NewMarket Corporation Reports Record Results for the Year 2012

  NewMarket Corporation Reports Record Results for the Year 2012

  *Record Net Income and Earnings Per Share for the Year 2012
  *Record Petroleum Additives Operating Profit for the Year
  *Special Dividend of $25 Per Share Paid in the Fourth Quarter

Business Wire

RICHMOND, Va. -- January 28, 2013

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 2012.

NewMarket’s net income for the year 2012 increased to a record $239.6 million,
or $17.85 per share, compared to net income of $206.9 million, or $15.09 per
share for the year 2011. For the fourth quarter of this year, net income was
$53.1 million, or $3.94 per share, compared to net income of $33.7 million, or
$2.51 per share for the same period last year.

The earnings for 2012 and prior year periods include certain special items
which are presented in the following Summary of Earnings and discussed more
fully on the financial statements and footnotes that are a part of this
earnings release.

                                                            
                              Summary of Earnings
                              (In millions, except per-share amounts)
                              Fourth Quarter Ended     Year Ended
                              December 31              December 31
                              2012          2011       2012          2011
Net Income:
Net income                    $ 53.1        $ 33.7     $ 239.6       $ 206.9
Tax (benefit) of special        (6.2  )       -          (6.2  )       -
dividend
(Gain) Loss on interest         (0.2  )       0.8        3.3           10.7
rate swap agreement
Loss on early                   -             -          6.1           -
extinguishment of debt
(Gain) on legal                -           -         -           (23.9 )
settlement, net
Income excluding the          $ 46.7       $ 34.5     $ 242.8      $ 193.7 
above special items
                                                                             
Diluted Earnings Per
Share:
Net income                    $ 3.94        $ 2.51     $ 17.85       $ 15.09
Tax (benefit) of special        (0.46 )       -          (0.46 )       -
dividend
(Gain) Loss on interest         (0.01 )       0.06       0.24          0.78
rate swap agreement
Loss on early                   -             -          0.45          -
extinguishment of debt
(Gain) on legal                -           -         -           (1.74 )
settlement, net
Income excluding the          $ 3.47       $ 2.57     $ 18.08      $ 14.13 
above special items
                                                                             

Excluding these special items from all periods, earnings for the year 2012
were a record $242.8 million, or $18.08 per share, an increase of 25 percent
compared to last year’s results of $193.7 million, or $14.13 per share. On
this same basis, earnings for this year’s fourth quarter were $46.7 million,
or $3.47 per share, an improvement of 35 percent over fourth quarter last year
results of $34.5 million, or $2.57 per share. Earnings per share for the year
and fourth quarter of this year increased 28 percent and 35 percent,
respectively, on this same basis.

Petroleum additives operations had a record performance for the year 2012 with
operating profit of $372.0 million, an improvement of 20 percent over last
year’s operating profit of $309.6 million excluding the 2011 gain on the legal
settlement. Sales of petroleum additives for the year increased to $2.2
billion, an increase of 3 percent over sales last year of $2.1 billion while
shipments were down almost 2 percent. Petroleum additives operating profit for
the fourth quarter of 2012 was $71.6 million, an improvement of 21 percent
over fourth quarter operating profit last year of $59.3 million. Sales for the
fourth quarter of 2012 increased 2 percent to $511.2 million, compared to
sales for the same period last year of $499.0 million and included the benefit
of 4 percent higher shipments. Our petroleum additives business continues to
deliver excellent results. We believe the fundamentals of how we run the
business – a safety-first culture, customer-focused solutions, technology
driven product offerings, world-class supply chain and regional organizational
structure to better serve our customers’ needs – are the core to this success.
We continue to increase our investment in research and development and
regional presence as evidence of our commitment to our customers.

These operational results continue to generate strong cash flows. During the
year 2012, we paid dividends of $375.7 million (including special dividend of
$335.4 million), funded capital expenditures of $38.8 million and increased
cash $38.8 million while only increasing debt by $185.2 million.

This special year in which we celebrated the 125^th anniversary of our Company
was another year of growth and success. The excellent results reflect the
outstanding performance and dedication of NewMarket employees around the world
and the confidence our customers have entrusted in us. Our strong financial
position enhances our capability for future growth and improving shareholder
value.

