NEWMARKET CORP 10-Q

ITEM 1. Financial Statements NEWMARKET CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (in thousands, except per-share amounts) Third Quarter Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Net sales $ 622,207 $ 512,869 $ 1,779,543 $ 1,483,150 Cost of goods sold 483,986 346,262 1,338,570 1,038,898 Gross profit 138,221 166,607 440,973 444,252 Selling, general, and administrative expenses 39,729 34,690 111,379 105,837 Research, development, and testing expenses 35,387 33,113 107,241 102,168 Operating profit 63,105 98,804 222,353 236,247 Interest and financing expenses, net 9,345 6,466 24,557 20,575 Other income (expense), net 7,393 25,280 19,785 39,292 Income before income tax expense 61,153 117,618 217,581 254,964 Income tax expense 9,115 21,824 43,879 51,280 Net income $ 52,038 $ 95,794 $ 173,702 $ 203,684 Earnings per share - basic and diluted $ 4.80 $ 8.77 $ 15.94 $ 18.52 Cash dividends declared per share $ 2.10 $ 1.90 $ 5.90 $ 5.70 See accompanying Notes to Condensed Consolidated Financial Statements 4 Table of Contents NEWMARKET CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (in thousands) Third Quarter Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Net income $ 52,038 $ 95,794 $ 173,702 $ 203,684 Other comprehensive income (loss): Pension plans and other postretirement benefits: 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 ) 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 ) 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 $( 535 ) in third quarter 2021,$( 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 ) Other comprehensive income (loss) ( 7,427 ) 13,754 790 ( 150 ) Comprehensive income $ 44,611 $ 109,548 $ 174,492 $ 203,534 See accompanying Notes to Condensed Consolidated Financial Statements 5 Table of Contents NEWMARKET CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (in thousands, except share amounts) September 30, 2021 December 31, 2020 ASSETS Current assets: Cash and cash equivalents $ 59,613 $ 125,172 Marketable securities 378,902 0 Trade and other accounts receivable, less allowance for credit losses 414,847 336,395 Inventories 479,039 401,031 Prepaid expenses and other current assets 34,459 35,480 Total current assets 1,366,860 898,078 Property, plant, and equipment, net 677,481 665,147 Intangibles (net of amortization) and goodwill 128,125 129,944 Prepaid pension cost 139,760 137,069 Operating lease right-of-use assets 67,586 61,329 Deferred charges and other assets 57,404 42,308 Total assets $ 2,437,216 $ 1,933,875 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $ 250,658 $ 189,937 Accrued expenses 86,677 78,422 Dividends payable 20,600 15,184 Income taxes payable 5,202 3,760 Operating lease liabilities 15,231 13,410 Other current liabilities 13,029 11,742 Total current liabilities 391,397 312,455 Long-term debt 991,919 598,848 Operating lease liabilities-noncurrent 52,319 48,324 Other noncurrent liabilities 228,808 214,424 Total liabilities 1,664,443 1,174,051 Commitments and contingencies (Note 10) Shareholders’ equity: Common stock and paid-in capital (with no par value; authorized shares - 80,000,000 ; issued and outstanding shares - 10,637,047 at September 30, 2021 and 10,921,377 at December 31, 2020) 0 717 Accumulated other comprehensive loss ( 172,374 ) ( 173,164 ) Retained earnings 945,147 932,271 Total shareholders' equity 772,773 759,824 Total liabilities and shareholders’ equity $ 2,437,216 $ 1,933,875 See accompanying Notes to Condensed Consolidated Financial Statements 6 Table of Contents NEWMARKET CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Unaudited) (in thousands, except share and per-share amounts) Common Stock and Paid-in Capital Accumulated Other Comprehensive Loss Retained Earnings Total Shareholders’ Equity Shares Amount Balance at June 30, 2020 10,923,999 $ 281 $ ( 176,652 ) $ 811,656 $ 635,285 Net income 95,794 95,794 Other comprehensive income (loss) 13,754 13,754 Cash dividends ($ 1.90 per share) ( 20,751 ) ( 20,751 ) Repurchases of common stock ( 3,835 ) ( 870 ) ( 564 ) ( 1,434 ) 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 Net income 52,038 52,038 Other