NewMarket (US:NEU)2019-10-24 14:25Financial Performance - Consolidated net sales for Q3 2019 totaled $555.8 million, a decrease of $7.3 million, or 1.3%, from Q3 2018[83] - Petroleum additives net sales for the first nine months of 2019 were $1.6 billion, down 5.7% from $1.7 billion in the same period of 2018[86] - Operating profit for petroleum additives increased by $19.0 million in Q3 2019 compared to Q3 2018, and by $54.1 million for the first nine months of 2019 compared to the same period in 2018[95] - The operating profit margin for petroleum additives was 17.2% in Q3 2019, up from 13.5% in Q3 2018, and 17.4% for the first nine months of 2019, compared to 13.3% in the same period of 2018[96] - The decrease in petroleum additives net sales for the first nine months of 2019 was attributed to lower product shipments across all regions, with the most significant decline in the EMEAI region[86] Expenses and Taxation - Research and development (R&D) expenses as a percentage of net sales were 6.6% for Q3 2019, compared to 6.3% for Q3 2018[100] - Selling, general, and administrative expenses (SG&A) decreased by $0.6 million, or 1.9%, in Q3 2019 compared to Q3 2018, and by $10.2 million, or 9.9%, for the first nine months of 2019 compared to the same period in 2018[99] - Interest and financing expenses were $7.0 million for Q3 2019, down from $7.8 million in Q3 2018, primarily due to lower average debt outstanding[101] - Income tax expense for Q3 2019 was $19.7 million, with an effective tax rate of 22.5%, compared to $9.8 million and 14.4% in Q3 2018[103] - Income tax expense for the first nine months of 2019 was $60.8 million, up from $47.3 million in the same period of 2018, with an effective tax rate increase from 21.6% to 22.9%[104] Cash Flow and Capital Structure - Cash and cash equivalents increased to $80.0 million as of September 30, 2019, a rise of $6.9 million since December 31, 2018[106] - Cash flows from operating activities for the first nine months of 2019 were $233.2 million, which included $36.0 million used for higher working capital requirements[110] - Total working capital was $546.5 million at September 30, 2019, compared to $542.1 million at December 31, 2018, with a current ratio of 2.95 to 1[113] - Cash used in investing activities totaled $37.1 million during the first nine months of 2019, with total capital spending expected to be in the range of $60 million to $70 million for the year[114] - Long-term debt decreased from $771.0 million at December 31, 2018, to $640.0 million at September 30, 2019, resulting in a long-term debt percentage of total capitalization dropping from 61.1% to 50.4%[116][119] Strategic Outlook - The company expects the petroleum additives market to grow at an annual rate of 1% to 2%, with plans to exceed this growth rate over the long term[124] - Significant investments have been made in organizational talent, technology development, and global infrastructure to enhance operating results and customer solutions[125] - The company remains focused on the petroleum additives industry for future acquisitions, viewing it as a segment with solid return opportunities while minimizing risk[126] - The company aims to provide a 10% compounded return per year for shareholders over any five-year period, emphasizing a long-term view and customer-focused strategy[123]