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Item 1. Financial Statements

2021-10-26 compared with 2021-07-29 · 81 added, 64 removed, 348 unchanged (29% of the section changed)

2 unchanged sentences

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per-share amounts) Second Quarter Ended

June 30, Six Months Ended

(in thousands, except per-share amounts) Third Quarter Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

15 unchanged sentences

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands) Second Quarter Ended

June 30, Six Months Ended

(in thousands) Third Quarter Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

2 unchanged sentences

Pension plans and other postretirement benefits:

Amortization of prior service cost (credit) included in net periodic benefit cost (income), net of income tax expense (benefit) of $( 156 ) in second quarter 2021, $( 171 ) in second quarter 2020, $( 315 ) in six months 2021, and $( 341 ) in six months 2020

Prior service credit (cost) arising during the period, net of income tax expense (benefit) of $ 8 in third quarter and nine months 2021, $( 7 ) in third quarter and nine months 2020

27 ( 23 ) 27 ( 23 )

Actuarial net gain (loss) arising during the period, net of income tax expense (benefit) of $ 0 in second quarter 2021, $ 0 in second quarter 2020, $( 219 ) in six months 2021, and $ 0 in six months 2020

Amortization of prior service cost (credit) included in net periodic benefit cost (income), net of income tax expense (benefit) of $( 157 ) in third quarter 2021, $( 169 ) in third quarter 2020, $( 472 ) in nine months 2021, and $( 510 ) in nine months 2020

( 496 ) ( 528 ) ( 1,481 ) ( 1,590 )

Amortization of actuarial net loss (gain) included in net periodic benefit cost (income), net of income tax expense (benefit) of $ 575 in second quarter 2021, $ 396 in second quarter 2020, $ 1,104 in six months 2021, and $ 793 in six months 2020

Actuarial net gain (loss) arising during the period, net of income tax expense (benefit) of $( 433 ) in third quarter 2021, $ 977 in third quarter 2020, $( 652 ) in nine months 2021, and $ 977 in nine months 2020

( 1,363 ) 3,008 ( 2,020 ) 3,008

Amortization of actuarial net loss (gain) included in net periodic benefit cost (income), net of income tax expense (benefit) of $ 593 in third quarter 2021, $ 297 in third quarter 2020, $ 1,697 in nine months 2021, and $ 1,090 in nine months 2020

1,806 941 5,345 3,468

Total pension plans and other postretirement benefits

( 26 ) 3,398 1,871 4,863

Foreign currency translation adjustments, net of income tax expense (benefit) of $ 785 in second quarter 2021,$( 151 ) in second quarter 2020, $ 321 in six months 2021, and $( 992 ) in six months 2020

Foreign currency translation adjustments, net of income tax expense (benefit) of $( 535 ) in third quarter 2021,$( 118 ) in third quarter 2020, $( 214 ) in nine months 2021, and $( 1,110 ) in nine months 2020

( 7,401 ) 10,356 ( 1,081 ) ( 5,013 )

4 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts) June 30,

(in thousands, except share amounts) September 30,

2021 December 31,

30 unchanged sentences

authorized shares - 80,000,000 ;

issued and outstanding shares - 10,928,129 at June 30, 2021 and 10,921,377 at December 31, 2020)

issued and outstanding shares - 10,637,047 at September 30, 2021 and 10,921,377 at December 31, 2020)

Accumulated other comprehensive loss ( 172,374 ) ( 173,164 )

9 unchanged sentences

Shares Amount

Balance at March 31, 2020 10,938,744 $ 0 $ ( 176,343 ) $ 815,592 $ 639,249

Balance at June 30, 2020 10,923,999 $ 281 $ ( 176,652 ) $ 811,656 $ 635,285

Net income 95,794 95,794

3 unchanged sentences

Repurchases of common stock ( 3,835 ) ( 870 ) ( 564 ) ( 1,434 )

Tax withholdings related to stock-based compensation ( 8 ) ( 8 )

