Q2 2024 NewMarket Corp Earnings Call

Good afternoon, everyone, and welcome to the NewMarket Corporation conference call-in webcast to review second quarter 2024 financial results.

Operator: Foundation Conference Call-on-Webcast to review 2nd quarter of 2024 financial results. At this time, all participants have been placed on a listen-only mode.

Operator: A conference call-in webcast to review second quarter 2024 financial results. At this time, all participants have been placed on a listen-only mode. It is now my pleasure to turn the floor over to...

At this time, all participants have been placed on a listen-only mode. It is now my pleasure to turn the floor over to your host, Bill Skrobacz. Sir, the floor is yours.

Matthew: It is not my pleasure to turn the floor over to your host, Bill Skrobacz; serve the floor shores.

Bill Skrobacz: Thank you, Matthew, and thanks to everyone for joining me this afternoon.

Speaker: Thank you, Matthew, 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. 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.

William J. Skrobacz: Thank you, Matthew, and thanks to everyone for joining me.

Bill 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. 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 the reconciliation of the non-GAAP financial measures to the comparable GAAP financial measures.

Speaker Change: this afternoon.

Speaker Change: 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 .

Speaker Change: During this call, I will also discuss the non-GAAP financial measures included in our earnings release.

Speaker Change: 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.

Bill Skrobacz: We filed that 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. Net income for the 2nd quarter of 2024 was $112 million or $11.63 a share, compared to net income of $100 million or $10.36 a share for the same period in 2023. Petroleum additives net sales were $670 million compared to $684 million for the 2nd quarter of last year. Petroleum additives operating profit for the quarter was $148 million compared to $132 million for the 2nd quarter of 2023.

Speaker Change: We filed at our 10Q 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.

Speaker: I will be referring to the data that was included in last night's earnings. Net income for the second quarter of 2024 was $112 million, or $11.63 a share, compared to net income of $100 million, or $10.36 a share, for the same period in 2023. Petroleum Additive's net sales were $670 million, compared to $684 million for the second quarter of last year. Petroleum Additive's operating profit for the quarter was $148 million, compared to $132 million for the second quarter of 2023. The profit increase was mainly due to lower raw material and operating costs, as well as increased shipments partially offset by lower selling prices.

Speaker Change: Net income for the second quarter of 2024 was $112 million, or $11.63 a share, compared to net income of $100 million, or $10.36 a share, for the same period in 2023.

Speaker Change: Petroleum Additive's net sales were $670 million compared to $684 million for the second quarter of last year. Petroleum Additive's operating profit for the quarter was $148 million compared to $132 million for the second quarter of 2023.

Bill Skrobacz: The profit increase was mainly due to lower raw material and operating costs, as well as increased shipments, partially offset by lower selling prices. Shipments increased approximately 1% when comparing the 2nd quarter of 2024 with the same period in 2023.

Speaker Change: The profit increase was mainly due to lower raw material and operating costs, as well as increased shipments partially offset by lower selling prices.

Speaker: Shipments increased by approximately 1% when comparing the second quarter of 2024 with the same period in 2023. We're pleased with the strong performance of our petroleum additives business. We are seeing the favorable results of our ongoing focus on margin management; managing our operating costs, our inventory levels, and our portfolio profitability will remain priorities throughout 2024. We completed the acquisition of American Pacific Corporation, or AMPAC, on January 16, 2024. The financial results of our AMPAC business since the date of acquisition are included in our Specialty Materials section.

Speaker Change: Shipments increased approximately 1% when comparing the second quarter of 2024 with the same period in 2023.

Bill Skrobacz: We're pleased with the strong performance of our petroleum additives business. We have seen the favorable results of our ongoing focus on margin management, managing our operating costs, our inventory levels, and our portfolio profitability will remain priorities throughout 2024.

Speaker Change: We're pleased with the strong performance of our petroleum additives business. We are seeing the favorable results of our ongoing focus on margin management.

Speaker Change: Managing our operating costs, our inventory levels, and our portfolio profitability will remain priorities throughout 2024.

Bill Skrobacz: We completed the acquisition of American Pacific Corporation or Ampac on January 16, 2024. The financial results of our Ampac business since the date of acquisition are included in our Specialty Materials segment. Specialty material sales for the 2nd quarter of 2024 were $38 million; specialty materials operating profit for the 2nd quarter of 2024 was $5 million compared to a loss of $5 million for the 1st quarter of 2024. The specialty materials results reflect the sale of Ampac finished goods inventory that we acquired at closing. This inventory was recorded at fair value on the acquisition date, and when sold during the 1st half of 2024, generated no margin.

