Newmarket Corp 10-Q for FY2022 Q1

Newmarket Corp (NEU)

10-Q 2022-04-28 For: 2022-03-31

Added on April 08, 2026

About this 10-Q

Newmarket Corp filed this 10-Q on April 28, 2022, covering the quarter ended March 31, 2022 (FY2022 Q1).

Headline figures

Quarter ended March 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $662.55M; up 16.9% from $566.62M a year earlier
Net income: $59.32M; down 14.9% from net income of $69.71M a year earlier

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Virginia		20-0812170
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

330 South Fourth Street		23219-4350
Richmond,	Virginia
(Address of principal executive offices)		(Zip Code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, with no par value	NEU	New York Stock Exchange


			Page Number
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements (unaudited)
Consolidated Statements of Income - Three Months Ended March 31, 2022 and March 31, 2021			4
Consolidated Statements of Comprehensive Income - Three Months Ended March 31, 2022 and March 31, 2021			5
Condensed Consolidated Balance Sheets - March 31, 2022 and December 31, 2021			6
Consolidated Statements of Shareholders' Equity - Three Months Ended March 31, 2022 and March 31, 2021			7
Condensed Consolidated Statements of Cash Flows - Three Months Ended March 31, 2022 and March 31, 2021			8
Notes to Condensed Consolidated Financial Statements			9
Financial Statement Presentation			9
Net Sales			9
Segment Information			10
Pension Plans and Other Postretirement Benefits			11
Earnings Per Share			11
Marketable Securities			12
Inventories			12
Intangibles (Net of Amortization) and Goodwill			13
Long-term Debt			13
Commitments and Contingencies			14
Other Comprehensive Income (Loss) and Accumulated Other Comprehensive Loss			15
Fair Value Measurements			15
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			16
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk			21
ITEM 4. Controls and Procedures			21
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings			22
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds			22
ITEM 6. Exhibits			22
SIGNATURES			23


(in thousands, except per-share amounts)	Three Months Ended March 31,
		2022		2021
Net sales		$	662,552	$	566,615
Cost of goods sold		507,389		404,862
Gross profit		155,163		161,753
Selling, general, and administrative expenses		35,622		36,915
Research, development, and testing expenses		36,251		36,337
Operating profit		83,290		88,501
Interest and financing expenses, net		9,406		6,343
Loss on early extinguishment of debt		7,545		0
Other income (expense), net		7,168		7,212
Income before income tax expense		73,507		89,370
Income tax expense		14,189		19,658
Net income		$	59,318	$	69,712
Earnings per share - basic and diluted		$	5.75	$	6.38
Cash dividends declared per share		$	2.10	$	1.90


(in thousands)	Three Months Ended March 31,
		2022		2021
Net income		$	59,318	$	69,712
Other comprehensive income (loss):
Pension plans and other postretirement benefits:

Amortization of prior service cost (credit) included in net periodic benefit cost (income), net of income tax expense (benefit) of $(156) in 2022, and $(159) in 2021		(496)		(491)
Actuarial net gain (loss) arising during the period, net of income tax expense (benefit) of $7 in 2022, and $(219) in 2021		16		(657)
Amortization of actuarial net loss (gain) included in net periodic benefit cost (income), net of income tax expense (benefit) of $175 in 2022, and $529 in 2021		539		1,790
Total pension plans and other postretirement benefits		59		642




Foreign currency translation adjustments, net of income tax expense (benefit) of $1,131 in 2022, and $(464) in 2021		(3,102)		467




Other comprehensive income (loss)		(3,043)		1,109
Comprehensive income		$	56,275	$	70,821


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


(in thousands, except share amounts)	March 31, 2022		December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	84,550	$	83,304
Marketable securities	0		375,918
Trade and other accounts receivable, less allowance for credit losses	464,510		391,779
Inventories	524,091		498,539
Prepaid expenses and other current assets	41,183		38,633
Total current assets	1,114,334		1,388,173
Property, plant, and equipment, net	671,327		676,770
Intangibles (net of amortization) and goodwill	127,356		127,752
Prepaid pension cost	245,751		242,604
Operating lease right-of-use assets	69,294		68,402

