What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-04-27 compared with 2022-10-25 · 90 added, 118 removed, 102 unchanged (67% of the section changed)

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current and future governmental regulations;

the gain or loss of significant customers;

the loss of significant customers;

failure to attract and retain a highly-qualified workforce;

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and other factors detailed from time to time in the reports that NewMarket files with the SEC, including the risk factors in Item 1A.

“Risk Factors” of our 2021 Annual Report, which is available to shareholders upon request.

“Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2022, which is available to shareholders upon request.

You should keep in mind that any forward-looking statement made by us in this report or elsewhere speaks only as of the date on which we make it.

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In light of these risks and uncertainties, any forward-looking statement made in this report or elsewhere, might not occur.

When comparing the results of the petroleum additives segment for the first nine months of 2022 with the first nine months of 2021, net sales increased 17.1% primarily due to higher selling prices, partially offset by decreases in product shipments and an unfavorable foreign currency impact.

Petroleum additives operating profit was 8.6% higher when comparing the first nine months of 2022 with the first nine months of 2021, reflecting the higher selling prices that favorably impacted net sales, mostly offset by significantly higher raw material costs and higher operating and conversion costs.

During the first nine months of 2022, we repurchased 499,275 shares of our common stock for a total of $155.2 million.

We also redeemed our 4.10% senior notes and sold all of our marketable securities.

When comparing the results of the petroleum additives segment for the first three months of 2023 with the first three months of 2022, net sales increased 6.0% primarily due to significantly higher selling prices, partially offset by decreases in product shipments and an unfavorable foreign currency impact.

Petroleum additives operating profit was 51.9% higher when comparing the first three months of 2023 with the first three months of 2022, reflecting the higher selling prices that favorably impacted net sales, partially offset by significantly higher raw material costs, as well as higher operating and conversion costs and lower product shipments.

Shipments have been lower than our expectations over the last few quarters due primarily to a general economic slowdown and customer destocking.

We continue to operate in a general inflationary environment.

While we have experienced some improvement in the supply chain disruptions which have impacted the petrochemicals industry and our company over the past several years, we expect to continue to be challenged by high costs during 2023.

Despite the challenging economic environment, our financial position remains strong.

We have sufficient access to capital, if needed, and do not anticipate any issues with meeting the covenants for all our debt agreements for the foreseeable future.

Our major capital projects are continuing to progress substantially as planned.

Our operations generate cash that is in excess of the needs of the business.

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Our investments continue to be in organizational talent, technology development and processes, and global infrastructure, consisting of technical centers, production capability, and geographic expansion.

Impact of the Current Economic Environment

The current economic environment in which we operate is characterized by steadily rising costs, including raw material costs, limitations on certain supply availability, a challenging transportation system, and an equally challenging global supply chain network.

Because of our active business continuity process and global network, we have continued to substantially manage through these factors during the first nine months of the year.

We will continue working with our customers to deliver product, but at the same time, we also expect to be challenged by these ongoing economic factors as we manage our business throughout the rest of the year.

In addition to the general inflationary environment in which we operate, the Russia-Ukraine war has introduced additional challenges to our business.

While this conflict has not had a material impact on our financial results for the first nine months of 2022, numerous countries have imposed sanctions against Russia.

We are complying with these sanctions and are evaluating this evolving situation to assess its impact on our business.

Despite the challenging economic environment, our financial position remains strong.

We have sufficient access to capital, if needed, and do not anticipate any issues with meeting the covenants for all our debt agreements.

Our major capital projects are continuing to progress substantially as planned.

The chemical industry and our products are essential for transportation of goods and services.

During the first three months of 2023, we repurchased 82,486 shares of our common stock for a total of $28.5 million.

The chemical industry and our products are essential for transportation of people, goods and services.

Our business continuity planning process focuses our efforts on managing through this challenging time and helping our customers do the same.

Results of Operations

Consolidated net sales for the third quarter of 2022 totaled $696.0 million, representing an increase of $73.8 million, or 11.9% from the third quarter of 2021.

Consolidated net sales for the first nine months of 2022 totaled $2.1 billion, representing an increase of $302.7 million, or 17.0%, from the first nine months of 2021.

Consolidated net sales for the first three months of 2023 totaled $702.8 million, representing an increase of $40.2 million, or 6.1%, from the first three months of 2022.

The following table shows net sales by segment and product line.

Third Quarter Ended

September 30, Nine Months Ended

September 30,

Three Months Ended March 31,

(in millions) 2023 2022

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The regions in which we operate include North America, Latin America, Asia Pacific, and the EMEAI region.