comprehensive income (loss) ( 7,427 ) ( 7,427 ) Cash dividends ($ 2.10 per share) ( 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 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 Net income 203,684 203,684 Other comprehensive income (loss) ( 150 ) ( 150 ) Cash dividends ($ 5.70 per share) ( 62,667 ) ( 62,667 ) Repurchases of common stock ( 270,963 ) ( 2,630 ) ( 98,804 ) ( 101,434 ) Tax withholdings related to stock-based compensation ( 1,547 ) ( 641 ) ( 641 ) Stock-based compensation 5,350 1,593 43 1,636 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 Net income 173,702 173,702 Other comprehensive income (loss) 790 790 Cash dividends ($ 5.90 per share) ( 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 September 30, 2021 10,637,047 $ 0 $ ( 172,374 ) $ 945,147 $ 772,773 See accompanying Notes to Condensed Consolidated Financial Statements 7 Table of Contents NEWMARKET CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands) Nine Months Ended September 30, 2021 2020 Cash and cash equivalents at beginning of year $ 125,172 $ 144,397 Cash flows from operating activities: Net income 173,702 203,684 Adjustments to reconcile net income to cash flows from operating activities: Depreciation and amortization 63,075 63,045 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 Working capital changes ( 98,426 ) ( 33,493 ) Cash pension and postretirement contributions ( 7,820 ) ( 7,717 ) Other, net 4,868 1,879 Cash provided from (used in) operating activities 145,018 216,320 Cash flows from investing activities: Capital expenditures ( 64,025 ) ( 60,133 ) Purchases of marketable securities ( 391,429 ) 0 Proceeds from sales and maturities of marketable securities 9,894 0 Proceeds from sale of land 0 20,000 Other, net 0 ( 927 ) Cash provided from (used in) investing activities ( 445,560 ) ( 41,060 ) Cash flows from financing activities: Net borrowings (repayments) under revolving credit facility 1,000 ( 34,678 ) Issuance of 2.70 % senior notes 395,052 0 Dividends paid ( 64,116 ) ( 62,667 ) Repurchases of common stock ( 91,711 ) ( 101,434 ) Debt issuance costs ( 3,897 ) ( 1,349 ) Other, net ( 581 ) ( 82 ) Cash provided from (used in) financing activities 235,747 ( 200,210 ) Effect of foreign exchange on cash and cash equivalents ( 764 ) ( 1,746 ) Decrease in cash and cash equivalents ( 65,559 ) ( 26,696 ) Cash and cash equivalents at end of period $ 59,613 $ 117,701 See accompanying Notes to Condensed Consolidated Financial Statements 8 Table of Contents NEWMARKET CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. 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 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 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. Unless the context otherwise indicates, all references to “we,” “us,” “our,” the “company,” and “NewMarket” are to NewMarket Corporation and its consolidated subsidiaries. 2. Net Sales Our revenues are primarily derived from the manufacture and sale of petroleum additives products. We sell petroleum additives products across the world to customers located in the North America, Latin America, Asia Pacific, and Europe/Middle East/Africa/India (EMEAI) regions. Our customers primarily consist of global, national, and independent oil companies. Our contracts generally include one performance obligation, which is providing petroleum additives products. The performance obligation is satisfied at a point in time when products are shipped, delivered, or consumed by the customer, depending on the underlying contracts. In limited cases, we collect funds in advance of shipping product to our customers and recognizing the related revenue. These prepayments from customers are recorded as a contract liability to our customer until we recognize the revenue. Some of our contracts include variable consideration in the form of rebates or business development funds. We regularly review both rebates and business development funds and make adjustments when necessary, recognizing the full amount of any adjustment in the period identified. The following table provides information on our net sales by geographic area. Information on net