NewMarket (US:NEU)2019-02-07 23:13Financial Data and Key Metrics Changes - Profit before tax for Q4 2018 was $71.1 million, a 9.5% increase compared to $64.9 million in Q4 2017 [4] - Net income for Q4 2018 was $62.8 million, or $5.58 per share, compared to $4.1 million, or $0.35 per share in Q4 2017 [5] - Income tax expense decreased to $8.3 million in Q4 2018 from $60.9 million in Q4 2017 [5] Business Line Data and Key Metrics Changes - Petroleum additives operating profit for Q4 2018 was $79.5 million, up 7.2% from Q4 2017, while sales decreased by 3.5% to $537 million due to lower shipments [7] - Full-year 2018 petroleum additive operating profit was $311 million, down 9.9% compared to the previous year, with shipments down 2.8% [10][11] Market Data and Key Metrics Changes - Shipments decreased across both lubricant additives and fuel additives, with Latin America being the only region reporting an increase in fuel additive shipments [8][11] - The company experienced a decrease in lubricant additive shipments in all regions except Asia-Pacific [11] Company Strategy and Development Direction - The company aims for margin recovery throughout 2019, focusing on research and development to bring higher value products to customers [18] - The company plans to maintain capital investments in the range of $75 million to $85 million for 2019 [13] Management Comments on Operating Environment and Future Outlook - Management noted that rising raw material costs led to margin compression, overshadowing progress made in the fourth quarter [15] - The company is committed to providing a 10% compounded return per year for shareholders over any five-year period, despite not achieving this goal in 2018 [16] Other Important Information - The company returned $312 million to shareholders through dividends and stock repurchases in 2018 [12] - The company ended the year with a net debt to EBITDA ratio of 1.8 times, comfortable within the 1.5 to 2 times range [13] Q&A Session Summary Question: Long-term shipment trends for lubricant additives in North America - The company does not disclose shipments in the 10-K but aims to grow a few percentage points greater than the market [22] - Shipments were down 10% in the quarter, but the company does not see any fundamental change in the marketplace [31] Question: Difference in profitability between lube and fuel additives - Margins improved due to pricing catching up with raw materials, with no significant disruptions noted [30] Question: Inventory position and pricing expectations - The company has not seen any relief in raw material costs and does not carry higher than normal inventory [34][35] - Management indicated that pricing adjustments are ongoing to reach historical margin levels [37]