NEU - Earnings call transcript Q1 2018

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Operator

Greetings, and welcome to the NewMarket Corporation First Quarter 2018 Financial Results. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Brian Paliotti, Chief Financial Officer for NewMarket Corporation. Thank you. Mr. begin. may you Paliotti,

Brian Paliotti

and today for Chairman is Doug, afternoon. and us With me Teddy thanks, you, joining everyone, this CEO. Thank Gottwald, our

this contained forward-looking. including Form reminder, call differ cause SEC materially a some filings, forward-looking the our earnings to made As XX-K. statements release those are our of actual results recent will our factors Relevant during be from that in could most statements conference and

over We our were from non-GAAP $XX During $XX or year. website, last The earnings profit measure. this the or in additives we and across was to net a with $X a the $XX an a night’s measures in performance. region EPS amounts call, quarter with year’s versus million; the increase. year. release. period will record last million included saw equal $XX quarter of quarter all million. remaining in more price financial almost be the – the increase The shipments million Of $XXX.X the includes $X.XX X.X% decrease additives XXXX contributed sales of with take $XX $XX our Petroleum for comparable Petroleum year. quarter revenue, European increase sales in the up regions other the million company. about our of measure FX, with product filed was half same will million; X.X% contributing regions $X.XX and in earnings was the Petroleum from the XXXX XX% first to most of mix additives and million, the million, decrease of increase first of shipments of Please of release. the is release, was Net it last share an is shipments. of on the last to net year, lubricant share first or Asia lubricant is additive Europe than Latin be for and financial Pacific offset are can by an discuss contributing in due reconciliation prior primary higher which data increases Pacific $XX period this additives which to income non-GAAP increase which This operating was of offset increase partially and X.X% additive Asia income quarterly earnings fuel were that fuel million The financial GAAP lower the record main of America our were decrease contain included the this for compared by the and may review it. an improvement found to for a our primarily shipments, referring additives details regions time our drivers to in I the significantly slight in –which in operations XX-Q morning, same decreases last shipments. Latin last partially was on shipments, America. and shipments. performance

our selling the margin and a as compressed marketplace. the materials several when continue see than we margins Raw a will to and costs result. we on on and quarters, to been in two- is prices. stabilize first profitability a we quarter, our prolonged same Typically, story when have Regarding in implement recover last rising between the five-month the are been to able increase quarters. last rise the material been where recovery. raw pass lag the able material we’re have lag see This Raw have throughout as but six a the margins, increases costs there’s period faster cost until the

been there rest costs over We several no in committed of will to priority believe address and remain as the our continue past Margin improvement them. partially these pricing the top of seen we’ve quarters. have the will addressed margin we are actions compression fundamental increases reversing margins. quarter dynamics, have in quarter XX.X%, throughout the We rate through the due impacts changes to looking effective to our for same in industry our lower, The The was the the to tax and reform. the first was last the rate down tax from continue U.S. we XXXX of rate year. forward to are to XX.X% of period first recover year primarily

the expect an effective in range. XX% tax to we have year, For full rate the

CapEx capital. quarter, variations $XX million normal the working $XX funding include million, of On dividend using fund items of the and more cash of the our of flow to for note cash

debt low very with complete operate happy I’m year. way Phase is Singapore net plant that with some more manufacturing report remaining to below started production leverage a our EBITDA the X on this with continue to and commercial We to X.X times. of

And In capacity together, the with into should with investments to they globe. serve our us contributing these system. addition, provide we’re the the integration of the pleased progresses. be year our will and Mexican the growing to around of of acquisition Both our bottom as our needs capability line customers more

significant level to our since the expect of plant. our lowest XXXX. will CapEx $XXX Singapore see expenditure million versus our of we a decrease completion in be to XXXX, range, level in million reflecting capital $XXX For the XXXX,

concludes grow that improve to shareholder and value services the Doug, to made ability new We’d technical to we These intend and up people, and the customers goods Over investments that significant to like around our value. for use to and we’ve past centers world. capabilities open technology, planned our expand comments. our capacity, capabilities production the in have several the to our deliver questions. line been years, the investments these

Operator

Instructions] now We Dmitry of the the from Research. first Longbow [Operator be question line Silversteyn Our question-and-answer session. comes conducting will from

Dmitry Silversteyn

question at year-over-year. for But me additives you it’s to said my that you revenue number. contributor $X.X taking clarify down fuel what tells the Yes, I just XX-Q, want thank I shipments it look your your when million being to about

Brian Paliotti

shipments Yes, combined. that’s mix and

Dmitry Silversteyn

Okay.

went volumes up, and that went mix down. actually It’s it. got Okay,

Okay, that explains that.

million your is this income. Usually, hefty plus looking sort a P&L, other or in just quarter. of per $X.X at million Secondly, you minus $X.X pretty had

that? or least item income that year? the So of benefits the to went be what should for were balance line charges or what think would into And that I we onetime how about assume unusual at

Brian Paliotti

Sure, Dmitry.

the pension. accounting we is that of on changes change One standards implemented the

point see the And that other And you out to and income, some of to persist move that additives million into so that income, from of and in other in the million profit $X impact petroleum was operating will this forward. range. $X

Dmitry Silversteyn

Okay.

was dollars one down that your was reclassification. why of they Part it much of as reasons were So additives. as were in the EBIT

Brian Paliotti

That’s correct.

Dmitry Silversteyn

Okay.

Okay, that’s helpful.

typically. not with you time-to-time debt as happen happens something up Secondly, from versus I It quarterly, went does fourth your the back. guys look quarter, that

that, level? So will getting what you funding what debt-to-EBITDA end Do And what amount particular plans year at? a working of paying are the driver the was or to that net – you for down particular than think you do have other a that capital?

Brian Paliotti

Your – cash. can it well, Certainly, results working you normal the variation. was use capital the of as the see was in

We to to in have where From we the and of of want million at that business X.X debt-to-EBITDA, times. in note. nothing so the We went times. X we’re X.X operate debt fixed $XXX net perspective of

raw want first quarter. look it, in we’re and range increase inventory sales to So material, in in the at at the that we the the rise we operate. where impacts typical impacts Obviously, with way the receivables

Dmitry Silversteyn

Okay.

going where the you end to So had you’re then the time same somewhere had it. and up basically, probably down up along you slight

Brian Paliotti

And we’re to to going on year as add be this well. to that, CapEx down Dmitry,

Dmitry Silversteyn

XX-K that the the should share or – Okay, press in should count? full I your so that see help. release was say? or in What diluted I didn’t XX-Q,

Brian Paliotti

quarter? first share in an From or outstanding what bought the we back

Dmitry Silversteyn

fully or is use From what you average the diluted at the your of to the end quarter, share count EPS? your for whatever calculate quarter

Brian Paliotti

exact get $XX,XXX,XXX. is can I It the you amount.

Dmitry Silversteyn

$XX,XXX.

cool. Okay,

fourth I it million up quarter, price X.X%, about calculate that think Your better increase I had in $X.X little delivered. obviously. price was than It’s if was you a the the

enough as to you’re the material mean, year try be seems Looking your at it’s From offset the we to reading, I’m of increases continuing How the to sort get dilution. price I about unfolds? materials. the everything to onboard I’m think of everybody increases. announcements lot so pricing there, not prior raw progression margins, price realization should with assuming there’s raw a out of offset nearly to

renegotiate time So at contracts is a matter of it to or reset particular contracts date? these the to just a

Teddy Gottwald

Teddy. priority to It’s one on our top those this recover very is much mind Dmitry, of number It’s now. for right margins. us

working at We’re it.

we the in comments, be the moving up. As moving because target said it a keep raw continues to materials

Brian costs as we with We’re And going we’re see leveling continue going we to play catch-up. doing to mentioned, it. the and until best can, to we’re continue out,

