NewMarket (US:NEU)2021-02-16 14:05Financial Performance - Consolidated net sales for 2020 amounted to $2.0 billion, a decrease of $179 million, or 8.2% from 2019[144]. - Petroleum additives net sales for 2020 were approximately 8.0% lower than 2019 levels, with North America representing nearly 50% of the decrease[147]. - The volume of product shipments for petroleum additives decreased 5.2% when comparing 2020 with 2019[150]. - Petroleum additives operating profit for 2020 was $333 million, a decrease of $26 million from 2019, with an operating profit margin of 16.7%[154][156]. - Net sales for the year ended December 31, 2020, were $2,010,931 thousand, a decrease of 8.2% from $2,190,295 thousand in 2019[244]. - Gross profit for 2020 was $595,032 thousand, down from $629,869 thousand in 2019, reflecting a gross margin of approximately 29.6%[244]. - Operating profit decreased to $311,802 thousand in 2020 from $337,321 thousand in 2019, indicating a decline of 7.5%[244]. - Net income for 2020 was $270,568 thousand, representing an increase of 6.4% compared to $254,286 thousand in 2019[244]. - Earnings per share for 2020 were $24.64, up from $22.73 in 2019, marking an increase of 8.4%[244]. - Comprehensive income for 2020 was $260,152 thousand, a decrease from $272,854 thousand in 2019[246]. Cash Flow and Capital Management - Cash generated from operating activities was $284 million in 2020, down from $337 million in 2019[164]. - In 2020, the company generated $284 million in cash from operations, which was used to repurchase $101 million of common stock, pay $83 million in dividends, repay $45 million on the revolving credit facility, and fund $93 million for capital expenditures[165]. - Cash and cash equivalents decreased from $144 million at the end of 2019 to $125 million at December 31, 2020[167]. - The company had long-term debt of $599 million at December 31, 2020, down from $643 million at the end of 2019, resulting in a decrease in total long-term debt as a percentage of total capitalization from 48.5% to 44.1%[176]. - The average interest rate for borrowings under credit facilities was 1.4% in 2020, down from 3.0% in 2019[174]. - The company has sufficient access to additional capital, including a new $900 million revolving credit facility established in March 2020[141]. - Outstanding letters of credit amounted to $2 million at December 31, 2020, with an unused portion of the revolving credit facility totaling $898 million[173]. - The company expects cash from operations and available borrowing under credit facilities to be sufficient for operating needs and planned capital expenditures in the long term[185]. Research and Development - Research and development (R&D) investment decreased approximately $4 million in 2020, with R&D as a percentage of net sales increasing to 7.0%[160]. - Research, development, and testing expenses were $140,367 thousand in 2020, slightly down from $144,465 thousand in 2019[244]. - Capital expenditures were $93 million in 2020, with an estimated range of $75 million to $85 million for 2021, focusing on improvements to manufacturing and R&D infrastructure[179]. Pension and Retirement Plans - Cash contributions to pension and postretirement plans were $11 million in 2020, with an actuarial gain of approximately $43 million due to actual investment returns exceeding expected returns[192]. - The forecasted 2021 expense for U.S. pension and postretirement plans would increase by approximately $5 million if the expected rate of return is decreased by 100 basis points to 7.0%[194]. - A 100 basis point decrease in the discount rate to 1.875% would increase the forecasted 2021 expense for U.S. pension and postretirement benefit plans by approximately $9 million[196]. - The expected aggregate cash contributions to the U.S. pension plans are projected to be approximately $3 million in 2021, while contributions to postretirement benefit plans are expected to be around $2 million[198]. - The average remaining service period of active participants in the U.K. pension plan is 16 years, with an average remaining life expectancy of 26 years for inactive participants[199]. - The expected long-term rate of return for the U.K. pension plan was 5.0% at December 31, 2020, based on a target asset allocation of 40% in pooled equities funds, 40% in pooled government bonds, and 20% in pooled diversified growth funds[201]. - Actuarial gains on the assets were approximately $4 million in 2020, with an expected amortization of the actuarial net loss of about $3 million in 2021[202]. Market Outlook and Strategy - The petroleum additives market is expected to grow in the 1% to 2% range annually, with the company planning to exceed that growth rate over the long term[208]. - The company aims to provide a 10% compounded return per year for shareholders over any five-year period, driven by a customer-focused strategy and technology-driven product offerings[207]. Assets and Liabilities - Total assets increased to $1,933,875,000 in 2020 from $1,885,132,000 in 2019, representing a growth of 2.6%[248]. - Total liabilities decreased to $1,174,051,000 in 2020 from $1,202,034,000 in 2019, a reduction of 2.3%[248]. - The company’s total shareholders' equity rose to $759,824,000 in 2020 from $683,098,000 in 2019, an increase of 11.2%[250]. - Retained earnings increased to $932,271,000 in 2020 from $843,881,000 in 2019, an increase of 10.5%[250]. Debt Management - Total long-term debt at December 31, 2020, was $599 million, all at fixed rates, indicating no interest rate risk associated with fixed rate debt[224]. - A hypothetical 100 basis point decrease in interest rates would have resulted in a change of $22 million in the fair value of the company's debt at December 31, 2020[225]. - The company had no derivative financial instruments outstanding at the end of 2020 or 2019, indicating a conservative approach to risk management[282]. - Issued $250 million in 3.78% senior unsecured notes, maturing on January 4, 2029, with annual principal payments of $50 million starting January 4, 2025[330]. - Compliance with all covenants under the 3.78% senior notes as of December 31, 2020, and December 31, 2019[331]. - Entered into a $900 million multicurrency revolving credit facility on March 5, 2020, with a term of five years[332]. - The revolving credit facility includes a $500 million sublimit for foreign currency borrowings and a $50 million sublimit for letters of credit[332]. - An expansion feature allows for an increase in the revolving credit facility or incremental term loans up to $425 million[332]. - The revolving credit facility is available on a revolving basis until March 5, 2025[332].