NewMarket Corporation Reports Fourth Quarter and Full Year 2020 Results

  • Full Year Net Income of $270.6 Million and Earnings Per Share of $24.64
  • Petroleum Additives Full Year Operating Profit of $333.2 Million
  • Focus Remains on Investing in the Long-Term Success of the Company

Richmond, VA, February 3, 2021 – NewMarket Corporation (NYSE:NEU) Chairman and Chief Executive Officer, Thomas E. Gottwald, released the following earnings report of the Company’s operations for the fourth quarter and full year 2020.

Net income for the fourth quarter of 2020 was $66.9 million, or $6.12 per share, compared to net income of $50.1 million, or $4.48 per share, for the fourth quarter of 2019. Net income for 2020 was $270.6 million, or $24.64 per share compared to net income of $254.3 million, or $22.73 per share. Net income for the year benefited from a gain of $16.5 million related to the sale of a non-operating parcel of real estate, along with a reduced effective tax rate compared to 2019.

Sales for the petroleum additives segment for the fourth quarter of 2020 were $525.2 million, down 1.2% compared to the same period last year. Petroleum additives operating profit for the fourth quarter of 2020 was $84.3 million, compared to $73.6 million for the fourth quarter of 2019. For the year, petroleum additives sales were $2.0 billion compared to sales in 2019 of $2.2 billion. This decrease was due mainly to lower shipments and decreased selling prices.

Petroleum additives operating profit for 2020 was $333.2 million, a 7.2% decrease compared to 2019 operating profit of $359.2 million. This decrease was mainly due to changes in selling prices, lower shipments and higher conversion costs, partially offset by lower raw material costs and selling, general, and administrative costs. Shipments decreased 5.2% between the full-year periods, with decreases in both lubricant additives and fuel additives shipments.

Petroleum additives operating results for 2020 have been marked by economic uncertainty resulting from the ongoing effects of the COVID-19 pandemic and the related restrictions on the movement of people, goods and services. While we have continued to operate throughout the year in each of our regions, we have at various times seen significant changes in some of the key drivers that affect the performance of our business. During the second quarter of 2020, government and business shutdowns in North America and Europe led to a precipitous drop in vehicle miles driven and auto production, with gasoline consumption in the United States dropping to its lowest point in over 50 years. With less travel and fewer miles driven, combined with automobile plant closures, global demand for our products declined substantially, except in our Asia Pacific region where demand remained relatively stable throughout the year. As restrictions eased and economies reopened in the second half of 2020, global production of automobiles began to rebound and gasoline consumption and miles driven showed steady improvement in most countries, including the United States. Late in the fourth quarter, renewed restrictions on travel and work in certain countries had a negative effect on our business. The pace and stability of improvement in demand for our products will continue to depend heavily on economic recovery and the rate at which government restrictions are lifted and remain lifted.

The effective tax rate for 2020 was 18.3% compared to 23.3% for 2019. The decrease in the tax rate in 2020 was mainly the result of finalizing prior year tax filings and releasing certain tax reserves.

Our business continues to generate strong cash flow. During the year we funded capital expenditures of $93.3 million, paid dividends of $83.4 million, and repaid $44.7 million of borrowings on our revolving credit facility. We also repurchased 270,963 shares of our common stock for a cost of $101.4 million.

As we look back at our results for the year, we are extremely proud of the operational performance we achieved given the volatility the COVID-19 pandemic introduced into the global economy. Throughout the economic downturn, the chemical industry and our products have been recognized as essential for the transportation of goods and services, and our facilities have continued to operate and function safely. I want to sincerely thank our employees for their continued determination and commitment to do what is necessary to support our customers and ensure their supply demands are met. I am very proud of them.

As we look forward to 2021, we will continue to monitor government restrictions on the movement of people, goods and services as well as the status of vaccination programs that are being implemented globally. We are hopeful the vaccinations will help provide more stability in the global economy in 2021. Our business decisions will continue to be focused on the long-term success of our company, including emphasis on satisfying customer needs, generating solid operating results, and promoting the greatest long-term value for our shareholders, customers and employees. We believe the fundamentals of how we run our business – a long-term view, safety and people first culture, customer-focused solutions, technology-driven product offerings, and a world-class supply chain capability – will continue to be beneficial for all our stakeholders.

