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, 2022 2021 2022 2021 Net sales $ 696,049 $ 622,207 $ 2,082,240 $ 1,779,543 Cost of goods sold 547,742 483,986 1,621,294 1,338,570 Gross profit 148,307 138,221 460,946 440,973 Selling, general, and administrative expenses 35,192 39,729 109,303 111,379 Research, development, and testing expenses 34,388 35,387 106,035 107,241 Operating profit 78,727 63,105 245,608 222,353 Interest and financing expenses, net 8,369 9,345 24,859 24,557 Loss on early extinguishment of debt 0 0 7,545 0 Other income (expense), net 9,971 7,393 26,240 19,785 Income before income tax expense 80,329 61,153 239,444 217,581 Income tax expense 17,103 9,115 50,428 43,879 Net income $ 63,226 $ 52,038 $ 189,016 $ 173,702 Earnings per share - basic and diluted $ 6.32 $ 4.80 $ 18.60 $ 15.94 Cash dividends declared per share $ 2.10 $ 2.10 $ 6.30 $ 5.90 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, 2022 2021 2022 2021 Net income $ 63,226 $ 52,038 $ 189,016 $ 173,702 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 $ 0 in third quarter and nine months 2022, $ 8 in third quarter and nine months 2021 0 27 0 27 Amortization of prior service cost (credit) included in net periodic benefit cost (income), net of income tax expense (benefit) of $( 157 ) in third quarter 2022, $( 157 ) in third quarter 2021, $( 470 ) in nine months 2022, and $( 472 ) in nine months 2021 ( 500 ) ( 496 ) ( 1,494 ) ( 1,481 ) Actuarial net gain (loss) arising during the period, net of income tax expense (benefit) of $ 583 in third quarter 2022, $( 433 ) in third quarter 2021, $ 590 in nine months 2022, and $( 652 ) in nine months 2021 1,812 ( 1,363 ) 1,828 ( 2,020 ) Amortization of actuarial net loss (gain) included in net periodic benefit cost (income), net of income tax expense (benefit) of $ 145 in third quarter 2022, $ 593 in third quarter 2021, $ 493 in nine months 2022, and $ 1,697 in nine months 2021 445 1,806 1,515 5,345 Total pension plans and other postretirement benefits 1,757 ( 26 ) 1,849 1,871 Foreign currency translation adjustments, net of income tax expense (benefit) of $( 194 ) in third quarter 2022, $( 535 ) in third quarter 2021, $ 279 in nine months 2022, and $( 214 ) in nine months 2021 ( 35,973 ) ( 7,401 ) ( 68,251 ) ( 1,081 ) Other comprehensive income (loss) ( 34,216 ) ( 7,427 ) ( 66,402 ) 790 Comprehensive income $ 29,010 $ 44,611 $ 122,614 $ 174,492 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, 2022 December 31, 2021 ASSETS Current assets: Cash and cash equivalents $ 71,972 $ 83,304 Marketable securities 0 375,918 Trade and other accounts receivable, less allowance for credit losses 476,061 391,779 Inventories 592,222 498,539 Prepaid expenses and other current assets 33,847 38,633 Total current assets 1,174,102 1,388,173 Property, plant, and equipment, net 653,231 676,770 Intangibles (net of amortization) and goodwill 126,323 127,752 Prepaid pension cost 254,695 242,604 Operating lease right-of-use assets, net 64,213 68,402 Deferred charges and other assets 64,280 54,735 Total assets $ 2,336,844 $ 2,558,436 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $ 285,475 $ 246,097 Accrued expenses 85,549 85,103 Dividends payable 19,357 16,648 Income taxes payable 10,887 4,442 Operating lease liabilities 15,742 15,709 Current portion of long-term debt 0 349,434 Other current liabilities 9,125 7,654 Total current liabilities 426,135 725,087 Long-term debt 1,008,516 789,853 Operating lease liabilities-noncurrent 47,900 52,591 Other noncurrent liabilities 186,917 228,776 Total liabilities 1,669,468 1,796,307 Commitments and contingencies (Note 9) Shareholders’ equity: Common stock and paid-in capital (with no par value; authorized shares - 80,000,000 ; issued and outstanding shares - 9,871,440 at September 30, 2022 and 10,362,722 at December 31, 2021) 0 0 Accumulated other comprehensive loss ( 148,629 ) ( 82,227 ) Retained earnings 816,005 844,356 Total shareholders' equity 667,376 762,129 Total liabilities and shareholders’ equity $ 2,336,844 $ 2,558,436 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, 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 June 30, 2022 10,079,643 $ 0 $ ( 114,413 ) $ 835,748 $ 721,335 Net income 63,226 63,226 