While there is some fluctuation, the percentage of net sales generated by region remained fairly consistent when comparing the nine months of 2022 with the same period in 2021, as well as with the full year in 2021.

Petroleum additives net sales for the third quarter of 2022 were $692.7 million compared to $619.1 for the third quarter of 2021, an increase of 11.9%.

Petroleum additives net sales for the first nine months of 2022 were $2.1 billion compared to $1.8 billion for the first nine months of 2021, an increase of 17.1%.

For both the third quarter and nine months comparative periods, the increases were across all regions.

North America represented around 35% of the increase for the third quarter comparison, while EMEAI represented about 30%.

For the nine months comparison, North America contributed about 50% of the increase and EMEAI contributed approximately 25%.

The Asia Pacific region contributed about 25% of the increase for the third quarter comparison and about 10% of the increase for the nine months comparison.

Latin America contributed the remaining increases for both comparative periods.

The following table details the approximate components of the increase in petroleum additives net sales between the third quarter and first nine months of 2022 and 2021.

(in millions) Third Quarter Nine Months

Period ended September 30, 2021 $ 619.1 $ 1,770.6

While there is some fluctuation, the percentage of net sales generated by region remained fairly consistent when comparing the three months of 2023 with the same period in 2022, as well as with the full year 2022.

Petroleum additives net sales for the first three months of 2023 were $700.0 million compared to $660.3 million for the first three months of 2022, an increase of 6.0%.

The increase was across all regions except for the Asia Pacific region, which reported a decrease in petroleum additives net sales when comparing the first three months periods of 2023 and 2022.

The North America region represented around 80% of the increase for the three months comparison, while the EMEAI region represented about 20%.

The increase in the Latin America region was offset by the decrease in the Asia Pacific region.

The following table details the approximate components of the increase in petroleum additives net sales between the first three months of 2023 and 2022.

(in millions) Three Months

Period ended March 31, 2022 $ 660.3

Lubricant additives shipments (82.8)

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Foreign currency impact, net (9.7)

Period ended September 30, 2022 $ 692.7 $ 2,074.0

When comparing both the third quarter and the first nine months periods of 2022 and 2021, higher selling prices were the predominant factor in the increase in petroleum additives net sales.

Higher selling prices were partially offset by lower shipments for both lubricant additives and fuel additives products, as well as an unfavorable impact from foreign currency

exchange rates for both the third quarter and nine months comparative periods.

The United States Dollar strengthened against all of the major currencies in which we transact when comparing both the third quarter and first nine months periods of 2022 and 2021, resulting in an unfavorable impact to petroleum additives net sales for the comparative periods.

The unfavorable foreign currency impacts for both the third quarter and nine months comparison were predominantly due to changes in the Euro and Japanese Yen exchange rates.

On a worldwide basis, the volume of product shipments for petroleum additives decreased 8.5% when comparing the two third quarter periods and 1.3% when comparing the first nine months of 2022 and 2021.

The worldwide decrease in petroleum additives shipments for both the third quarter and nine months comparative periods included lower lubricant additives shipments, as well as lower fuel additives shipments.

The decrease in lubricant additives shipments when comparing the 2022 third quarter with the 2021 third quarter was across all regions with most of the decrease from the North America region.

The lubricant additives decrease in shipments for the first nine months 2022 and first nine months 2021 comparison was across all regions except EMEAI with the decrease almost comparable across the other regions.

The decrease in fuel additives shipments for the third quarter comparison was in the North America and EMEAI regions with a small increase in the Latin America region.

The Asia Pacific region, while down very slightly, was substantially unchanged for the third quarter comparison.

The nine months comparison for fuel additives shipments reflected decreases in the EMEAI and Asia Pacific regions which were partially offset by increases in the North America and Latin America regions.

The “All other” category includes the operations of the antiknock compounds business and certain contracted manufacturing and services.

Period ended March 31, 2023 $ 700.0

When comparing the first three months of 2023 and 2022, higher selling prices drove the increase in petroleum additives net sales.

Higher selling prices were partially offset by lower shipments, as well as an unfavorable impact from foreign currency exchange rates for the three months comparative periods.

The United States Dollar strengthened against all of the major currencies in which we transact when comparing the first three months periods of 2023 and 2022, resulting in an unfavorable impact to petroleum additives net sales for the comparative periods.

The unfavorable foreign currency impacts for the three months comparison were predominantly due to changes in the Euro, Japanese Yen, and Chinese Renminbi exchange rates.