Stock-based compensation 1,225 876 2 878

Balance at September 30, 2020 10,921,389 $ 287 $ ( 162,898 ) $ 886,137 $ 723,526

Balance at June 30, 2021 10,928,129 $ 1,748 $ ( 164,947 ) $ 1,012,409 $ 849,210

Balance at March 31, 2021 10,928,154 $ 1,190 $ ( 172,055 ) $ 981,220 $ 810,355

Net income 52,038 52,038

2 unchanged sentences

( 22,590 ) ( 22,590 )

Repurchases of common stock ( 292,392 ) ( 2,748 ) ( 96,712 ) ( 99,460 )

Stock-based compensation 1,310 1,000 2 1,002

Balance at June 30, 2021 10,928,129 $ 1,748 $ ( 164,947 ) $ 1,012,409 $ 849,210

Balance at September 30, 2021 10,637,047 $ 0 $ ( 172,374 ) $ 945,147 $ 772,773

Balance at December 31, 2019 11,188,549 $ 1,965 $ ( 162,748 ) $ 843,881 $ 683,098

7 unchanged sentences

Stock-based compensation 5,350 1,593 43 1,636

Balance at June 30, 2020 10,923,999 $ 281 $ ( 176,652 ) $ 811,656 $ 635,285

Balance at September 30, 2020 10,921,389 $ 287 $ ( 162,898 ) $ 886,137 $ 723,526

Balance at December 31, 2020 10,921,377 $ 717 $ ( 173,164 ) $ 932,271 $ 759,824

3 unchanged sentences

( 64,116 ) ( 64,116 )

Repurchases of common stock ( 292,392 ) ( 2,748 ) ( 96,712 ) ( 99,460 )

Stock-based compensation 8,062 2,031 2 2,033

Balance at June 30, 2021 10,928,129 $ 1,748 $ ( 164,947 ) $ 1,012,409 $ 849,210

Balance at September 30, 2021 10,637,047 $ 0 $ ( 172,374 ) $ 945,147 $ 772,773

See accompanying Notes to Condensed Consolidated Financial Statements

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands) Six Months Ended

(in thousands) Nine Months Ended

September 30,

Cash and cash equivalents at beginning of year $ 125,172 $ 144,397

4 unchanged sentences

Deferred income tax expense 6,205 5,405

Gain on sale of land 0 ( 16,483 )

Unrealized (gain) loss on marketable securities 3,414 0

7 unchanged sentences

Proceeds from sales and maturities of marketable securities 9,894 0

Proceeds from sale of land 0 20,000

Other, net 0 ( 927 )

1 unchanged sentence

Cash flows from financing activities:

Net borrowings under revolving credit facility 0 47,059

Net borrowings (repayments) under revolving credit facility 1,000 ( 34,678 )

Issuance of 2.70 % senior notes

5 unchanged sentences

Effect of foreign exchange on cash and cash equivalents ( 764 ) ( 1,746 )

Increase (decrease) in cash and cash equivalents 28,692 ( 42,333 )

Decrease in cash and cash equivalents ( 65,559 ) ( 26,696 )

Cash and cash equivalents at end of period $ 59,613 $ 117,701

3 unchanged sentences

Financial Statement Presentation

In the opinion of management, the accompanying consolidated financial statements of NewMarket Corporation and its subsidiaries contain all necessary adjustments for the fair presentation of, in all material respects, our consolidated financial position as of June 30, 2021 and December 31, 2020, and our consolidated results of operations, comprehensive income, and changes in shareholders' equity for the second quarter and six months ended June 30, 2021 and June 30, 2020, and our cash flows for the six months ended June 30, 2021 and June 30, 2020.

In the opinion of management, the accompanying consolidated financial statements of NewMarket Corporation and its subsidiaries contain all necessary adjustments for the fair presentation of, in all material respects, our consolidated financial position as of September 30, 2021 and December 31, 2020, and our consolidated results of operations, comprehensive income, and changes in shareholders' equity for the third quarter and nine months ended September 30, 2021 and September 30, 2020, and our cash flows for the nine months ended September 30, 2021 and September 30, 2020.

