NewMarket Corporation Reports First Quarter 2014 Results

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 of 2014.

Net income for the first quarter of 2014 was $57.5 million, or $4.43 per share, compared to net income of $67.8 million, or $5.07 per share for the first quarter of last year. Earnings for both the first quarter of this year and the first quarter of last year included the impact of valuing an interest rate swap at fair value, while the first quarter of last year also included income from operations of a discontinued business. Excluding these items, EPS for the first quarter of 2014 was $4.54, compared to $4.97 for the first quarter of last year (see Summary of Earnings table below).

Petroleum additives sales for this year’s first quarter were $574.0 million, up 2.8% versus the same period last year, and shipments were up 5.9%. Petroleum additives operating profit for the quarter was $96.2 million, or 5.7% lower than last year’s very strong first quarter of $102.0 million. Foreign currency exchange had a small unfavorable effect in the first quarter of 2014 versus a larger favorable effect in last year’s first quarter, resulting in a total decrease in operating profit between periods of about $6 million. We also experienced an unfavorable product mix when comparing the two quarters. The operating profit margin for the quarter was 16.8% and the margin for the four quarters ended March 31, 2014 was 16.2%. Both amounts are in line with our expectations of the performance of our business over the long-term.

The effective tax rate this quarter was 31.4% while last year’s first quarter rate was 27.6%. Last year’s rate included the effects of the R&D tax credit for all of 2012 and the first quarter of 2013, as the R&D tax credit extension was not enacted until January 2013. Congress has not yet enacted the R&D tax credit for 2014.

During the first quarter, we repurchased 232,200 shares of our stock at a cost of $81.5 million, or an average cost per share of $350.95. We ended the quarter with 12.9 million shares outstanding.

We are pleased with the operating performance of our business. The last few years have been marked by upward trends in costs as we have worked to meet our customers’ needs through technological advances in research and development, and through investments in facilities and human capital to drive our business forward. Through these periods, we have continued to manage our business to satisfy our customers’ needs while maintaining profitability. We expect to see increased demand in the petroleum additives market in 2014 and beyond, and we are optimistic about continuing to grow our business and to deliver increased shareholder value.

Please read our first quarter Form 10-Q for more details on operations of the Company.

Sincerely,

Thomas E. Gottwald

The results for this year and last year include the impact from valuing an interest rate swap agreement at fair value. Prior year results also include results from operations of a discontinued business. The Company is reporting net income including these items, as well as income excluding them, and related per share amounts in the Summary of Earnings included in the earnings release. The Company has also included the non-GAAP financial measure EBITDA in this earnings release. A schedule following the financial statements included in this earnings release is provided reflecting the calculation of EBITDA, defined as income from continuing operations, before the deduction of interest and financing expenses, income taxes, depreciation and amortization. EBITDA is shown on the schedule both including and excluding the interest rate swap agreement. 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 net income determined under GAAP.

As a reminder, a conference call and Internet webcast is scheduled for 3:00 p.m. EDT on Thursday, April 24, 2014, to review first quarter 2014 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 at www.NewMarket.com or www.investorcalendar.com. A teleconference replay of the call will be available until May 1, 2014 at 11:59 p.m. EDT by dialing 1-877-660-6853 (domestic) and 1-201-612-7415 (international). The conference ID number is 13579260. 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 that makes 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: availability of raw materials and transportation systems; supply disruptions at single sourced facilities; ability to respond effectively to technological changes in our industry; failure to protect our intellectual property rights; 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; political, economic, and regulatory factors concerning our products; 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 2013 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.