On a worldwide basis, the volume of product shipments for petroleum additives decreased 15.4% when comparing the first three months of 2023 and 2022.

The worldwide decrease in petroleum additives shipments for the three months comparative periods included lower lubricant additives shipments, as well as lower fuel additives shipments.

The decrease in lubricant additives shipments when comparing the first three months of 2023 with the same period of 2022 was across all regions with around 30% of the decrease in each of the North America, EMEAI, and Asia Pacific regions and the remaining decrease in the Latin America region.

The three months comparison for fuel additives shipments reflected decreases in all regions except for North America, which reflected a small increase.

The “All other” category includes the operations of the antiknock compounds business and certain contracted manufacturing and related services.

Segment Operating Profit

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Depreciation on segment property, plant, and equipment, as well as amortization of segment intangible assets and lease right-of-use assets, is included in segment operating profit.

The following table reports segment operating profit for the third quarter and nine months ended September 30, 2022 and September 30, 2021.

Third Quarter Ended

September 30, Nine Months Ended

September 30,

The following table reports segment operating profit for the three months ended March 31, 2023 and March 31, 2022.

Three Months Ended March 31,

(in millions) 2023 2022

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Petroleum Additives Segment

Petroleum additives segment gross profit increased $9.9 million and operating profit increased $10.9 million when comparing the third quarter of 2022 to the third quarter of 2021.

For the first nine months of 2022 compared to the first nine months of 2021, gross profit increased $19.4 million and operating profit increased $20.7 million.

Cost of goods sold as a percentage of net sales was 78.7% for the third quarter of 2022, 77.7% for the third quarter of 2021, 77.9% for the first nine months of 2022, and 75.2% for the first nine months of 2021.

The operating profit margin was 12.0% for the third quarter of 2022, 11.7% for the third quarter of 2021, 12.6% for the first nine months of 2022, and 13.6% for the first nine months of 2021.

For the rolling four quarters ended September 30, 2022, the operating profit margin for petroleum additives was 11.4%.

When comparing the third quarter and first nine months of 2022 and 2021, both gross profit and operating profit included the favorable impact of significantly higher selling prices, which were partially offset by significantly higher raw material costs for the third quarter and nine months comparison periods.

Operating and conversion costs for both the third quarter and nine months comparison periods were unfavorable, as was the impact from shipments for the third quarter comparison.

The impact from shipments for the nine months comparison had a small favorable impact on both gross profit and operating profit.

While shipments volumes were slightly lower when comparing the first nine months of 2022 to the first nine months of 2021, the mix of products sold during the 2022 period resulted in the small favorable impact.

Throughout most of 2021, we experienced declining operating margins due mainly to the prolonged period of escalating raw material costs.

While raw material costs, along with other operating costs, have continued to increase in 2022, we have been able to make adjustments to selling prices.

Nonetheless, we remain challenged by the ongoing inflationary environment and continue to experience a lag between when price increases go into effect and when margin recovery is realized.

This lag will

continue until raw material costs and other operating costs, including higher costs resulting from the worldwide supply chain disruptions, stabilize.

In this uncertain economic environment of continuing increasing costs, operating profit margins are a priority for us.

Margin recovery and cost control will remain priorities throughout this year with the goal of returning to our historical profit margin range.

Petroleum additives segment gross profit increased $36.2 million and operating profit increased $45.2 million when comparing the first three months of 2023 to the first three months of 2022.

Cost of goods sold as a percentage of net sales was 71.7% for the first three months of 2023 and 76.6% for the first three months of 2022.

The operating profit margin was 18.9% for the first three months of 2023 and 13.2% for the first three months of 2022.

For the rolling four quarters ended March 31, 2023, the operating profit margin for petroleum additives was 15.2%.

When comparing the first three months of 2023 and 2022, both gross profit and operating profit included the favorable impact of significantly higher selling prices.

The favorable impact from higher selling prices was partially offset by significantly higher raw material costs, as well as higher operating and conversion costs and lower product shipments.

While raw material costs, along with other operating costs, increased throughout 2022, we were able to make adjustments to selling prices, which are reflected in our results for the first three months comparisons between 2023 and 2022.

We have experienced some stabilization of raw material costs during the first quarter of 2023, but nonetheless remain challenged by the ongoing inflationary environment impacting raw material and other operating costs, along with a decrease in demand on a global basis.

In this uncertain economic environment of increased costs and lower demand, operating profit margins remain a priority for us.