Thomas E. Gottwald

The petroleum additives segment consists of the North America (the United States and Canada), Latin America (Mexico, Central America, and South America), Asia Pacific, and Europe/Middle East/Africa/India (Europe or EMEAI) regions.

The Company has disclosed the non-GAAP financial measure EBITDA and the related calculation in the schedules included with this earnings release. EBITDA is defined as income from continuing operations before the deduction of interest and financing expenses, income taxes, depreciation (on property, plant and equipment) and amortization (on intangibles and lease right-of-use assets). The Company believes that even though this item is not required by or presented in accordance with United States generally accepted accounting principles (GAAP), this additional measure enhances understanding of the Company’s performance and period to period comparability. The Company believes that this item 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. EST on Thursday, February 4, 2021, to review fourth quarter and full year 2020 financial results. You can access the conference call live by dialing 1-888-506-0062 (domestic) or 1-973-528-0011 (international) and requesting the NewMarket conference call. To avoid delays, callers should dial in five minutes early. A teleconference replay of the call will be available until March 4, 2021 at 3:00 p.m. EST by dialing 1-877-481-4010 (domestic) or 1-919-882-2331 (international). The replay passcode number is 39452. The call will also be broadcast via the Internet and can be accessed through the Company’s website at or 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, the availability of raw materials and distribution systems; disruptions at production facilities, including single-sourced facilities; hazards common to chemical businesses; the ability to respond effectively to technological changes in our industry; failure to protect our intellectual property rights; sudden or sharp raw material price increases; competition from other manufacturers; current and future governmental regulations; the gain or loss of significant customers; failure to attract and retain a highly-qualified workforce; an information technology system failure or security breach; the occurrence or threat of extraordinary events, including natural disasters; terrorist attacks and health-related epidemics such as the COVID-19 pandemic; risks related to operating outside of the United States; political, economic, and regulatory factors concerning our products; the impact of substantial indebtedness on our operational and financial flexibility; the impact of fluctuations in foreign exchange rates; resolution of environmental liabilities or legal proceedings; limitation of our insurance coverage; our inability to realize expected benefits from investment in our infrastructure or from recent or future acquisitions, or our inability to successfully integrate recent or future acquisitions into our business; the underperformance of our pension assets resulting in additional cash contributions to our pension plans; 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 2019 Annual Report on Form 10-K and Part II. Item 1A. “Risk Factors” of our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020, which are 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 arise 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.

Brian D. Paliotti
Investor Relations
Phone: 804.788.5555
Fax: 804.788.5688

(In thousands, except per-share amounts, unaudited)
    Fourth Quarter Ended
December 31,
  Twelve Months Ended
December 31,
    2020   2019   2020   2019
Petroleum additives   $ 525,212      $ 531,775      $ 2,001,567      $ 2,175,904   
All other   2,569      2,670      9,364      14,391   
Total   $ 527,781      $ 534,445      $ 2,010,931      $ 2,190,295   
Segment operating profit:                
Petroleum additives   $ 84,323      $ 73,608      $ 333,241      $ 359,228   
All other   (2,051)     (1,654)     (100)     (1,562)  
Segment operating profit   82,272      71,954      333,141      357,666   
Corporate unallocated expense   (6,481)     (4,503)     (21,744)     (20,345)  
Interest and financing expenses   (5,753)     (6,501)     (26,328)     (29,241)  
Other income (expense), net   6,285      5,683      46,218      23,510   
Income before income tax expense   $ 76,323      $ 66,633      $ 331,287      $ 331,590   
Net income   $ 66,884      $ 50,102      $ 270,568      $ 254,286   
Earnings per share – basic and diluted   $ 6.12      $ 4.48      $ 24.64      $ 22.73   

