NewMarket Corporation Reports First Quarter 2025 Results
Net income for the first quarter of 2025 was $125.9 million, or $13.26 per share, compared to net income of $107.7 million, or $11.23 per share, for the same period last year.
Petroleum additives sales for the first quarter of 2025 were $645.6 million, compared to $677.3 million for the same period in 2024. Petroleum additives operating profit for the first quarter of 2025 was $142.1 million, compared to a first quarter record of $150.9 million for the first quarter of 2024. The decrease in petroleum additives operating profit was primarily driven by a 7.2% decline in shipments between quarterly periods. Lubricant additives shipments decreased in Asia Pacific and North America, while Europe and Latin America reported slight increases. Fuel additives shipments were lower in all regions except Asia Pacific, which reported a small increase. Despite the lower shipments, our operating profit margin for the first quarter of 2025 remained strong as a result of our continued focus on operational efficiency.
Specialty materials sales were $53.7 million for the first quarter of 2025, compared to $17.0 million for the first quarter of 2024. Specialty materials operating profit was $23.2 million for the first quarter of 2025, compared to an operating loss of $5.0 million for the first quarter of 2024. The increase in specialty materials operating profit was primarily driven by increased volumes as well as favorable product mix. As previously stated, we will see substantial variation in quarterly results for the specialty materials segment on an ongoing basis due to the nature of its business. Specialty materials sales and operating profit for the first quarter of 2024 reflect financial results since the acquisition of American Pacific Corporation (AMPAC) on January 16, 2024.
Our operations generated solid cash flows during the first quarter of 2025. We repurchased common stock for $57.1 million, paid dividends of $26.1 million, and funded capital expenditures of $13.0 million. Additionally, we reduced our Net Debt by $21.5 million during the first quarter of 2025, driving our Net Debt to EBITDA ratio down to 1.1 as of March 31, 2025.
As discussed in AMPAC's April 21, 2025 press release, the AMPAC board of directors approved a capital investment of up to $100 million at our AMPAC facility in Cedar City, Utah, to expand ammonium perchlorate production capacity by more than 50%. With a projected completion date in 2026, the increased production capacity will allow AMPAC to meet the demand of U.S. military and space launch programs, while also addressing the needs of U.S. allies in these critical areas. The project remains subject to approval by NewMarket's board of directors.
We are pleased with the strong performance of our business during the first quarter of 2025 and continue to see favorable results from our ongoing efficiency initiatives. Investing in technology to meet customer needs, enhancing our operational efficiency, and improving our portfolio profitability will remain priorities throughout 2025.
We are monitoring the uncertain macroeconomic environment, particularly the changes in international trade relations and tariffs, and assessing the potential impacts to our operations. Our dedicated team continues to make decisions to promote long-term value for our shareholders and customers, and remains focused on our long-term objectives. We believe the fundamentals of how we run our business - a long-term view, safety-first culture, customer-focused solutions, technology-driven product offerings, and world-class supply chain capability - will continue to be beneficial for all our stakeholders.
Sincerely,
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 specialty materials segment, which consists of the AMPAC business, operates primarily in North America.
The Company has disclosed the non-GAAP financial measures EBITDA, Net Debt, and Net Debt to EBITDA, as well as the related calculations 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). Net Debt is defined as long-term debt, including current maturities, less cash and cash equivalents. Net Debt to EBITDA is defined as Net Debt divided by EBITDA for the rolling four quarters ended as of the specified date. The Company believes that even though these items are not required by or presented in accordance with United States generally accepted accounting principles (GAAP), these additional measures enhance understanding of the Company's performance and period to period comparability. The Company believes that these items should not be considered an alternative to our results determined under GAAP.
As a reminder, a conference call and webcast is scheduled for 3:00 p.m. ET on Thursday, April 24, 2025, to review first quarter 2025 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 Thursday, May 1, 2025, at 3:00 p.m. ET by dialing 1-877-481-4010 (domestic) or 1-919-882-2331 (international). The replay passcode number is 52250. The call will also be broadcast via the internet and can be accessed through the Company's website at www.newmarket.com or www.webcaster4.com/Webcast/Page/2001/52250. A webcast replay will be available for 30 days.
NewMarket Corporation is a holding company operating through its subsidiaries, Afton Chemical Corporation (Afton), Ethyl Corporation (Ethyl), and American Pacific Corporation (AMPAC). The Afton and Ethyl companies develop, manufacture, blend, and deliver chemical additives that enhance the performance of petroleum products. AMPAC is a manufacturer of specialty materials primarily used in solid rocket motors for the aerospace and defense industries. The NewMarket family of companies has a long-term commitment to its people, to safety, to providing innovative solutions for its customers, and to making the world a better place.
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 industries; failure to protect our intellectual property rights; sudden, sharp, or prolonged raw material price increases; competition from other manufacturers; current and future governmental regulations; the loss of significant customers; termination or changes to contracts with contractors and subcontractors of the U.S. government or directly with the U.S. government; 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, wars and health-related epidemics; risks related to operating outside of the United States, including tariffs and trade policy; 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 acquisitions, or our inability to successfully integrate 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 Part I, Item 1A. 'Risk Factors' of our Annual Report on Form 10-K for the year ended December 31, 2024, which is available to shareholders at www.newmarket.com.
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 us. 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.