Deferred charges and other assets	53,491		54,735
Total assets	$	2,281,553	$	2,558,436
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	290,846	$	246,097
Accrued expenses	73,401		85,103
Dividends payable	16,418		16,648
Income taxes payable	7,781		4,442
Operating lease liabilities	16,174		15,709
Current portion of long-term debt	0		349,434
Other current liabilities	7,079		7,654
Total current liabilities	411,699		725,087
Long-term debt	841,074		789,853
Operating lease liabilities-noncurrent	53,096		52,591
Other noncurrent liabilities	215,594		228,776
Total liabilities	1,521,463		1,796,307
Commitments and contingencies (Note 10)
Shareholders’ equity:
Common stock and paid-in capital (with no par value; authorized shares - 80,000,000; issued and outstanding shares - 10,254,703 at March 31, 2022 and 10,362,722 at December 31, 2021)	0		0
Accumulated other comprehensive loss	(85,270)		(82,227)
Retained earnings	845,360		844,356
Total shareholders' equity	760,090		762,129
Total liabilities and shareholders’ equity	$	2,281,553	$	2,558,436


(in thousands, except share and per-share amounts)	Common Stock and Paid-in Capital			Accumulated Other Comprehensive Loss		Retained Earnings		Total Shareholders’ Equity
	Shares	Amount


















Balance at December 31, 2020	10,921,377	$	717	$	(173,164)	$	932,271	$	759,824
Net income						69,712		69,712
Other comprehensive income (loss)				1,109				1,109
Cash dividends ($1.90 per share)						(20,763)		(20,763)



Stock-based compensation	6,777	473						473
Balance at March 31, 2021	10,928,154	$	1,190	$	(172,055)	$	981,220	$	810,355

Balance at December 31, 2021	10,362,722	$	0	$	(82,227)	$	844,356	$	762,129
Net income						59,318		59,318
Other comprehensive income (loss)				(3,043)				(3,043)
Cash dividends ($2.10 per share)						(21,570)		(21,570)
Repurchases of common stock	(115,796)	(597)				(36,750)		(37,347)


Stock-based compensation	7,777	597				6		603
Balance at March 31, 2022	10,254,703	$	0	$	(85,270)	$	845,360	$	760,090


(in thousands)	Actual Cash Contributions for Three Months Ended March 31, 2022		Expected Remaining Cash Contributions for Year Ending December 31, 2022
Domestic plans
Pension benefits	$	620	$	1,859
Postretirement benefits	365		1,094
Foreign plans
Pension benefits	1,114		5,123


	Domestic
	Pension Benefits				Postretirement Benefits
	Three Months Ended March 31,
(in thousands)	2022		2021		2022		2021
Service cost	$	4,856	$	4,814	$	260	$	250
Interest cost	3,389		3,241		289		292
Expected return on plan assets	(10,940)		(9,670)		(204)		(233)
Amortization of prior service cost (credit)	68		68		(757)		(757)
Amortization of actuarial net (gain) loss	536		1,390		8		12
Net periodic benefit cost (income)	$	(2,091)	$	(157)	$	(404)	$	(436)


		Foreign
		Pension Benefits
	Three Months Ended March 31,
(in thousands)			2022		2021
Service cost			$	2,360	$	2,757
Interest cost			1,098		827
Expected return on plan assets			(2,635)		(2,666)
Amortization of prior service cost (credit)			37		38
Amortization of actuarial net (gain) loss			169		901
Net periodic benefit cost (income)			$	1,029	$	1,857


	December 31, 2021
			Fair Value Measurements Using
(in thousands)	Fair Value		Level 1		Level 2		Level 3
Debt securities
Corporate bonds	$	48,727	$	0	$	48,727	$	0

Equity securities
U.S. government income mutual fund	327,191		327,191		0		0
Total marketable securities	$	375,918	$	327,191	$	48,727	$	0


	March 31,		December 31,
(in thousands)	2022		2021
Finished goods and work-in-process	$	420,356	$	393,778
Raw materials	85,357		86,856
Stores, supplies, and other	18,378		17,905
	$	524,091	$	498,539


	March 31, 2022				December 31, 2021
(in thousands)	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Amortizing intangible assets
Formulas and technology	$	6,200	$	4,908	$	6,200	$	4,650
Contract	2,000		1,050		2,000		1,000
Customer bases	5,440		4,207		5,440		4,160

Goodwill	123,881				123,922
	$	137,521	$	10,165	$	137,562	$	9,810


(in thousands)	Three Months Ended March 31,
	2022		2021
Cash and cash equivalents at beginning of year	$	83,304	$	125,172
Cash flows from operating activities:
Net income	59,318		69,712
Adjustments to reconcile net income to cash flows from operating activities:
Depreciation and amortization	21,072		20,631
Deferred income tax (benefit) expense	(12,135)		2,455
Loss on early extinguishment of debt	7,545		0

Working capital changes	(66,987)		(41,421)
Loss on marketable securities	2,977		0
Cash pension and postretirement contributions	(2,099)		(2,577)
Other, net	(2,910)		571
Cash provided from (used in) operating activities	6,781		49,371
Cash flows from investing activities:
Capital expenditures	(12,612)		(20,524)
Purchases of marketable securities	(787)		0
Proceeds from sales and maturities of marketable securities	372,846		0