(In thousands, except per-share amounts, unaudited)
    Fourth Quarter Ended
December 31,
  Twelve Months Ended
December 31,
    2020   2019   2020   2019
Net sales   $ 527,781      $ 534,445      $ 2,010,931      $ 2,190,295   
Cost of goods sold   377,001      391,005      1,415,899      1,560,426   
Gross profit   150,780      143,440      595,032      629,869   
Selling, general, and administrative expenses   37,026      38,167      142,863      148,083   
Research, development, and testing expenses   38,199      37,717      140,367      144,465   
Operating profit   75,555      67,556      311,802      337,321   
Interest and financing expenses, net   5,753      6,501      26,328      29,241   
Other income (expense), net   6,521      5,578      45,813      23,510   
Income before income tax expense   76,323      66,633      331,287      331,590   
Income tax expense   9,439      16,531      60,719      77,304   
Net income   $ 66,884      $ 50,102      $ 270,568      $ 254,286   
Earnings per share – basic and diluted   $ 6.12      $ 4.48      $ 24.64      $ 22.73   
Cash dividends declared per share   $ 1.90      $ 1.90      $ 7.60      $ 7.30   

(In thousands except share amounts, unaudited)
    December 31,
  December 31,
Current assets:        
Cash and cash equivalents   $ 125,172      $ 144,397   
Trade and other accounts receivable, less allowance for credit losses
  336,395      335,826   
Inventories   401,031      365,938   
Prepaid expenses and other current assets   35,480      33,237   
Total current assets   898,078      879,398   
Property, plant, and equipment, net   665,147      635,439   
Intangibles (net of amortization) and goodwill   129,944      131,880   
Prepaid pension cost   137,069      133,848   
Operating lease right-of-use assets   61,329      60,505   
Deferred charges and other assets   42,308      44,062   
Total assets   $ 1,933,875      $ 1,885,132   
Current liabilities:        
Accounts payable   $ 189,937      $ 178,773   
Accrued expenses   78,422      77,350   
Dividends payable   15,184      19,217   
Income taxes payable   3,760      10,632   
  Operating lease liabilities   13,410      14,036   
Other current liabilities   11,742      8,887   
Total current liabilities   312,455      308,895   
Long-term debt   598,848      642,941   
Operating lease liabilities – noncurrent   48,324      46,792   
Other noncurrent liabilities   214,424      203,406   
Total liabilities   1,174,051      1,202,034   
Shareholders’ equity:        
Common stock and paid-in capital (with no par value; issued and outstanding shares – 10,921,377 at December 31, 2020 and 11,188,549 at December 31, 2019)
  717      1,965   
Accumulated other comprehensive loss   (173,164)     (162,748)  
Retained earnings   932,271      843,881   
Total shareholders’ equity   759,824      683,098   
Total liabilities and shareholders’ equity   $ 1,933,875      $ 1,885,132   

(In thousands, unaudited)
    Twelve Months Ended
December 31,
    2020   2019
Net income   $ 270,568      $ 254,286   
Depreciation and amortization   84,002      87,560   
Cash pension and postretirement contributions   (10,655)     (9,932)  
Working capital changes   (54,089)     4,763   
Deferred income tax expense   7,554      7,384   
Capital expenditures   (93,316)     (59,434)  
Net repayments under revolving credit facility   (44,678)     (123,451)  
Repurchases of common stock   (101,434)      
Dividends paid   (83,417)     (81,676)  
Proceeds from sale of land   20,000       
Gain on sale of land   (16,483)      
All other   2,723      (8,143)  
(Decrease) increase in cash and cash equivalents   $ (19,225)     $ 71,357   

(In thousands, unaudited)
    Fourth Quarter Ended
December 31,
  Twelve Months Ended
December 31,
    2020   2019   2020   2019
Net Income   $ 66,884      $ 50,102      $ 270,568      $ 254,286   
Interest and financing expenses, net   5,753      6,501      26,328      29,241   
Income tax expense   9,439      16,531      60,719      77,304   
Depreciation and amortization   20,684      21,775      82,666      86,421   
EBITDA   $ 102,760      $ 94,909      $ 440,281      $ 447,252