NewMarket Corporation (NEU) has announced its financial results for the third quarter of 2024, with a net income of $132 million, or $13.79 per share, an increase from the previous year's $111 million, or $11.60 per share. Despite a slight decrease in petroleum additives sales from $664 million in Q3 2023 to $663 million in Q3 2024, the company saw an increase in operating profit in this segment, primarily due to reduced raw material and operating costs. The recent acquisition of American Pacific Corp. (AMPAC) has been integrated into NewMarket's specialty materials segment, contributing $59 million in sales for the quarter.
Key Takeaways
- NewMarket Corporation reports a net income of $132 million for Q3 2024, up from $111 million in Q3 2023.
- Earnings per share (EPS) rose to $13.79, compared to $11.60 in the same quarter last year.
- Petroleum additives sales were nearly flat at $663 million, while operating profit in this segment increased to $157 million.
- The acquisition of AMPAC is reflected in the specialty materials segment, with sales of $59 million for the quarter.
- NewMarket anticipates variations in quarterly results for AMPAC but expects full-year results to meet preacquisition expectations.
- The company paid dividends of $24 million and invested $14 million in capital expenditures during the quarter.
- Net debt-to-EBITDA ratio stood at 1.4, below the target range of 1.5 to 2.
Company Outlook
- NewMarket anticipates capital expenditures to be between $50 million and $70 million for the full year of 2024.
- The company maintains a focus on margin management and operating cost, inventory levels, and portfolio profitability.
- Long-term objectives continue to be a priority, with a focus on creating value for shareholders and customers.
Bearish Highlights
- Petroleum additives sales saw a minor decline from the previous year's figures.
- The specialty materials segment's operating profit reflects no margin due to the sale of acquired AMPAC inventory recorded at fair value.
Bullish Highlights
- Increased petroleum additives operating profit due to lower raw material and operating costs.
- Strong cash flow generation during the quarter.
- Successful integration of AMPAC into NewMarket's operations.
Misses
- There were no specific financial misses reported in the earnings call.
Q&A Highlights
- The company did not hold a question-and-answer session but is available for questions via email or phone.
NewMarket Corporation's third-quarter results demonstrate a solid financial performance with increased net income and operating profits in the petroleum additives segment. The acquisition of AMPAC has expanded the company's specialty materials portfolio, although it has yet to contribute to profit margins due to the fair value accounting of the acquired inventory. NewMarket's strategic focus on cost management and long-term growth, along with its robust cash flow and prudent debt management, positions it to continue its commitment to delivering value to stakeholders. The company's executives remain available for further inquiries from interested parties.
InvestingPro Insights
NewMarket Corporation's (NEU) strong financial performance in Q3 2024 is further supported by data from InvestingPro. The company's P/E ratio of 12.58 and adjusted P/E ratio of 11.55 for the last twelve months as of Q3 2024 indicate that the stock is trading at a relatively attractive valuation compared to its earnings. This aligns with an InvestingPro Tip suggesting that NEU is "Trading at a low P/E ratio relative to near-term earnings growth."
The company's commitment to shareholder returns is evident in its dividend policy. InvestingPro data shows a current dividend yield of 1.85% and a dividend growth of 11.11% over the last twelve months. An InvestingPro Tip highlights that NewMarket "Has raised its dividend for 5 consecutive years," which underscores the company's financial stability and commitment to returning value to shareholders.
NewMarket's profitability is also noteworthy, with a gross profit margin of 30.84% and an operating income margin of 20.68% for the last twelve months as of Q3 2024. This strong profitability is reflected in another InvestingPro Tip stating that the company has been "Profitable over the last twelve months."
For investors seeking more comprehensive analysis, InvestingPro offers additional tips and insights, with 8 more tips available for NewMarket Corporation on the platform.
Full transcript - NewMarket Corp (NEU) Q3 2024:
Operator: Good day, and welcome to the NewMarket Corporation's scheduled conference call and webcast to review the Third Quarter 2024 Financial Results. At this time, all participants are in a listen-only mode. I would now like to turn the call over to your host, Bill Skrobacz. Floor is yours.
Bill Skrobacz: Thank you, Kelly, and thanks to everyone for joining me this afternoon. As a reminder, some of the statements made during this conference call may be forward-looking. Relevant factors that could cause actual results to differ materially from those forward-looking statements are contained in our earnings release and in our SEC filings, including our most recent Form 10-K. During this call, I will also discuss the non-GAAP financial measures included in our earnings release. The earnings release, which can be found on our website, includes a reconciliation of the non-GAAP financial measures to the comparable GAAP financial measures. We filed our 10-Q this morning. It contains significantly more details on the operations and performance of our company. Please take time to review it. I will be referring to the data that was included in last night's earnings release. Net income for the third quarter of 2024 was $132 million, or $13.79 per share, compared to net income of $111 million, or $11.60 per share, for the same period last year. Petroleum additives sales for the third quarter of 2024 were $663 million compared to $664 million for the same period in 2023. Petroleum additives operating profit for the third quarter of 2024 was $157 million compared to $140 million for the third quarter of 2023. The increase in petroleum additives operating profit was mainly due to lower raw material and operating costs, partially offset by lower selling prices. We remain pleased with the strong performance of our petroleum additives business during the first 9 months of 2024. We continue to see the favorable results of our ongoing focus on margin management. Managing our operating cost, our inventory levels and our portfolio profitability will remain priorities throughout 2024. We completed the acquisition of American Pacific Corp., AMPAC, on January 16, 2024. We report the financial results of our AMPAC business since the date of acquisition in our specialty materials segment. Specialty materials sales were $59 million for the third quarter of 2024 and $114 million for the first 9 months of 2024. Specialty Materials operating profit for the third quarter and first 9 months of 2024 were $16 million. The specialty materials third quarter and first 9 months 2024 results reflect the sale of AMPAC finished goods inventory that we acquired at closing. The acquired inventory was recorded at fair value on the acquisition date and was sold during the first 9 months of 2024, generating no margin. We expect to see substantial variation in quarterly results for AMPAC due to the nature of its business, and we anticipate full year 2024 results to be consistent with our preacquisition expectations. Our operations produced strong cash flows during the quarter. We paid dividends of $24 million and funded capital expenditures of $14 million. Since the AMPAC acquisition, we have made net payments of $259 million on our revolving credit facility. As of September 30, 2024, our net debt-to-EBITDA ratio was 1.4, which is slightly below our target operating range of 1.5 to 2. For 2024, we expect to see capital expenditures in the $50 million to $70 million range. We want to thank our dedicated employees for their hard work in welcoming and integrating AMPAC into our family of companies. Our team continues to make decisions to promote long-term value for our shareholders and customers and remain 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. Thank you for joining me for the call today. Kelly, that concludes our planned comments. We are available for questions via e-mail or by phone. So please feel free to contact me directly. Thank you all again, and we will talk to you next quarter.
Operator:
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