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Item 1. Financial Statements

2022-08-03 compared with 2022-04-28 · 89 added, 69 removed, 299 unchanged (35% of the section changed)

2 unchanged sentences

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per-share amounts) Three Months Ended

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

June 30, Six Months Ended

2022 2021 2022 2021

Net sales $ 723,639 $ 590,721 $ 1,386,191 $ 1,157,336

15 unchanged sentences

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands) Three Months Ended

(in thousands) Second Quarter Ended

June 30, Six Months Ended

2022 2021 2022 2021

Net income $ 66,472 $ 51,952 $ 125,790 $ 121,664

1 unchanged sentence

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 2022, and $( 159 ) in 2021

Amortization of prior service cost (credit) included in net periodic benefit cost (income), net of income tax expense (benefit) of $( 157 ) in second quarter 2022, $( 156 ) in second quarter 2021, $( 313 ) in six months 2022, and $( 315 ) in six months 2021

( 498 ) ( 494 ) ( 994 ) ( 985 )

Actuarial net gain (loss) arising during the period, net of income tax expense (benefit) of $ 7 in 2022, and $( 219 ) in 2021

Amortization of actuarial net loss (gain) included in net periodic benefit cost (income), net of income tax expense (benefit) of $ 175 in 2022, and $ 529 in 2021

Actuarial net gain (loss) arising during the period, net of income tax expense (benefit) of $ 0 in second quarter 2022, $ 0 in second quarter 2021, $ 7 in six months 2022, and $( 219 ) in six months 2021

0 0 16 ( 657 )

Amortization of actuarial net loss (gain) included in net periodic benefit cost (income), net of income tax expense (benefit) of $ 173 in second quarter 2022, $ 575 in second quarter 2021, $ 348 in six months 2022, and $ 1,104 in six months 2021

531 1,749 1,070 3,539

Total pension plans and other postretirement benefits

Foreign currency translation adjustments, net of income tax expense (benefit) of $ 1,131 in 2022, and $( 464 ) in 2021

33 1,255 92 1,897

Foreign currency translation adjustments, net of income tax expense (benefit) of $( 658 ) in second quarter 2022, $ 785 in second quarter 2021, $ 473 in six months 2022, and $ 321 in six months 2021

( 29,176 ) 5,853 ( 32,278 ) 6,320

Other comprehensive income (loss) ( 29,143 ) 7,108 ( 32,186 ) 8,217

3 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts) March 31,

(in thousands, except share amounts) June 30,

2022 December 31,

31 unchanged sentences

authorized shares - 80,000,000 ;

issued and outstanding shares - 10,254,703 at March 31, 2022 and 10,362,722 at December 31, 2021)

issued and outstanding shares - 10,079,643 at June 30, 2022 and 10,362,722 at December 31, 2021)

Accumulated other comprehensive loss ( 114,413 ) ( 82,227 )

9 unchanged sentences

Shares Amount

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

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

Net income 51,952 51,952

3 unchanged sentences

Stock-based compensation ( 25 ) 558 558

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

Balance at March 31, 2022 10,254,703 $ 0 $ ( 85,270 ) $ 845,360 $ 760,090

Net income 66,472 66,472

Other comprehensive income (loss) ( 29,143 ) ( 29,143 )

Cash dividends ($ 2.10 per share)

( 21,290 ) ( 21,290 )

Repurchases of common stock ( 173,941 ) ( 678 ) ( 54,820 ) ( 55,498 )

Stock-based compensation ( 1,119 ) 678 26 704

Balance at June 30, 2022 10,079,643 $ 0 $ ( 114,413 ) $ 835,748 $ 721,335

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

3 unchanged sentences

( 41,526 ) ( 41,526 )

Stock-based compensation 6,752 1,031 1,031

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

Balance at December 31, 2021 10,362,722 $ 0 $ ( 82,227 ) $ 844,356 $ 762,129

Net income 125,790 125,790

Other comprehensive income (loss) ( 32,186 ) ( 32,186 )