NEWMARKET CORPORATION AND SUBSIDIARIES
(In thousands, except per-share amounts, unaudited)
Three Months Ended March 31,
2025
2024
Net sales
$
700,946
$
696,736
Cost of goods sold
464,923
480,371
Gross profit
236,023
216,365
Selling, general, and administrative expenses
42,978
44,365
Research, development, and testing expenses
33,176
31,200
Operating profit
159,869
140,800
Interest and financing expenses, net
10,700
15,654
Other income (expense), net
14,944
12,547
Income before income tax expense
164,113
137,693
Income tax expense
38,164
29,961
Net income
$
125,949
$
107,732
Earnings per share - basic and diluted
$
13.26
$
11.23
Cash dividends declared per share
$
2.75
$
2.50
Expand
NEWMARKET CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts, unaudited)
March 31,
2025
2024
ASSETS
Current assets:
Cash and cash equivalents
$
118,253
$
77,476
Trade and other accounts receivable, less allowance for credit losses
463,337
395,450
Inventories
489,759
505,426
Prepaid expenses and other current assets
52,415
51,203
Total current assets
1,123,764
1,029,555
Property, plant, and equipment, net
734,580
735,361
Intangibles (net of amortization) and goodwill
744,126
750,424
Prepaid pension cost
503,042
490,418
Operating lease right-of-use assets, net
75,197
71,253
Deferred charges and other assets
52,215
52,530
Total assets
$
3,232,924
$
3,129,541
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable
$
249,757
$
225,874
Accrued expenses
70,463
89,277
Dividends payable
21,698
22,037
Income taxes payable
32,261
15,798
Operating lease liabilities
16,303
15,337
Other current liabilities
5,775
6,155
Total current liabilities
396,257
374,478
Long-term debt
990,555
971,281
Operating lease liabilities - noncurrent
58,100
54,754
Other noncurrent liabilities
268,516
267,445
Total liabilities
1,713,428
1,667,958
Shareholders' equity:
Common stock and paid-in capital (with no par value; issued and outstanding shares - 9,434,506 at March 31, 2025 and 9,524,789 at December 31, 2024)
0
0
Accumulated other comprehensive income
43,896
32,870
Retained earnings
1,475,600
1,428,713
Total shareholders' equity
1,519,496
1,461,583
Total liabilities and shareholders' equity
$
3,232,924
$
3,129,541
Expand
NEWMARKET CORPORATION AND SUBSIDIARIES
SELECTED CONSOLIDATED CASH FLOW DATA
(In thousands, unaudited)
Three Months Ended March 31,
2025
2024
Net income
$
125,949
$
107,732
Depreciation and amortization
28,778
25,807
Cash pension and postretirement contributions
(2,374
)
(2,727
)
Working capital changes
(26,590
)
(21,434
)
Deferred income tax benefit
505
(3,899
)
Capital expenditures
(13,016
)
(13,564
)
Acquisition of business, net of cash acquired
0
(683,924
)
Net borrowings under revolving credit facility
69,000
386,000
Principal payment on 3.78% senior notes
(50,000
)
0
Dividends paid
(26,057
)
(23,986
)
Repurchases of common stock
(57,064
)
0
Proceeds from term loan
0
250,000
Debt issuance costs
0
(2,251
)
All other
(8,354
)
(12,624
)
Increase in cash and cash equivalents
$
40,777
$
5,130
Expand
Expand
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These loans also have greater price volatility than those loans with a higher priority and may be less liquid. However, second lien loans often pay interest at higher rates than first lien loans reflecting such additional risks. The Fund intends to terminate on or about August 1, 2027. Because the assets of the Fund will be liquidated in connection with the termination, the Fund may be required to sell portfolio securities when it otherwise would not, including at times when market conditions are not favorable, which may cause the Fund to lose money. The Fund is not a "target term" Fund and its primary objective is to provide high current income. As a result, the Fund may not return the Fund's initial public offering price of $20.00 per share at its termination. Investing in securities of non-U.S. issuers, which are generally denominated in non-U.S. currencies, may involve certain risks not typically associated with investing in securities of U.S. issuers, including but not limited to economic risks, political risks, and currency risks. Investing in emerging market countries, as compared to foreign developed markets, involves substantial additional risk due to more limited information about the issuer and/or the security (including limited financial and accounting information); higher brokerage costs; different accounting, auditing and financial reporting standards; less developed legal systems and thinner trading markets; the possibility of currency blockages or transfer restrictions; an emerging market country's dependence on revenue from particular commodities or international aid; and the risk of expropriation, nationalization or other adverse political or economic developments. Use of leverage can result in additional risk and cost, and can magnify the effect of any losses. The Fund's portfolio is subject to credit risk, interest rate risk, liquidity risk, prepayment risk and reinvestment risk. Interest rate risk is the risk that fixed-income securities will decline in value because of changes in market interest rates. Credit risk is the risk that an issuer of a security will be unable or unwilling to make dividend, interest and/or principal payments when due and that the value of a security may decline as a result. Credit risk may be heightened for the Fund because it invests in below investment grade securities. Liquidity risk is the risk that the fund may have difficulty disposing of senior loans if it seeks to repay debt, pay dividends or expenses, or take advantage of a new investment opportunity. Prepayment risk is the risk that, upon a prepayment, the actual outstanding debt on which the Fund derives interest income will be reduced. The Fund may not be able to reinvest the proceeds received on terms as favorable as the prepaid loan. Reinvestment risk is the risk that income from the Fund's portfolio will decline if the Fund invests the proceeds from matured, traded or called instruments at market interest rates that are below the Fund's portfolio's current earnings rate. The risks of investing in the Fund are spelled out in the shareholder report and other regulatory filings. The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients. The Fund's daily closing New York Stock Exchange price and net asset value per share as well as other information can be found at or by calling 1-800-988-5891.
