NewMarket Corporation Reports Improved Third Quarter and Nine Months 2005 Results 
10/26/2005 
 

RICHMOND, Va.--(BUSINESS WIRE)--Oct. 26, 2005--NewMarket Corporation (NYSE:NEU) President and Chief Executive Officer, Thomas E. Gottwald, released the following earnings report for the third quarter and first nine months of 2005 and an update of the Company's operations.

Third quarter 2005 earnings excluding certain special items were $10.3 million or $0.61 per share, a significant improvement over earnings on the same basis for third quarter 2004 of $4.6 million or $0.26 per share. Net income for third quarter 2005, including the special items, was $13.4 million or $0.79 per share compared to net income for third quarter 2004 on the same basis of $13.0 million or $0.76 per share.

For the first nine months of 2005, earnings excluding certain special items were $25.6 million or $1.51 per share compared to earnings for the first nine months of last year on the same basis of $21.7 million or $1.28 per share. Including the special items, net income for the first nine months of 2005 was $31.2 million or $1.84 per share, while net income for the first nine months of last year was $30.1 million or $1.78 per share. A description of the special items as well as a reconciliation of net income under generally accepted accounting principles in the United States (GAAP) to earnings excluding special items is included at the end of the earnings release for further clarification.

Petroleum additives segment operating profit for the third quarter of this year was $17.4 million, a significant improvement over third quarter 2004 operating profit of $8.6 million, excluding a 2004 special item gain of $0.8 million. For the first nine months of 2005, petroleum additives operating profit improved to $44.2 million from operating profit on the same basis of $38.8 million for the same period last year. The improved results reflect higher petroleum additives sales which increased 20 percent to $267.4 million for this year's third quarter compared to sales of $222.8 million for third quarter 2004. Sales for the first nine months of 2005 of $773.6 million are up 18 percent compared to sales for the same period last year of $655.5 million. The improved petroleum additives results reflect the success of our strategy to supply our customers with a strong and diverse portfolio of petroleum additives products that enables them to differentiate their products in the marketplace. Margins remain under pressure, however, as the ever increasing raw material costs have kept us from fully restoring our margins. Consequently we continue to pursue price increases for our products. Our progress during the first three quarters encourages us to believe that petroleum additives operating profit for the fourth quarter and year 2005 will exceed the same periods last year.

Tetraethyl lead (TEL) operating profit for third quarter 2005 of $5.6 million was up from operating profit of $4.7 million, excluding a 2004 special item, for the same period last year. For the first nine months of 2005, TEL operating profit declined to $15.5 million compared to operating profit of $20.2 million, excluding a 2004 special item, for the first nine months of 2004 as the market for this product continues to decline. We expect the continuing decline in TEL will result in both fourth quarter and year TEL operating profit being lower than the same periods last year.

Operations and effective working capital management provided strong cash flow during the quarter, which enabled us to pay off the remaining $30 million of bank debt and begin to build cash for future opportunities.

The overall improvement in earnings reflects the increased profit contribution of the petroleum additives team, despite challenging market conditions, which more than offset the inevitable decline in profits of TEL. Lastly, I thank our entire Supply Team for their tireless efforts to steer us through the many difficulties caused by the already tight material supply situation, compounded by the recent storms in the US Gulf coast. They have met every challenge and have demonstrated that our customers' confidence in our ability to deliver is well placed.

As noted, net income for the third quarter and nine months for both 2005 and 2004 include certain special items. The Company has reported net income including special items, as well as earnings excluding special items in this release. The Company believes that even though earnings excluding special items is not required or in accordance with GAAP, this additional measure enhances understanding of the Company's performance. This is because earnings excluding special items excludes the impact of certain non-recurring items and enhances period to period comparability. Earnings excluding special items should not be considered an alternative to net income determined under GAAP. The following table is a reconciliation of net income under GAAP to earnings excluding special items.