Cash dividends ($ 4.20 per share)

( 42,860 ) ( 42,860 )

Repurchases of common stock ( 289,737 ) ( 1,275 ) ( 91,570 ) ( 92,845 )

Stock-based compensation 6,658 1,275 32 1,307

Balance at March 31, 2022 10,254,703 $ 0 $ ( 85,270 ) $ 845,360 $ 760,090

Balance at June 30, 2022 10,079,643 $ 0 $ ( 114,413 ) $ 835,748 $ 721,335

See accompanying Notes to Condensed Consolidated Financial Statements

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands) Three Months Ended

(in thousands) Six Months Ended

Cash and cash equivalents at beginning of year $ 83,304 $ 125,172

27 unchanged sentences

Effect of foreign exchange on cash and cash equivalents ( 735 ) 706

Increase in cash and cash equivalents 1,246 397,233

(Decrease) increase in cash and cash equivalents ( 3,813 ) 28,692

Cash and cash equivalents at end of period $ 79,491 $ 153,864

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 March 31, 2022 and December 31, 2021, and our consolidated results of operations, comprehensive income, and changes in shareholders' equity for the three months ended March 31, 2022 and March 31, 2021, and our cash flows for the three months ended March 31, 2022 and March 31, 2021.

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, 2022 and December 31, 2021, and our consolidated results of operations, comprehensive income, and changes in shareholders' equity for the second quarter and six months ended June 30, 2022 and June 30, 2021, and our cash flows for the six months ended June 30, 2022 and June 30, 2021.

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, 2021 (2021 Annual Report), as filed with the Securities and Exchange Commission (SEC).

The results of operations for the three month period ended March 31, 2022 are not necessarily indicative of the results to be expected for the full year ending December 31, 2022.

The results of operations for the six month period ended June 30, 2022 are not necessarily indicative of the results to be expected for the full year ending December 31, 2022.

The December 31, 2021 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.

1 unchanged sentence

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.

We sell petroleum additives products across the world to customers located in the North America (the United States and Canada), Latin America (Mexico, Central America, and South America), Asia Pacific, and EMEAI (Europe/Middle East/Africa/India) regions.

Our customers primarily consist of global, national, and independent oil companies.

7 unchanged sentences

Information on net sales by segment is in Note 3.

Three Months Ended

Second Quarter Ended

June 30, Six Months Ended

(in thousands) 2022 2021 2022 2021

11 unchanged sentences

Net Sales by Segment

Three Months Ended

Second Quarter Ended

June 30, Six Months Ended

(in thousands) 2022 2021 2022 2021

6 unchanged sentences

Segment Operating Profit

Three Months Ended

Second Quarter Ended

June 30, Six Months Ended

(in thousands) 2022 2021 2022 2021

11 unchanged sentences

Pension Plans and Other Postretirement Benefits

The table below shows cash contributions made during the three months ended March 31, 2022, as well as the remaining cash contributions we expect to make during the year ending December 31, 2022, for our domestic and foreign pension plans and domestic postretirement benefit plan.

(in thousands) Actual Cash Contributions for Three Months Ended March 31, 2022 Expected Remaining Cash Contributions for Year Ending December 31, 2022

The table below shows cash contributions made during the six months ended June 30, 2022, as well as the remaining cash contributions we expect to make during the year ending December 31, 2022, for our domestic and foreign pension plans and domestic postretirement benefit plan.