All adjustments are of a normal, recurring nature, unless otherwise disclosed.

These financial statements should be read in conjunction with the consolidated financial statements and related notes included in the NewMarket Corporation Annual Report on Form 10-K for the year ended December 31, 2020 (2020 Annual Report), as filed with the Securities and Exchange Commission (SEC).

The results of operations for the six month period ended June 30, 2021 are not necessarily indicative of the results to be expected for the full year ending December 31, 2021.

The results of operations for the nine month period ended September 30, 2021 are not necessarily indicative of the results to be expected for the full year ending December 31, 2021.

The December 31, 2020 condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America.

11 unchanged sentences

Information on net sales by segment is in Note 3.

Second Quarter Ended

June 30, Six Months Ended

Third Quarter Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2021 2020 2021 2020

11 unchanged sentences

Net Sales by Segment

Second Quarter Ended

June 30, Six Months Ended

Third Quarter Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2021 2020 2021 2020

6 unchanged sentences

Segment Operating Profit

Second Quarter Ended

June 30, Six Months Ended

Third Quarter Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2021 2020 2021 2020

10 unchanged sentences

Pension Plans and Other Postretirement Benefits

The table below shows cash contributions made during the six months ended June 30, 2021, as well as the remaining cash contributions we expect to make during the year ending December 31, 2021, for our domestic and foreign pension plans and domestic postretirement benefit plan.

(in thousands) Actual Cash Contributions for Six Months Ended June 30, 2021 Expected Remaining Cash Contributions for Year Ending December 31, 2021

The table below shows cash contributions made during the nine months ended September 30, 2021, as well as the remaining cash contributions we expect to make during the year ending December 31, 2021, for our domestic and foreign pension plans and domestic postretirement benefit plan.

(in thousands) Actual Cash Contributions for Nine Months Ended September 30, 2021 Expected Remaining Cash Contributions for Year Ending December 31, 2021

Domestic plans

9 unchanged sentences

Pension Benefits Postretirement Benefits

Second Quarter Ended June 30,

Third Quarter Ended September 30,

(in thousands) 2021 2020 2021 2020

6 unchanged sentences

Pension Benefits Postretirement Benefits

Six Months Ended June 30,

Nine Months Ended September 30,

(in thousands) 2021 2020 2021 2020

8 unchanged sentences

Pension Benefits

Second Quarter Ended June 30, Six Months Ended June 30,

Third Quarter Ended September 30, Nine Months Ended September 30,

(in thousands) 2021 2020 2021 2020

6 unchanged sentences

Earnings Per Share

We had 26,703 shares of nonvested restricted stock at June 30, 2021 and 19,858 shares of nonvested restricted stock at June 30, 2020 that were excluded from the calculation of diluted earnings per share, as their effect on earnings per share would be anti-dilutive.

We had 26,618 shares of nonvested restricted stock at September 30, 2021 and 19,963 shares of nonvested restricted stock at September 30, 2020 that were excluded from the calculation of diluted earnings per share, as their effect on earnings per share would be anti-dilutive.

The nonvested restricted stock is considered a participating security since the restricted stock contains nonforfeitable rights to dividends.

1 unchanged sentence

The following table illustrates the earnings allocation method utilized in the calculation of basic and diluted earnings per share.

Second Quarter Ended

June 30, Six Months Ended

Third Quarter Ended

September 30, Nine Months Ended

September 30,

(in thousands, except per-share amounts) 2021 2020 2021 2020

17 unchanged sentences

Unrealized gains and losses, as well as the investment income attributable to the debt and equity securities, are reported in Other income (expense), net in the Consolidated Statements of Income.

The debt securities have a cost basis of $ 48 million and the equity securities have a cost basis of $ 331 million at June 30, 2021.