Summary of Earnings for the Third Quarter and Nine Months:
---------------------------------------------------------------

                                        Third Quarter     Nine Months
                                             Ended           Ended
                                         September 30    September 30
                                        --------------  --------------
                                         2005   2004    2005    2004
                                        ------- ------  ------  ------
Net Income
 Net income                            $  13.4 $ 13.0  $ 31.2  $ 30.1
    (Less) Special items:
       Benefit of insurance settlements      -   (8.4)   (2.5)   (8.4)
       Gain on sale of property           (1.8)     -    (1.8)      -
       Tax settlement                     (1.3)     -    (1.3)      -
                                                    -               -
                                        ------- ------  ------  ------

 Earnings excluding Special items      $  10.3 $  4.6  $ 25.6  $ 21.7
                                        ======= ======  ======  ======

Basic Earnings Per Share:

 Net income                            $  0.79 $ 0.76  $ 1.84  $ 1.78
    (Less) Special items:
       Benefit of insurance settlements      -  (0.50)  (0.15)  (0.50)
       Gain on sale of property          (0.11)     -   (0.11)      -
       Tax settlement                    (0.07)     -   (0.07)      -
                                        ------- ------  ------  ------

 Earnings excluding Special items      $  0.61 $ 0.26  $ 1.51  $ 1.28
                                        ======= ======  ======  ======

As a reminder, a conference call and Internet web cast is scheduled for 10:00 a.m. EDT on Friday, October 28, 2005, to review third quarter 2005 financial results. You can access the conference call live by dialing 877-407-8031 (domestic) or 201-689-8031 (international) and requesting the NewMarket conference call. To avoid delays, callers should dial in five minutes early. The call will also be broadcast via the Internet and can be accessed through the Company's website at www.NewMarket.com or www.investorcalendar.com. A teleconference replay of the call will be available until November 2, 2005 at 11:59 p.m. by dialing 877-660-6853 (domestic) and 201-612-7415 (international). The account number is 286. The conference ID number is 172707. A webcast replay will be available for 30 days.

NewMarket Corporation through its subsidiaries, Afton Chemical Corporation and Ethyl Corporation, develops, manufactures, blends, and delivers chemical additives that enhance the performance of petroleum products. From custom-formulated chemical blends to market-general additive components, the NewMarket family of companies provides the world with the technology to make fuels burn cleaner, engines run smoother and machines last longer.

Some of the information contained in this press release constitutes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although NewMarket's management believes its expectations are based on reasonable assumptions within the bounds of its knowledge of its business and operations, there can be no assurance that actual results will not differ materially from expectations.

Factors that could cause actual results to differ materially from expectations include, but are not limited to: timing of sales orders; gain or loss of significant customers; competition from other manufacturers; resolution of environmental liabilities; changes in the demand for our products; significant changes in new product introduction; increases in product cost; the impact of fluctuations in foreign exchange rates on reported results of operations; changes in various markets; geopolitical risks in certain of the countries in which we conduct business; the impact of consolidation of the petroleum additives industry; and other factors detailed from time to time in the reports that NewMarket files with the Securities and Exchange Commission, including the risk factors in Item 7A, "Quantitative and Qualitative Disclosures About Market Risk" of our 2004 Annual Report on Form 10-K, which is available to shareholders upon request.

You should keep in mind that any forward-looking statement made by NewMarket in the foregoing discussion speaks only as of the date on which such forward-looking statement is made. New risks and uncertainties come up from time to time, and it is impossible for us to predict these events or how they may affect the company. We have no duty to, and do not intend to, update or revise the forward-looking statements in this discussion after the date hereof, except as may be required by law. In light of these risks and uncertainties, you should keep in mind that the events described in any forward-looking statement made in this discussion, or elsewhere, might not occur.

For Investor Information, Contact:

     NewMarket Corporation, Richmond
     Investor Relations: David A. Fiorenza, 804-788-5555
     Fax: 804-788-5688
     investorrelations@newmarket.com
 
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