The operating profit margin of 15.2% for the rolling four quarters ended March 31, 2023 is at the lower end of the range of our long-term expectations.

As a result, we intend to continue to focus on cost control and margin recovery throughout this year.

While operating margins will fluctuate from quarter to quarter due to multiple factors, we believe the fundamentals of our business and industry as a whole are unchanged.

Petroleum additives selling, general, and administrative expenses (SG&A) for the third quarter of 2022 were substantially unchanged from the third quarter of 2021 and were $0.4 million lower when comparing the first nine months of 2022 and first nine months of 2021.

SG&A as a percentage of net sales was 4.4% for the third quarter of 2022, 4.9% for the third quarter of 2021, 4.4% for the first nine months of 2022, and 5.2% for the first nine months of 2021.

Petroleum additives selling, general, and administrative expenses (SG&A) for the first three months of 2023 were $1.6 million higher than the first three months of 2022.

SG&A as a percentage of net sales was 4.7% for both the first three months of 2023 and 2022.

Our SG&A costs are primarily personnel-related and include salaries, benefits, and other costs associated with our workforce, including travel-related expenses.

While personnel-related costs fluctuate from period to period, there were no significant changes in the drivers of these costs when comparing the periods.

Our investment in petroleum additives research, development, and testing (R&D) decreased approximately $1 million when comparing the third quarter periods, as well as the first nine months periods of 2022 and 2021.

As a percentage of net sales, R&D was 5.0% for the third quarter of 2022, 5.7% for the third quarter of 2021, 5.1% for the first nine months of 2022, and 6.1% for the first nine months of 2021.

Our investment in petroleum additives research, development, and testing (R&D) decreased approximately $3.2 million when comparing the first three months periods of 2023 and 2022.

As a percentage of net sales, R&D was 4.7% for the first three months of 2023 and 5.5% for the first three months of 2022.

Our R&D investments reflect our efforts to support the development of solutions that meet our customers' needs, meet new and evolving standards, and support our expansion into new product areas.

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Interest and Financing Expenses, Net

Interest and financing expenses were $8.4 million for the third quarter of 2022, $9.3 million for the third quarter of 2021, $24.9 million for the first nine months of 2022, and $24.6 million for the first nine months of 2021.

The decrease for the third quarter comparison resulted from a lower average interest rate, as well as lower average outstanding debt, along with lower amortization and fees.

A decrease in capitalized interest during the 2022 period partially offset these favorable impacts.

The increase for the nine months comparison resulted primarily from higher outstanding debt during the 2022 period, as well as lower capitalized interest.

A lower average interest rate partially offset these unfavorable impacts.

Interest and financing expenses were $10.8 million for the first three months of 2023 and $9.4 million for the first three months of 2022.

The increase for the three months comparison resulted primarily from a higher average interest rate during the 2023 period, which was partially offset by lower average outstanding debt, along with lower amortization and fees.

Other Income (Expense), Net

Other income (expense), net was income of $10.0 million for the third quarter of 2022, $7.4 million for the third quarter of 2021, $26.2 million for the first nine months of 2022, and $19.8 million for the first nine months of 2021.

The amounts for both the 2022 and 2021 third quarter and first nine months periods primarily reflect the components of net periodic benefit cost (income), except for service cost, from defined benefit pension and postretirement plans.

Other income (expense), net was income of $10.9 million for the first three months of 2023 and $7.2 million for the first three months of 2022.

The amounts for both 2023 and 2022 primarily reflect the components of net periodic benefit cost (income), except for service cost, from defined benefit pension and postretirement plans.

See Note 4 for further information on total periodic benefit cost (income).

The first nine months of 2022 also included a loss on marketable securities of $3.0 million.

The first three months of 2022 also included a loss on marketable securities of $3.0 million.

Income Tax Expense

Income tax expense was $17.1 million for the third quarter of 2022 and $9.1 million for the third quarter of 2021.

The effective tax rate was 21.3% for the third quarter of 2022 and 14.9% for the third quarter of 2021.

Income tax expense increased $5.1 million due to a higher effective tax rate and $2.9 million due to higher income before income tax expense.

Income tax expense was $50.4 million for the first nine months of 2022 and $43.9 million for the first nine months of 2021.

The effective tax rate was 21.1% for the first nine months of 2022 and 20.2% for the first nine months of 2021.

Income tax expense was $27.6 million for the first three months of 2023 and $14.2 million for the first three months of 2022.

The effective tax rate was 22.0% for the first three months of 2023 and 19.3% for the first three months of 2022.

