which we conduct business; our ability to complete construction of the office building for MeadWestvaco within budget and in a timely manner; 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 2007 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 millions except per share amounts, unaudited)
| | | | | | | | |
| | | Three Months Ended
March 31 | |
| | | 2008 | | | 2007 | |
Net sales: | | | | | | | | |
Petroleum additives | | $ | 380.6 | | | $ | 306.9 | |
All other (a) | | | 1.7 | | | | 2.9 | |
| | | | | | | | |
Total | | $ | 382.3 | | | $ | 309.8 | |
| | | | | | | | |
Segment operating profit: | | | | | | | | |
Petroleum additives (b) | | | 37.7 | | | | 29.0 | |
All other (a) | | | (1.4 | ) | | | (1.2 | ) |
| | | | | | | | |
Segment operating profit | | | 36.3 | | | | 27.8 | |
Corporate unallocated expense | | | (3.9 | ) | | | (3.9 | ) |
Interest expense | | | (3.0 | ) | | | (3.0 | ) |
Other income, net | | | 0.6 | | | | 0.4 | |
| | | | | | | | |
Income from continuing operations before income taxes | | $ | 30.0 | | | $ | 21.3 | |
| | | | | | | | |
Net income: | | | | | | | | |
Income from continuing operations | | $ | 19.8 | | | $ | 14.0 | |
Discontinued operations (c) | | | — | | | | 2.2 | |
| | | | | | | | |
Net income | | $ | 19.8 | | | $ | 16.2 | |
| | | | | | | | |
Basic earnings per share: | | | | | | | | |
Income from continuing operations | | $ | 1.28 | | | $ | 0.81 | |
Discontinued operations (c) | | | — | | | | 0.13 | |
| | | | | | | | |
Basic earnings per share | | $ | 1.28 | | | $ | 0.94 | |
| | | | | | | | |
Diluted earnings per share: | | | | | | | | |
Income from continuing operations | | $ | 1.27 | | | $ | 0.80 | |
Discontinued operations (c) | | | — | | | | 0.13 | |
| | | | | | | | |
Diluted earnings per share | | $ | 1.27 | | | $ | 0.93 | |
| | | | | | | | |
Notes to Segment Results and Other Financial Information
| (a) | During the second quarter 2007 and after the settlement of the Arbitration Actions with Innospec Inc. (Arbitration Actions) and the resulting termination of the tetraethyl lead (TEL) marketing agreements with Innospec Inc. (see note c), we determined the continuing operations of our TEL business no longer represented a significant segment. As a result, we have reclassified the continuing results of our TEL business in the “All other” caption above. Also included in the “All other” caption is certain contract manufacturing of Ethyl Corporation and the real estate development activities. |
| (b) | Petroleum additives segment operating profit in 2008 includes a gain of $3.2 million from a class action lawsuit related to raw materials. |
| (c) | Discontinued operations reflect the termination of the TEL marketing agreements with Innospec Inc. effective April 1, 2007. The 2007 amount represents the after tax earnings of the discontinued business. |
NEWMARKET CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share amounts, unaudited)
| | | | | | |
| | | Three Months Ended
March 31 |
| | | 2008 | | 2007 |
Net sales | | $ | 382,350 | | $ | 309,796 |
Cost of goods sold (a) | | | 300,747 | | | 240,367 |
| | | | | | |
Gross profit | | | 81,603 | | | 69,429 |
Selling, general, and administrative expenses | | | 28,773 | | | 26,755 |
Research, development, and testing expenses | | | 20,229 | | | 18,811 |
| | | | | | |
Operating profit | | | 32,601 | | | 23,863 |
Interest and financing expenses | | | 3,015 | | | 2,962 |
Other income, net | | | 379 | | | 390 |
| | | | | | |
Income from continuing operations before income taxes | | | 29,965 | | | 21,291 |
Income tax expense | | | 10,193 | | | 7,266 |
| | | | | | |
Income from continuing operations | | | 19,772 | | | 14,025 |
Discontinued operations (b): | | | | | | |
