neu-20230331

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 March 31, 2023


☐			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. ¨


			Page Number
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements (unaudited)
Consolidated Statements of Income - Three Months Ended March 31, 2023 and March 31, 2022			4
Consolidated Statements of Comprehensive Income - Three Months Ended March 31, 2023 and March 31, 2022			5
Condensed Consolidated Balance Sheets - March 31, 2023 and December 31, 2022			6
Consolidated Statements of Shareholders' Equity - Three Months Ended March 31, 2023 and March 31, 2022			7
Condensed Consolidated Statements of Cash Flows - Three Months Ended March 31, 2023 and March 31, 2022			8
Notes to Condensed Consolidated Financial Statements			9
Financial Statement Presentation			9
Net Sales			9
Segment Information			10
Pension Plans and Other Postretirement Benefits			10
Earnings Per Share			11
Inventories			12
Intangibles (Net of Amortization) and Goodwill			12
Long-term Debt			13
Commitments and Contingencies			13
Other Comprehensive Income (Loss) and Accumulated Other Comprehensive Loss			14
Fair Value Measurements			14
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			21
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings			22
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds			22
ITEM 6. Exhibits			22
SIGNATURES			23


(in thousands, except per-share amounts)	Three Months Ended March 31,
		2023		2022
Net sales		$	702,789	$	662,552
Cost of goods sold		504,745		507,389
Gross profit		198,044		155,163
Selling, general, and administrative expenses		39,847		35,622
Research, development, and testing expenses		33,156		36,251
Operating profit		125,041		83,290
Interest and financing expenses, net		10,773		9,406
Loss on early extinguishment of debt		0		7,545
Other income (expense), net		10,880		7,168
Income before income tax expense		125,148		73,507
Income tax expense		27,565		14,189
Net income		$	97,583	$	59,318
Earnings per share - basic and diluted		$	10.09	$	5.75
Cash dividends declared per share		$	2.10	$	2.10


(in thousands)	Three Months Ended March 31,
		2023		2022
Net income		$	97,583	$	59,318
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 $(171) in 2023 and $(156) in 2022		(547)		(496)
Actuarial net gain (loss) arising during the period, net of income tax expense (benefit) of $0 in 2023 and $7 in 2022		0		16
Amortization of actuarial net loss (gain) included in net periodic benefit cost (income), net of income tax expense (benefit) of $(118) in 2023 and $175 in 2022		(375)		539
Total pension plans and other postretirement benefits		(922)		59




Foreign currency translation adjustments, net of income tax expense (benefit) of $207 in 2023 and $1,131 in 2022		11,366		(3,102)




Other comprehensive income (loss)		10,444		(3,043)
Comprehensive income		$	108,027	$	56,275


(in thousands, except share amounts)	March 31, 2023		December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	70,115	$	68,712

Trade and other accounts receivable, less allowance for credit losses	457,203		453,692
Inventories	566,136		631,383
Prepaid expenses and other current assets	38,107		38,338
Total current assets	1,131,561		1,192,125
Property, plant, and equipment, net	658,092		659,998
Intangibles (net of amortization) and goodwill	125,754		126,069
Prepaid pension cost	310,753		302,584
Operating lease right-of-use assets, net	60,350		62,417

Deferred charges and other assets	64,261		63,625
Total assets	$	2,350,771	$	2,406,818
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	212,277	$	273,289
Accrued expenses	72,336		89,508
Dividends payable	17,861		17,850
Income taxes payable	35,248		16,109
Operating lease liabilities	14,948		15,569

Other current liabilities	5,826		11,562
Total current liabilities	358,496		423,887
Long-term debt	957,958		1,003,737
Operating lease liabilities-noncurrent	45,588		46,968
Other noncurrent liabilities	166,929		169,819
Total liabilities	1,528,971		1,644,411
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 - 9,625,959 at March 31, 2023 and 9,702,147 at December 31, 2022)	0		0
Accumulated other comprehensive loss	(61,551)		(71,995)
Retained earnings	883,351		834,402
Total shareholders' equity	821,800		762,407
Total liabilities and shareholders’ equity	$	2,350,771	$	2,406,818


(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 December 31, 2021	10,362,722	$	0	$	(82,227)	$	844,356	$	762,129
Net income						59,318		59,318
Other comprehensive income (loss)				(3,043)				(3,043)
Cash dividends ($2.10 per share)						(21,570)		(21,570)
Repurchases of common stock	(115,796)	(597)				(36,750)		(37,347)


Stock-based compensation	7,777	597				6		603
Balance at March 31, 2022	10,254,703	$	0	$	(85,270)	$	845,360	$	760,090

Balance at December 31, 2022	9,702,147	$	0	$	(71,995)	$	834,402	$	762,407
Net income						97,583		97,583
Other comprehensive income (loss)				10,444				10,444
Cash dividends ($2.10 per share)						(20,292)		(20,292)
Repurchases of common stock	(82,486)	(1,223)				(27,525)		(28,748)

Tax withholdings related to stock-based compensation	(2,417)	0				(803)		(803)
Stock-based compensation	8,715	1,223				(14)		1,209
Balance at March 31, 2023	9,625,959	$	0	$	(61,551)	$	883,351	$	821,800