Income tax expense increased $10.0 million due to higher income before income tax expense with the remaining $3.4 million of the difference caused by the higher effective tax rate.

The increase in the effective tax rate for both the third quarter and nine months comparisons was primarily driven by the impact from our foreign operations.

The increase in the effective tax rate for the three months comparison was primarily the result of an increase in the U.S.

tax on foreign earnings and a decreased benefit of the research and development tax credit.

Cash Flows, Financial Condition, and Liquidity

Cash and cash equivalents at September 30, 2022 were $72.0 million, a decrease of $11.3 million since December 31, 2021.

Cash and cash equivalents held by our foreign subsidiaries amounted to $69.3 million at September 30, 2022 and $81.1 million at December 31, 2021.

Cash and cash equivalents at March 31, 2023 were $70.1 million, an increase of $1.4 million since December 31, 2022.

Cash and cash equivalents held by our foreign subsidiaries amounted to $67.9 million at March 31, 2023 and $65.3 million at December 31, 2022.

Periodically, we repatriate cash from our foreign subsidiaries to the United States through intercompany dividends and loans.

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Cash Flows – Operating Activities

Cash flows provided from operating activities for the first nine months of 2022 were $16.0 million, adjusted for the use of $198.6 million to fund higher working capital requirements.

The $198.6 million used for working capital excluded an unfavorable foreign currency impact to the components of working capital on the balance sheet.

The most significant changes in working capital included a decrease in marketable securities, as well as increases in accounts receivable, inventory, and accounts payable.

During 2022, we sold all of our marketable securities.

The increase in accounts receivable balances when comparing September 30, 2022 with the end of 2021 was primarily the result of higher sales prices during 2022.

The increase in inventory was primarily caused by higher raw material costs, as well as an increase in quantities.

The increase in accounts payable reflected higher raw material and operating costs and normal fluctuations across the regions due to timing.

Including cash and cash equivalents, as well as the impact of changes in foreign currency exchange rates on the balance sheet, we had total working capital of $748.0 million at September 30, 2022 and $663.1 million at December 31, 2021.

The current ratio was 2.76 at September 30, 2022 and 1.91 at December 31, 2021.

Cash flows provided from operating activities for the first three months of 2023 were $109.9 million, including $9.8 million to reflect lower working capital requirements.

The $9.8 million excluded an unfavorable foreign currency impact to the components of working capital on the balance sheet.

The most significant changes in working capital included decreases in inventories, accounts payable, and accrued expenses, as well as an increase in income taxes payable.

The decrease in inventories reflects our planned destocking in response to lower demand and destocking by our customers.

The decrease in accounts payable is primarily the result of destocking and lower production levels.

The change in accrued expenses reflects normal rebate payments to customers, as well as payments of accrued interest on our debt agreements.

The increase in income taxes payable is primarily caused by the timing of some first quarter estimated tax payments.

Including cash and cash equivalents, as well as the impact of changes in foreign currency exchange rates on the balance sheet, we had total working capital of $773.1 million at March 31, 2023 and $768.2 million at December 31, 2022.

The current ratio was 3.16 at March 31, 2023 and 2.81 at December 31, 2022.

Cash Flows – Investing Activities

Cash provided from investing activities totaled $331.7 million during the first nine months of 2022 primarily representing the proceeds from the sale of marketable securities of $372.8 million.

Capital expenditures for the first nine months of 2022 were $40.4 million.

Cash used in investing activities totaled $11.9 million during the first three months of 2023 for capital expenditures.

We expect that our total capital spending during 2023 will be in the $60 million to $70 million range and will include several improvements to our manufacturing and R&D infrastructure around the world.

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Cash Flows – Financing Activities

Cash used in financing activities during the first nine months of 2022 amounted to $356.1 million.

These cash flows included $350.0 million for the redemption of the 4.10% senior notes along with $7.1 million of costs related to the redemption (see Debt discussion below), $150.8 million for repurchases of our common stock, and cash dividends of $63.8 million.

We also borrowed an additional $218.0 million on the revolving credit facility.

Our long-term debt was $1.0 billion at September 30, 2022 compared to $1.1 billion at December 31, 2021.

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.

Cash used in financing activities during the first three months of 2023 amounted to $97.1 million.

These cash flows included net payments of $46.0 million on the revolving credit facility, $28.5 million for repurchases of our common stock, and cash dividends of $20.3 million.

Our long-term debt was $958.0 million at March 31, 2023 compared to $1.0 billion at December 31, 2022.