Sincerely,

Thomas E. Gottwald

The results for both the fourth quarter and year for both this year and last
year include the impact from valuing an interest rate swap agreement at fair
value at the end of each reporting period. This year’s fourth quarter and year
also include a tax benefit from the special $25 per share dividend paid in the
fourth quarter. The current year results also include a loss on the early
extinguishment of debt while the results for the year 2011 include a gain on a
legal settlement. The Company is reporting net income including these items,
as well as income excluding them, and related per share amounts in the Summary
of Earnings included in the earnings release. The Company has also included
the non-GAAP financial measure EBITDA in this earnings release. A schedule
following the financial statements included in this earnings release is
provided reflecting the calculation of EBITDA, defined as net income, before
the deduction of interest and financing expenses, income taxes, depreciation
and amortization. EBITDA is shown on the schedule both including and excluding
the items noted above. The Company believes that even though these items are
not required by or presented in accordance with United States generally
accepted accounting principles (GAAP), these additional measures enhance
understanding of the Company’s performance and period to period comparability.
The Company believes that these items should not be considered an alternative
to net income determined under GAAP.

As a reminder, a conference call and Internet webcast is scheduled for 11:00
a.m. EST on Tuesday, January 29, 2013, to review fourth quarter and year 2012
financial results. You can access the conference call live by dialing
1-877-407-8031 (domestic) or1-201-689-8031 (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 5, 2013 at 11:59 p.m. EST by dialing 1-877-660-6853
(domestic) and 1-201-612-7415 (international). The conference ID number is
407213. 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 2011 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,
                              2012      2011      2012        2011    
                                                                   
Revenue:
Petroleum additives          $ 511.2     $ 499.0     $ 2,200.8     $ 2,126.5
Real estate development        2.8         2.9         11.4          11.4
All other (a)                 2.2       3.7       11.1        11.7    
Total                        $ 516.2    $ 505.6    $ 2,223.3    $ 2,149.6 
                                                                   
Segment operating profit:
Petroleum additives
Petroleum additives before
gain on legal settlement,    $ 71.6      $ 59.3      $ 372.0       $ 309.6
net
Gain on legal settlement,     0.0       0.0       0.0         38.7    
net (b)
Total petroleum additives      71.6        59.3        372.0         348.3
                                                                   
                                                                   
Real estate development        1.6         1.7         7.0           7.0
All other (a)                 1.2       1.4       6.3         2.9     
                                                                   
Segment operating profit       74.4        62.4        385.3         358.2
                                                                   
Corporate unallocated          (4.2  )     (5.2  )     (20.2   )     (16.7   )
expense
Interest and financing         (2.3  )     (4.7  )     (10.8   )     (18.8   )
expenses
Gain (loss) on an interest     0.3         (1.4  )     (5.3    )     (17.5   )
rate swap agreement (c)
Loss on early                  0.0         0.0         (9.9    )     0.0
extinguishment of debt (d)
Other (expense) income,       (0.4  )    (0.4  )    2.3         (1.5    )
net
                                                                   
Income before income tax     $ 67.8     $ 50.7     $ 341.4      $ 303.7   
expense
                                                                   
Net income                   $ 53.1     $ 33.7     $ 239.6      $ 206.9   
                                                                   
Basic earnings per share     $ 3.94     $ 2.51     $ 17.85      $ 15.10   
                                                                   
Diluted earnings per share   $ 3.94     $ 2.51     $ 17.85      $ 15.09   


Notes to Segment Results and Other Financial Information
    
      "All other" includes the results of our tetraethyl lead (TEL) business,
(a)   as well as certain contract manufacturing performed by Ethyl
      Corporation.
      