Other comprehensive income (loss) ( 34,216 ) ( 34,216 ) Cash dividends ($ 2.10 per share) ( 20,930 ) ( 20,930 ) Repurchases of common stock ( 209,538 ) ( 298 ) ( 62,042 ) ( 62,340 ) Stock-based compensation 1,335 298 3 301 Balance at September 30, 2022 9,871,440 $ 0 $ ( 148,629 ) $ 816,005 $ 667,376 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 Balance at December 31, 2021 10,362,722 $ 0 $ ( 82,227 ) $ 844,356 $ 762,129 Net income 189,016 189,016 Other comprehensive income (loss) ( 66,402 ) ( 66,402 ) Cash dividends ($ 6.30 per share) ( 63,790 ) ( 63,790 ) Repurchases of common stock ( 499,275 ) ( 1,573 ) ( 153,612 ) ( 155,185 ) Stock-based compensation 7,993 1,573 35 1,608 Balance at September 30, 2022 9,871,440 $ 0 $ ( 148,629 ) $ 816,005 $ 667,376 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, 2022 2021 Cash and cash equivalents at beginning of year $ 83,304 $ 125,172 Cash flows from operating activities: Net income 189,016 173,702 Adjustments to reconcile net income to cash flows from operating activities: Depreciation and amortization 62,160 63,075 Deferred income tax (benefit) expense ( 33,685 ) 6,205 Loss on early extinguishment of debt 7,545 0 Working capital changes ( 198,637 ) ( 98,426 ) Loss on marketable securities 2,977 3,414 Cash pension and postretirement contributions ( 7,111 ) ( 7,820 ) Other, net ( 6,303 ) 4,868 Cash provided from (used in) operating activities 15,962 145,018 Cash flows from investing activities: Capital expenditures ( 40,402 ) ( 64,025 ) Purchases of marketable securities ( 787 ) ( 391,429 ) Proceeds from sales and maturities of marketable securities 372,846 9,894 Cash provided from (used in) investing activities 331,657 ( 445,560 ) Cash flows from financing activities: Redemption of 4.10 % senior notes ( 350,000 ) 0 Net borrowings under revolving credit facility 218,000 1,000 Issuance of 2.70 % senior notes 0 395,052 Dividends paid ( 63,790 ) ( 64,116 ) Repurchases of common stock ( 150,754 ) ( 91,711 ) Cash costs of 4.10 % senior notes redemption ( 7,099 ) 0 Debt issuance costs 0 ( 3,897 ) Other, net ( 2,496 ) ( 581 ) Cash provided from (used in) financing activities ( 356,139 ) 235,747 Effect of foreign exchange on cash and cash equivalents ( 2,812 ) ( 764 ) (Decrease) increase in cash and cash equivalents ( 11,332 ) ( 65,559 ) Cash and cash equivalents at end of period $ 71,972 $ 59,613 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, 2022 and December 31, 2021, and our consolidated results of operations, comprehensive income, and changes in shareholders' equity for the third quarter and nine months ended September 30, 2022 and September 30, 2021, and our cash flows for the nine months ended September 30, 2022 and September 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 nine month period ended September 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. 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 (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. 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) 2022 2021 2022 2021 Net sales United States $ 242,631 $ 219,912 $ 716,913 $ 580,799 China 30,578 56,470 145,008 202,523 Europe, Middle East, Africa, India 217,108 188,603 616,438 533,732 Asia Pacific, except China 119,566 81,174 338,405 247,575 Other foreign 86,166 76,048 265,476 214,914 Net sales $ 696,049 $ 622,207 $ 2,082,240 $ 1,779,543 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 contract manufacturing and services associated with Ethyl Corporation (Ethyl). Net Sales by Segment Third Quarter Ended September 30, Nine Months Ended September 30, (in thousands) 2022 2021 2022 2021 Petroleum additives Lubricant additives $ 582,559 $ 527,142 $ 1,775,574 $ 1,520,475 Fuel additives 110,134 91,928 298,444 250,080 Total 692,693 619,070 2,074,018 1,770,555 All other 3,356 3,137 8,222 8,988 Net sales $ 696,049 $ 622,207 $ 2,082,240 $ 1,779,543 Segment Operating Profit Third Quarter Ended September 30, Nine Months Ended September 30, (in thousands) 2022 2021 2022 2021 Petroleum additives $ 83,023 $ 72,128 $ 261,130 $ 240,399 All other ( 41 ) ( 151 ) ( 205 ) ( 798 ) Segment operating profit 82,982 71,977 260,925 239,601 Corporate, general, and administrative expenses ( 4,167 ) ( 8,731 ) ( 