Core Insights - NewMarket (NYSE:NEU) is a holding company with subsidiaries Afton Chemical and Ethyl Corp., focusing on petroleum additives and specialty materials [1][4][17] - The company recently acquired AMPAC for approximately 700million,whichhasimpacteditsfinancialresults,particularlyinthespecialtymaterialsdivision[4][5][17]FinancialPerformance−InQ12024,NewMarketreportedtotalrevenueof697 million, a decrease of just under 1% year-over-year, while gross profit increased by over 9% to just over 216million[11][16]−Operatingprofitinthepetroleumadditivesdivisionwasnearly151 million, contrasting with a negative operating profit of 5millioninthespecialtymaterialsdivision[7][11]−Thecompanygeneratedunderlyingfreecashflowof110 million, with a reported operating cash flow of approximately 124millionafteraccountingforworkingcapitalinvestments[4][8]DebtandCashFlow−AsoftheendofQ12024,NewMarkethad117 million in cash and 1.28billioningrossdebt,resultinginanetdebtlevelof1.16 billion, up from 531millionattheendofthepreviousyear[4][14]−Thecompanyanticipatesendingtheyearwithanetdebtoflessthan1 billion and a debt ratio closer to 1.5 times EBITDA, which is in line with its internal targets [14][19] Acquisition Impact - The AMPAC acquisition contributed to an operating loss in the specialty materials division, attributed to non-recurring items and transaction-related expenses [5][17] - NewMarket expects improved results from the specialty materials division in the upcoming quarters, aligning with pre-acquisition expectations [17] Earnings and Valuation - Net income for Q1 2024 was 107.7million,reflectinganincreaseofover1011.23 [16][19] - The stock is currently trading at about 9.5 times projected full-year EBITDA of $625 million, with expectations for this multiple to decrease as debt is repaid and the AMPAC acquisition begins to contribute positively [19]
NewMarket (NEU) Seeking Alpha·2024-06-20 14:30