(in thousands) Actual Cash Contributions for Six Months Ended June 30, 2022 Expected Remaining Cash Contributions for Year Ending December 31, 2022

Domestic plans

9 unchanged sentences

Pension Benefits Postretirement Benefits

Three Months Ended March 31,

Second Quarter Ended June 30,

(in thousands) 2022 2021 2022 2021

5 unchanged sentences

Net periodic benefit cost (income) $ ( 2,092 ) $ ( 156 ) $ ( 402 ) $ ( 437 )

Pension Benefits

Three Months Ended March 31,

Pension Benefits Postretirement Benefits

Six Months Ended June 30,

(in thousands) 2022 2021 2022 2021

5 unchanged sentences

Net periodic benefit cost (income) $ ( 4,183 ) $ ( 313 ) $ ( 806 ) $ ( 873 )

Earnings Per Share

We had 34,349 shares of nonvested restricted stock at March 31, 2022 and 26,728 shares of nonvested restricted stock at March 31, 2021 that were excluded from the calculation of diluted earnings per share, as their effect on earnings per share would be anti-dilutive.

NEWMARKET CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Pension Benefits

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

(in thousands) 2022 2021 2022 2021

Service cost $ 2,252 $ 2,769 $ 4,612 $ 5,526

Interest cost 1,050 834 2,148 1,661

Expected return on plan assets ( 2,509 ) ( 2,691 ) ( 5,144 ) ( 5,357 )

Amortization of prior service cost (credit) 35 38 72 76

Amortization of actuarial net (gain) loss 162 907 331 1,808

Net periodic benefit cost (income) $ 990 $ 1,857 $ 2,019 $ 3,714

Earnings Per Share

We had 33,230 shares of nonvested restricted stock at June 30, 2022 and 26,703 shares of nonvested restricted stock at June 30, 2021 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.

Three Months Ended

Second Quarter Ended

June 30, Six Months Ended

(in thousands, except per-share amounts) 2022 2021 2022 2021

3 unchanged sentences

Earnings allocated to participating securities

193 130 368 283

Net income attributable to common shareholders after allocation of earnings to participating securities

4 unchanged sentences

Earnings per share - basic and diluted $ 6.54 $ 4.75 $ 12.28 $ 11.13

Marketable Securities

During 2021, NewMarket invested in both debt, which was designated as trading, and equity marketable securities.

Subsequently, during the first three months of 2022, we sold all of the marketable securities.

While held, the marketable securities were recorded on a settlement date basis at estimated fair value and were classified as current assets in the Consolidated Balance Sheets.

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 had a cost basis of $ 50 million and the equity securities had a cost basis of $ 334 million at December 31, 2021.

At March 31, 2022 the cost basis for all marketable securities was zero .

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 was 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 was based on actively quoted market prices.

December 31, 2021

Fair Value Measurements Using

(in thousands) Fair Value Level 1 Level 2 Level 3

Debt securities

Corporate bonds $ 48,727 $ 0 $ 48,727 $ 0

Equity securities

government income mutual fund 327,191 327,191 0 0

Total marketable securities $ 375,918 $ 327,191 $ 48,727 $ 0

March 31, December 31,

June 30, December 31,

(in thousands)

6 unchanged sentences

Intangibles (Net of Amortization) and Goodwill

The net carrying amount of intangibles and goodwill was $ 127 million at March 31, 2022 and $ 128 million at December 31, 2021.

The net carrying amount of intangibles and goodwill was $ 127 million at June 30, 2022 and $ 128 million at December 31, 2021.

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

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

(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, 2021 and March 31, 2022 is due to foreign currency fluctuation.

The change in the gross carrying amount between December 31, 2021 and June 30, 2022 is due to foreign currency fluctuation.

There is no accumulated goodwill impairment.

Amortization expense was (in thousands):

Three months ended March 31, 2022 355

Three months ended March 31, 2021 721

Second quarter ended June 30, 2022 $ 356

Six months ended June 30, 2022 711

Second quarter ended June 30, 2021 723

Six months ended June 30, 2021 1,444

Estimated amortization expense for the remainder of 2022, as well as estimated annual amortization expense related to our intangible assets for the next five years, is expected to be (in thousands):

3 unchanged sentences

Long-term Debt

(in thousands) March 31,

(in thousands) June 30,

2022 December 31,

16 unchanged sentences

We recognized a loss of $ 7.5 million on the early extinguishment including cash paid of $ 7.1 million for the premium on the early redemption and a write-off of $ 0.4 million of unamortized deferred financing costs.