15,389 ) ( 16,591 ) Interest and financing expenses, net ( 8,369 ) ( 9,345 ) ( 24,859 ) ( 24,557 ) Loss on early extinguishment of debt 0 0 ( 7,545 ) 0 Other income (expense), net 9,883 7,252 26,312 19,128 Income before income tax expense $ 80,329 $ 61,153 $ 239,444 $ 217,581 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, 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 Nine Months Ended September 30, 2022 Expected Remaining Cash Contributions for Year Ending December 31, 2022 Domestic plans Pension benefits $ 1,765 $ 572 Postretirement benefits 937 312 Foreign plans Pension benefits 4,409 1,796 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) 2022 2021 2022 2021 Service cost $ 4,490 $ 4,858 $ 299 $ 310 Interest cost 3,332 3,282 294 285 Expected return on plan assets ( 10,945 ) ( 9,666 ) ( 185 ) ( 213 ) Amortization of prior service cost (credit) 68 66 ( 757 ) ( 757 ) Amortization of actuarial net (gain) loss 419 1,502 22 2 Net periodic benefit cost (income) $ ( 2,636 ) $ 42 $ ( 327 ) $ ( 373 ) Domestic Pension Benefits Postretirement Benefits Nine Months Ended September 30, (in thousands) 2022 2021 2022 2021 Service cost $ 14,202 $ 14,486 $ 820 $ 810 Interest cost 10,109 9,764 872 868 Expected return on plan assets ( 32,825 ) ( 29,006 ) ( 593 ) ( 680 ) Amortization of prior service cost (credit) 204 203 ( 2,271 ) ( 2,271 ) Amortization of actuarial net (gain) loss 1,491 4,282 39 27 Net periodic benefit cost (income) $ ( 6,819 ) $ ( 271 ) $ ( 1,133 ) $ ( 1,246 ) 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) 2022 2021 2022 2021 Service cost $ 2,123 $ 2,748 $ 6,735 $ 8,274 Interest cost 993 829 3,141 2,490 Expected return on plan assets ( 2,362 ) ( 2,674 ) ( 7,506 ) ( 8,031 ) Amortization of prior service cost (credit) 33 38 105 114 Amortization of actuarial net (gain) loss 152 901 483 2,709 Net periodic benefit cost (income) $ 939 $ 1,842 $ 2,958 $ 5,556 5. Earnings Per Share We had 33,070 shares of nonvested restricted stock at September 30, 2022 and 26,618 shares of nonvested restricted stock at September 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. 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) 2022 2021 2022 2021 Earnings per share numerator: Net income attributable to common shareholders before allocation of earnings to participating securities $ 63,226 $ 52,038 $ 189,016 $ 173,702 Earnings allocated to participating securities 207 129 575 412 Net income attributable to common shareholders after allocation of earnings to participating securities $ 63,019 $ 51,909 $ 188,441 $ 173,290 Earnings per share denominator: Weighted-average number of shares of common stock outstanding - basic and diluted 9,965 10,821 10,130 10,875 Earnings per share - basic and diluted $ 6.32 $ 4.80 $ 18.60 $ 15.94 6. Inventories September 30, December 31, (in thousands) 2022 2021 Finished goods and work-in-process $ 464,463 $ 393,778 Raw materials 108,277 86,856 Stores, supplies, and other 19,482 17,905 $ 592,222 $ 498,539 12 Table of Contents NEWMARKET CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 7. Intangibles (Net of Amortization) and Goodwill The net carrying amount of intangibles and goodwill was $ 126 million at September 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. September 30, 2022 December 31, 2021 (in thousands) Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Amortizing intangible assets Formulas and technology $ 6,200 $ 5,425 $ 6,200 $ 4,650 Contract 2,000 1,150 2,000 1,000 Customer base 5,440 4,302 5,440 4,160 Goodwill 123,560 123,922 $ 137,200 $ 10,877 $ 137,562 $ 9,810 All of the intangibles relate to the petroleum additives segment. The change in the gross carrying amount between December 31, 2021 and September 30, 2022 is due to foreign currency fluctuation. There is no accumulated goodwill impairment. Amortization expense was (in thousands): Third quarter ended September 30, 2022 $ 356 Nine months ended September 30, 2022 1,067 Third quarter ended September 30, 2021 356 Nine months ended September 30, 2021 1,800 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): 2022 $ 356 2023 907 2024 390 2025 390 2026 390 2027 190 We amortize formulas and technology over 6 years, the contract over 10 years, and the customer base over 20 years . 