What changed in this filing

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Item 1. Business

2024-02-15 compared with 2023-02-15 · 48 added, 43 removed, 235 unchanged (28% of the section changed)

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NEU) is a holding company and is the parent company of Afton Chemical Corporation (Afton), Ethyl Corporation (Ethyl), NewMarket Services Corporation (NewMarket Services), and NewMarket Development Corporation (NewMarket Development).

NewMarket is also the ultimate parent company of American Pacific Corporation (AMPAC), which we acquired for approximately $700 million on January 16, 2024.

Each of our subsidiaries manages its own assets and liabilities.

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NewMarket Development manages the real property that we own in Virginia.

AMPAC manufactures and sells critical performance additives used in solid rocket motors for space launch and military defense applications.

NewMarket Services provides various administrative services to NewMarket, Afton, Ethyl, and NewMarket Development.

NewMarket Services departmental and other expenses are billed to each subsidiary pursuant to services agreements between the companies.

Going forward, NewMarket Services will also provide such services to AMPAC.

NewMarket Services expenses are billed to each subsidiary pursuant to services agreements between the companies.

References in this Annual Report on Form 10-K to “we,” “us,” “our,” and “NewMarket” are to NewMarket Corporation and its consolidated subsidiaries, unless the context indicates otherwise.

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Through an open, flexible, and collaborative style, Afton works closely with its customers to understand their business and help them meet their goals.

This style has allowed Afton to develop long-term relationships with its customers in every major region of the world, which Afton serves through our manufacturing facilities across the globe.

This style has allowed Afton to develop long-term relationships with its customers in every major region of the world, which Afton serves through its manufacturing facilities across the globe.

We have operations in North America, Europe, Asia, and South America.

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Further information on our operations in the various geographic areas is in Note 4 of the Notes to Consolidated Financial Statements.

With approximately 500 employees in research, development, and testing, Afton is dedicated to developing additive formulations that are tailored to our customers’ and the end-users’ specific needs.

With almost 500 employees in research, development, and testing, Afton is dedicated to developing additive formulations that are tailored to our customers’ and the end-users’ specific needs.

Afton’s portfolio of technologically-advanced, value-added products allows it to provide a full range of products, services, and solutions to its customers.

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This effort is ongoing in nature.

AMPAC manufactures and sells critical performance additives used in solid rocket motors for space launch and military defense applications.

AMPAC also manufactures and sells Halotron BrX, a fire extinguishing agent that replaces legacy high ozone-depleting fire extinguishing agents.

We were incorporated in the Commonwealth of Virginia in 2004.

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Business Segments

Our business is composed of one segment, petroleum additives, which is primarily represented by Afton.

The antiknock compounds business of Ethyl is reflected in the “All other” category.

For the periods presented in this Annual Report on Form 10-K, our business was composed of one segment, petroleum additives, which is primarily represented by Afton.

The antiknock compounds business of Ethyl is reflected in the “All

other” category.

Each of these is discussed below.

We intend to present AMPAC as a separate segment beginning with the Quarterly Report on Form 10-Q for the quarter ending March 31, 2024.

Petroleum Additives - Petroleum additives are used in lubricating oils and fuels to enhance their performance in machinery, vehicles, and other equipment.

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Engine oil additives are typically sold to lubricant manufacturers who combine them with a base oil fluid to meet internal, industry, and OEM specifications.

Key drivers of engine oil additives demand are the number of vehicles on the road, total vehicle miles driven, fuel economy, the average age of vehicles on the road, drain intervals, engine and crankcase size, changes in engine design, and temperature and specification changes driven by the OEMs.

The extension of drain intervals has generally offset increased demand due to higher vehicle population, new hardware, and more miles driven.

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Driveline additives are generally sold to oil companies for ultimate sale to vehicle OEMs for new vehicles (factory-fill), service dealers for aftermarket servicing (service-fill), retailers, and distributors.

Key drivers of the driveline additives marketplace are the number of vehicles manufactured, total number of vehicles in operation, drain intervals for transmission fluids and axle fluids, changes in engine and transmission design and temperatures, and specification changes driven by the OEMs.

Industrial Additives - The industrial additives submarket is comprised of additives designed for products for industrial applications such as hydraulic fluids, grease, industrial gear fluids, and industrial specialty applications, such as turbine oils.

This submarket also shares in the 30% of the market not covered by engine oil additives.

These products must conform to industry specifications, OEM requirements, and/or application and operating environment demands.

These products must

conform to industry specifications, OEM requirements, and/or application and operating environment demands.

Industrial additives are generally sold to oil companies, service dealers for after-market servicing, and distributors.

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• cold flow improvers, which improve the pumping and flow of distillate and diesel fuels in cold temperatures;

• octane enhancers, which increase octane ratings and decrease emissions;

• static dissipating additives.

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The competition among the participants in these industries is characterized by the need to provide customers with cost effective, technologically-capable products that meet or exceed industry specifications.

The need to continually increase technology performance and lower cost through formulation technology and cost improvement programs is vital for success in this environment.

The need to continually increase

technology performance and lower cost through formulation technology and cost improvement programs is vital for success in this environment.

All Other - The “All other” category includes the operations of the antiknock compounds business (primarily sales of antiknock compounds in North America), as well as certain contracted manufacturing and related services performed by Ethyl.

The Ethyl facility is located in Houston, Texas and is substantially dedicated to terminal operations related to antiknock compounds and other fuel additives.

The financial results of the petroleum additives activities by Ethyl are reflected in the petroleum additives segment results.

The financial results of the petroleum additives activities performed by Ethyl are reflected in the petroleum additives segment results.

The “All other” category financial results include a service fee charged by Ethyl for its production services to Afton.

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In some cases, we source from a single supplier.

In cases where we decide to source from a single supplier, we manage our risk by maintaining safety stock of the raw material or qualifying alternate suppliers, which could take additional time to implement, but we are confident we can ensure continued supply for our customers.

During the past three years, global supply chain disruptions negatively affected both supply, as well as distribution and transportation networks.

We continuously monitor our raw material supply situation and adjust our procurement strategies as conditions require.

In such cases, we manage our risk by maintaining safety stock of the raw material or qualifying alternate suppliers, which could take additional time to implement, but we are confident we can ensure continued supply for our customers.

While we have experienced improvement in the supply chain disruptions which impacted the petrochemicals industry over the past several years, we continuously monitor our raw material supply situation and adjust our procurement strategies as conditions require.

Research, Development, and Testing

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We are committed to providing the most advanced products, comprehensive testing programs, and superior technical solutions tailored to the needs of our customers and OEMs worldwide.

Afton continues to successfully implement techniques to drive efficiency in technology discovery and development, while expanding our internal testing, research, and customer support capabilities around the world in support of our goals of providing market-driven technical leadership and performance-based differentiation.

In 2022, we continued to invest in and progress our technology plans.

Afton continues to successfully implement techniques to drive efficiency in technology discovery and development, while aligning our internal testing to market changes, research, customer support, and predictive capabilities around the world in support of our goals of providing market-driven technical leadership and performance-based differentiation.

In 2023, we continued to invest in and progress our technology plans and established a new team to focus on adjacent spaces that can utilize our chemistry and technology.

Afton continues to develop new products and technology to keep our customers well-positioned for the future by meeting evolving OEM requirements, including specific demands of hybrid and electric vehicles, industry specifications, and environmental regulations.

A significant portion of our R&D investment is dedicated to the development of products that are differentiated by their ability to deliver improved fuel efficiency in addition to robust performance in a wide range of new vehicle and industrial equipment designs.

Afton’s state-of-the art testing capabilities enable customized research in all areas of performance needed by both OEMs and tier one suppliers.

Afton’s state-of-the art testing capabilities enable customized research in all areas of performance needed by both OEMs and tier one suppliers including the latest advancements in e-mobility.

Our leading-edge capabilities and fundamental understanding in the areas of combustion, friction control, energy efficiency, electric motor compatibility, and wear prevention are used to set the stage for next-generation products in all areas.

In line with Afton’s vision, we continue to focus our technology to make the world a better place by reducing the use of chemicals of concern, using more raw materials from sustainable sources, developing additives that enable some of the world’s most fuel efficient fluids, creating fuels additives that enable engines to be more efficient, and being a market leader in transmission fluids for full battery electric vehicles.

In addition, we are continuing to see benefits from our waste minimization efforts with a 33% reduction in hazardous waste generation from R&D operations in Richmond, Virginia when compared to last year.

In line with Afton’s vision, we continue to focus our technology to make the world a better place by reducing the use of chemicals of concern, using more raw materials from sustainable sources, developing additives that enable some of the world’s most fuel efficient fluids, creating fuel additives that enable engines to be more efficient, and being a market leader in transmission fluids for full battery electric vehicles.

We continue to have strong results in our environmental initiatives.

For example, a year over year comparison (2023 versus 2022) of our Richmond site shows a 24% reduction

in hazardous waste generation and an energy usage decrease of over 8% due to LED light installations and changes in laboratory operating procedures.

In 2023, we successfully launched new technologies across all our lubricant additives and fuel additives product areas.

We developed new engine oil products for passenger cars and commercial trucks in support of our customers in all the major regions of the world in which we operate, including engine oil technology designed for the latest fuel-efficient passenger car specifications, as well as solutions for commercial vehicles.

We developed new engine oil products for passenger cars and commercial trucks in support of our customers in all the major regions of the world in which we operate, including engine oil technology designed for hybrid vehicles, as well as solutions for commercial vehicles.

We continued to develop new products in multiple application areas in the industrial additives sector, including hydraulic, industrial gear, turbine, slideway, and grease additives.

Research is focused on the development of technologies that will provide differentiation to our customers in multiple performance areas, including equipment life, reliability, and energy efficiency, as well as eliminating or reducing chemicals of concern.

This includes focusing on our wind turbine technology to maintain our technology leadership in this important and growing market.

This includes focusing on our next generation wind turbine technology to maintain our technology leadership in this important and growing market.

Research continued in our transmission fluid, axle oil, and tractor fluid product lines.

This included the development of new OEM-specific additives used in factory-fill fluids installed during automotive component and vehicle assembly in the United States, Germany, Japan, India, and China.

We launched new OEM specific technology for full battery electric passenger and commercial vehicles for industry-leading OEMs and are a top supplier in this new and growing market.

We also developed new products for the service-fill sector to provide our customers with the latest additives technology available, with specific focus on the Asia Pacific region.

We continue to provide leading technology in the fuel additives area.

This included the development of new OEM-specific additives used in factory-fill fluids installed during automotive component and vehicle assembly.

We continue to launch new OEM-specific technology for full battery electric passenger and commercial vehicles and are a top supplier in this new and growing market.

Our market-leading battery electric vehicle transmission fluid promotes efficiency, and we developed new products for the service-fill sector to provide our customers with the latest additive technology available.

We also provide leading technology in the fuel additives area.

In 2023, we developed new technology in both gasoline performance additives and diesel performance additives.

This includes launching a new technology platform that is both more efficient and better performing.

This includes launching a new technology platform designed for gasoline direct injection engines that is both more efficient and better-performing.

In addition, we continue to maintain close interactions with regulatory, industry and OEM leaders to guide our development of future fuel additives technologies based on well-defined market needs.

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We believe our patent position is strong, aggressively managed, and sufficient for the conduct of our business.

We also have several hundred trademark registrations throughout the world for our marks, including NewMarket ® , Afton Chemical ® , Ethyl ® , mmt ® , HiTEC ® , GREENBURN ® , Passion for Solutions ® , CleanStart ® , Microbotz ® , DriveMore ® , and Axcel ® .

We also have several hundred trademark registrations throughout the world for our marks, including NewMarket ® , Afton Chemical ® , Ethyl ® , HiTEC ® , Passion for Solutions ® , DriveMore ® , and Axcel ® .

Human Capital

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We place the highest level of commitment on safety and strive to operate our business every day focused on its importance.

Keeping our employees safe is a management priority, and the past three years were particularly challenging in that regard because of the COVID-19 pandemic.

While some of our employees were required to work from home due to government mandates, all of our facilities continued to be operational throughout 2020 to 2022 since the chemical industry and our products are considered essential for the transportation of people, goods, and services.

For employees working onsite at our facilities, management invested significant time and effort to ensure the safety of our employees, above and beyond local government requirements and guidance, and to help mitigate risk.

Keeping our employees safe is a management priority.

We have a diverse workforce, representative of the geographic regions in which we do business.

We place a high value on diverse thoughts, skills, perspectives, cultures, and knowledge because we believe that such diversity results in better business decision making.