sales by segment is in Note 3. Third Quarter Ended September 30, Nine Months Ended September 30, (in thousands) 2021 2020 2021 2020 Net sales United States $ 219,912 $ 175,086 $ 580,799 $ 476,858 China 56,470 56,531 202,523 159,771 Europe, Middle East, Africa, India 188,603 161,484 533,732 483,051 Asia Pacific, except China 81,174 64,498 247,575 210,670 Other foreign 76,048 55,270 214,914 152,800 Net sales $ 622,207 $ 512,869 $ 1,779,543 $ 1,483,150 9 Table of Contents NEWMARKET CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 3. Segment Information The tables below show our consolidated segment results. The “All other” category includes the operations of the antiknock compounds business, as well as certain contracted manufacturing and services associated with Ethyl Corporation (Ethyl). Net Sales by Segment Third Quarter Ended September 30, Nine Months Ended September 30, (in thousands) 2021 2020 2021 2020 Petroleum additives Lubricant additives $ 527,142 $ 432,938 $ 1,520,475 $ 1,240,042 Fuel additives 91,928 77,342 250,080 236,313 Total 619,070 510,280 1,770,555 1,476,355 All other 3,137 2,589 8,988 6,795 Net sales $ 622,207 $ 512,869 $ 1,779,543 $ 1,483,150 Segment Operating Profit Third Quarter Ended September 30, Nine Months Ended September 30, (in thousands) 2021 2020 2021 2020 Petroleum additives $ 72,128 $ 102,186 $ 240,399 $ 248,918 All other ( 151 ) 2,015 ( 798 ) 1,951 Segment operating profit 71,977 104,201 239,601 250,869 Corporate, general, and administrative expenses ( 8,731 ) ( 5,565 ) ( 16,591 ) ( 15,263 ) Interest and financing expenses, net ( 9,345 ) ( 6,466 ) ( 24,557 ) ( 20,575 ) Other income (expense), net 7,252 25,448 19,128 39,933 Income before income tax expense $ 61,153 $ 117,618 $ 217,581 $ 254,964 10 Table of Contents NEWMARKET CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 4. Pension Plans and Other Postretirement Benefits 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 Pension benefits $ 2,140 $ 713 Postretirement benefits 872 291 Foreign plans Pension benefits 4,808 1,537 The tables below present information on net periodic benefit cost (income) for our domestic and foreign pension plans and domestic postretirement benefit plan. The service cost component of net periodic benefit cost (income) is reflected in cost of goods sold; selling, general, and administrative expenses; or research, development, and testing expenses, according to where other compensation costs arising from services rendered by the pertinent employee are recorded on the Consolidated Statements of Income. The remaining components of net periodic benefit cost (income) are recorded in other income (expense), net on the Consolidated Statements of Income. Domestic Pension Benefits Postretirement Benefits Third Quarter Ended September 30, (in thousands) 2021 2020 2021 2020 Service cost $ 4,858 $ 4,012 $ 310 $ 250 Interest cost 3,282 3,311 285 314 Expected return on plan assets ( 9,666 ) ( 9,309 ) ( 213 ) ( 222 ) Amortization of prior service cost (credit) 66 70 ( 757 ) ( 757 ) Amortization of actuarial net (gain) loss 1,502 874 2 0 Net periodic benefit cost (income) $ 42 $ ( 1,042 ) $ ( 373 ) $ ( 415 ) Domestic Pension Benefits Postretirement Benefits Nine Months Ended September 30, (in thousands) 2021 2020 2021 2020 Service cost $ 14,486 $ 12,407 $ 810 $ 684 Interest cost 9,764 10,328 868 1,005 Expected return on plan assets ( 29,006 ) ( 27,920 ) ( 680 ) ( 704 ) Amortization of prior service cost (credit) 203 203 ( 2,271 ) ( 2,271 ) Amortization of actuarial net (gain) loss 4,282 3,506 27 0 Net periodic benefit cost (income) $ ( 271 ) $ ( 1,476 ) $ ( 1,246 ) $ ( 1,286 ) 11 Table of Contents NEWMARKET CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Foreign Pension Benefits Third Quarter Ended September 30, Nine Months Ended September 30, (in thousands) 2021 2020 2021 2020 Service cost $ 2,748 $ 2,153 $ 8,274 $ 6,360 Interest cost 829 967 2,490 2,880 Expected return on plan assets ( 2,674 ) ( 2,426 ) ( 8,031 ) ( 7,221 ) Amortization of prior service cost (credit) 38 ( 12 ) 114 ( 33 ) Amortization of actuarial net (gain) loss 901 355 2,709 1,047 Net periodic benefit cost (income) $ 