(in thousands)	Actual Cash Contributions for Three Months Ended March 31, 2023		Expected Remaining Cash Contributions for Year Ending December 31, 2023
Domestic plans
Pension benefits	$	603	$	1,808
Postretirement benefits	314		943
Foreign plans
Pension benefits	1,373		4,543


	Domestic
	Pension Benefits				Postretirement Benefits
	Three Months Ended March 31,
(in thousands)	2023		2022		2023		2022
Service cost	$	2,658	$	4,856	$	130	$	260
Interest cost	4,536		3,389		391		289
Expected return on plan assets	(11,509)		(10,940)		(202)		(204)
Amortization of prior service cost (credit)	6		68		(757)		(757)
Amortization of actuarial net (gain) loss	(411)		536		(76)		8
Net periodic benefit cost (income)	$	(4,720)	$	(2,091)	$	(514)	$	(404)


		Foreign
		Pension Benefits
	Three Months Ended March 31,
(in thousands)		2023		2022
Service cost		$	1,054	$	2,360
Interest cost		1,544		1,098
Expected return on plan assets		(2,841)		(2,635)
Amortization of prior service cost (credit)		34		37
Amortization of actuarial net (gain) loss		(6)		169
Net periodic benefit cost (income)		$	(215)	$	1,029


	March 31,		December 31,
(in thousands)	2023		2022
Finished goods and work-in-process	$	455,168	$	497,652
Raw materials	89,873		113,484
Stores, supplies, and other	21,095		20,247
	$	566,136	$	631,383


	March 31, 2023				December 31, 2022
(in thousands)	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Amortizing intangible assets
Formulas and technology	$	6,200	$	5,942	$	6,200	$	5,683
Contract	2,000		1,250		2,000		1,200
Customer base	5,440		4,397		5,440		4,350

Goodwill	123,703				123,662
	$	137,343	$	11,589	$	137,302	$	11,233


(in thousands)	Three Months Ended March 31,
	2023		2022
Cash and cash equivalents at beginning of year	$	68,712	$	83,304
Cash flows from operating activities:
Net income	97,583		59,318
Adjustments to reconcile net income to cash flows from operating activities:
Depreciation and amortization	20,313		21,072
Deferred income tax benefit	(4,932)		(12,135)
Loss on early extinguishment of debt	0		7,545

Working capital changes	9,795		(66,987)
Loss on marketable securities	0		2,977
Cash pension and postretirement contributions	(2,290)		(2,099)
Other, net	(10,554)		(2,910)
Cash provided from (used in) operating activities	109,915		6,781
Cash flows from investing activities:
Capital expenditures	(11,881)		(12,612)
Purchases of marketable securities	0		(787)
Proceeds from sales and maturities of marketable securities	0		372,846

Cash provided from (used in) investing activities	(11,881)		359,447
Cash flows from financing activities:
Net (repayments) borrowings under revolving credit facility	(46,000)		51,000

Dividends paid	(20,292)		(21,570)
Repurchases of common stock	(28,479)		(37,347)
Redemption of 4.10% senior notes	0		(350,000)
Cash costs of 4.10% senior notes redemption	0		(7,099)

Other, net	(2,280)		(833)
Cash provided from (used in) financing activities	(97,051)		(365,849)
Effect of foreign exchange on cash and cash equivalents	420		867
Increase in cash and cash equivalents	1,403		1,246
Cash and cash equivalents at end of period	$	70,115	$	84,550


	Three Months Ended March 31,
(in thousands)		2023		2022
Net sales
United States		$	256,398	$	224,688
Europe, Middle East, Africa, India		204,210		195,987
Asia Pacific		151,949		157,544
Other foreign		90,232		84,333
Net sales		$	702,789	$	662,552


	Three Months Ended March 31,
(in thousands)		2023		2022
Petroleum additives
Lubricant additives		$	602,574	$	570,042
Fuel additives		97,417		90,262
Total		699,991		660,304
All other		2,798		2,248
Net sales		$	702,789	$	662,552


2023	$	551
2024	390
2025	390
2026	390
2027	190
2028	140



Three months ended March 31, 2023			356

Three months ended March 31, 2022			355


(in thousands)	Pension Plans and Other Postretirement Benefits		Foreign Currency Translation Adjustments		Accumulated Other Comprehensive (Loss) Income
Balance at December 31, 2021	$	1,522	$	(83,749)	$	(82,227)
Other comprehensive income (loss) before reclassifications	16		(3,102)		(3,086)
Amounts reclassified from accumulated other comprehensive loss (a)	43		0		43
Other comprehensive income (loss)	59		(3,102)		(3,043)
Balance at March 31, 2022	$	1,581	$	(86,851)	$	(85,270)

Balance at December 31, 2022	$	54,562	$	(126,557)	$	(71,995)
Other comprehensive income (loss) before reclassifications	0		11,366		11,366
Amounts reclassified from accumulated other comprehensive loss (a)	(922)		0		(922)
Other comprehensive income (loss)	(922)		11,366		10,444
Balance at March 31, 2023	$	53,640	$	(115,191)	$	(61,551)


	Three Months Ended March 31,
(in millions)		2023		2022
Petroleum additives
Lubricant additives		$	602.6	$	570.0
Fuel additives		97.4		90.3
Total		700.0		660.3
All other		2.8		2.3
Net sales		$	702.8	$	662.6

SEC Form 10-Q filed by NewMarket Corp