The debt securities have a cost basis of $ 50 million and the equity securities have a cost basis of $ 332 million at September 30, 2021.

The fair value of both the debt and equity securities are shown in the second table below.

The portion of unrealized gains and losses for the period related to both the debt and equity securities still held at the reporting date are as follows:

Second Quarter Ended

June 30, Six Months Ended

Third Quarter Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2021 2021

4 unchanged sentences

The estimated fair value of equity securities is based on actively quoted market prices.

June 30, 2021

September 30, 2021

Fair Value Measurements Using

5 unchanged sentences

Total marketable securities $ 378,902 $ 329,055 $ 49,847 $ 0

June 30, December 31,

September 30, December 31,

(in thousands)

6 unchanged sentences

Intangibles (Net of Amortization) and Goodwill

The net carrying amount of intangibles and goodwill was $ 129 million at June 30, 2021 and $ 130 million at December 31, 2020.

The net carrying amount of intangibles and goodwill was $ 128 million at September 30, 2021 and $ 130 million at December 31, 2020.

The gross carrying amount and accumulated amortization of each type of intangible asset and goodwill are presented in the table below.

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

(in thousands) Gross

9 unchanged sentences

All of the intangibles relate to the petroleum additives segment.

The change in the gross carrying amount between December 31, 2020 and June 30, 2021 is due to a customer base becoming fully amortized and foreign currency fluctuation.

The change in the gross carrying amount between December 31, 2020 and September 30, 2021 is due to a customer base becoming fully amortized and foreign currency fluctuation.

There is no accumulated goodwill impairment.

Amortization expense was (in thousands):

Second quarter ended June 30, 2021 $ 723

Six months ended June 30, 2021 1,444

Second quarter ended June 30, 2020 1,009

Six months ended June 30, 2020 1,736

Third quarter ended September 30, 2021 $ 356

Nine months ended September 30, 2021 1,800

Third quarter ended September 30, 2020 586

Nine months ended September 30, 2020 2,322

Estimated amortization expense for the remainder of 2021, as well as estimated annual amortization expense related to our intangible assets for the next five years, is expected to be (in thousands):

5 unchanged sentences

Long-term Debt

(in thousands) June 30,

(in thousands) September 30,

2021 December 31,

5 unchanged sentences

250,000 250,000

Revolving credit facility 1,000 0

$ 991,919 $ 598,848

9 unchanged sentences

The outstanding 3.78 % senior notes are unsecured and were issued in a 2017 private placement with The Prudential Insurance Company of America and certain other purchasers.

We were in compliance with all covenants under all issuances of outstanding senior notes as of June 30, 2021 and December 31, 2020.

We were in compliance with all covenants under all issuances of outstanding senior notes as of September 30, 2021 and December 31, 2020.

Revolving Credit Facility - The revolving credit facility has a borrowing capacity of $ 900 million, a term of five years , and matures on March 5, 2025.

The obligations under the revolving credit facility are unsecured and are fully and unconditionally guaranteed by NewMarket.

There were no outstanding borrowings under the revolving credit facility at June 30, 2021 or December 31, 2020.

As of June 30, 2021 and December 31, 2020 outstanding letters of credit were approximately $ 2 million resulting in the unused portion of the credit facility amounting to $ 898 million.

We were in compliance with all covenants under the revolving credit facility as of June 30, 2021 and December 31, 2020.

The average interest rate for borrowings under the credit agreement was 2.7 % during the first nine months of 2021.

Outstanding letters of credit amounted to approximately $ 2 million at both September 30, 2021 and December 31, 2020.

The unused portion of the credit facility amounted to $ 897 million as of September 30, 2021 and $ 898 million at December 31, 2020.

We were in compliance with all covenants under the revolving credit facility as of September 30, 2021 and December 31, 2020.