1,842 $ 1,037 $ 5,556 $ 3,033 5. Earnings Per Share 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. As such, we use the two-class method to compute basic and diluted earnings per share for all periods presented since this method yields the most dilutive result. The following table illustrates the earnings allocation method utilized in the calculation of basic and diluted earnings per share. Third Quarter Ended September 30, Nine Months Ended September 30, (in thousands, except per-share amounts) 2021 2020 2021 2020 Earnings per share numerator: Net income attributable to common shareholders before allocation of earnings to participating securities $ 52,038 $ 95,794 $ 173,702 $ 203,684 Earnings allocated to participating securities 129 172 412 326 Net income attributable to common shareholders after allocation of earnings to participating securities $ 51,909 $ 95,622 $ 173,290 $ 203,358 Earnings per share denominator: Weighted-average number of shares of common stock outstanding - basic and diluted 10,821 10,903 10,875 10,981 Earnings per share - basic and diluted $ 4.80 $ 8.77 $ 15.94 $ 18.52 12 Table of Contents NEWMARKET CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 6. Marketable Securities During May 2021, NewMarket invested in both debt and equity marketable securities. The debt securities are designated as trading. The marketable securities are recorded on a settlement date basis at estimated fair value and are classified as current assets in the Consolidated Balance Sheets. 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 $ 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: Third Quarter Ended September 30, Nine Months Ended September 30, (in thousands) 2021 2021 Unrealized gains and (losses) recognized during the reporting period on debt securities still held at the reporting date $ ( 287 ) $ ( 231 ) Unrealized gains and (losses) recognized during the reporting period on equity securities still held at the reporting date $ ( 813 ) $ ( 3,183 ) The following table provides information on the fair value of the marketable securities, as well as the related level within the fair value hierarchy. The estimated fair value of debt securities is based on reported trades of the debt security adjusted for other observable market data including, but not limited to, benchmark yield curves, market-based quotes of similar assets, and other market-corroborated inputs. The estimated fair value of equity securities is based on actively quoted market prices. September 30, 2021 Fair Value Measurements Using (in thousands) Fair Value Level 1 Level 2 Level 3 Debt securities: Corporate bonds $ 49,847 $ 0 $ 49,847 $ 0 Equity securities: U.S. government income mutual fund 329,055 329,055 0 0 Total marketable securities $ 378,902 $ 329,055 $ 49,847 $ 0 7. Inventories September 30, December 31, (in thousands) 2021 2020 Finished goods and work-in-process $ 376,319 $ 325,588 Raw materials 85,161 59,413 Stores, supplies, and other 17,559 16,030 $ 479,039 $ 401,031 13 Table of Contents NEWMARKET CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 8. Intangibles (Net of Amortization) and Goodwill 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. September 30, 2021 December 31, 2020 (in thousands) Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Amortizing intangible assets Formulas and technology $ 6,200 $ 4,392 $ 6,200 $ 3,617 Contract 2,000 950 2,000 800 Customer bases 5,440 4,112 14,240 12,037 Goodwill 123,939 123,958 $ 137,579 $ 9,454 $ 146,398 $ 16,454 All of the intangibles relate to the petroleum additives segment. 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): 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): 2021 $ 356 2022 1,423 2023 907 2024 390 2025 390 2026 390 We amortize the contract over 10 years; the customer base over 20 years; and formulas and technology over 6 years. 