Dmitry Silversteyn

the finish I’m could price somewhere first if year and in the through realization? But expect the quarters remaining of of and the progression sort done what I of quarter, north you’ve guys given you three to fourth at Okay. X% looking year

Teddy Gottwald

hope so. I would certainly

Dmitry Silversteyn

Okay, good.

at visible looking Okay. raw If beyond and of obviously, most base obviously some guys buy one, your but metals and base you material oil hydrocarbons hydro I’m – oil. inflation, is kind the

or can they two would you, If if additives, be? point you three lube it’s for different key versus fuel additives for they’re whether raw to – what materials the

Brian Paliotti

Well, top raw the we that listed XX in the K materials buy. we

of the big oil items. major because at We of of are Those spend the drivers list, by base PIB and look obviously that are major being multitude take obviously one a ones. and would so other them, them. being those solvents And one whatnot. a I the of

Dmitry Silversteyn

in either material or Yes, quarterly or anything dollar terms there raw percentage a the on did terms can or me dollar in you, year-over-year provide basis? inflation okay. And to what either percentages is you basis

Brian Paliotti

take to a and Dmitry, can look back get I at that, you.

Dmitry Silversteyn

think for much was that by question That decent looking guys anniversaries the in If I’m Okay. of But third have if pretty final continue good had And organic that quarter, now back not you growth the to before mix obviously, growth side. you into at understand And the Mexican there’s Brian. And acquisition? How granularity volumes impact in up jump you queue. of the a lube and that growth in shipments. terms mistaken. provide Can that I that? I be additives any there. on contributed then I put would helpful, in the I’m

Brian Paliotti

positive positive was – was It impact. a it

positive. and going. San in happy organization to del into an the and we’re comments, made integration But now, is I we’re it’s Juan plant Rio So the going as And the the facility just it’s how it with break apart. integrated not

Dmitry Silversteyn

back get will enough, Okay, the I into alright queue. fair

Brian Paliotti

Okay.

Operator

[Operator Company. Instructions] line comes question London the from of Snow with Trey Our next The

Unidentified Analyst

the time think frame. leverage said target X.X Brian, I to right? your that is optimal you in Is X

Brian Paliotti

net correct, correct. That’s to debt That’s EBITDA.

Unidentified Analyst

that of cycle Or is new along your you to of assets? – And level sort on that? that is just it Is get based that level? dependent? do how Or

Teddy Gottwald

ahead of come times X say, a if to This quite –we to because want credit range periods keep We in storms time lot gives acquisitions want the Staying balance. a for had rating as It’s it’s to come a as go balance a for it way. we to of costs. lower beyond such as a reasonable any for Teddy. acquisition. range use now. of I And well that reason, good particular is weather in us for it’s than that indicated that our maintain might good to any flexibility time that We’ve much that a that willingness when range don’t would to conservative, X.X to some go We’ve not borrowing comfortably ensure handle sheet.

Unidentified Analyst

Right.

And what CapEx now? behind your sense. level Phase you, be X of that sort then maintenance makes being with Okay, of Singapore will

Brian Paliotti

Obviously, we we’ve operated operated –before we’ve new plant, had Singapore think a them. we’ve traditionally couple from said I level. in that in of the the plants the

So and ground. know that more back that you we’re have going could than on assets be to look we higher the guess, I because

Unidentified Analyst

thank you. Alright okay. Great,

Brian Paliotti

are You welcome.

Operator

hand management to further the no call to back comments. are queue. for over questions There I’d in closing like

Brian Paliotti

you Thank you, for thank We’ll you, to talk everyone, and next Doug, quarter. Okay. in. calling

Operator

and Ladies for your teleconference. does Thank today’s conclude this you participation. gentlemen,

day. time your wonderful and may this You disconnect at lines a have

NewMarket (NEU) 27 Apr 182018 Q1 Earnings call transcript