Exhibit 99.1
NEWMARKET CORPORATION REPORTS FIRST QUARTER 2010 RESULTS
| • | Petroleum Additives Operating Profit Improves 41 Percent |
| • | Polartech Acquisition Completed |
| • | Repurchased 168,549 Shares of Common Stock |
Richmond, VA, April 21, 2010 – NewMarket Corporation (NYSE – NEU) President and Chief Executive Officer, Thomas E. Gottwald, released the following earnings report of the Company’s operations for the first quarter 2010.
Net income for the first quarter 2010 increased to $42.1 million, or $2.78 per share, an improvement of 47 percent over net income for the first quarter of 2009 of $28.7 million, or $1.88 per share.
First quarter 2010 results reflect another strong performance in petroleum additives with operating profit improving to $70.4 million. This represents an improvement of 41 percent over operating profit for the first quarter of last year of $50.1 million. The increase reflects the benefit of higher lubricant additives operating profits. Sales of petroleum additives in the first quarter of this year increased to $389.3 million, an increase of 16 percent from sales for the first quarter of last year of $334.8 million. Shipments increased 21 percent for the first quarter over the same period last year predominately in the lubricant additives product lines. Shipments were especially weak in the first two months of last year and are now at a level we believe is near normal. Our petroleum additives group continues to focus on providing our customers with the innovative products they need to serve this market as evidenced by the increased investment we have made in research and development.
This continued strong operating performance strengthens our financial position by providing excellent cash flow. During the first quarter of this year, we utilized cash on hand to acquire Polartech, a leading metalworking additive company, and to purchase 168,549 shares of our common stock at an average price of $84.70 per share. We also reduced debt on Foundry Park I by over $30 million and obtained five year financing to repay the construction loan that was due later this year. Our cash position remains strong with a balance of $88 million at the end of the quarter, compared to a cash balance of $151.8 million at year end 2009.
We are pleased with our performance in the first quarter of this year. Our investments in geographic expansion have led to improvements in all regions. During the quarter, we welcomed over 100 employees of Polartech into our corporate family and are excited about integrating this business and expanding our global footprint with the production facilities in India and China. Our investments in research and development have positioned us well to meet new industry specifications and increased customer requirements, and we continue to make the investments in people, technology and facilities in order to help our customers meet their needs and to continue to succeed in this marketplace.
Sincerely,
Thomas E. Gottwald
As a reminder, a conference call and Internet webcast is scheduled for 3:00 p.m. EDT on Thursday, April 22, 2010, to review first quarter 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 atwww.NewMarket.com orwww.investorcalendar.com. A teleconference replay of the call will be available until April 29, 2010 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 349178. 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: availability of raw materials and transportation systems; ability to respond effectively to technological changes in our industry; supply disruptions at single sourced facilities; failure to protect our intellectual property rights; political, economic, and regulatory factors concerning our products; 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; 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 2009 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 | ||||||||
| 2010 | 2009 | |||||||
Revenue: | ||||||||
Petroleum additives | $ | 389.3 | $ | 334.8 | ||||
Real estate development | 2.9 | — | ||||||
All other (a) | 2.9 | 2.3 | ||||||
Total | $ | 395.1 | $ | 337.1 | ||||
