NewMarket (NEU) - 2024 Q2 - Quarterly Report

Financial Performance - Net sales for the second quarter of 2024 totaled $710.2 million, an increase of$ 25.1 million, or 3.7%, from the second quarter of 2023[67] - Petroleum additives net sales for the first six months of 2024 were $1.3 billion, a decrease of 2.7% compared to$ 1.4 billion in the same period of 2023[68] - The operating profit for the petroleum additives segment increased by 13.1% for the first six months of 2024, reflecting lower raw material and operating costs[60] - Petroleum additives segment gross profit increased by $12.1 million in the second quarter of 2024 compared to the same period in 2023[77] - The company experienced a 2.1% decrease in petroleum additives net sales for the second quarter of 2024 compared to the same quarter in 2023[68] - The operating profit margin for petroleum additives was 20.7% for the rolling four quarters ended June 30, 2024, consistent with historical ranges[80] Financial Position and Debt - The company maintains a strong financial position with sufficient access to capital and does not anticipate issues meeting debt covenants[60] - The company entered into a new$ 900 million revolving credit facility and a $250 million unsecured term loan on January 22, 2024[60] - Total long-term debt increased to$ 1.2 billion at June 30, 2024, compared to $643.6 million at December 31, 2023[92] Expenses and Income - SG&A expenses for Q2 2024 increased by$ 1.7 million compared to Q2 2023, representing 4.7% of net sales[80] - R&D investment decreased by $5.3 million in Q2 2024 compared to Q2 2023, accounting for 4.3% of net sales[80] - Interest and financing expenses rose to$ 15.9 million in Q2 2024 from $10.3 million in Q2 2023, primarily due to higher average debt and interest rates[83] - Other income increased to$ 12.0 million in Q2 2024 from $10.7 million in Q2 2023, reflecting components of net periodic benefit cost[84] - Income tax expense for Q2 2024 was$ 31.4 million, with an effective tax rate of 21.9%, up from $25.1 million and 20.1% in Q2 2023[85] Cash Flow - Cash and cash equivalents decreased by$ 24.3 million to $87.6 million as of June 30, 2024[88] - Cash provided from operating activities was$ 217.8 million for the first six months of 2024, including $40.7 million of higher working capital requirements[89] Market Outlook - The company anticipates a long-term growth rate of up to 2% in the petroleum additives market and plans to exceed this growth rate[104] Acquisition - The acquisition of AMPAC was completed for approximately$ 697 million on January 16, 2024, contributing to the specialty materials segment[60] Specialty Materials - The specialty materials segment reported net sales of $38.0 million for the second quarter of 2024[72] Cost of Goods Sold - The cost of goods sold as a percentage of net sales for the second quarter of 2024 was 68.9%, down from 71.3% in the second quarter of 2023[78]