We were in compliance with all covenants under all issuances of outstanding senior notes as of March 31, 2022 and December 31, 2021.

We were in compliance with all covenants under all issuances of outstanding senior notes as of June 30, 2022 and December 31, 2021.

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 1.8 % during the first three months of 2022 and 1.6 % during the full year of 2021.

We were in compliance with all covenants under the revolving credit facility as of March 31, 2022 and December 31, 2021.

Outstanding borrowings under the revolving credit facility amounted to $ 199 million at March 31, 2022 and $ 148 million at December 31, 2021.

Outstanding letters of credit amounted to approximately $ 2 million at March 31, 2022 and at December 31, 2021.

The unused portion of the credit facility amounted to $ 699 million as of March 31, 2022 and $ 750 million at December 31, 2021.

The obligations under the revolving credit facility are unsecured.

The average interest rate for borrowings under the credit agreement was 2.1 % during the first six months of 2022 and 1.6 % during the full year of 2021.

We were in compliance with all covenants under the revolving credit facility as of June 30, 2022 and December 31, 2021.

Outstanding borrowings under the revolving credit facility amounted to $ 269 million at June 30, 2022 and $ 148 million at December 31, 2021.

Outstanding letters of credit amounted to approximately $ 2 million at both June 30, 2022 and December 31, 2021.

The unused portion of the credit facility amounted to $ 629 million as of June 30, 2022 and $ 750 million at December 31, 2021.

Commitments and Contingencies

5 unchanged sentences

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 $ 10 million at March 31, 2022 and $ 11 million at December 31, 2021.

Our total accruals for environmental remediation, dismantling, and decontamination were approximately $ 10 million at June 30, 2022 and $ 11 million at December 31, 2021.

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 $ 8 million of the total accrual above at both March 31, 2022 and December 31, 2021, using discount rates ranging from 3 % to 9 % for both periods.

The aggregate undiscounted amount for these sites was $ 10 million at both March 31, 2022 and December 31, 2021.

Together, the amounts accrued on a discounted basis related to these sites represented approximately $ 8 million of the total accrual above at both June 30, 2022 and December 31, 2021, using discount rates ranging from 3 % to 9 % for both periods.

The aggregate undiscounted amount for these sites was $ 10 million at both June 30, 2022 and December 31, 2021.

NEWMARKET CORPORATION AND SUBSIDIARIES

12 unchanged sentences

1,897 6,320 8,217

Balance at March 31, 2021 $ ( 92,129 ) $ ( 79,926 ) $ ( 172,055 )

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

Balance at December 31, 2021 $ 1,522 $ ( 83,749 ) $ ( 82,227 )

4 unchanged sentences

92 ( 32,278 ) ( 32,186 )

Balance at March 31, 2022 $ 1,581 $ ( 86,851 ) $ ( 85,270 )

Balance at June 30, 2022 $ 1,614 $ ( 116,027 ) $ ( 114,413 )

(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).

1 unchanged sentence

Fair Value Measurements

The carrying amount of cash and cash equivalents in the Consolidated Balance Sheets, as well as the fair value, was $ 85 million at March 31, 2022 and $ 83 million at December 31, 2021.

The carrying amount of cash and cash equivalents in the Consolidated Balance Sheets, as well as the fair value, was $ 79 million at June 30, 2022 and $ 83 million at December 31, 2021.

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

No material events occurred during the three months ended March 31, 2022 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.

No material events occurred during the six months ended June 30, 2022 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 registered 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 March 31, 2022.

The estimated fair value of our registered senior notes included in the table below is based on the last quoted price closest to June 30, 2022.

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

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

(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