See Note 8 for additional information on the 2.70% senior notes, 3.78% senior notes, and revolving credit facility, including the unused portion of our revolving credit facility.

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The revolving credit facility contains financial covenants that require NewMarket to maintain a consolidated Leverage Ratio (as defined in the agreement) of no more than 3.75 to 1.00, except during an Increased Leverage Period (as defined in the agreement) at the end of each quarter.

At September 30, 2022, the Leverage Ratio was 2.71 under the revolving credit facility.

At September 30, 2022, we were in compliance with all covenants under the 3.78% senior notes, 2.70% senior notes, and revolving credit facility.

As a percentage of total capitalization (total long-term debt and shareholders’ equity), our total long-term debt percentage increased from 59.9% at December 31, 2021 to 60.2% at September 30, 2022.

The change resulted primarily from the increase in outstanding revolving credit facility borrowings and the decrease in shareholders' equity, partially offset by the repayment of the 4.10% senior notes.

The change in shareholders’ equity primarily reflects our earnings offset by dividend payments, the repurchases of our common stock, and the impact of foreign currency translation adjustments along with the changes in the funded position of our defined benefit plans.

At March 31, 2023, the Leverage Ratio was 1.91 under the revolving credit facility.

At March 31, 2023, we were in compliance with all covenants under the 3.78% senior notes, 2.70% senior notes, and revolving credit facility.

As a percentage of total capitalization (total long-term debt and shareholders’ equity), our total long-term debt decreased from 56.8% at December 31, 2022 to 53.8% at March 31, 2023.

The change resulted primarily from the decrease in outstanding revolving credit facility borrowings, along with the increase in shareholders' equity.

The increase in shareholders’ equity primarily reflects our earnings offset by dividend payments, the repurchases of our common stock, and the impact of foreign currency translation adjustments.

Generally, we repay any outstanding long-term debt with cash from operations or refinancing activities.

Critical Accounting Policies and Estimates

This Form 10-Q and our 2021 Annual Report include discussions of our accounting policies, as well as methods and estimates used in the preparation of our financial statements.

We also provided a discussion of Critical Accounting Policies and Estimates in our 2021 Annual Report.

There have been no significant changes in our critical accounting policies and estimates from those reported in our 2021 Annual Report.

This Form 10-Q and our 2022 Annual Report on Form 10-K include discussions of our accounting policies, as well as methods and estimates used in the preparation of our financial statements.

We also provided a discussion of Critical Accounting Policies and Estimates in our 2022 Annual Report on Form 10-K.

There have been no significant changes in our critical accounting policies and estimates from those reported in our 2022 Annual Report on Form 10-K.

Recent Accounting Pronouncements

See Note 12, Recent Accounting Pronouncements for a discussion of recent accounting pronouncements which may impact our financial statements.

There have been no recent accounting pronouncements which have not been adopted and may have a significant impact our financial statements.

Our stated goal is to provide a 10% compounded return per year for our shareholders over any five-year period (defined by earnings per share growth plus dividend yield), although we may not necessarily achieve a 10% return each year.

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We believe the fundamentals of how we run our business - a long-term view, safety-first culture, customer-focused solutions, technology-driven product offerings, and world-class supply chain capability - will continue to be beneficial for all of our stakeholders over the long term.

We expect our petroleum additives segment to experience impacts to its operating performance due to the current economic environment, as we continue to see challenges with the global supply network, inflationary trends, and raw material price escalation and volatility.

We expect that the petroleum additives market will grow in the 1% to 2% range annually for the foreseeable future.

We plan to exceed that growth rate over the long-term.

We expect our petroleum additives segment to experience impacts to its operating performance during 2023 due to the uncertain economic environment in which we operate, as we continue to see challenges with inflationary trends and raw material price volatility.

As a result, we will continue to focus on cost control and operating profit margin recovery throughout the year.

We expect over the long-term that the petroleum additives market will grow annually in the 1% to 2% range.

We plan to exceed that growth rate.

Over the past several years we have made significant investments in our business as the industry fundamentals remain positive.

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It is our view that this industry segment will provide the greatest opportunity for solid returns on our investments while minimizing risk.

We remain focused on this strategy and will evaluate any future opportunities.

We remain focused on this strategy and will evaluate

any future opportunities.

We will continue to evaluate all alternative uses of cash to enhance shareholder value, including stock repurchases and dividends.

Quantitative and Qualitative Disclosures About Market Risk

At March 31, 2023, there were no material changes in our market risk from the information provided in the 2022 Annual Report .

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 2. Management’s Discussion and Analysis