Cash provided from (used in) investing activities	359,447		(20,524)
Cash flows from financing activities:
Redemption of 4.10% senior notes	(350,000)		0
Net borrowings under revolving credit facility	51,000		0
Issuance of 2.70% senior notes	0		395,052
Dividends paid	(21,570)		(20,763)
Repurchases of common stock	(37,347)		0
Cash costs of 4.10% senior notes redemption	(7,099)		0
Debt issuance costs	0		(2,932)
Other, net	(833)		(1,915)
Cash provided from (used in) financing activities	(365,849)		369,442
Effect of foreign exchange on cash and cash equivalents	867		(1,056)
Increase in cash and cash equivalents	1,246		397,233
Cash and cash equivalents at end of period	$	84,550	$	522,405


	Three Months Ended March 31,
(in thousands)		2022		2021
Net sales
United States		$	224,688	$	170,324
China		52,703		73,988
Europe, Middle East, Africa, India		195,987		176,650
Asia Pacific, except China		104,841		82,597
Other foreign		84,333		63,056
Net sales		$	662,552	$	566,615


	Three Months Ended March 31,
(in thousands)		2022		2021
Petroleum additives
Lubricant additives		$	570,042	$	494,556
Fuel additives		90,262		70,342
Total		660,304		564,898
All other		2,248		1,717
Net sales		$	662,552	$	566,615


2022	$	1,068
2023	907
2024	390
2025	390
2026	390
2027	190



Three months ended March 31, 2022			355

Three months ended March 31, 2021			721


(in thousands)	Pension Plans and Other Postretirement Benefits		Foreign Currency Translation Adjustments		Accumulated Other Comprehensive (Loss) Income
Balance at December 31, 2020	$	(92,771)	$	(80,393)	$	(173,164)
Other comprehensive income (loss) before reclassifications	(657)		467		(190)
Amounts reclassified from accumulated other comprehensive loss (a)	1,299		0		1,299
Other comprehensive income (loss)	642		467		1,109
Balance at March 31, 2021	$	(92,129)	$	(79,926)	$	(172,055)

Balance at December 31, 2021	$	1,522	$	(83,749)	$	(82,227)
Other comprehensive income (loss) before reclassifications	16		(3,102)		(3,086)
Amounts reclassified from accumulated other comprehensive loss (a)	43		0		43
Other comprehensive income (loss)	59		(3,102)		(3,043)
Balance at March 31, 2022	$	1,581	$	(86,851)	$	(85,270)


	Three Months Ended March 31,
(in millions)		2022		2021
Petroleum additives
Lubricant additives		$	570.0	$	494.6
Fuel additives		90.3		70.3
Total		660.3		564.9
All other		2.3		1.7
Net sales		$	662.6	$	566.6


(in millions)	Three Months
Period ended March 31, 2021	$	564.9
Lubricant additives shipments	(0.4)
Fuel additives shipments	2.6
Selling prices	102.3
Foreign currency impact, net	(9.1)
Period ended March 31, 2022	$	660.3


Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
January 1 to January 31	15,359	$	333.89	15,359	$	476,686,367
February 1 to February 28	44,214	317.31		44,214	462,656,920
March 1 to March 31	56,223	323.52		56,223	444,467,566
Total	115,796	$	322.52	115,796	$	444,467,566


Exhibit 3.1			Articles of Incorporation Amended and Restated effective April 27, 2012 (incorporated by reference to Exhibit 3.1 to Form 8-K (File No. 1-32190) filed April 30, 2012)
Exhibit 3.2			NewMarket Corporation Bylaws Amended and Restated effective August 6, 2015 (incorporated by reference to Exhibit 3.1 to Form 8-K (File No. 1- 32190) filed August 6, 2015)
Exhibit 31(a)			Certification pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Thomas E. Gottwald
Exhibit 31(b)			Certification pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Brian D. Paliotti
Exhibit 32(a)			Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Thomas E. Gottwald
Exhibit 32(b)			Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Brian D. Paliotti
Exhibit 101			Inline XBRL Instance Document and Related Items (the instance document does not appear in the Interactive Data File because its Inline XBRL tags are embedded within the Inline XBRL document)
Exhibit 104			Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


			NEWMARKET CORPORATION
			(Registrant)

Date: April 28, 2022			By: /s/ Brian D. Paliotti
			Brian D. Paliotti
			Vice President and
			Chief Financial Officer
			(Principal Financial Officer)

Date: April 28, 2022			By: /s/ William J. Skrobacz
			William J. Skrobacz
			Controller
			(Principal Accounting Officer)