RICHMOND, Va. --- NewMarket Corporation (NYSE:NEU):
- Income from Continuing Operations, Before Special Items, Improved 6 Percent for the Year and 26 Percent for the Fourth Quarter
- Earnings Per Share from Continuing Operations Before Special Items Improved 17 Percent for the Year and 32 Percent for the Fourth Quarter
- Petroleum Additive Net Sales Increased 18 Percent for the Year and 1 Percent for the Fourth Quarter
NewMarket Corporation (NYSE:NEU) President and Chief Executive Officer, Thomas E. Gottwald, released the following earnings report of the company’s operations for the fourth quarter and year 2008.
Income from continuing operations for the year 2008 amounted to $73.2 million, an increase of 6 percent from earnings on the same basis for the year 2007 of $69 million before special items. Earnings per share on this basis for the year 2008 were $4.75 per share, an improvement of 17 percent over earnings per share on this basis for the year 2007 of $4.07 per share before special items. Including the year 2007 discontinued operations and special items, net income for the year 2007 was $95.3 million, or $5.62 per share.
Income from continuing operations for the fourth quarter of 2008 was $19.4 million, an increase of 26 percent from earnings on the same basis for the fourth quarter 2007 of $15.4 million before special items. Earnings per share on this basis for the fourth quarter of 2008 were $1.27 per share, an increase of 32 percent from earnings per share for the fourth quarter of 2007 on this basis of $.96 per share before special items. Including fourth quarter 2007 special items, net income for the fourth quarter of last year was $27 million, or $1.68 per share.
Earnings per share for the 2008 periods reflect the benefit of share repurchases made in both 2007 and 2008. The year 2007 special items include the 2007 gain associated with the termination of the tetraethyl lead (TEL) marketing agreements, as well as the after-tax earnings from these agreements in the first quarter of 2007 (discontinued operations), which together total a benefit of $16.8 million. The year 2007 results also include a tax benefit of $9.5 million primarily associated with the reversal of taxes previously provided on the undistributed earnings of certain of our foreign subsidiaries. These items are reflected separately for clarification in the Summary of Earnings schedule at the end of this press release.
The petroleum additive operations had another strong performance in 2008 with sales increasing to $1.6 billion, an improvement of 18 percent over sales in 2007 of $1.4 billion. This improvement in sales included the benefit of a 4 percent increase in volumes shipped for 2008 as a whole despite experiencing a significant drop in demand during the last two months of 2008. Operating profit for the year 2008 was $130 million, a slight improvement over the year 2007 operating profit of $129.4 million. For the fourth quarter of 2008, petroleum additives net sales were $365.6 million, an improvement of 1 percent from sales for the fourth quarter of last year of $360.6 million. Operating profit for the fourth quarter of this year increased to $32.5 million, an improvement of 13 percent over last year’s fourth quarter operating profit of $28.7 million.
While petroleum additives operating profit for the year 2008 showed a slight improvement over last year, during most of the year the business experienced unprecedented increases in the cost of many of our raw materials compressing margins as raw material cost increases were outpacing our pricing actions. As raw material increases slowed towards the latter part of 2008, we experienced some margin recovery. As the world’s economic problems became more pronounced in the fourth quarter and the price of oil dropped precipitously causing the destocking of inventory by many of our customers, the demand for our lubricant additives dropped approximately 20 percent from the average for the first nine months, as measured in tons shipped. Prior to this demand drop, we had been running our plants at high rates to satisfy our customers’ requirements. During the last part of 2008 we lowered our operating rates significantly in order to properly manage inventory levels and working capital. Some raw material costs have also begun to fall which should benefit us as well as our customers.
While world economies continue to experience turbulent financial conditions, our financial position remains strong. Currently, our volumes continue to be negatively impacted by the worldwide economic slowdown and customer destocking actions which continues into 2009. We believe the destocking process may continue throughout the first quarter, and that the underlying market demand will be within 5 to 8 percent of historical levels. We have also instituted a number of cost controls including travel restrictions, reduced discretionary spend, reduced hiring and delays in certain capital projects.
Overall, we are pleased with our performance in 2008 and we are well positioned for the challenges and opportunities of 2009 and thereafter. Our strong performance in 2008 is the result of the continuing outstanding performance of NewMarket employees around the world and their dedication to provide innovative products and services to our customers.
Thomas E. Gottwald
As a reminder, a conference call and Internet web cast is scheduled for 10 a.m. EST on Thursday, February 5, 2009, to review fourth quarter and year 2008 financial results. You can access the conference call live by dialing 1-877-407-8031 (domestic) or 1-201-689-8031 (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 19, 2009 at 11:59 p.m. EST by dialing 1-877-660-6853 (domestic) and 1-201-612-7415 (international). The account number is 286. The conference ID number is 309859. 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: changes in the demand for our products; increases in product cost and our ability to increase prices; timing of sales orders; gain or loss of significant customers; competition from other manufacturers and resellers; resolution of environmental liabilities; significant changes in new product introduction; 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; our ability to complete construction and obtain permanent long-term financing of the office building for MeadWestvaco within budget and in a timely manner; 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 2007 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:
David A. Fiorenza
Additional Financial Information (PDF)