neu-20230930

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, 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 - T hird Quarter and Nine Months Ended September 30, 2023 and September 30, 2022			4
Consolidated Statements of Comprehensive Income - Third Quarter and Nine Months Ended September 30, 2023 and September 30, 2022			5
Condensed Consolidated Balance Sheets - September 30, 2023 and December 31, 2022			6
Consolidated Statements of Shareholders' Equity - Third Quarter and Nine Months Ended September 30, 2023 and September 30, 2022			7
Condensed Consolidated Statements of Cash Flows - Nine Months Ended September 30, 2023 and September 30, 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			23
ITEM 5. Other Information			23
ITEM 6. Exhibits			23
SIGNATURES			24


(in thousands, except per-share amounts)	Third Quarter Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Net sales	$	667,150	$	696,049	$	2,055,069	$	2,082,240
Cost of goods sold	465,445		547,742		1,459,682		1,621,294
Gross profit	201,705		148,307		595,387		460,946
Selling, general, and administrative expenses	37,386		35,192		114,671		109,303
Research, development, and testing expenses	31,894		34,388		99,008		106,035
Operating profit	132,425		78,727		381,708		245,608
Interest and financing expenses, net	9,221		8,369		30,249		24,859
Loss on early extinguishment of debt	0		0		0		7,545
Other income (expense), net	11,278		9,971		32,881		26,240
Income before income tax expense	134,482		80,329		384,340		239,444
Income tax expense	23,235		17,103		75,886		50,428
Net income	$	111,247	$	63,226	$	308,454	$	189,016
Earnings per share - basic and diluted	$	11.60	$	6.32	$	32.05	$	18.60
Cash dividends declared per share	$	2.25	$	2.10	$	6.60	$	6.30


(in thousands)	Third Quarter Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Net income	$	111,247	$	63,226	$	308,454	$	189,016
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 $(159) in third quarter 2023, $0 in third quarter 2022, $(159) in nine months 2023, and $0 in nine months 2022	(489)		0		(489)		0
Amortization of prior service cost (credit) included in net periodic benefit cost (income), net of income tax expense (benefit) of $(141) in third quarter 2023, $(157) in third quarter 2022, $(482) in nine months 2023, and $(470) in nine months 2022	(454)		(500)		(1,547)		(1,494)
Actuarial net gain (loss) arising during the period, net of income tax expense (benefit) of $(239) in third quarter 2023, $583 in third quarter 2022, $(239) in nine months 2023, and $590 in nine months 2022	(784)		1,812		(784)		1,828
Amortization of actuarial net loss (gain) included in net periodic benefit cost (income), net of income tax expense (benefit) of $(105) in third quarter 2023, $145 in third quarter 2022, $(342) in nine months 2023, and $493 in nine months 2022	(332)		445		(1,081)		1,515
Total pension plans and other postretirement benefits	(2,059)		1,757		(3,901)		1,849




Foreign currency translation adjustments, net of income tax expense (benefit) of $(327) in third quarter 2023, $(194) in third quarter 2022, $371 in nine months 2023, and $279 in nine months 2022	(9,966)		(35,973)		9,114		(68,251)




Other comprehensive income (loss)	(12,025)		(34,216)		5,213		(66,402)
Comprehensive income	$	99,222	$	29,010	$	313,667	$	122,614


(in thousands, except share amounts)	September 30, 2023		December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	102,560	$	68,712

Trade and other accounts receivable, less allowance for credit losses	427,764		453,692
Inventories	503,411		631,383
Prepaid expenses and other current assets	31,859		38,338
Total current assets	1,065,594		1,192,125
Property, plant, and equipment, net	649,968		659,998
Intangibles (net of amortization) and goodwill	124,620		126,069
Prepaid pension cost	323,055		302,584
Operating lease right-of-use assets, net	64,272		62,417

Deferred charges and other assets	62,886		63,625
Total assets	$	2,290,395	$	2,406,818
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	215,108	$	273,289
Accrued expenses	72,301		89,508
Dividends payable	18,894		17,850
Income taxes payable	6,058		16,109
Operating lease liabilities	13,963		15,569

Other current liabilities	5,880		11,562
Total current liabilities	332,204		423,887
Long-term debt	779,401		1,003,737
Operating lease liabilities-noncurrent	49,093		46,968
Other noncurrent liabilities	157,754		169,819
Total liabilities	1,318,452		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 - 9,590,151 at September 30, 2023 and 9,702,147 at December 31, 2022)	1,557		0
Accumulated other comprehensive loss	(66,782)		(71,995)
Retained earnings	1,037,168		834,402
Total shareholders' equity	971,943		762,407
Total liabilities and shareholders’ equity	$	2,290,395	$	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 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 June 30, 2023	9,589,239	$	0	$	(54,757)	$	947,497	$	892,740
Net income						111,247		111,247
Other comprehensive income (loss)				(12,025)				(12,025)
Cash dividends ($2.25 per share)						(21,578)		(21,578)

Tax withholdings related to stock-based compensation	(76)	(33)						(33)
Stock-based compensation	988	1,590				2		1,592
Balance at September 30, 2023	9,590,151	$	1,557	$	(66,782)	$	1,037,168	$	971,943

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

Balance at December 31, 2022	9,702,147	$	0	$	(71,995)	$	834,402	$	762,407
Net income						308,454		308,454
Other comprehensive income (loss)				5,213				5,213
Cash dividends ($6.60 per share)						(63,457)		(63,457)
Repurchases of common stock	(119,075)	(1,857)				(41,419)		(43,276)

