RICHMOND, Va.--NewMarket Corporation President and Chief Executive Officer, Thomas E. Gottwald released the following earnings report and update of the company's operations for the fourth quarter and year 2006.
We are pleased to report to you that the year 2006 was a very successful year for NewMarket Corporation and included several major accomplishments. These accomplishments included a significant improvement in earnings for the year 2006, reflecting strong gains in our petroleum additives segment results. We also recently completed a refinancing of our loan agreements which provides us with more flexibility and favorable terms to build for the future.
Earnings for the year 2006, excluding special items, increased to $53.7 million, or $3.08 per share, a 52 percent improvement over earnings on the same basis for the year 2005 of $35 million, or $2.02 per share. Including special items, net income for the year 2006 was $57.5 million, or $3.30 per share, while net income for the year 2005 was $42.4 million, or $2.45 per share.
Earnings for the fourth quarter 2006, excluding special items, improved to $10.5 million, or $.60 per share, compared to earnings on the same basis for the fourth quarter of 2005 of $8.0 million, or $.46 per share, a 30 percent increase. Including special items, net income for the fourth quarter of this year was $4.5 million, or $.26 per share, while net income for the fourth quarter last year was $11.1 million, or $.64 per share.
The petroleum additives segment continues its strong performance with net sales for the year increasing to $1.3 billion compared to net sales of $1.1 billion for the year 2005. Net sales of petroleum additives in the fourth quarter of this year increased to $304.2 million compared to net sales for the same period last year of $293.3 million. Operating profit before the net benefit of special items for this segment for the year 2006, increased to $100.3 million, an improvement of 67 percent over operating profit on this same basis for last year of $60 million. Petroleum additives operating profit, excluding the benefit of special items for the fourth quarter of this year, improved to $19.6 million compared to operating profit for the same period last year of $17.6 million. The improvement in petroleum additive operating profit in 2006 reflects a better sales mix including increased volumes of certain higher margin products as well as our progress in restoring margins through the introduction of more cost-effective products and price increases to recover cost. These improved results come from a variety of our product lines and reflect our commitment to supply our customers with top quality products and unique technical and marketing solutions.
The expected decline in tetraethyl lead (TEL) continued with operating profit for the year 2006 amounting to $3.1 million compared to operating profit for last year of $14.1 million, excluding the benefit of a special item. This segment will continue to be a minor contributor to the overall profitability of the Company as its usage declines throughout the world.
During the fourth quarter 2006, we replaced our 8.875% senior notes due 2010 with a new issue of 7.125% senior notes due 2016. We also amended and extended our bank credit facility with terms that we believe are more indicative of the financial strength that we now exhibit. The replacement of the senior notes did result in a one time charge that is included in our fourth quarter results, but will also benefit future periods with lower interest expense charges.
The success of the year 2006 is reflected in the improvement of our financial results. We salute the dedicated NewMarket employees around the world for their commitment and the progress they have achieved as they continue to find ways to bring increased value to our customers and shareholders.
Thomas E. Gottwald
As noted, net income for both the fourth quarters and the years 2006 and 2005 include certain special items. The Company has reported net income including special items, as well as earnings excluding special items and related per share amounts in this release. The Company believes that even though earnings excluding special items are not required by or presented in accordance with GAAP, this additional measure enhances understanding of the Company's performance. Earnings excluding these items 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 Fourth Quarter and Year:
Ended Year Ended
December 31 December 31
2006 2005 2006 2005
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Net income $ 4.5 $ 11.1 $ 57.5 $ 42.4
Settlements-net benefit (1.0) (5.5) (2.5)
Earn-out agreement income - (3.3) -
Gain on sale of property - (3.1) (2.0) (4.9)
Loss on extinguishment of debt 7.0 - 7.0
------- ------ ------ ------
Earnings excluding special items $ 10.5 $ 8.0 $ $ 53.7 $ 35.0
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Diluted Earnings Per Share:
Net income $ 0.26 $ 0.64 $ 3.30 $ 2.45
Settlements-net benefit (0.06) - (0.31) (0.14)
Earn-out agreement income - - (0.19) -
Gain on sale of property - (0.18) (0.12) (0.29)
Loss on extinguishment of debt 0.40 - 0.40 -
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Earnings excluding special items $ 0.60 $ 0.46 $ 3.08 $ 2.02
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As a reminder, a conference call and Internet web cast is scheduled for 10:00 a.m. EST on Monday, February 5, 2007 to review fourth quarter and year 2006 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 February 12, 2007 at 11:59 p.m. EST by dialing 877-660-6853 (domestic) and 201-612-7415 (international). The account number is 286. The conference ID number is 227252. 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 1A, "Risk Factors" of our 2005 Annual Report on Form 10-K and in Item 1A, "Risk Factors" of our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2006, which are 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
Additional Financial Information (PDF)