Speaker Change: We completed the acquisition of American Pacific Corporation, or AMPAC, on January 16, 2024. The financial results of our AMPAC business since the date of acquisition are included in our Specialty Materials segment.

Speaker: Specialty materials sales for the second quarter of 2024 were $38 million. Specialty materials operating profit for the second quarter of 2024 was $5 million, compared to a loss of $5 million for the first quarter of 2020. Specialty materials results reflect the sale of Ampac finished goods inventory that we acquired at closing. This inventory was recorded at fair value on the acquisition date, and when sold during the first half of 2024, generated no margin.

Speaker Change: Specialty materials sales for the second quarter of 2024 were $38 million. Specialty materials operating profit for the second quarter of 2024 was $5 million, compared to a loss of $5 million for the first quarter of 2024.

Speaker Change: The specialty materials results reflect the sale of Ampact Finished Goods Inventory that we acquired at closing. This inventory was recorded at fair value on the acquisition date and when sold during the first half of 2024, generated no margin.

Bill Skrobacz: We expect any of this remaining inventory to be sold during the 3rd quarter of 2024. We will see substantial variation in quarterly results for AMPAC due to the nature of its business. And we anticipate full-year 2024 results to be consistent with our pre-acquisition expectations.

Speaker: We expect any remaining inventory to be sold during the third quarter of 2024; we will see substantial variation in quarterly results for Ampac due to the nature of its business, and we anticipate full year 2024 results to be consistent with our pre-acquisition expectation. We generated solid cash flows from operations during the quarter. We funded capital expenditures of $15 million, and we paid dividends of $24 million. Since the AMPAC acquisition, we have made payments of $171 million on our revolving credit facility. As of June 30, 2024, our net debt-to-EBITDA ratio was 1.6, which is within our target range of 1.5 to 2 times. For 2024, we expect to see capital expenditures in the $50 to $70 million range.

Speaker Change: We expect any of this remaining inventory to be sold during the third quarter of 2024. We will see substantial variation in quarterly results for Ampac due to the nature of its business.

Speaker Change: and we anticipate full year 2024 results to be consistent with our pre-acquisition expectations.

Bill Skrobacz: We generated solid cash flows from operations during the quarter. We funded capital expenditures of 15 million, and we paid dividends of $24 million. Since the AMPAC was issued, we have made payments of $171 million on our revolving credit facility. As of June 30, 2024, our net debt to EBITDA ratio was 1.6, which is within our target range of 1.5 to 2 times.

Speaker Change: We generated solid cash flows from operations during the quarter. We funded capital expenditures of $15 million and we paid dividends of $24 million.

Speaker Change: Since the AMPAC acquisition, we have made payments of $171 million on our revolving credit facility.

Speaker Change: As of June 30, 2024, our net debt-to-EBITDA ratio was 1.6, which is within our target range of 1.5 to 2 times.

Bill Skrobacz: For 2024, we expect to see capital expenditures in the $50 to $70 million range. We anticipate continued strength in our petroleum-madative segment. We also look forward to the ongoing integration of AMPAC into the new market family of companies. We continue to make decisions to promote long-term value for our shareholders and customers, and we remain focused on our long-term objective. We believe the fundamentals and 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.

Speaker Change: For 2024, we expect to see capital expenditures in the $50 to $70 million range.

Speaker: We anticipate continued strength in our petroleum additive segment. We also look forward to the ongoing integration of AMPAC into the NewMarket family of companies. We continue to make decisions to promote long-term value for our shareholders and customers, and we remain focused on our long-term objectives. 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.

Speaker Change: We anticipate continued strength in our petroleum additive segment. We also look forward to the ongoing integration of Ampac into the NewMarket family of companies.

Speaker Change: We continue to make decisions to promote long-term value for our shareholders and customers, and we remain focused on our long-term objectives.

Speaker Change: We believe the fundamentals and how we run our business.

Speaker Change: 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.

Bill Skrobacz: Thank you for joining me for the call today. Matthew, that concludes our plan and comments.

Speaker: Thank you for joining me on the call today. Matthew, 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 me for the call today. Matthew, 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.

Bill Skrobacz: 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.

Bill Skrobacz: Thank you.

Operator: Everyone concludes today's event. You may disconnect at this time and have a wonderful day. Thank you for your participation.