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Item 1. Financial Statements

2024-04-25 compared with 2023-10-26 · 175 added, 126 removed, 266 unchanged (53% of the section changed)

2 unchanged sentences

CONSOLIDATED STATEMENTS OF INCOME

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

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

(in thousands, except per-share amounts) Three Months Ended March 31,

Net sales $ 696,736 $ 702,789

5 unchanged sentences

Interest and financing expenses, net 15,654 10,773

Loss on early extinguishment of debt 0 0 0 7,545

Other income (expense), net 12,547 10,880

7 unchanged sentences

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands) Third Quarter Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

(in thousands) Three Months Ended March 31,

Net income $ 107,732 $ 97,583

1 unchanged sentence

Pension plans and other postretirement benefits:

Prior service credit (cost) arising during the period, net of income tax expense (benefit) of $( 159 ) in third quarter 2023, $ 0 in third quarter 2022, $( 159 ) in nine months 2023, and $ 0 in nine months 2022

( 489 ) 0 ( 489 ) 0

Amortization of prior service cost (credit) included in net periodic benefit cost (income), net of income tax expense (benefit) of $( 141 ) in third quarter 2023, $( 157 ) in third quarter 2022, $( 482 ) in nine months 2023, and $( 470 ) in nine months 2022

( 454 ) ( 500 ) ( 1,547 ) ( 1,494 )

Actuarial net gain (loss) arising during the period, net of income tax expense (benefit) of $( 239 ) in third quarter 2023, $ 583 in third quarter 2022, $( 239 ) in nine months 2023, and $ 590 in nine months 2022

Amortization of prior service cost (credit) included in net periodic benefit cost (income), net of income tax expense (benefit) of $( 174 ) in 2024 and $( 171 ) in 2023

( 502 ) ( 547 )

Amortization of actuarial net loss (gain) included in net periodic benefit cost (income), net of income tax expense (benefit) of $( 105 ) in third quarter 2023, $ 145 in third quarter 2022, $( 342 ) in nine months 2023, and $ 493 in nine months 2022

Amortization of actuarial net loss (gain) included in net periodic benefit cost (income), net of income tax expense (benefit) of $( 122 ) in 2024 and $( 118 ) in 2023

( 358 ) ( 375 )

1 unchanged sentence

( 860 ) ( 922 )

Foreign currency translation adjustments, net of income tax expense (benefit) of $( 327 ) in third quarter 2023, $( 194 ) in third quarter 2022, $ 371 in nine months 2023, and $ 279 in nine months 2022

Foreign currency translation adjustments, net of income tax expense (benefit) of $( 238 ) in 2024 and $ 207 in 2023

( 6,943 ) 11,366

4 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts) September 30,

(in thousands, except share amounts) March 31,

2024 December 31,

29 unchanged sentences

authorized shares - 80,000,000 ;

issued and outstanding shares - 9,590,151 at September 30, 2023 and 9,702,147 at December 31, 2022)

issued and outstanding shares - 9,594,250 at March 31, 2024 and 9,590,086 at December 31, 2023)

Accumulated other comprehensive loss ( 28,874 ) ( 21,071 )

9 unchanged sentences

Shares Amount

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

Balance at December 31, 2022 9,702,147 $ 0 $ ( 71,995 ) $ 834,402 $ 762,407

Net income 97,583 97,583

3 unchanged sentences

Repurchases of common stock ( 82,486 ) ( 1,223 ) ( 27,525 ) ( 28,748 )

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 June 30, 2023 9,589,239 $ 0 $ ( 54,757 ) $ 947,497 $ 892,740

Net income 111,247 111,247

Other comprehensive income (loss) ( 12,025 ) ( 12,025 )

Cash dividends ($ 2.25 per share)

( 21,578 ) ( 21,578 )

Tax withholdings related to stock-based compensation

Stock-based compensation 988 1,590 2 1,592

Balance at September 30, 2023 9,590,151 $ 1,557 $ ( 66,782 ) $ 1,037,168 $ 971,943

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)

( 2,417 ) 0 ( 803 ) ( 803 )

Repurchases of common stock ( 499,275 ) ( 1,573 ) ( 153,612 ) ( 155,185 )

Stock-based compensation 8,715 1,223 ( 14 ) 1,209

Balance at September 30, 2022 9,871,440 $ 0 $ ( 148,629 ) $ 816,005 $ 667,376

Balance at March 31, 2023 9,625,959 $ 0 $ ( 61,551 ) $ 883,351 $ 821,800

Balance at December 31, 2023 9,590,086 $ 2,130 $ ( 21,071 ) $ 1,096,002 $ 1,077,061

3 unchanged sentences

( 23,986 ) ( 23,986 )

Repurchases of common stock ( 119,075 ) ( 1,857 ) ( 41,419 ) ( 43,276 )

Tax withholdings related to stock-based compensation

1 unchanged sentence

Stock-based compensation 5,980 394 8 402

Balance at September 30, 2023 9,590,151 $ 1,557 $ ( 66,782 ) $ 1,037,168 $ 971,943

Balance at March 31, 2024 9,594,250 $ 1,406 $ ( 28,874 ) $ 1,179,756 $ 1,152,288

See accompanying Notes to Condensed Consolidated Financial Statements

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands) Nine Months Ended

September 30,

(in thousands) Three Months Ended March 31,

Cash and cash equivalents at beginning of year $ 111,936 $ 68,712

4 unchanged sentences

Deferred income tax benefit ( 3,899 ) ( 4,932 )

Loss on early extinguishment of debt 0 7,545

Working capital changes ( 21,434 ) 9,795

Loss on marketable securities 0 2,977

Cash pension and postretirement contributions ( 2,727 ) ( 2,290 )

3 unchanged sentences

Capital expenditures ( 13,564 ) ( 11,881 )

Purchases of marketable securities 0 ( 787 )

Proceeds from sales and maturities of marketable securities 0 372,846

Acquisition of business (net of $ 15,580 of cash acquired)

( 683,924 ) 0

Cash provided from (used in) investing activities ( 697,488 ) ( 11,881 )

Cash flows from financing activities:

Net (repayments) borrowings under revolving credit facility ( 225,000 ) 218,000

Net borrowings (repayments) under revolving credit facility 386,000 ( 46,000 )

Proceeds from term loan 250,000 0

Dividends paid ( 23,986 ) ( 20,292 )

Debt issuance costs ( 2,251 ) 0

Repurchases of common stock 0 ( 28,479 )

Redemption of 4.10 % senior notes

0 ( 350,000 )

Cash costs of 4.10 % senior notes redemption

Other, net ( 8,372 ) ( 2,280 )

1 unchanged sentence

Effect of foreign exchange on cash and cash equivalents ( 1,612 ) 420

Increase (decrease) in cash and cash equivalents 33,848 ( 11,332 )

Increase in cash and cash equivalents 5,130 1,403

Cash and cash equivalents at end of period $ 117,066 $ 70,115

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 September 30, 2023 and December 31, 2022, and our consolidated results of operations, comprehensive income, and changes in shareholders' equity for the third quarter and nine months ended September 30, 2023 and September 30, 2022, and our cash flows for the nine months ended September 30, 2023 and September 30, 2022.

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, 2024 and December 31, 2023, our consolidated results of operations, comprehensive income, and changes in shareholders' equity for the three months ended March 31, 2024 and March 31, 2023, and our cash flows for the three months ended March 31, 2024 and March 31, 2023.

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, 2023 (2023 Annual Report), as filed with the Securities and Exchange Commission (SEC).

The results of operations for the nine month period ended September 30, 2023 are not necessarily indicative of the results to be expected for the full year ending December 31, 2023.

The results of operations for the three month period ended March 31, 2024 are not necessarily indicative of the results to be expected for the full year ending December 31, 2024.

The December 31, 2023 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.

Supplier Finance Program

We offer our vendors a supplier finance program, which allows our vendors to receive payment from a third-party finance provider earlier than our normal payment terms would provide.

NewMarket and its subsidiaries are not a party to the arrangement between our vendor and the finance provider, and there are no assets pledged as security or other forms of guarantees provided by NewMarket to the finance provider.

NewMarket and its subsidiaries are not a party to any arrangement between our vendors and the finance provider, and there are no assets pledged as security or other forms of guarantees provided by NewMarket to the finance provider.

For those vendors who opt to participate in the program, we pay the finance provider the full amount of the invoices on the normal due date.

At September 30, 2023, the amount of confirmed invoices under the supplier finance program was not material.

Our revenues are primarily derived from the manufacture and sale of petroleum additives products.

At both March 31, 2024 and December 31, 2023, the amount of confirmed invoices under the supplier finance program was not material.

Acquisition of Business

On January 16, 2024, we completed the acquisition of all issued and outstanding ownership units of AMPAC Intermediate Holdings, LLC, the ultimate parent company of American Pacific Corporation (AMPAC), for approximately $ 700 million.

Based in Cedar City, Utah, AMPAC has one operating facility from which it manufactures and sells critical specialty materials primarily used in solid rocket motors for space launch and military defense applications.

AMPAC is qualified on many NASA and Department of Defense programs and has been serving space launch and national defense programs for more than 60 years.

The acquisition of AMPAC expands our presence in mission-critical, resilient sectors.

It was funded by cash on hand and borrowings under our then existing revolving credit facility.

The purchase consideration is subject to a customary post-closing adjustment for working capital, which is expected to be finalized during the second quarter of 2024.

The preliminary fair values of the assets acquired and the liabilities assumed in the AMPAC acquisition are as follows (in millions):

Cash and cash equivalents $ 16

Trade and other accounts receivable, net 6

Inventories 28

Prepaid expenses and other current assets 3

Property, plant, and equipment, net 111

Intangibles and goodwill 650

Deferred charges and other assets 5

Accounts payable ( 3 )

Accrued expenses ( 5 )

Other noncurrent liabilities ( 111 )

Fair value of net assets acquired $ 700

NEWMARKET CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Identified intangible assets acquired consisted of the following (in millions):

Fair Value Estimated Useful Lives (in years)

Customer base $ 272 17.5

Formulas and technology 60 8

Trademarks and trade names 30 15

Water rights 30 indefinite

As part of the acquisition, we recorded $ 258 million of goodwill.

The goodwill recognized is attributable to increased access to mission-critical, resilient sectors with a role in global safety, security, and space exploration, as well as the value of the skilled assembled workforce of AMPAC.

All of the goodwill recognized is part of the specialty materials segment, and none of the goodwill is deductible for income tax purposes.

The allocation of the purchase price of AMPAC to the tangible and intangible assets acquired and liabilities assumed was developed using preliminary estimates of fair value and based on information currently available.

We are continuing to finalize the valuation of certain assets and liabilities and expect to complete our valuations within one year of the date of acquisition.

Acquisition-related charges of $ 1 million consisted primarily of legal and professional fees and are included in selling, general, and administrative expenses in our Consolidated Statements of Income.

We are accounting for this acquisition using the acquisition method of accounting for business combinations under the provisions of Financial Accounting Standards Board (FASB) Accounting Standard Codification (ASC) Topic 805, Business Combinations (ASC 805) and have included the results of operations of the acquired business in our Consolidated Statement of Income from the date of acquisition, as well as in the specialty materials segment in Note 4.

These results include a charge related to the sale of finished goods inventory acquired, which was recorded at fair market value on the acquisition date and sold to customers from the date of acquisition through March 31, 2024.

The following table presents the financial results for AMPAC from the date of acquisition through March 31, 2024.

Supplemental Information (in thousands) January 16 to

AMPAC March 31, 2024

Net sales $ 17,047

Loss before income taxes ( 5,001 )

The following table presents our estimated unaudited pro forma consolidated results for the three months ended March 31, 2024 and March 31, 2023, assuming the acquisition of AMPAC had occurred on January 1, 2023.

The unaudited pro forma information is presented for informational purposes only and is not indicative of the results of operations that would have been realized if the acquisition had been completed at the beginning of 2023, nor is it indicative of expected results for any future period.

In addition, no effect is given to any future synergistic benefits that could result from the integration of AMPAC into the NewMarket companies.

Unaudited pro forma information for the three months ended March 31, 2024 and March 31, 2023 include adjustments to depreciation and amortization based upon the fair value allocation of the purchase price to AMPAC's tangible and intangible assets acquired and liabilities assumed as though the acquisition had occurred on January 1, 2023, as well as adjustments for debt-related costs and management fees.

The acquisition-related costs and the charge related to the fair value adjustment to acquisition-date inventory were recognized in actual results during the three months ended March 31, 2024, but for the presentation below, these costs are excluded from 2024 unaudited pro forma income before income taxes and are instead reflected in 2023 pro forma income before income taxes as though they were incurred during the three months ended March 31, 2023.

Pro Forma Supplemental Information (unaudited) (in thousands) Three Months Ended

Consolidated March 31, 2024 March 31, 2023

Net sales $ 701,836 $ 718,983

Income before income taxes 140,004 105,984

NEWMARKET CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Our revenues are predominantly 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.

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

Our petroleum additives contracts generally include one performance obligation, which is satisfied at a point in time when products are shipped, delivered, or consumed by the customer, depending on the underlying contracts.

Additionally, we have revenue from the manufacture and sale of critical specialty materials products used primarily in solid rocket motors for space launch and military defense applications.

The sale of specialty materials products is predominantly to customers located in the United States, with limited amounts to customers in other countries.

Our specialty materials customers are primarily contractors or subcontractors of the U.S.

Specialty materials contracts generally include one performance obligation, which is typically satisfied at a point in time when the products are shipped from the plant site.

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 until we ship the product and 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 to estimated amounts when necessary, recognizing the full amount of any adjustment in the period identified.

Some of our contracts include variable consideration in the form of rebates, tiered pricing, and/or business development funds.

We regularly review these and make adjustments to estimated amounts 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 presented in Note 4.

Third Quarter Ended

September 30, Nine Months Ended

September 30,

Three Months Ended March 31,

(in thousands) 2024 2023

4 unchanged sentences

Net sales $ 696,736 $ 702,789

NEWMARKET CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Segment Information

2 unchanged sentences

Net Sales by Segment

Third Quarter Ended

September 30, Nine Months Ended

September 30,

Three Months Ended March 31,

(in thousands) 2024 2023

3 unchanged sentences

Total 677,264 699,991

Specialty materials 17,047 0

All other 2,425 2,798

Net sales $ 696,736 $ 702,789

NEWMARKET CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Segment Operating Profit

Third Quarter Ended

September 30, Nine Months Ended

September 30,

Three Months Ended March 31,

(in thousands) 2024 2023

Petroleum additives $ 150,909 $ 132,068

Specialty materials ( 4,967 ) 0

All other ( 81 ) ( 975 )

2 unchanged sentences

Interest and financing expenses, net ( 15,654 ) ( 10,773 )

Loss on early extinguishment of debt 0 0 0 ( 7,545 )

Other income (expense), net 13,043 11,319

2 unchanged sentences

Pension Plans and Other Postretirement Benefits

The table below shows cash contributions made during the nine months ended September 30, 2023, as well as the remaining cash contributions we expect to make during the year ending December 31, 2023, for our domestic and foreign pension plans and domestic postretirement benefit plan.

(in thousands) Actual Cash Contributions for Nine Months Ended September 30, 2023 Expected Remaining Cash Contributions for Year Ending December 31, 2023

The table below shows cash contributions made during the three months ended March 31, 2024, as well as the remaining cash contributions we expect to make during the year ending December 31, 2024, for our domestic and foreign pension plans and domestic postretirement benefit plan.

(in thousands) Actual Cash Contributions for Three Months Ended March 31, 2024 Expected Remaining Cash Contributions for Year Ending December 31, 2024

Domestic plans

3 unchanged sentences

Pension benefits 1,501 4,033

NEWMARKET CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The tables below present information on net periodic benefit cost (income) for our domestic and foreign pension plans and domestic postretirement benefit plan.

4 unchanged sentences

Pension Benefits Postretirement Benefits

Third Quarter Ended September 30,

(in thousands) 2023 2022 2023 2022

Service cost $ 2,482 $ 4,490 $ 130 $ 299

Interest cost 4,587 3,332 404 294

Expected return on plan assets ( 11,510 ) ( 10,945 ) ( 182 ) ( 185 )

Amortization of prior service cost (credit) 127 68 ( 757 ) ( 757 )

Amortization of actuarial net (gain) loss ( 376 ) 419 ( 55 ) 22

Net periodic benefit cost (income) $ ( 4,690 ) $ ( 2,636 ) $ ( 460 ) $ ( 327 )

Pension Benefits Postretirement Benefits

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands) 2024 2023 2024 2023

5 unchanged sentences

Net periodic benefit cost (income) $ ( 5,213 ) $ ( 4,720 ) $ ( 412 ) $ ( 514 )

NEWMARKET CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Pension Benefits

Third Quarter Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands) 2024 2023

6 unchanged sentences

Earnings Per Share

We had 34,071 shares of nonvested restricted stock at September 30, 2023 and 33,070 shares of nonvested restricted stock at September 30, 2022 that were excluded from the calculation of diluted earnings per share.

We had 34,678 shares of nonvested restricted stock at March 31, 2024 and 34,579 shares of nonvested restricted stock at March 31, 2023 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.

NEWMARKET CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Third Quarter Ended

September 30, Nine Months Ended

September 30,

Three Months Ended March 31,

(in thousands, except per-share amounts) 2024 2023

7 unchanged sentences

Weighted-average number of shares of common stock outstanding - basic and diluted

9,556 9,965 9,592 10,130

Earnings per share - basic and diluted $ 11.23 $ 10.09

(in thousands)

September 30,

2024 December 31,

3 unchanged sentences

$ 493,554 $ 456,234

NEWMARKET CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Intangibles (Net of Amortization) and Goodwill

The net carrying amount of intangibles and goodwill was $ 125 million at September 30, 2023 and $ 126 million at December 31, 2022.

The net carrying amount of intangibles and goodwill was $ 769 million at March 31, 2024 and $ 125 million at December 31, 2023.

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

(in thousands) Gross

6 unchanged sentences

Customer base 277,440 7,891 5,440 4,539

Trademarks and trade names 30,000 425 0 0

Water rights 29,392 0

Goodwill 381,997 123,741

$ 778,829 $ 9,911 $ 137,381 $ 12,739

All of the intangibles relate to the petroleum additives segment.

The change in the gross carrying amount of goodwill between December 31, 2022 and September 30, 2023 is due to foreign currency fluctuation.

Of the total intangibles and goodwill, $ 125 million is attributable to the petroleum additives segment and $ 644 million is attributable to the specialty materials segment.

The change in the gross carrying amount between December 31, 2023 and March 31, 2024 is due to the identifiable intangible assets and goodwill from the acquisition of AMPAC, as well as the write-off of fully amortized identifiable intangible assets and the foreign currency fluctuation on goodwill in the petroleum additives segment.

See Note 2 for further information on the intangibles and goodwill obtained with the AMPAC acquisition.

There is no accumulated goodwill impairment.

Amortization expense was (in thousands):

Third quarter ended September 30, 2023 $ 748

Nine months ended September 30, 2023 1,459

Third quarter ended September 30, 2022 356

Nine months ended September 30, 2022 1,067

NEWMARKET CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Three months ended March 31, 2024 $ 5,372

Three months ended March 31, 2023 356

Estimated amortization expense for the remainder of 2024, as well as estimated annual amortization expense related to our intangible assets for the next five years, is expected to be (in thousands):

We amortize the customer base over 20 years.

2024 $ 18,925

We amortize the formulas and technology over 8 years, the customer base over 17.5 to 20 years, and the trademarks and trade names over 15 years.

Long-term Debt

(in thousands) September 30,

(in thousands) March 31,

2024 December 31,

3 unchanged sentences

250,000 250,000

Term loan (net of related deferred financing costs) 249,614 0

Revolving credit facility 386,000 0

$ 1,279,457 $ 643,622

NEWMARKET CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Senior Notes - The 2.70 % senior notes, which were issued in 2021, are unsecured with an aggregate principal amount of $ 400 million.

1 unchanged sentence

The 3.78 % senior notes are unsecured and were issued in a 2017 private placement with The Prudential Insurance Company of America and certain other purchasers.

We were in compliance with all covenants under all issuances of senior notes as of September 30, 2023 and December 31, 2022.

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 6.1 % during the first nine months of 2023 and 3.5 % during the year ended December 31, 2022.

We were in compliance with all covenants under the revolving credit facility as of September 30, 2023 and December 31, 2022.

Outstanding borrowings under the revolving credit facility amounted to $ 136 million at September 30, 2023 and $ 361 million at December 31, 2022.

Outstanding letters of credit amounted to approximately $ 2 million at both September 30, 2023 and December 31, 2022.

The unused portion of the credit facility amounted to $ 762 million at September 30, 2023 and $ 537 million at December 31, 2022.

We were in compliance with all covenants under all issuances of senior notes as of March 31, 2024 and December 31, 2023.

Term Loan - On January 22, 2024, NewMarket entered into an unsecured credit agreement for a $ 250 million term loan (the Term Loan Credit Agreement), which matures on January 22, 2026.

We borrowed the entire $ 250 million available under the Term Loan Credit Agreement and paid financing costs of $ 0.4 million, which are being amortized over the term of the agreement.

NewMarket is required to repay the principal amount borrowed under the term loan in full at maturity.

We may, in our sole discretion and subject to the conditions set forth in the Term Loan Credit Agreement, prepay amounts borrowed under the term loan, together with any accrued and unpaid interest, prior to maturity.

Any amounts prepaid prior to maturity are not available for additional borrowings by NewMarket.

The principal amount borrowed under the term loan initially bears interest at a variable rate equal to Term SOFR plus the Applicable Rate.

We may, at our option, elect for outstanding portions of the principal amount to instead bear interest at a variable rate equal to the Base Rate or Weekly Adjusted Term SOFR, plus, in each case, the Applicable Rate, subject to the conditions set forth in the Term Loan Credit Agreement.

The Applicable Rate is based, at our option, on either our Leverage Ratio or Ratings Level.

All capitalized terms are as defined in the Term Loan Credit Agreement.

The Term Loan Credit Agreement contains certain customary covenants, including financial covenants, which require NewMarket to maintain a consolidated Leverage Ratio (as defined in the Term Loan Credit Agreement) of no more than 3.75 to 1.00 except during an Increased Leverage Period (as defined in the Term Loan Credit Agreement).

We were in compliance with all covenants under the term loan as of March 31, 2024.

Revolving Credit Facility - On January 22, 2024, NewMarket entered into a credit agreement for a new $ 900 million revolving credit facility (the Revolving Credit Agreement).

The revolving credit facility matures on January 22, 2029 and includes a $ 500 million sublimit for multicurrency borrowings, an initial letter of credit sublimit of $ 25 million, and a $ 20 million sublimit for swingline loans.

The Revolving Credit Agreement includes an expansion feature allowing us, subject to certain conditions, to request an increase in the aggregate amount of the revolving credit facility or obtain incremental term loans in an amount up to $ 450 million.

We may also request an extension of the maturity date as provided for in the Revolving Credit Agreement.

Certain of NewMarket's foreign subsidiaries may, from time to time, become borrowers under the Revolving Credit Agreement.

The obligations under the Revolving Credit Agreement are unsecured and are fully and unconditionally guaranteed by NewMarket.

Concurrently with entering into the Revolving Credit Agreement, we terminated our former revolving credit facility dated as of March 5, 2020.

Upon termination, we repaid the amount then outstanding under the former revolving credit facility, plus accrued and unpaid interest.

Borrowings made under the revolving credit facility bear interest at a variable rate determined, at our option, at an annual rate equal to (i) the Base Rate, (ii) Term SOFR, (iii) the Weekly Adjusted Term SOFR, (iv) the Alternative Currency Term Rate, or (v) the Alternative Currency Daily Rate, each plus the Applicable Rate and all as defined in the Revolving Credit Agreement.

The Applicable Rate is based, at our option, on either our Leverage Ratio or Ratings Level.

All capitalized terms are as defined in the Revolving Credit Agreement.

The Revolving Credit Agreement contains certain customary covenants, including financial covenants, which require NewMarket to maintain a consolidated Leverage Ratio (as defined in the Revolving Credit Agreement) of no more than 3.75 to 1.00 except during an Increased Leverage Period (as defined in the Revolving Credit Agreement).

We were in compliance with all covenants under the revolving credit facility in effect as of March 31, 2024 and December 31, 2023.

We paid financing costs in 2024 of approximately $ 1.8 million related to this revolving credit facility and carried over deferred financing costs from the former revolving credit facility of approximately $ 0.4 million, resulting in total deferred financing costs of $ 2.2 million as of March 31, 2024, which we are amortizing over the term of the Revolving Credit Agreement.

The average interest rate for borrowings under the revolving credit agreements in place during a given period was 6.6 % during the first three months of 2024 and 6.2 % during the full year of 2023.

Outstanding borrowings under the applicable revolving credit facility amounted to $ 386 million at March 31, 2024 and none at December 31, 2023.

Outstanding letters of credit amounted to approximately $ 2 million at both March 31, 2024 and

NEWMARKET CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2023.

The unused portion of the applicable revolving credit facility amounted to $ 512 million at March 31, 2024 and $ 898 million at December 31, 2023.

Commitments and Contingencies

4 unchanged sentences

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.

NEWMARKET CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Environmental

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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 both September 30, 2023 and December 31, 2022.

Our total accruals for environmental remediation, dismantling, and decontamination were approximately $ 11 million at both March 31, 2024 and December 31, 2023.

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 September 30, 2023 and December 31, 2022, using discount rates ranging from 3 % to 9 % for both periods.

The aggregate undiscounted amount for these sites was $ 10 million at both September 30, 2023 and December 31, 2022.

Together, the amounts accrued on a discounted basis related to these sites represented approximately $ 8 million of the total accrual above at March 31, 2024 and $ 9 million at December 31, 2023, using discount rates ranging from 3 % to 9 % for both periods.

The aggregate undiscounted amount for these sites was $ 10 million at March 31, 2024 and $ 11 million at December 31, 2023.

At March 31, 2024, we had commitments of approximately $ 4 million for leases that have not yet commenced.

Other Comprehensive Income (Loss) and Accumulated Other Comprehensive Loss

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Amounts reclassified from accumulated other comprehensive loss (a)

( 922 ) 0 ( 922 )

Other comprehensive income (loss)

( 922 ) 11,366 10,444

Balance at September 30, 2022 $ 3,371 $ ( 152,000 ) $ ( 148,629 )

Balance at March 31, 2023 $ 53,640 $ ( 115,191 ) $ ( 61,551 )

Balance at December 31, 2023 $ 79,966 $ ( 101,037 ) $ ( 21,071 )

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( 860 ) ( 6,943 ) ( 7,803 )

Balance at September 30, 2023 $ 50,661 $ ( 117,443 ) $ ( 66,782 )

Balance at March 31, 2024 $ 79,106 $ ( 107,980 ) $ ( 28,874 )

(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 5 in this Quarterly Report on Form 10-Q and Note 17 in our 2023 Annual Report for further information.

Fair Value Measurements

The carrying amount of cash and cash equivalents in the Consolidated Balance Sheets, as well as the fair value, was $ 103 million at September 30, 2023 and $ 69 million at December 31, 2022.

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

No material events occurred during the nine months ended September 30, 2023 requiring adjustment to the recognized balances of assets or liabilities which are recorded at fair value on a nonrecurring basis.

NEWMARKET CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Long-term debt – We record the carrying amount of our long-term debt at historical cost, less deferred financing costs related to our 2.70% senior notes.

Fair Value Measurements

The carrying amount of cash and cash equivalents in the Consolidated Balance Sheets, as well as the fair value, was $ 117 million at March 31, 2024 and $ 112 million at December 31, 2023.

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

No material events occurred during the three months ended March 31, 2024 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 outstanding senior notes and term loan.

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 2.70% senior notes included in the table below is based on the last quoted price closest to September 30, 2023.

The estimated fair value of our publicly traded outstanding senior notes included in the table below is based on the last quoted price closest to March 31, 2024.

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

(in thousands) Carrying

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Long-term debt $ 1,279,457 $ 1,204,870 $ 643,622 $ 572,983

Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No.

2023-07, "Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures" (ASU 2023-07).

ASU 2023-07 requires expanded disclosures about reportable segments including additional information on segment expenses, expanded interim period disclosures, and an explanation of how the chief operating decision maker utilizes segment information in evaluating segment performance.

ASU 2023-07 was effective for our reporting period beginning January 1, 2024 with the interim period requirements effective for our reporting period beginning January 1, 2025.

ASU 2023-07 only currently impacts the disclosures in our annual consolidated financial statements, which will be included in our 2024 Annual Report on Form 10-K.

We are currently assessing the impact that the adoption of ASU 2023-07 will have on the disclosures in our consolidated financial statements.

In December 2023, the FASB issued Accounting Standards Update No.

2023-09, "Income Taxes (Topic 740):

Improvements to Income Tax Disclosures" (ASU 2023-09).

The FASB issued ASU 2023-09 to enhance the transparency and decision-making usefulness of income tax disclosures by requiring additional information on an entity's tax rate reconciliation, as well as income taxes paid.

ASU 2023-09 is effective for our reporting period beginning January 1, 2025.

We are currently assessing the impact that the adoption of ASU 2023-09 will have on the disclosures in our consolidated financial statements.

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