Income from operations of discontinued business (net of tax) | | | — | | | 2,217 |
| | | | | | |
Net income | | $ | 19,772 | | $ | 16,242 |
| | | | | | |
Basic earnings per share | | | | | | |
Income from continuing operations | | $ | 1.28 | | $ | 0.81 |
Discontinued operations (b) | | | — | | | 0.13 |
| | | | | | |
| | $ | 1.28 | | $ | 0.94 |
| | | | | | |
Diluted earnings per share | | | | | | |
Income from continuing operations | | $ | 1.27 | | $ | 0.80 |
Discontinued operations (b) | | | — | | | 0.13 |
| | | | | | |
| | $ | 1.27 | | $ | 0.93 |
| | | | | | |
Shares used to compute basic earnings per share | | | 15,459 | | | 17,294 |
| | | | | | |
Shares used to compute diluted earnings per share | | | 15,558 | | | 17,412 |
| | | | | | |
Cash dividends declared per share | | $ | 0.20 | | $ | 0.125 |
| | | | | | |
Notes to Consolidated Statements of Income
| (a) | Cost of goods sold in 2008 includes a gain of $3.2 million from a class action lawsuit related to raw materials. |
| (b) | Discontinued operations reflect the termination of the TEL marketing agreements with Innospec Inc. effective April 1, 2007. The income from operations for the 2007 period represents the after tax earnings of the discontinued operations. Income from operations before tax amounted to $3.5 million for the three months 2007. |
NEWMARKET CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, unaudited)
| | | | | | | | |
| | | March 31
2008 | | | December 31
2007 | |
ASSETS | | | | | | | | |
Current assets: | | | | | | | | |
Cash and cash equivalents | | $ | 48,030 | | | $ | 71,872 | |
Restricted cash | | | 190 | | | | 190 | |
Trade and other accounts receivable, less allowance for doubtful accounts ($1,059 - 2008; $1,059 - 2007) | | | 236,107 | | | | 207,190 | |
Inventories | | | 206,282 | | | | 193,694 | |
Deferred income taxes | | | 14,871 | | | | 18,727 | |
Prepaid expenses | | | 6,500 | | | | 3,368 | |
| | | | | | | | |
Total current assets | | | 511,980 | | | | 495,041 | |
| | | | | | | | |
Property, plant and equipment, at cost | | | 804,479 | | | | 789,634 | |
Less accumulated depreciation and amortization | | | 609,143 | | | | 606,072 | |
| | | | | | | | |
Net property, plant and equipment | | | 195,336 | | | | 183,562 | |
| | | | | | | | |
Prepaid pension cost | | | 3,737 | | | | 2,616 | |
Deferred income taxes | | | 23,937 | | | | 21,396 | |
Other assets and deferred charges | | | 21,507 | | | | 22,764 | |
Intangibles, net of amortization | | | 44,017 | | | | 45,555 | |
| | | | | | | | |
Total assets | | $ | 800,514 | | | $ | 770,934 | |
| | | | | | | | |
| | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | |
| | |
Current liabilities: | | | | | | | | |
Accounts payable | | $ | 118,608 | | | $ | 104,636 | |
Accrued expenses | | | 48,494 | | | | 57,043 | |
Dividends payable | | | 2,802 | | | | 3,154 | |
Book overdraft | | | 4,336 | | | | 6,249 | |
Long-term debt, current portion | | | 747 | | | | 736 | |
Income taxes payable | | | 8,689 | | | | 5,843 | |
| | | | | | | | |
Total current liabilities | | | 183,676 | | | | 177,661 | |
| | | | | | | | |
Long-term debt | | | 162,216 | | | | 157,061 | |
Other noncurrent liabilities | | | 123,627 | | | | 119,205 | |
Shareholders’ equity | | | | | | | | |
Common stock and paid in capital (without par value) Issued and Outstanding - 15,482,370 in 2008 and 15,566,225 in 2007 | | | 864 | | | | 5,235 | |
Accumulated other comprehensive loss | | | (31,101 | ) | | | (34,360 | ) |
Retained earnings | | | 361,232 | | | | 346,132 | |
| | | | | | | | |
| | | 330,995 | | | | 317,007 | |
| | | | | | | | |
Total liabilities and shareholders’ equity | | $ | 800,514 | | | $ | 770,934 | |
| | | | | | | | |