NEWMARKET CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Commitments and Contingencies

7 unchanged sentences

While we believe we are currently adequately accrued for known environmental issues, it is possible that unexpected future costs could have a significant impact on our consolidated financial position, results of operations, and cash flows.

Our total accruals for environmental remediation, dismantling, and decontamination were approximately $ 10 million at both June 30, 2021 and December 31, 2020.

Our total accruals for environmental remediation, dismantling, and decontamination were approximately $ 9 million at September 30, 2021 and $ 10 million at December 31, 2020.

Of the total accrual, the current portion is included in accrued expenses and the noncurrent portion is included in other noncurrent liabilities on the Condensed Consolidated Balance Sheets.

NEWMARKET CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Our more significant environmental sites include a former plant site in Louisiana (the Louisiana site) and a Houston, Texas plant site (the Texas site).

Together, the amounts accrued on a discounted basis related to these sites represented approximately $ 7 million of the total accrual above at June 30, 2021 and $ 8 million at December 31, 2020, using discount rates ranging from 3 % to 9 % for both periods.

The aggregate undiscounted amount for these sites was $ 9 million at both June 30, 2021 and December 31, 2020.

Our more significant environmental sites include a former plant site in Louisiana and a Houston, Texas plant site.

Together, the amounts accrued on a discounted basis related to these sites represented approximately $ 7 million of the total accrual above at September 30, 2021 and $ 8 million at December 31, 2020, using discount rates ranging from 3 % to 9 % for both periods.

The aggregate undiscounted amount for these sites was $ 9 million at both September 30, 2021 and December 31, 2020.

Other Comprehensive Income (Loss) and Accumulated Other Comprehensive Loss

10 unchanged sentences

4,863 ( 5,013 ) ( 150 )

Balance at June 30, 2020 $ ( 68,330 ) $ ( 108,322 ) $ ( 176,652 )

Balance at September 30, 2020 $ ( 64,932 ) $ ( 97,966 ) $ ( 162,898 )

Balance at December 31, 2020 $ ( 92,771 ) $ ( 80,393 ) $ ( 173,164 )

5 unchanged sentences

1,871 ( 1,081 ) 790

Balance at June 30, 2021 $ ( 90,874 ) $ ( 74,073 ) $ ( 164,947 )

Balance at September 30, 2021 $ ( 90,900 ) $ ( 81,474 ) $ ( 172,374 )

(a) The pension plan and other postretirement benefit components of accumulated other comprehensive loss are included in the computation of net periodic benefit cost (income).

See Note 4 in this Quarterly Report on Form 10-Q and Note 17 in our 2020 Annual Report for further information.

NEWMARKET CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Fair Value Measurements

The carrying amount of cash and cash equivalents in the Consolidated Balance Sheets, as well as the fair value, was $ 154 million at June 30, 2021 and $ 125 million at December 31, 2020.

The carrying amount of cash and cash equivalents in the Consolidated Balance Sheets, as well as the fair value, was $ 60 million at September 30, 2021 and $ 125 million at December 31, 2020.

The fair value is classified as Level 1 in the fair value hierarchy.

No material events occurred during the six months ended June 30, 2021 requiring adjustment to the recognized balances of assets or liabilities which are recorded at fair value on a nonrecurring basis.

No material events occurred during the nine months ended September 30, 2021 requiring adjustment to the recognized balances of assets or liabilities which are recorded at fair value on a nonrecurring basis.

Long-term debt – We record the carrying amount of our long-term debt at historical cost, less deferred financing costs related to our publicly traded senior notes.

The estimated fair value of our long-term debt is shown in the table below and is based primarily on estimated current rates available to us for debt of the same remaining duration and adjusted for nonperformance risk and credit risk.

The estimated fair value of our publicly-traded senior notes included in the table below is based on the last quoted price closest to June 30, 2021.

The estimated fair value of our publicly-traded senior notes included in the table below is based on the last quoted price closest to September 30, 2021.

The fair value of our debt instruments are classified as Level 2.

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

(in thousands) Carrying

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements