NewMarket Corporation Reports Improved Year and Fourth Quarter Results 
2/3/2011 
  • Earnings Per Share Up 14 Percent for the Year and Fourth Quarter
  • Petroleum Additives Operating Profit Improves 7 Percent for the Year
  • Purchased 1.2 Million Shares of Common Stock During the Year for $124.9 Million
  • Reduced Debt $28.2 Million During the Year
  • Increased Dividend Declared in Fourth Quarter 17 Percent

RICHMOND, Va.--NewMarket Corporation (NYSE: NEU) President and Chief Executive Officer, Thomas E. Gottwald, released the following earnings report of the Company’s operations for the year and fourth quarter 2010.

Net income for the year 2010 increased to $177.1 million, or $12.09 per share, an improvement of 9 percent over net income for the year 2009 of $162.3 million, or $10.65 per share. For the fourth quarter, net income improved 7 percent to $49.4 million, or $3.47 per share, compared to net income for the fourth quarter last year of $46.3 million, or $3.03 per share. The percentage increase in earnings per share was 14 percent for both the year and fourth quarter reflecting the additional benefit of the stock purchases. Net income for all periods includes gains and losses on an interest rate swap agreement related to financing on Foundry Park which are reflected separately for each period in the Summary of Earnings schedule at the end of this press release.

Petroleum additives operations had a very strong performance in 2010 with operating profit improving to $299.1 million, an increase of 7 percent over operating profit last year of $279.8 million. The improvement reflects the continuing excellent performance of the lubricant additive product line. Sales of petroleum additives for the year improved to $1.77 billion, an increase of 17 percent over sales for the year 2009 of $1.52 billion. The increase in sales included the benefit of a 12 percent increase in shipments compared to last year.

Petroleum additives results were also up for the fourth quarter with operating profit of $72 million, an increase of 9 percent over operating profit for fourth quarter last year of $65.8 million. Sales of petroleum additives for this year’s fourth quarter of $455.0 million were up 13 percent over sales of $401.4 million for the fourth quarter last year including the benefit of a 3 percent increase in shipments.

This strong performance in 2010 reflects the continuing strength of our petroleum additives operations in all regions. This success is driven by our commitment to supply our customers with the differentiating top quality products, marketing solutions and unique technical support that enhances their position in the marketplace.

This strong operational performance and resulting cash flow, together with available cash, enabled us to complete several important initiatives during the year, including (i) the first quarter 2010 acquisition of Polartech, a leading metalworking additives company, (ii) purchasing 1,213,158 shares (287,917 shares in the fourth quarter) of our common stock for $124.9 million, and (iii) reducing debt during the year by $28.2 million. We remain intent on focusing the use of our cash flow on enhancing our business operations and generating shareholder value.

While 2010 was NewMarket’s most profitable year, it was also a year marked by considerable investment for the future. We added manufacturing capacity in Singapore to better serve our Asia/Pacific customers, invested in additional facilities and testing capability in R&D, introduced a number of new products, added additional staffing around the world, and put in place new management systems to position ourselves for future growth. In addition, we finished the year with the lowest Recordable Injury rate in our history.

Our performance in 2010 gives us good momentum and we are well positioned for the challenges and opportunities of 2011 and thereafter. I want to thank our customers for their continued support, and I want to thank our employees for working safely and smartly around the world.

Sincerely,

Thomas E. Gottwald

Summary of Earnings for the 2010 and 2009 Periods

As noted, net income for the fourth quarter of both 2010 and 2009 included income benefits while the full year 2010 and 2009 included charges on an interest rate swap agreement related to financing on Foundry Park. These amounts result from the Company valuing the swap agreement at its fair value.

The Company is reporting net income including these amounts, as well as income excluding them, and related per share amounts in this Summary of Earnings. The Company believes that even though income, excluding these amounts, is not required by or presented in accordance with generally accepted accounting principles (GAAP) accepted in the United States, this additional measure enhances understanding of the Company’s performance. The Company believes earnings, excluding this item, enhance period to period comparability. The Company believes that income, excluding this item, should not be considered an alternative to net income determined under GAAP. The following table is a reconciliation of net income under GAAP to net income excluding the gains and losses on the interest rate swap agreement.

Summary of Earnings
(In millions, except per-share amounts)
Fourth Quarter Ended Year Ended
December 31 December 31
2010 2009

2010

2009

Net Income
Net income $ 49.4 $ 46.3 $ 177.1 $ 162.3
(Gain) loss on interest rate swap agreement (4.4 ) (2.8 ) 6.3 7.0
Income excluding (gain) loss on interest rate swap $ 45.0 $ 43.5 $ 183.4 $ 169.3
Diluted Earnings Per Share:
Net income $ 3.47 $ 3.03 $ 12.09 $ 10.65
(Gain) loss on interest rate swap agreement (0.31 ) (0.18 ) 0.43 0.46
Income excluding (gain) loss on interest rate swap $ 3.16 $ 2.85 $ 12.52 $ 11.11

As a reminder, a conference call and Internet webcast is scheduled for 10:00 a.m. EST on Friday, February 4, 2011, to review fourth quarter and year 2010 financial results. You can access the conference call live by dialing 1-877-407-9210 (domestic) or 1-201-689-8049 (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, 2011 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 364809. 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: availability of raw materials and transportation systems; supply disruptions at single sourced facilities; ability to respond effectively to technological changes in our industry; failure to protect our intellectual property rights; hazards common to chemical businesses; occurrence or threat of extraordinary events, including natural disasters and terrorist attacks; competition from other manufacturers; sudden or sharp raw materials price increases; gain or loss of significant customers; risks related to operating outside of the United States; the impact of fluctuations in foreign exchange rates; political, economic, and regulatory factors concerning our products; future governmental regulation; resolution of environmental liabilities or legal proceedings; inability to complete future acquisitions or successfully integrate future acquisitions into our business 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 2009 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.

NEWMARKET CORPORATION AND SUBSIDIARIES
SEGMENT RESULTS AND OTHER FINANCIAL INFORMATION

(In millions except per share amounts, unaudited)

Fourth Quarter Ended Twelve Months Ended
December 31 December 31
2010 2009 2010 2009

Revenue:

Petroleum additives $ 455.0 $ 401.4 $ 1,774.4 $ 1,518.1
Real estate development 2.7 0.0 11.3 0.0
All other (a) 2.9 2.8 11.7 12.0
Total $ 460.6 $ 404.2 $ 1,797.4 $ 1,530.1

Segment operating profit:

