NewMarket Corporation Reports First Quarter 2016 Results

NewMarket Corporation (NYSE:NEU) Chairman and Chief Executive Officer, Thomas E. Gottwald, released the following earnings report of the Company’s operations for the first quarter of 2016.

Net income for the first quarter of 2016 was $61.9 million, or $5.22 per share, compared to net income of $63.9 million, or $5.14 per share, for the first quarter of 2015. Earnings for the first quarter of this year and last year included the impact of valuing an interest rate swap at fair value. Excluding this item, first quarter 2016 earnings were $64.3 million, or $5.42 per share, compared to $65.4 million, or $5.26 per share, last year (see Summary of Earnings table below).

Sales for the petroleum additives segment for the first quarter of 2016 were $506.1 million, down 8.8% versus the same period last year, due mainly to changes in selling prices, mix and lower shipments. Petroleum additives operating profit for the first quarter of 2016 was $100.4 million, a 4.4% decrease over first quarter operating profit last year of $105.0 million. The decrease was due to changes in selling price and lower shipments, substantially offset by lower raw material costs. Petroleum additives shipments for the first quarter of 2016 were down 3.4% from the same period last year. Decreases in lubricant additives shipments in North America and Latin America were partially offset by increases in Asia Pacific and Europe, and fuel additive decreases in North America and Europe were partially offset by increases in Asia Pacific and Latin America.

During the first quarter, we repurchased 98,867 shares of our stock at a cost of $35.8 million, or an average cost per share of $362.25. We also funded capital expenditures of $28.4 million primarily to support the construction of the Singapore Plant, and we paid dividends of $19.0 million.

We are pleased with the strong performance of the petroleum additives segment, evidenced by just over $100 million in operating profit in the first quarter of 2016. Our operating profit margin for the rolling four quarters ended March 31, 2016 was 17.8%, which is consistent with our long term expectations for the performance of the petroleum additives business. We are continuing to invest in the future with robust spending in research and development to position us to meet our customers’ business needs with innovative solutions. We are also nearing the completion of phase one of our Singapore manufacturing facility. Phase two is expected to be completed in 2018, and will more than double our investment there. We believe the fundamentals of how we run our business - a long term view, safety first culture, customer-focused solutions, technology driven product offerings, and world class supply chain capability - will continue to be beneficial for all our stakeholders.

Sincerely,

Thomas E. Gottwald

The results for this year and last year include the impact of valuing an interest rate swap at fair value. The Company is reporting net income and related per share amounts including this item, as well as excluding it, in the Summary of Earnings table included in the earnings release. The Segment Results and Other Financial Information table included in this earnings release includes a non-GAAP financial measure, Income 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. EBITDA is shown on the schedule both including and excluding the interest rate swap agreement. 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 3:00 p.m. EDT on Thursday, April 28, 2016 to review first quarter 2016 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 May 5, 2016 at 11:59 p.m. EDT by dialing 1-877-660-6853 (domestic) or 1-201-612-7415 (international). The conference ID number is 13634255. 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 additive packages to market-general additives, the NewMarket family of companies provides the world with the technology to make engines run smoother, machines last longer, and fuels burn cleaner.

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, the availability of raw materials and distribution systems; disruptions at manufacturing facilities, including single-sourced facilities; the ability to respond effectively to technological changes in our industry; failure to protect our intellectual property rights; failure to attract and retain a highly-qualified workforce; hazards common to chemical businesses; competition from other manufacturers; sudden or sharp raw material price increases; the gain or loss of significant customers; the occurrence or threat of extraordinary events, including natural disasters and terrorist attacks; risks related to operating outside of the United States; the impact of fluctuations in foreign exchange rates; an information technology system failure; political, economic, and regulatory factors concerning our products; future governmental regulation; resolution of environmental liabilities or legal proceedings; and our inability to realize expected benefits from investment in our infrastructure or future acquisitions or our inability to 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 2015 Annual Report on Form 10-K, which is 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.

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