NewMarket Corporation Reports Third Quarter and First Nine Months 2013 Results

NewMarket Corporation (NYSE:NEU) President and Chief Executive Officer, Thomas E. Gottwald, released the following earnings report of the Company’s operations for the third quarter and first nine months of 2013.

Net income for the third quarter of 2013 improved to $78.9 million, or $5.94 per share, compared to net income of $64.7 million, or $4.83 per share, for the third quarter of 2012. For the first nine months of 2013, net income increased to $210.7 million, or $15.81 per share, compared to net income of $186.5 million, or $13.91 per share, for the first nine months of last year.

Net income includes the results of discontinued operations of the real estate development segment and certain special items detailed in the Summary of Earnings below. In addition to the income from operations of the discontinued business, discontinued operations also include the gain on the July 2, 2013 sale of an office building which was owned by Foundry Park I, our wholly-owned subsidiary. All periods also include the impact of valuing an interest rate swap at fair value, while the first nine months of 2012 include a loss on early extinguishment of debt.

For the third quarter of this year, earnings excluding discontinued operations and special items amounted to $57.4 million, or $4.32 per share, compared to earnings on the same basis for the third quarter of last year of $64.9 million, or $4.84 per share. On the same basis, earnings for the first nine months of this year were $185.2 million, or $13.90 per share, while earnings for the first nine months of last year amounted to $194.1 million, or $14.47 per share.

The petroleum additives segment had another strong quarterly performance, as petroleum additives sales for the third quarter of this year were $577.6 million, an improvement of 5.5 percent over sales for the same period last year of $547.7 million. Shipments were up approximately 6 percent. Sales of petroleum additives for the first nine months of this year were $1,717.3 million compared to sales in the first nine months of last year of $1,689.6 million, while shipments were up approximately 2 percent for the period. Segment operating profit remained relatively consistent between the third quarter periods, at $95.5 million in the third quarter of 2013 versus $96.3 million in the prior year third quarter. For the first nine months of this year, petroleum additives operating profit was $295.3 million compared to operating profit for the same period last year of $300.4 million.

You will note in the previous table (Summary of Earnings) that earnings per share, excluding discontinued operations and special items was lower by $.52 per share compared to the third quarter 2012. As presented in the attachment entitled Segment Results and Other Financial Information, the same decrease (on a pretax basis) was $10.5 million. Our petroleum additives segment accounted for $0.8 million of the difference. The other major contributors included: lower operating profit in the All Other segment of $3.4 million mainly driven by certain accruals related to historical operations of our TEL business; higher Interest and Financing expenses of $3.0 million primarily due to the issuance of senior notes in December 2012 and lower debt outstanding in last year’s third quarter; and a decrease in Other Income, Net of $1.4 million due to a gain we recognized in the prior year third quarter due to the sale of securities we held in conjunction with a legal settlement.

We expect that our petroleum additives operating profit in 2013 will exceed last year’s result. We continue to increase our investment in research and development to enable the continuing flow of innovative products and solutions to our customers. Our business continues to generate strong cash flows. During the third quarter of this year we repurchased 52,400 shares of our stock bringing the total repurchases in the first nine months of this year to 157,800 shares at a cost of $41.2 million or an average cost per share of $260.81. Our strong cash flows coupled with the sale of the office building by Foundry Park I have resulted in a $247.3 million balance in our cash and cash equivalents at September 30, 2013, along with a $71.9 million reduction in debt since year end 2012.

Our Company is performing as expected, as world economies continue to recover. Our financial position is strong enhancing our capabilities to invest for future growth to meet our global customers’ needs and improve shareholder value.

Please read our third quarter Form 10-Q for more details on operations of the Company.

Sincerely,

Thomas E. Gottwald

The results for all periods this year and last year include discontinued operations, as well as the impact from valuing an interest rate swap agreement at fair value at the end of each reporting period. The prior year nine month results also include a loss on the early extinguishment of debt. The Company is reporting net income including these items, as well as income excluding them, and related per share amounts in the Summary of Earnings included in the earnings release. The Segment Results and Other Financial Information table included in this earnings release also includes a non-GAAP financial measure, Income from Continuing Operations before Special Items and Income Tax Expense, which is reconciled to a GAAP measure. The Company has also included the non-GAAP financial measure EBITDA in this earnings release. A schedule following the financial statements included in this earnings release is provided reflecting the calculation of EBITDA, defined as income from continuing operations, before the deduction of interest and financing expenses, income taxes, depreciation and amortization. The Company believes that even though these items are not required by or presented in accordance with United States generally accepted accounting principles (GAAP), these additional measures enhance understanding of the Company’s performance and period to period comparability. The Company believes that these items should not be considered an alternative to net income determined under GAAP.

As a reminder, a conference call and Internet webcast is scheduled for 10:00 a.m. EDT on Tuesday, October 29, 2013, to review third quarter and first nine months 2013 financial results. You can access the conference call live by dialing 1-877-407-9210 (domestic) or 1-201-689-8049 (international) and requesting the NewMarket conference call. To avoid delays, callers should dial in five minutes early. The call will also be broadcast via the Internet and can be accessed through the Company’s website at www.NewMarket.com or www.investorcalendar.com. A teleconference replay of the call will be available until November 5, 2013 at 11:59 p.m. EST by dialing 1-877-660-6853 (domestic) and 1-201-612-7415 (international). The conference ID number is 100505. A webcast replay will be available for 30 days.

NewMarket Corporation through its subsidiaries, Afton Chemical Corporation and Ethyl Corporation, develops, manufactures, blends, and delivers chemical additives that enhance the performance of petroleum products. From custom-formulated chemical blends to market-general additive components, the NewMarket family of companies provides the world with the technology to make fuels burn cleaner, engines run smoother and machines last longer.

Some of the information contained in this press release constitutes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although NewMarket’s management believes its expectations are based on reasonable assumptions within the bounds of its knowledge of its business and operations, there can be no assurance that actual results will not differ materially from expectations.

Factors that could cause actual results to differ materially from expectations include, but are not limited to: availability of raw materials and transportation systems; supply disruptions at single sourced facilities; ability to respond effectively to technological changes in our industry; failure to protect our intellectual property rights; hazards common to chemical businesses; occurrence or threat of extraordinary events, including natural disasters and terrorist attacks; competition from other manufacturers; sudden or sharp raw materials price increases; gain or loss of significant customers; risks related to operating outside of the United States; the impact of fluctuations in foreign exchange rates; political, economic, and regulatory factors concerning our products; future governmental regulation; resolution of environmental liabilities or legal proceedings; inability to complete future acquisitions or successfully integrate future acquisitions into our business and other factors detailed from time to time in the reports that NewMarket files with the Securities and Exchange Commission, including the risk factors in Item 1A, “Risk Factors” of our 2012 Annual Report on Form 10-K and Quarterly Report on Form 10-Q for the second quarter 2013, which are available to shareholders upon request.

You should keep in mind that any forward-looking statement made by NewMarket in the foregoing discussion speaks only as of the date on which such forward-looking statement is made. New risks and uncertainties come up from time to time, and it is impossible for us to predict these events or how they may affect the company. We have no duty to, and do not intend to, update or revise the forward-looking statements in this discussion after the date hereof, except as may be required by law. In light of these risks and uncertainties, you should keep in mind that the events described in any forward-looking statement made in this discussion, or elsewhere, might not occur.