neu-20220630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


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

For the quarterly period ended June 30, 2022


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

For the transition period from to

Commission File Number 1-32190

NEWMARKET CORPORATION

(Exact name of registrant as specified in its charter)


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)

Registrant’s telephone number, including area code - (804) 788-5000

Securities registered pursuant to Section 12(b) of the Act:


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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No x

Number of shares of common stock, with no par value, outstanding as of July 31, 2022: 10,013,045

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NEWMARKET CORPORATION

INDEX


			Page Number
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements (unaudited)
Consolidated Statements of Income - Second Quarter and Six Months Ended June 3 0 , 2022 and June 3 0 , 2021			4
Consolidated Statements of Comprehensive Income - Second Quarter and Six Months Ended June 30, 2022 and June 30, 2021			5
Condensed Consolidated Balance Sheets - June 30, 2022 and December 31, 2021			6
Consolidated Statements of Shareholders' Equity - Second Quarter and Six Months Ended June 30, 2022 and June 30, 2021			7
Condensed Consolidated Statements of Cash Flows - Six Months Ended June 30, 2022 and June 30, 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			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			22
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings			23
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds			23
ITEM 6. Exhibits			23
SIGNATURES			24

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PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

NEWMARKET CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)


(in thousands, except per-share amounts)	Second Quarter Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Net sales	$	723,639	$	590,721	$	1,386,191	$	1,157,336
Cost of goods sold	566,163		449,722		1,073,552		854,584
Gross profit	157,476		140,999		312,639		302,752
Selling, general, and administrative expenses	38,489		34,735		74,111		71,650
Research, development, and testing expenses	35,396		35,517		71,647		71,854
Operating profit	83,591		70,747		166,881		159,248
Interest and financing expenses, net	7,084		8,869		16,490		15,212
Loss on early extinguishment of debt	0		0		7,545		0
Other income (expense), net	9,101		5,180		16,269		12,392
Income before income tax expense	85,608		67,058		159,115		156,428
Income tax expense	19,136		15,106		33,325		34,764
Net income	$	66,472	$	51,952	$	125,790	$	121,664
Earnings per share - basic and diluted	$	6.54	$	4.75	$	12.28	$	11.13
Cash dividends declared per share	$	2.10	$	1.90	$	4.20	$	3.80

See accompanying Notes to Condensed Consolidated Financial Statements

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NEWMARKET CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


(in thousands)	Second Quarter Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Net income	$	66,472	$	51,952	$	125,790	$	121,664
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 $(157) in second quarter 2022, $(156) in second quarter 2021, $(313) in six months 2022, and $(315) in six months 2021	(498)		(494)		(994)		(985)
Actuarial net gain (loss) arising during the period, net of income tax expense (benefit) of $0 in second quarter 2022, $0 in second quarter 2021, $7 in six months 2022, and $(219) in six months 2021	0		0		16		(657)
Amortization of actuarial net loss (gain) included in net periodic benefit cost (income), net of income tax expense (benefit) of $173 in second quarter 2022, $575 in second quarter 2021, $348 in six months 2022, and $1,104 in six months 2021	531		1,749		1,070		3,539
Total pension plans and other postretirement benefits	33		1,255		92		1,897




Foreign currency translation adjustments, net of income tax expense (benefit) of $(658) in second quarter 2022, $785 in second quarter 2021, $473 in six months 2022, and $321 in six months 2021	(29,176)		5,853		(32,278)		6,320




Other comprehensive income (loss)	(29,143)		7,108		(32,186)		8,217
Comprehensive income	$	37,329	$	59,060	$	93,604	$	129,881

See accompanying Notes to Condensed Consolidated Financial Statements

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NEWMARKET CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


(in thousands, except share amounts)	June 30, 2022		December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	79,491	$	83,304
Marketable securities	0		375,918
Trade and other accounts receivable, less allowance for credit losses	515,002		391,779
Inventories	530,186		498,539
Prepaid expenses and other current assets	36,282		38,633
Total current assets	1,160,961		1,388,173
Property, plant, and equipment, net	663,462		676,770
Intangibles (net of amortization) and goodwill	126,842		127,752
Prepaid pension cost	248,575		242,604
Operating lease right-of-use assets	66,821		68,402

