Press release·02/14/2025 21:54:46

Financial Strength and Resilience Amid Challenging Times

Despite the challenging economic environment, NewMarket Corporation’s financial position remains strong. The company has sufficient access to capital and does not anticipate any issues with meeting debt covenants in the foreseeable future. NewMarket’s business typically generates significant cash beyond its operational needs, allowing it to invest in the long-term growth of the company.

Solid Revenue and Profit Performance

NewMarket’s consolidated net sales for 2024 amounted to $2.8 billion, an increase of $88 million or 3.3% from 2023. This growth was driven by the company’s specialty materials segment, which contributed $141 million in net sales following the acquisition of AMPAC in January 2024.

The petroleum additives segment, which accounts for the majority of NewMarket’s business, saw a 2.0% decrease in net sales compared to 2023. This decline was primarily due to lower selling prices and a small unfavorable foreign currency impact, partially offset by a slight increase in lubricant additives shipments.

Despite the revenue decrease, the petroleum additives segment reported a strong increase in operating profit, rising from $514 million in 2023 to $592 million in 2024. This improvement was driven by lower raw material and operating costs, which more than offset the impact of lower selling prices. The specialty materials segment also contributed $17 million in operating profit during the period it was owned in 2024.

Strengths and Weaknesses

One of NewMarket’s key strengths is its focus on managing operating costs and enhancing portfolio profitability. The company has maintained a strong gross profit margin in its petroleum additives business, improving from 71.2% in 2023 to 68.0% in 2024. This was achieved through effective cost control and optimization of inventory levels.

Another strength is NewMarket’s continued investment in technology and innovation to meet its customers’ evolving needs. The company’s research and development (R&D) spending remains substantial, accounting for 4.7% of net sales in 2024. These investments are aimed at developing solutions that support the company’s current product base and enable future growth.

However, one potential weakness is the company’s reliance on the petroleum additives industry, which accounts for the vast majority of its business. While NewMarket believes the industry will provide the greatest opportunity for solid returns, any significant downturn in this market could have a material impact on the company’s performance.

The acquisition of AMPAC, while outside of NewMarket’s core petroleum additives business, is seen as an opportunity to provide long-term value for shareholders. Nonetheless, the company’s primary focus in the acquisition area remains on the petroleum additives industry, as it believes this will offer the best returns while minimizing risk.

Outlook and Future Prospects

NewMarket remains confident in its customer-focused strategy and approach to the market. The company believes the fundamentals of its business, including its safety-first culture, technology-driven product offerings, and world-class supply chain capability, will continue to benefit all stakeholders in the long term.

In the petroleum additives segment, NewMarket expects to exceed the industry’s anticipated annual growth rate of up to 2% over the long term. The company plans to continue investing in operational efficiencies, organizational talent, technology development, and global infrastructure to support this growth and enhance its ability to deliver value to customers.

While the petroleum additives segment may experience some impacts to its operating performance in 2025 due to the uncertain global economic environment, NewMarket anticipates continued strength from this core business. The company will maintain its focus on cost control and operating profit margin management to navigate any near-term challenges.

In the specialty materials segment, the integration of AMPAC is expected to provide long-term value for shareholders. However, NewMarket’s primary focus in the acquisition area remains on the petroleum additives industry, as it believes this will offer the greatest opportunity for solid returns while minimizing risk.

Overall, NewMarket’s strong financial position, customer-centric approach, and continued investments in its business position the company well to navigate the current economic environment and capitalize on future growth opportunities in the petroleum additives and specialty materials markets.

Key Financial Highlights

• Consolidated net sales of $2.8 billion in 2024, up 3.3% from 2023
• Petroleum additives segment net sales of $2.6 billion, down 2.0% from 2023
• Specialty materials segment net sales of $141 million (since acquisition in January 2024)
• Petroleum additives segment operating profit of $592 million, up from $514 million in 2023
• Specialty materials segment operating profit of $17 million (since acquisition in January 2024)
• Cash generated from operating activities of $520 million in 2024, down from $577 million in 2023
• Total long-term debt of $971 million at the end of 2024, up from $644 million at the end of 2023
• Working capital of $655 million at the end of 2024, with a current ratio of 2.75 to 1

Conclusion

Despite the challenges posed by the current economic environment, NewMarket has demonstrated its financial strength and resilience. The company’s focus on cost management, technology investment, and strategic acquisitions has enabled it to maintain profitability and position itself for future growth. While the petroleum additives industry remains the primary driver of NewMarket’s business, the company’s diversification into specialty materials provides additional opportunities for value creation. With a strong balance sheet, ample liquidity, and a customer-centric approach, NewMarket is well-equipped to navigate the uncertainties ahead and continue delivering value to its shareholders.