neu-20220930

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 September 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 September 30, 2022: 9,871,440

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NEWMARKET CORPORATION

INDEX


			Page Number
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements (unaudited)
Consolidated Statements of Income - Third Quarter and Nine Months Ended September 30, 2022 and September 30, 2021			4
Consolidated Statements of Comprehensive Income - Third Quarter and Nine Months Ended September 30, 2022 and September 30, 2021			5
Condensed Consolidated Balance Sheets - September 30, 2022 and December 31, 2021			6
Consolidated Statements of Shareholders' Equity - Third Quarter and Nine Months Ended September 30, 2022 and September 30, 2021			7
Condensed Consolidated Statements of Cash Flows - Nine Months Ended September 30, 2022 and September 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
Recent Accounting Pronouncements			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)	Third Quarter Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Net sales	$	696,049	$	622,207	$	2,082,240	$	1,779,543
Cost of goods sold	547,742		483,986		1,621,294		1,338,570
Gross profit	148,307		138,221		460,946		440,973
Selling, general, and administrative expenses	35,192		39,729		109,303		111,379
Research, development, and testing expenses	34,388		35,387		106,035		107,241
Operating profit	78,727		63,105		245,608		222,353
Interest and financing expenses, net	8,369		9,345		24,859		24,557
Loss on early extinguishment of debt	0		0		7,545		0
Other income (expense), net	9,971		7,393		26,240		19,785
Income before income tax expense	80,329		61,153		239,444		217,581
Income tax expense	17,103		9,115		50,428		43,879
Net income	$	63,226	$	52,038	$	189,016	$	173,702
Earnings per share - basic and diluted	$	6.32	$	4.80	$	18.60	$	15.94
Cash dividends declared per share	$	2.10	$	2.10	$	6.30	$	5.90

See accompanying Notes to Condensed Consolidated Financial Statements

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NEWMARKET CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


(in thousands)	Third Quarter Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Net income	$	63,226	$	52,038	$	189,016	$	173,702
Other comprehensive income (loss):
Pension plans and other postretirement benefits:
Prior service credit (cost) arising during the period, net of income tax expense (benefit) of $0 in third quarter and nine months 2022, $8 in third quarter and nine months 2021	0		27		0		27
Amortization of prior service cost (credit) included in net periodic benefit cost (income), net of income tax expense (benefit) of $(157) in third quarter 2022, $(157) in third quarter 2021, $(470) in nine months 2022, and $(472) in nine months 2021	(500)		(496)		(1,494)		(1,481)
Actuarial net gain (loss) arising during the period, net of income tax expense (benefit) of $583 in third quarter 2022, $(433) in third quarter 2021, $590 in nine months 2022, and $(652) in nine months 2021	1,812		(1,363)		1,828		(2,020)
Amortization of actuarial net loss (gain) included in net periodic benefit cost (income), net of income tax expense (benefit) of $145 in third quarter 2022, $593 in third quarter 2021, $493 in nine months 2022, and $1,697 in nine months 2021	445		1,806		1,515		5,345
Total pension plans and other postretirement benefits	1,757		(26)		1,849		1,871




Foreign currency translation adjustments, net of income tax expense (benefit) of $(194) in third quarter 2022, $(535) in third quarter 2021, $279 in nine months 2022, and $(214) in nine months 2021	(35,973)		(7,401)		(68,251)		(1,081)




Other comprehensive income (loss)	(34,216)		(7,427)		(66,402)		790
Comprehensive income	$	29,010	$	44,611	$	122,614	$	174,492

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)	September 30, 2022		December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	71,972	$	83,304
Marketable securities	0		375,918
Trade and other accounts receivable, less allowance for credit losses	476,061		391,779
Inventories	592,222		498,539
Prepaid expenses and other current assets	33,847		38,633
Total current assets	1,174,102		1,388,173
Property, plant, and equipment, net	653,231		676,770
Intangibles (net of amortization) and goodwill	126,323		127,752
Prepaid pension cost	254,695		242,604
Operating lease right-of-use assets, net	64,213		68,402

Deferred charges and other assets	64,280		54,735
Total assets	$	2,336,844	$	2,558,436
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	285,475	$	246,097
Accrued expenses	85,549		85,103
Dividends payable	19,357		16,648
Income taxes payable	10,887		4,442
Operating lease liabilities	15,742		15,709
Current portion of long-term debt	0		349,434
Other current liabilities	9,125		7,654
Total current liabilities	426,135		725,087
Long-term debt	1,008,516		789,853
Operating lease liabilities-noncurrent	47,900		52,591
Other noncurrent liabilities	186,917		228,776
Total liabilities	1,669,468		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 - 9,871,440 at September 30, 2022 and 10,362,722 at December 31, 2021)	0		0
Accumulated other comprehensive loss	(148,629)		(82,227)
Retained earnings	816,005		844,356
Total shareholders' equity	667,376		762,129
Total liabilities and shareholders’ equity	$	2,336,844	$	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 June 30, 2021	10,928,129	$	1,748	$	(164,947)	$	1,012,409	$	849,210
Net income						52,038		52,038
Other comprehensive income (loss)				(7,427)				(7,427)
Cash dividends ($2.10 per share)						(22,590)		(22,590)
Repurchases of common stock	(292,392)	(2,748)				(96,712)		(99,460)

Stock-based compensation	1,310	1,000				2		1,002
Balance at September 30, 2021	10,637,047	$	0	$	(172,374)	$	945,147	$	772,773

Balance at June 30, 2022	10,079,643	$	0	$	(114,413)	$	835,748	$	721,335
Net income						63,226		63,226
Other comprehensive income (loss)				(34,216)				(34,216)
Cash dividends ($2.10 per share)						(20,930)		(20,930)
Repurchases of common stock	(209,538)	(298)				(62,042)		(62,340)

Stock-based compensation	1,335	298				3		301
Balance at September 30, 2022	9,871,440	$	0	$	(148,629)	$	816,005	$	667,376

Balance at December 31, 2020	10,921,377	$	717	$	(173,164)	$	932,271	$	759,824
Net income						173,702		173,702
Other comprehensive income (loss)				790				790
Cash dividends ($5.90 per share)						(64,116)		(64,116)
Repurchases of common stock	(292,392)	(2,748)				(96,712)		(99,460)


Stock-based compensation	8,062	2,031				2		2,033
Balance at September 30, 2021	10,637,047	$	0	$	(172,374)	$	945,147	$	772,773

Balance at December 31, 2021	10,362,722	$	0	$	(82,227)	$	844,356	$	762,129
Net income						189,016		189,016
Other comprehensive income (loss)				(66,402)				(66,402)
Cash dividends ($6.30 per share)						(63,790)		(63,790)
Repurchases of common stock	(499,275)	(1,573)				(153,612)		(155,185)


Stock-based compensation	7,993	1,573				35		1,608
Balance at September 30, 2022	9,871,440	$	0	$	(148,629)	$	816,005	$	667,376

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)

Nine Months Ended
September 30,

SEC Form 10-Q filed by NewMarket Corp