NewMarket (NEU) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section provides the company's unaudited financial statements and management's analysis for the recent reporting period Financial Statements (unaudited) This section presents the unaudited consolidated financial statements for the second quarter and six months ended June 30, 2025, and 2024, including detailed notes Consolidated Statements of Income This section presents the company's revenues, expenses, and net income for the specified periods Consolidated Income Statement Highlights (in millions, except per-share amounts) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $698.5 | $710.2 | $1,399.5 | $1,407.0 | | Gross Profit | $221.0 | $218.5 | $457.0 | $434.8 | | Operating Profit | $143.2 | $147.0 | $303.0 | $287.8 | | Net Income | $111.2 | $111.6 | $237.2 | $219.4 | | EPS (basic and diluted) | $11.84 | $11.63 | $25.11 | $22.87 | | Cash Dividends per Share | $2.75 | $2.50 | $5.50 | $5.00 | Condensed Consolidated Balance Sheets This section details the company's assets, liabilities, and equity at specific points in time Condensed Consolidated Balance Sheet Highlights (in millions) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $1,067.8 | $1,029.6 | | Total Assets | $3,194.5 | $3,129.5 | | Total Current Liabilities | $402.1 | $374.5 | | Long-term Debt | $841.8 | $971.3 | | Total Liabilities | $1,582.8 | $1,668.0 | | Total Shareholders' Equity | $1,611.7 | $1,461.6 | Condensed Consolidated Statements of Cash Flows This section outlines the company's cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Cash Flow Highlights (in millions) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Cash from Operating Activities | $281.4 | $217.8 | | Cash from Investing Activities | $(29.3) | $(710.0) | | Cash from Financing Activities | $(264.2) | $470.5 | | Decrease in Cash | $(7.2) | $(24.3) | | Cash at End of Period | $70.3 | $87.6 | Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and additional information supporting the condensed financial statements - On January 16, 2024, the company acquired American Pacific Corporation (AMPAC) for approximately $697 million, funded by cash and borrowings, expanding its presence in mission-critical specialty materials for space launch and military defense[22] - The company operates through two reportable segments: Petroleum Additives and Specialty Materials, with Petroleum Additives being the primary revenue driver and Specialty Materials significantly expanded by the AMPAC acquisition[37] - Total long-term debt decreased to $841.8 million as of June 30, 2025, from $971.3 million at December 31, 2024, following principal payments on senior notes and a term loan[62][131] - Total accruals for environmental remediation, dismantling, and decontamination were approximately $11 million at both June 30, 2025, and December 31, 2024[71] Management's Discussion and Analysis of Financial Condition and Results of Operations Management provides an analysis of financial results for the first six months of 2025 compared to 2024, highlighting segment performance, financial position, and liquidity Results of Operations This section analyzes the company's operational performance, including segment sales and profitability Net Sales by Segment (in millions) | Segment | H1 2025 | H1 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Petroleum Additives | $1,299.4 | $1,347.1 | $(47.7) | -3.5% | | Specialty Materials | $95.8 | $55.1 | $40.7 | +73.9% | | Total Net Sales | $1,399.5 | $1,407.0 | $(7.5) | -0.5% | Segment Operating Profit (in millions) | Segment | H1 2025 | H1 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Petroleum Additives | $281.9 | $298.7 | $(16.8) | -5.6% | | Specialty Materials | $33.7 | $0.0 | $33.7 | N/A | - Petroleum additives shipments decreased by 4.9% in the first six months of 2025 compared to the same period in 2024, primarily due to lower lubricant additives shipments in Asia Pacific and North America[98][100] - The effective tax rate increased to 23.9% for the first six months of 2025 from 21.9% in the prior-year period, primarily driven by income from foreign operations[118] Cash Flows, Financial Condition, and Liquidity This section discusses the company's cash generation, financial position, and ability to meet its short-term and long-term obligations - Cash provided from operating activities was $281.4 million for the first six months of 2025[124] - Capital spending for 2025 is expected to be between $70 million and $100 million, including a significant investment to expand AMPAC's production capacity by over 50%[127][128] - In the first six months of 2025, the company used cash for $77.2 million in stock repurchases, $51.9 million in dividends, and $130 million in net debt repayments[130] - The company was in compliance with all debt covenants, with a Leverage Ratio of 1.13 at June 30, 2025, well below the maximum of 3.75[133][134] Outlook This section provides management's forward-looking statements regarding future performance and strategic priorities - The company's long-term goal is to provide a 10% compounded annual return for shareholders, defined as EPS growth plus dividend yield[138] - Management expects the petroleum additives market to grow 1-2% annually over the long term and plans for its segment to exceed that growth rate[139] - The primary focus for future acquisitions remains within the petroleum additives industry, though other value-enhancing opportunities like the AMPAC acquisition will be considered[144] Quantitative and Qualitative Disclosures About Market Risk The company states that there have been no material changes in its market risk profile since the disclosures made in its 2024 Annual Report on Form 10-K - At June 30, 2025, there were no material changes in market risk from the information provided in the 2024 Annual Report[145] Controls and Procedures Based on an evaluation conducted by management, including the CEO and CFO, the company's disclosure controls and procedures were concluded to be effective as of June 30, 2025 - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of the end of the period[146] - No changes in internal control over financial reporting occurred during the quarter ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, internal controls[147] PART II. OTHER INFORMATION This section covers various non-financial disclosures, including legal proceedings, equity sales, and exhibits Legal Proceedings The company reports that there have been no material changes to its legal proceedings as disclosed in the 2024 Annual Report - There have been no material changes to legal proceedings as disclosed in the 2024 Annual Report[148] Unregistered Sales of Equity Securities and Use of Proceeds The company details its share repurchase activity under a $500 million authorization effective January 1, 2025, including shares repurchased in Q2 2025 - A share repurchase program authorizing up to $500 million was approved by the Board, effective from January 1, 2025, to December 31, 2027[149] Share Repurchases in Q2 2025 | Period | Total Shares Purchased | Average Price Paid per Share | Approx. Dollar Value Remaining for Purchase | | :--- | :--- | :--- | :--- | | Total Q2 | 36,812 | $537.66 | $428.2 million | Other Information The company confirms that no director or officer adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the second quarter of 2025 - During the quarter ended June 30, 2025, no director or officer adopted or terminated a Rule 10b5-1 trading arrangement[153] Exhibits This section lists the exhibits filed with the 10-Q report, including corporate governance documents and certifications by the CEO and CFO - The report includes certifications from the CEO and CFO pursuant to the Sarbanes-Oxley Act of 2002, as well as Inline XBRL data files[154]