Petroleum additives

$ 72.0 $ 65.8 $ 299.1 $ 279.8
Real estate development 1.7 0.0 7.0 (0.4 )
All other (a) (0.7 ) 0.8 2.4 0.0
Segment operating profit 73.0 66.6 308.5 279.4
Corporate unallocated expense (5.8 ) (5.0 ) (20.3 ) (17.0 )
Interest and financing expenses (4.5 ) (3.0 ) (17.3 ) (11.7 )
Gain (loss) on an interest rate swap agreement (b) 7.2 4.3 (10.3 ) (11.4 )
Other (expense) income, net (0.4 ) 0.0 (0.6 ) 0.1
Income before income tax expense $ 69.5 $ 62.9 $ 260.0 $ 239.4
Net income $ 49.4 $ 46.3 $ 177.1 $ 162.3
Basic earnings per share $ 3.48 $ 3.04 $ 12.12 $ 10.67
Diluted earnings per share $ 3.47 $ 3.03 $ 12.09 $ 10.65
Notes to Segment Results and Other Financial Information
(a) "All other" includes the results of our TEL business, as well as certain contract manufacturing of Ethyl Corporation.
(b) The gain (loss) on an interest rate swap agreement represents the change, since the beginning of the reporting period, in the fair value of an interest rate swap which we entered into on June 25, 2009. We are not using hedge accounting to record the interest rate swap and, accordingly, any change in the fair value is immediately recognized in earnings.
NEWMARKET CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share amounts, unaudited)
Fourth Quarter Ended Twelve Months Ended
December 31 December 31
2010 2009 2010 2009
Revenue:
Net sales - product $ 457,906 $ 404,241 $ 1,786,076 $ 1,530,122
Rental revenue 2,742 - 11,316 -
460,648 404,241 1,797,392 1,530,122
Costs:
Cost of goods sold - product 332,537 286,435 1,277,505 1,066,862
Cost of rental 1,183 - 4,428 -
333,720 286,435 1,281,933 1,066,862
Gross profit 126,928 117,806 515,459 463,260
Selling, general, and administrative expenses 34,489 31,759 136,967 114,900
Research, development, and testing expenses 25,322 24,624 91,188 86,072
Operating profit 67,117 61,423 287,304 262,288
Interest and financing expenses 4,533 3,012 17,261 11,716
Other income (expense), net (a) 6,927 4,538 (10,047 ) (11,196 )
Income before income tax expense 69,511 62,949 259,996 239,376
Income tax expense 20,099 16,699 82,871 77,093
Net income $ 49,412 $ 46,250 $ 177,125 $ 162,283
Basic earnings per share $ 3.48 $ 3.04 $ 12.12 $ 10.67
Diluted earnings per share $ 3.47 $ 3.03 $ 12.09 $ 10.65
Shares used to compute basic earnings per share 14,209 15,208 14,619 15,206
Shares used to compute diluted earnings per share 14,235 15,245 14,650 15,243
Cash dividends declared per share $ 0.440 $ 0.375 $ 1.565 $ 1.075

Notes to Consolidated Statements of Income

(a)

On June 25, 2009 we entered into an interest rate swap. The gain on the interest rate swap for the fourth quarter ended December 31, 2010, was $7.2 million, and for the twelve months ended December 31, 2010, the loss was $10.3 million. For the fourth quarter ended December 31, 2009, the gain was $4.3 million, and for the twelve months ended December 31, 2009, the loss was $11.4 million. We are not using hedge accounting to record the interest rate swap, and accordingly, any change in the fair value is immediately recognized in earnings.

NEWMARKET CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, unaudited)
December 31 December 31
2010 2009
ASSETS
Current assets:
Cash and cash equivalents $ 49,192 $ 151,831
Short-term investments 300 300
Trade and other accounts receivable, less
allowance for doubtful accounts ($733 - 2010;

$1,195 - 2009)

257,748 214,887
Inventories 273,215 192,903
Deferred income taxes 6,876 4,118
Prepaid expenses and other current assets 15,444 39,100
Total current assets 602,775 603,139
Property, plant and equipment, at cost 988,180 934,382
Less accumulated depreciation and amortization 654,204 631,967
Net property, plant and equipment 333,976 302,415
Prepaid pension cost 8,597 2,430
Deferred income taxes 21,974 34,670
Other assets and deferred charges 48,893 37,475
Intangibles (net of amortization) and goodwill 46,526 45,063
Total assets $ 1,062,741 $ 1,025,192
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 109,250 $ 88,186
Accrued expenses 71,558 63,775
Dividends payable 5,304 4,992
Book overdraft 1,063 2,230
Long-term debt, current portion 4,369 33,881
Income taxes payable 14,843 4,988
Total current liabilities 206,387 198,052
Long-term debt 217,544 216,200
Other noncurrent liabilities 147,170 152,755
Shareholders' equity
Common stock and paid in capital (without par
value) Issued and Outstanding - 14,034,884
in 2010 and 15,209,989 in 2009 - 275
Accumulated other comprehensive loss (73,820 ) (74,784 )
Retained earnings 565,460 532,694
491,640 458,185
Total liabilities and shareholders' equity $ 1,062,741 $ 1,025,192

FOR INVESTOR INFORMATION CONTACT:
 David A. Fiorenza
 Investor Relations
 Phone: 804.788.5555
 Fax:  804.788.5688
 Email:  investorrelations@newmarket.com