14 Table of Contents NEWMARKET CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 9. Long-term Debt (in thousands) September 30, 2021 December 31, 2020 Senior notes - 2.70 % due 2031 (net of related deferred financing costs) $ 391,632 $ 0 Senior notes - 4.10 % due 2022 (net of related deferred financing costs) 349,287 348,848 Senior notes - 3.78 % due 2029 250,000 250,000 Revolving credit facility 1,000 0 $ 991,919 $ 598,848 Senior Notes - On March 18, 2021, we issued $ 400 million aggregate principal amount of 2.70 % senior notes due 2031. The 2.70 % senior notes are general unsecured senior obligations and rank equally with our other unsecured senior indebtedness. The offer and sale of the notes were registered under the Securities Act of 1933, as amended. We incurred financing costs in 2021 of approximately $ 4 million related to the 2.70 % senior notes, which are being amortized over the term of the notes. The indenture governing the 2.70 % senior notes includes certain customary covenants that, among other things and subject to certain qualifications and exceptions, limit our ability and the ability of our subsidiaries to: • grant liens to secure indebtedness; • engage in sale and lease back transactions; • merge or consolidate with, or convey, transfer or lease all or substantially all of our assets to a third party. The outstanding 4.10 % senior notes are unsecured, with an aggregate principal amount of $ 350 million and are registered under the Securities Act of 1933, as amended. 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 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. 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. 15 Table of Contents NEWMARKET CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 10. Commitments and Contingencies Legal Matters We are involved in legal proceedings that are incidental to our business and may include administrative or judicial actions. Some of these legal proceedings involve governmental authorities and relate to environmental matters. For further information, see Environmental below. While it is not possible to predict or determine with certainty the outcome of any legal proceeding, we believe the outcome of any of these proceedings, or all of them combined, will not result in a material adverse effect on our consolidated results of operations, financial condition, or cash flows. Environmental We are involved in environmental proceedings and potential proceedings relating to soil and groundwater contamination, disposal of hazardous waste, and other environmental matters at several of our current or former facilities, or at third-party sites where we have been designated as a potentially responsible party (PRP). 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 $ 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. 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. 11. Other Comprehensive Income (Loss) and Accumulated Other Comprehensive Loss The balances of, and changes in, the components of accumulated other comprehensive loss, net of tax, consist of the following: (in thousands) Pension Plans and Other Postretirement Benefits Foreign Currency Translation Adjustments Accumulated Other Comprehensive (Loss) Income Balance at December 31, 2019 $ ( 69,795 ) $ ( 92,953 ) $ ( 162,748 ) Other comprehensive income (loss) before reclassifications 2,985 ( 5,013 ) ( 2,028 ) Amounts reclassified from accumulated other comprehensive loss (a) 1,878 0 1,878 Other comprehensive income (loss) 4,863 ( 5,013 ) ( 150 ) Balance at September 30, 2020 $ ( 64,932 ) $ ( 97,966 ) $ ( 162,898 ) Balance at December 31, 2020 $ ( 92,771 ) $ ( 80,393 ) $ ( 173,164 ) Other comprehensive income (loss) before reclassifications ( 1,993 ) ( 1,081 ) ( 3,074 ) Amounts reclassified from accumulated other comprehensive loss (a) 3,864 0 3,864 Other comprehensive income (loss) 1,871 ( 1,081 ) 790 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. 16 Table of Contents NEWMARKET CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 12. Fair Value Measurements 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 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 September 30, 2021. The fair value of our debt instruments are classified as Level 2. September 30, 2021 December 31, 2020 (in thousands) Carrying Amount Fair Value Carrying Amount Fair Value Long-term debt $ 991,919 $ 1,044,278 $ 598,848 $ 648,671 17 Table of Contents