Q1 2024 NewMarket Corporation Earnings Call

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Speaker Change: Greetings and welcome to new market corporations conference call and webcast to review first quarter 'twenty 'twenty four financial results. At this time all participants are in a listen only mode. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad. Please note. Please note. This conference is being recorded.

Operator: Greetings. Welcome to NewMarket Corporation's conference call and webcast to review first quarter 2024 financial results. At this time, all participants are in a listen-only mode. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Bill Skrobacz, Vice President and CFO at NewMarket Corporation. Bill, you may begin

William J. Skrobacz: I will now turn the conference over to your host Bill <unk>, Vice President and CFO at Newmarket corporations build you may begin.

William J. Skrobacz: Thank you Paul and thanks to everyone for joining me this afternoon.

William J. Skrobacz: Thank you, Paul, 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.

William J. Skrobacz: 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.

William J. Skrobacz: During this call I will also discuss the non-GAAP financial measures, including than they are in the 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.

William J. Skrobacz: We filed our 10-Q this morning, and 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 first quarter of 2024 was $108,000,000, or $11.23 a share, compared to net income of $98,000,000, or $10.09 a share, for the first quarter of last year. Petroleum additive sales for the first three months of 2024 were $677 million, compared to $700 million for the same period in 2023.

William J. Skrobacz: 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.

William J. Skrobacz: Net income for the first quarter of 2024 was $108 million or $11 23, a share compared to net income or $98 million or $10 nine a share for the first quarter of last year petroleum additives sales for the first three months of 2024 were 600.

William J. Skrobacz: 77 million compared to 700 million for the same period in 2023.

William J. Skrobacz: Petroleum Additive's operating profit for the first quarter was $151 million, compared to $132 million for the first quarter of 2023. The increase was mainly due to lower raw material and operating costs, partially offset by lower selling prices and product mix.

William J. Skrobacz: Additives operating profit for the first quarter was $151 million compared to $132 million for the first quarter of 2023. The increase was mainly due to lower raw material and operating costs, partially offset by lower selling prices and product mix shipment.

William J. Skrobacz: Shipments increased 5 percent between quarterly periods, with increases in both lubricant additives and fuel additive shipments across all regions except Latin America, which reported a decrease in lubricant additive shipments, and North America, which reported a decrease in fuel additive shipments. We're pleased with the strong performance of our petroleum additive business during the first quarter of 2024. This was the sixth consecutive quarter with operating profit over $100 million. We are seeing evidence that our efforts to control operating costs are taking hold.

William J. Skrobacz: Shipments increased 5% between quarterly periods with increases in both lubricant additives and fuel additive shipments across all regions, except Latin America, which reported a decrease in lubricant additive shipments in North America, which reported a decrease in fuel additive shipments.

William J. Skrobacz: We're pleased with the strong performance of our petroleum additives business. During the first quarter of 2024. It is the sixth consecutive quarter with operating profit over $100 million.

William J. Skrobacz: We are seeing evidence that our efforts to control operating costs are taking hold throughout 2020 for managing our operating costs, our inventory levels and our portfolio profitability, while continuing our investment in technology will remain priorities.

William J. Skrobacz: Throughout 2024, managing our operating costs, our inventory levels, and our portfolio profitability while continuing our investment in technology will remain a priority. We completed the acquisition of American Pacific Corporation, or Ampac, on January 16, 2024 for approximately $700 million. Our first quarter results include 76 days of Ampac operations. The financial results of our Ampac business are included in our new Specialty Materials segment. Specialty materials sales for the first quarter of 2024 were $17 million, and we reported an operating loss of $5 million. The loss primarily resulted from the sale of Ampac finished goods inventory we acquired. This inventory was recorded at fair market value on the acquisition date and sold during the first quarter, generating no margin.

William J. Skrobacz: We completed the acquisition of American Pacific Corporation are AMPAC on January 16th 2024 for approximately $700 million. Our first quarter results include 76 days of impact operations. The financial results of our impact business are include.

William J. Skrobacz: And our new specialty materials segment.

William J. Skrobacz: Specialty materials sales for the first quarter of 2024 were $17 million and we reported an operating loss of $5 million. The loss primarily results from the sale of AMPAC finished goods inventory. We acquired this inventory was recorded at fair market value on the acquisition date and so.

William J. Skrobacz: During the first quarter generating no margin, we may see substantial variation in our quarterly results for am Pak on an ongoing basis due to the nature of the business and we anticipate full year results to be consistent with our pre acquisition expectations.

William J. Skrobacz: We may see substantial variation in our quarterly results for Ampac on an ongoing basis due to the nature of the business, and we anticipate full-year results to be consistent with our pre-acquisition expectations. We generated solid cash flows from operations during the quarter, we funded capital expenditures of $14 million, and we paid dividends of $24 million. In February, our board approved an 11% increase in our quarterly dividend rate. The acquisition of Ampac was funded by cash on hand and borrowings of approximately $690 million under our then existing revolving credit facility.

William J. Skrobacz: We generated solid cash flows from operations during the quarter, we funded capital expenditures of $14 million and we paid dividends of $24 million our fab in February our board approved an 11% increase in our quarterly dividend rate.

William J. Skrobacz: The acquisition of AMPAC was funded by cash on hand, and borrowings of approximately $690 million under our then existing revolver revolving credit facility on January 22nd 'twenty 'twenty four we replace that facility with a new 900 million dollar revolving credit.

William J. Skrobacz: On January 22, 2024, we replaced that facility with a new $900 million revolving credit facility and entered into a $200 million unsecured term loan. As of March 31st, 2024, our net debt to EBITDA ratio was 1.9, which is within our target operating range of 1.5 to 2.0.

William J. Skrobacz: Facility and entered into a 200 million unsecured term loan as of March 31, 2024, our net debt to EBITDA ratio was 1.9, which is within our target operating range of one five to two well.

William J. Skrobacz: We anticipate continued strength in our petroleum additive segment and we look forward to the successful integration of Ampac into the NewMarket family of companies. As a team, we will remain focused on maintaining long-term relationships with our customers, developing new products and technology to meet their needs, both now and in the future, and providing top-quality customer service. We believe the fundamentals of how we run our business, a long-term view, a safety-first culture, customer-focused solutions, technology-driven product offerings, and a world-class supply chain capability will continue to be beneficial for all our stakeholders.

William J. Skrobacz: We anticipate continued strength in our petroleum additives segment, we look forward to the successful integration.

William J. Skrobacz: The impact into the new market family of companies as a team we will remain focused on maintaining long term relationships with our customers developing new products and technology to meet their needs, both now and in the future and providing top quality customer service.

William J. Skrobacz: 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 a world class supply chain capability will continue to be beneficial for all our stakeholders.

William J. Skrobacz: Thank you for joining us on the call today. Paul, that concludes our planned comments. We are available for questions via email or by phone, so please feel free to contact me directly. Thank you all again, and we will talk to you next quarter.

Speaker Change: Thank you for joining.

William J. Skrobacz: Leading the call today, Paul that concludes our planned comments, we are available for questions via email or by phone. So please feel free to contact me directly. Thank you all again and we will talk to you next quarter.

Paul: Thank you. This does conclude today's conference you may disconnect. Your lines at this time. Thank you for your participation.

Operator: Thank you. This does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.

Operator: Yeah.