NewMarket (NEU) - 2024 Q3 - Quarterly Report

Financial Performance - Net sales for the petroleum additives segment decreased by 1.8% to $2.0 billion for the first nine months of 2024 compared to the same period in 2023, primarily due to lower selling prices[61] - Consolidated net sales for the third quarter of 2024 totaled$724.9 million, an increase of 8.7% from $667.2 million in the third quarter of 2023[64] - The acquisition of AMPAC was completed for approximately$697 million on January 16, 2024, contributing $59.1 million to net sales in the third quarter of 2024[61] - Specialty materials segment net sales for the first nine months of 2024 were$114.2 million, reflecting the operations of AMPAC since acquisition[71] - The company reported a negligible decrease of 0.1% in petroleum additives net sales for the third quarter of 2024 compared to the same quarter in 2023[66] - The volume of product shipments for petroleum additives increased by 1.8% when comparing the first nine months of 2024 to the same period in 2023[70] Profitability and Costs - Petroleum additives operating profit increased by 12.9% for the first nine months of 2024, reflecting lower raw material and operating costs[61] - The petroleum additives segment gross profit increased by $47.7 million for the first nine months of 2024 compared to the same period in 2023[75] - Cost of goods sold as a percentage of net sales decreased to 66.6$1.4 million in Q3 2024 compared to Q3 2023, representing 4.8% of net sales for both periods[77] - R&D investment increased by $0.3 million in Q3 2024 compared to Q3 2023, accounting for 4.9$7.0 million for the first nine months of 2024 compared to the same period in 2023[77] Financing and Debt - The company entered into a new $900 million revolving credit facility and a$250 million unsecured term loan on January 22, 2024[61] - Long-term debt increased to $1.1 billion as of September 30, 2024, compared to$643.6 million at December 31, 2023[87] - As of September 30, 2024, the company had $191 million outstanding under its revolving credit facility and$250 million under the term loan[92] - The company had no outstanding variable rate debt under its revolving credit facility as of December 31, 2023, indicating no interest rate risk at that time[92] - Interest and financing expenses rose to $14.2 million in Q3 2024 from$9.2 million in Q3 2023, primarily due to higher average debt and interest rates[79] Tax and Other Income - Income tax expense for Q3 2024 was $36.8 million, up from$23.2 million in Q3 2023, with an effective tax rate increase to 21.8% from 17.3%[81] - Other income increased to $13.8 million in Q3 2024 from$11.3 million in Q3 2023, reflecting components of net periodic benefit cost[80] Cash Flow and Investments - Cash and cash equivalents decreased by $31.6 million to$80.3 million as of September 30, 2024, compared to December 31, 2023[82] - Cash used in investing activities totaled $724.2 million in the first nine months of 2024, primarily for the acquisition of AMPAC for$681.5 million[85] 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[91] - If the variable portion of interest rates hypothetically increased by 10%, the effect on the company's earnings and cash flow would be $2.3 million[92]