Tax withholdings related to stock-based compensation	(2,493)	(33)				(803)		(836)
Stock-based compensation	9,572	3,447				(9)		3,438
Balance at September 30, 2023	9,590,151	$	1,557	$	(66,782)	$	1,037,168	$	971,943


(in thousands)	Actual Cash Contributions for Nine Months Ended September 30, 2023		Expected Remaining Cash Contributions for Year Ending December 31, 2023
Domestic plans
Pension benefits	$	1,793	$	598
Postretirement benefits	831		277
Foreign plans
Pension benefits	4,508		2,234


	Domestic
	Pension Benefits				Postretirement Benefits
	Third Quarter Ended September 30,
(in thousands)	2023		2022		2023		2022
Service cost	$	2,482	$	4,490	$	130	$	299
Interest cost	4,587		3,332		404		294
Expected return on plan assets	(11,510)		(10,945)		(182)		(185)
Amortization of prior service cost (credit)	127		68		(757)		(757)
Amortization of actuarial net (gain) loss	(376)		419		(55)		22
Net periodic benefit cost (income)	$	(4,690)	$	(2,636)	$	(460)	$	(327)


	Foreign
	Pension Benefits
	Third Quarter Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
Service cost	$	1,094	$	2,123	$	3,222	$	6,735
Interest cost	1,615		993		4,736		3,141
Expected return on plan assets	(2,973)		(2,362)		(8,713)		(7,506)
Amortization of prior service cost (credit)	36		33		104		105
Amortization of actuarial net (gain) loss	(6)		152		(18)		483
Net periodic benefit cost (income)	$	(234)	$	939	$	(669)	$	2,958


	September 30, 2023				December 31, 2022
(in thousands)	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Amortizing intangible assets
Formulas and technology	$	6,200	$	6,200	$	6,200	$	5,683
Contract	2,000		2,000		2,000		1,200
Customer base	5,440		4,492		5,440		4,350

Goodwill	123,672				123,662
	$	137,312	$	12,692	$	137,302	$	11,233


Third quarter ended September 30, 2023	$	748
Nine months ended September 30, 2023	1,459
Third quarter ended September 30, 2022	356
Nine months ended September 30, 2022	1,067


(in thousands)	Nine Months Ended September 30,
	2023		2022
Cash and cash equivalents at beginning of year	$	68,712	$	83,304
Cash flows from operating activities:
Net income	308,454		189,016
Adjustments to reconcile net income to cash flows from operating activities:
Depreciation and amortization	57,665		62,160
Deferred income tax benefit	(16,336)		(33,685)
Loss on early extinguishment of debt	0		7,545

Working capital changes	71,900		(198,637)
Loss on marketable securities	0		2,977
Cash pension and postretirement contributions	(7,132)		(7,111)
Other, net	(9,335)		(6,303)
Cash provided from (used in) operating activities	405,216		15,962
Cash flows from investing activities:
Capital expenditures	(34,793)		(40,402)
Purchases of marketable securities	0		(787)
Proceeds from sales and maturities of marketable securities	0		372,846

Cash provided from (used in) investing activities	(34,793)		331,657
Cash flows from financing activities:
Net (repayments) borrowings under revolving credit facility	(225,000)		218,000

Dividends paid	(63,457)		(63,790)
Repurchases of common stock	(42,864)		(150,754)
Redemption of 4.10% senior notes	0		(350,000)
Cash costs of 4.10% senior notes redemption	0		(7,099)

Other, net	(4,219)		(2,496)
Cash provided from (used in) financing activities	(335,540)		(356,139)
Effect of foreign exchange on cash and cash equivalents	(1,035)		(2,812)
Increase (decrease) in cash and cash equivalents	33,848		(11,332)
Cash and cash equivalents at end of period	$	102,560	$	71,972


	Third Quarter Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
Net sales
United States	$	246,462	$	242,631	$	745,470	$	716,913
Europe, Middle East, Africa, India	200,843		217,108		607,913		616,438
Asia Pacific	129,717		150,144		433,905		483,413
Other foreign	90,128		86,166		267,781		265,476
Net sales	$	667,150	$	696,049	$	2,055,069	$	2,082,240


2023	$	48
2024	190
2025	190
2026	190
2027	190
2028	140


(in thousands)	September 30, 2023		December 31, 2022
Senior notes - 2.70% due 2031 (net of related deferred financing costs)	$	393,401	$	392,737
Senior notes - 3.78% due 2029	250,000		250,000
Revolving credit facility	136,000		361,000
	$	779,401	$	1,003,737


(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	1,828		(68,251)		(66,423)
Amounts reclassified from accumulated other comprehensive loss (a)	21		0		21
Other comprehensive income (loss)	1,849		(68,251)		(66,402)
Balance at September 30, 2022	$	3,371	$	(152,000)	$	(148,629)

Balance at December 31, 2022	$	54,562	$	(126,557)	$	(71,995)
Other comprehensive income (loss) before reclassifications	(1,273)		9,114		7,841
Amounts reclassified from accumulated other comprehensive loss (a)	(2,628)		0		(2,628)
Other comprehensive income (loss)	(3,901)		9,114		5,213
Balance at September 30, 2023	$	50,661	$	(117,443)	$	(66,782)


	Third Quarter Ended September 30,				Nine Months Ended September 30,
(in millions)	2023		2022		2023		2022
Petroleum additives
Lubricant additives	$	562.7	$	582.6	$	1,753.8	$	1,775.6
Fuel additives	101.0

SEC Form 10-Q filed by NewMarket Corp