We employed 2,058 people at the end of 2022.

We employed approximately 2,000 people at the end of 2023.

Approximately 1,000 were located in the United States, 500 were in the Europe/Middle East/Africa/India region, 300 were in the Asia Pacific region, and 200 were in the Latin America region.

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In addition to utilizing our internal network, contacts, and specialized recruiters to identify and attract qualified personnel, we have established relationships with a number of universities globally and have intern and co-op programs in many of our locations.

Globally, approximately 17% of our employees have 20 years or more of service, and over the three-year period from 2020 to 2022, our resignation rate was approximately 4.6%.

Globally, approximately 16% of our employees have 20 years or more of service, and over the three-year period from 2021 through 2023, our resignation rate was approximately 5.4%.

We believe these measures demonstrate our success in hiring the right employees for the long-term and establishing a culture where respect for people is an everyday value.

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Every employee at NewMarket is responsible for ensuring that our high standards in the area of health, safety (including process safety), environmental protection, and security are upheld at all times.

Our Global Responsible Care Policy Statement includes a commitment to conduct operations in a manner that protects our employees, communities, and the environment, to comply with all applicable laws and regulations, and to reduce our environmental impacts.

Additionally, in pursuit of our vision of zero incidents, we work with our employees and other key stakeholders to establish appropriate goals, objectives, and targets.

"Responsible Care" is a registered service mark of the American Chemistry Council (ACC).

Both Afton and Ethyl have implemented Responsible Care ® Management Systems (RC14001 ® ) at North American facilities.

Both Afton and Ethyl have implemented Responsible Care ® Management Systems (RC14001 ® ) at North American facilities ("Responsible Care" is a registered service mark of the American Chemistry Council (ACC)).

Our Responsible Care ® management systems are certified by an independent third-party auditing process.

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In 2023, we continued to enhance our “Actively Caring” safety program, where people look out for the safety and welfare of others with courage and compassion, enabling the achievement of an injury-free environment.

Both Afton and Ethyl were top performers among their industry peers with our worldwide injury/illness recordable rate (which is the number of injuries per 200,000 hours worked) in 2022 at 0.44.

Additionally, during 2022 we had zero serious injuries across all sites, as well as zero recordable injuries at our Houston, Port Arthur, Ashland, Bracknell, Feluy, Rio de

Janeiro, San Juan del Rio, Singapore, Suzhou, and Tsukuba facilities.

Both Afton and Ethyl were top performers among their industry peers.

The NewMarket worldwide injury/illness recordable rate (which is the number of injuries per 200,000 hours worked) in 2023 was 0.45.

Additionally, during 2023 we had zero serious injuries across all sites, as well as zero recordable injuries at our Port Arthur, Ashland, Richmond R&D, Rio de Janeiro, San Juan del Rio, Singapore, Suzhou, and Tsukuba facilities.

The safety performance affirmed our Vision of Zero improvement plans and actions across the sites, as well as the importance placed on our safety-first culture.

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We spent approximately $41 million in 2023, $37 million in 2022, and $35 million in 2021 for ongoing environmental operating and clean-up costs, excluding depreciation of previously capitalized expenditures.

In addition to the ongoing environmental compliance costs and the costs to remediate contaminated sites, worldwide capital expenditures for pollution prevention and safety projects were $11 million in 2022 and $17 million in both 2021 and 2020.

In addition to the ongoing environmental compliance costs and the costs to remediate contaminated sites, worldwide capital expenditures for pollution prevention and safety projects were $10 million in 2023, $11 million in 2022, and $17 million in 2021.

The costs of complying with governmental pollution prevention and safety regulations are subject to:

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(Principal Executive Officer)

Skrobacz 63 Chief Financial Officer and Vice President (Principal Financial Officer)

Skrobacz 64 Vice President and Chief Financial Officer (Principal Financial Officer)

Hazelgrove, III 63 Executive Vice President and Chief Administrative Officer

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Our officers, at the discretion of the Board of Directors, hold office until the meeting of the Board of Directors following the next annual shareholders’ meeting.

Gottwald, Mr.

Hazelgrove, and Mr.

Warner have served in their capacity for at least the last five years.

Gottwald and Mr.

Hazelgrove have served in their capacity for at least the last five years.

Skrobacz, Mr.

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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-K

Item 1. Business