8. Long-term Debt (in thousands) September 30, 2022 December 31, 2021 Senior notes - 2.70 % due 2031 (net of related deferred financing costs) $ 392,516 $ 391,853 Senior notes - 3.78 % due 2029 250,000 250,000 Senior notes - 4.10 % due 2022 (net of related deferred financing costs) 0 349,434 Revolving credit facility 366,000 148,000 1,008,516 1,139,287 Less: Current maturity of 4.10 % senior notes 0 349,434 $ 1,008,516 $ 789,853 Senior Notes - The outstanding 2.70 % senior notes, which were issued in 2021, are unsecured with an aggregate principal amount of $ 400 million. The offer and sale of the notes were registered under the Securities Act of 1933, as amended. 13 Table of Contents NEWMARKET CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 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. On March 15, 2022, we redeemed the 4.10 % senior notes at a redemption price of 100 % of the principal amount of $ 350 million plus the accrued and unpaid interest on the notes and the applicable premium as outlined in the Indenture dated December 20, 2012. The 4.10 % senior notes were due December 2022. 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 September 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. The average interest rate for borrowings under the credit agreement was 2.7 % during the first nine 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 September 30, 2022 and December 31, 2021. Outstanding borrowings under the revolving credit facility amounted to $ 366 million at September 30, 2022 and $ 148 million at December 31, 2021. Outstanding letters of credit amounted to approximately $ 2 million at both September 30, 2022 and December 31, 2021. The unused portion of the credit facility amounted to $ 532 million at September 30, 2022 and $ 750 million at December 31, 2021. 9. 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. 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 September 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 $ 7 million of the total accrual above at September 30, 2022 and $ 8 million at December 31, 2021, using discount rates ranging from 3 % to 9 % for both periods. The aggregate undiscounted amount for these sites were $ 9 million at September 30, 2022 and $ 10 million at December 31, 2021. 14 Table of Contents NEWMARKET CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 10. 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, 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 ) Balance at December 31, 2021 $ 1,522 $ ( 83,749 ) $ ( 82,227 ) Other comprehensive income (loss) before reclassifications 1,828 ( 68,251 ) ( 66,423 ) Amounts reclassified from accumulated other comprehensive loss (a) 21 0 21 Other comprehensive income (loss) 1,849 ( 68,251 ) ( 66,402 ) Balance at September 30, 2022 $ 3,371 $ ( 152,000 ) $ ( 148,629 ) (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 18 in our 2021 Annual Report for further information. 11. Fair Value Measurements The carrying amount of cash and cash equivalents in the Consolidated Balance Sheets, as well as the fair value, was $ 72 million at September 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 nine months ended September 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 registered senior notes included in the table below is based on the last quoted price closest to September 30, 2022. The fair value of our debt instruments are classified as Level 2. September 30, 2022 December 31, 2021 (in thousands) Carrying Amount Fair Value Carrying Amount Fair Value Long-term debt, including current maturities $ 1,008,516 $ 896,982 $ 1,139,287 $ 1,178,066 12. Recent Accounting Pronouncements In September 2022, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2022-04, "Liabilities - Supplier Finance Programs - Disclosure of Supplier Finance Program Obligations" (ASU 2022-04). FASB issued ASU 2022-04 to enhance the transparency of supplier finance programs by requiring disclosures surrounding the programs be included in the financial statements. ASU 2022-04 is effective for our reporting period beginning January 1, 2023. We are evaluating the impact of ASU 2022-04 on our consolidated financial statements. 15 Table of Contents