Segment operating profit: | ||||||||
Petroleum additives | $ | 70.4 | $ | 50.1 | ||||
Real estate development | 1.8 | (0.2 | ) | |||||
All other (a) | 0.9 | (0.5 | ) | |||||
Segment operating profit | 73.1 | 49.4 | ||||||
Corporate unallocated expense | (4.2 | ) | (3.5 | ) | ||||
Interest and financing expenses | (3.9 | ) | (2.9 | ) | ||||
Loss on an interest rate swap agreement (b) | (2.4 | ) | — | |||||
Other (expense), net | (0.1 | ) | — | |||||
Income before income tax expense | $ | 62.5 | $ | 43.0 | ||||
Net income | $ | 42.1 | $ | 28.7 | ||||
Basic earnings per share | $ | 2.79 | $ | 1.89 | ||||
Diluted earnings per share | $ | 2.78 | $ | 1.88 | ||||
Notes to Segment Results and Other Financial Information
| (a) | “All other” includes the results of our TEL business, as well as certain contract manufacturing of Ethyl Corporation. |
| (b) | The loss 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 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 | ||||||
| 2010 | 2009 | |||||
Revenue: | ||||||
Net sales - product | $ | 392,265 | $ | 337,128 | ||
Rental revenue | 2,861 | — | ||||
| 395,126 | 337,128 | |||||
Costs: | ||||||
Cost of goods sold - product | 273,628 | 246,054 | ||||
Cost of rental | 1,090 | — | ||||
| 274,718 | 246,054 | |||||
Gross profit | 120,408 | 91,074 | ||||
Selling, general, and administrative expenses | 30,574 | 26,267 | ||||
Research, development, and testing expenses | 21,083 | 18,754 | ||||
Operating profit | 68,751 | 46,053 | ||||
Interest and financing expenses | 3,949 | 2,936 | ||||
Other expense, net(a) | 2,311 | 80 | ||||
Income before income tax expense | 62,491 | 43,037 | ||||
Income tax expense | 20,353 | 14,349 | ||||
Net income | $ | 42,138 | $ | 28,688 | ||
Basic earnings per share | $ | 2.79 | $ | 1.89 | ||
Diluted earnings per share | $ | 2.78 | $ | 1.88 | ||
Shares used to compute basic earnings per share | 15,118 | 15,203 | ||||
Shares used to compute diluted earnings per share | 15,154 | 15,241 | ||||
Cash dividends declared per share | $ | 0.375 | $ | 0.20 | ||
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 $2.4 million for the three months ended March 31, 2010. We are not using hedge accounting to record 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 2010 | December 31 2009 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 87,971 | $ | 151,831 | ||||
Short-term investments | 300 | 300 | ||||||
Trade and other accounts receivable, less allowance for doubtful accounts ($1,156 - 2010; $1,195 - 2009) | 214,026 | 214,887 | ||||||
Inventories | 202,787 | 192,903 | ||||||
Deferred income taxes | 4,064 | 4,118 | ||||||
Prepaid expenses and other current assets | 35,660 | 39,100 | ||||||
Total current assets | 544,808 | 603,139 | ||||||
Property, plant and equipment, at cost | 932,595 | 934,382 | ||||||
Less accumulated depreciation and amortization | 633,537 | 631,967 | ||||||
Net property, plant and equipment | 299,058 | 302,415 | ||||||
Prepaid pension cost | 3,228 | 2,430 | ||||||
Deferred income taxes | 36,756 | 34,670 | ||||||
Other assets and deferred charges | 88,096 | 37,475 | ||||||
Intangibles, net of amortization and goodwill | 42,885 | 45,063 | ||||||
Total assets | $ | 1,014,831 | $ | 1,025,192 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 87,025 | $ | 88,186 | ||||
Accrued expenses | 56,571 | 63,775 | ||||||
Dividends payable | 4,936 | 4,992 | ||||||
Book overdraft | 2,994 | 2,230 | ||||||
Long-term debt, current portion | 3,357 | 33,881 | ||||||
Income taxes payable | 16,163 | 4,988 | ||||||
Total current liabilities | 171,046 | 198,052 | ||||||
Long-term debt | 215,611 | 216,200 | ||||||
Other noncurrent liabilities | 154,457 | 152,755 | ||||||
Shareholders’ equity | ||||||||
Common stock and paid in capital (without par value) Issued and Outstanding - 15,042,440 in 2010 and 15,209,989 in 2009 | — | 275 | ||||||
Accumulated other comprehensive loss | (81,477 | ) | (74,784 | ) | ||||
Retained earnings | 555,194 | 532,694 | ||||||
| 473,717 | 458,185 | |||||||
Total liabilities and shareholders’ equity | $ | 1,014,831 | $ | 1,025,192 | ||||