Deferred charges and other assets	64,010		54,735
Total assets	$	2,330,671	$	2,558,436
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	320,930	$	246,097
Accrued expenses	76,177		85,103
Dividends payable	16,555		16,648
Income taxes payable	9,677		4,442
Operating lease liabilities	16,018		15,709
Current portion of long-term debt	0		349,434
Other current liabilities	7,277		7,654
Total current liabilities	446,634		725,087
Long-term debt	911,295		789,853
Operating lease liabilities-noncurrent	50,468		52,591
Other noncurrent liabilities	200,939		228,776
Total liabilities	1,609,336		1,796,307
Commitments and contingencies (Note 9)
Shareholders’ equity:
Common stock and paid-in capital (with no par value; authorized shares - 80,000,000; issued and outstanding shares - 10,079,643 at June 30, 2022 and 10,362,722 at December 31, 2021)	0		0
Accumulated other comprehensive loss	(114,413)		(82,227)
Retained earnings	835,748		844,356
Total shareholders' equity	721,335		762,129
Total liabilities and shareholders’ equity	$	2,330,671	$	2,558,436

See accompanying Notes to Condensed Consolidated Financial Statements

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NEWMARKET CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited)


(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 March 31, 2021	10,928,154	$	1,190	$	(172,055)	$	981,220	$	810,355
Net income						51,952		51,952
Other comprehensive income (loss)				7,108				7,108
Cash dividends ($1.90 per share)						(20,763)		(20,763)


Stock-based compensation	(25)	558						558
Balance at June 30, 2021	10,928,129	$	1,748	$	(164,947)	$	1,012,409	$	849,210

Balance at March 31, 2022	10,254,703	$	0	$	(85,270)	$	845,360	$	760,090
Net income						66,472		66,472
Other comprehensive income (loss)				(29,143)				(29,143)
Cash dividends ($2.10 per share)						(21,290)		(21,290)
Repurchases of common stock	(173,941)	(678)				(54,820)		(55,498)

Stock-based compensation	(1,119)	678				26		704
Balance at June 30, 2022	10,079,643	$	0	$	(114,413)	$	835,748	$	721,335

Balance at December 31, 2020	10,921,377	$	717	$	(173,164)	$	932,271	$	759,824
Net income						121,664		121,664
Other comprehensive income (loss)				8,217				8,217
Cash dividends ($3.80 per share)						(41,526)		(41,526)



Stock-based compensation	6,752	1,031						1,031
Balance at June 30, 2021	10,928,129	$	1,748	$	(164,947)	$	1,012,409	$	849,210

Balance at December 31, 2021	10,362,722	$	0	$	(82,227)	$	844,356	$	762,129
Net income						125,790		125,790
Other comprehensive income (loss)				(32,186)				(32,186)
Cash dividends ($4.20 per share)						(42,860)		(42,860)
Repurchases of common stock	(289,737)	(1,275)				(91,570)		(92,845)


Stock-based compensation	6,658	1,275				32		1,307
Balance at June 30, 2022	10,079,643	$	0	$	(114,413)	$	835,748	$	721,335

See accompanying Notes to Condensed Consolidated Financial Statements

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NEWMARKET CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


(in thousands)	Six Months Ended June 30,
	2022		2021
Cash and cash equivalents at beginning of year	$	83,304	$	125,172
Cash flows from operating activities:
Net income	125,790		121,664
Adjustments to reconcile net income to cash flows from operating activities:
Depreciation and amortization	41,670		41,719
Deferred income tax (benefit) expense	(21,036)		6,654
Loss on early extinguishment of debt	7,545		0

Working capital changes	(114,665)		(59,484)
Loss on marketable securities	2,977		2,314
Cash pension and postretirement contributions	(4,863)		(5,184)
Other, net	(13,052)		(3,629)
Cash provided from (used in) operating activities	24,366		104,054
Cash flows from investing activities:
Capital expenditures	(27,807)		(44,394)
Purchases of marketable securities	(787)		(387,653)
Proceeds from sales and maturities of marketable securities	372,846		9,894

Cash provided from (used in) investing activities	344,252		(422,153)
Cash flows from financing activities:
Redemption of 4.10% senior notes	(350,000)		0
Net borrowings under revolving credit facility	121,000		0
Issuance of 2.70% senior notes	0		395,052
Dividends paid	(42,860)		(41,526)
Repurchases of common stock	(90,782)

SEC Form 10-Q filed by NewMarket Corp