      On September 13, 2011, we signed a settlement agreement with Innospec
      Inc. and its subsidiaries Alcor Chemie Vertriebs GmbH and Innospec Ltd.
      (collectively, Innospec) which provided for mutual releases of the
      parties and dismissal of the actions with prejudice. Under the
      settlement agreement, Innospec will pay NewMarket an aggregate amount of
      approximately $45 million in a combination of cash, a promissory note,
(b)   and stock, of which $25 million was paid in cash on September 20, 2011
      and $5 million was paid in the form of 195,313 shares of unregistered
      Innospec Inc. common stock. Fifteen million dollars is payable in three
      equal annual installments of $5 million under the promissory note, which
      bears simple interest at 1% per year. The first installment was paid in
      September 2012. The gain is net of expenses related to the settlement of
      the lawsuit.
      
      The gain (loss) on an interest rate swap agreement represents the
      change, since the beginning of the reporting period, in the fair value
(c)   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.
      
      In March 2012, we entered into a $650 million five-year unsecured
      revolving credit facility which replaced our previous $300 million
      unsecured revolving credit facility. In April 2012, we used a portion of
      this new credit facility to fund the early redemption of all of our
      outstanding 7.125% senior notes due 2016 (senior notes), representing an
      aggregate principal amount of $150 million. In May 2012, we used a
(d)   portion of the new credit facility to repay the outstanding principal
      amount on the Foundry Park I, LLC mortgage loan agreement (mortgage
      loan). As a result, we recognized a loss on early extinguishment of debt
      of $9.9 million during the twelve months ended December 31, 2012 from
      accelerated amortization of financing fees associated with the prior
      revolving credit facility, the senior notes, and the mortgage loan, as
      well as from costs associated with redeeming the senior notes prior to
      maturity.

                                                            
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,
                     2012          2011          2012            2011
Revenue:
Net sales -          $ 513,322     $ 502,698     $ 2,211,878     $ 2,138,127
product
Rental revenue        2,858       2,858       11,431        11,431    
                      516,180     505,556     2,223,309     2,149,558 
                                                                 
Costs:
Cost of goods sold     374,461       379,302       1,581,393       1,586,145
- product
Cost of rental        1,183       1,183       4,386         4,386     
                      375,644     380,485     1,585,779     1,590,531 
                                                                 
Gross profit           140,536       125,071       637,530         559,027
                                                                 
Selling, general,
and administrative     39,506        39,784        154,209         151,602
expenses
Research,
development, and       31,276        28,768        117,845         105,496
testing expenses
Gain on legal
settlement, net       0           0           0             38,656    
(a)
                                                                 
Operating profit       69,754        56,519        365,476         340,585
                                                                 
Interest and           2,317         4,685         10,815          18,820
financing expenses
Loss on early
extinguishment of      0             0             9,932           0
debt (b)
Other income          402         (1,169  )    (3,338    )    (18,048   )
(expense), net (c)
                                                                 
Income before          67,839        50,665        341,391         303,717
income tax expense
                                                                 
Income tax expense    14,776      16,967      101,798       96,810    
                                                                 
Net income           $ 53,063     $ 33,698     $ 239,593      $ 206,907   
                                                                 
Basic earnings per   $ 3.94       $ 2.51       $ 17.85        $ 15.10     
share
                                                                 
Diluted earnings     $ 3.94       $ 2.51       $ 17.85        $ 15.09     
per share
                                                                 
Cash dividends       $ 25.75      $ 0.75       $ 28.00        $ 2.39      
declared per share


Notes to Consolidated Statements of Income
    
      On September 13, 2011, we signed a settlement agreement with Innospec
      Inc. and its subsidiaries Alcor Chemie Vertriebs GmbH and Innospec Ltd.
      (collectively, Innospec) which provided for mutual releases of the
      parties and dismissal of the actions with prejudice. Under the
      settlement agreement, Innospec will pay NewMarket an aggregate amount of
      approximately $45 million in a combination of cash, a promissory note,
(a)   and stock, of which $25 million was paid in cash on September 20, 2011
      and $5 million was paid in the form of 195,313 shares of unregistered
      Innospec Inc. common stock. Fifteen million dollars is payable in three
      equal annual installments of $5 million under the promissory note, which
      bears simple interest at 1% per year. The first installment was paid in
      September 2012. The gain is net of expenses related to the settlement of
      the lawsuit.
      
      In March 2012, we entered into a $650 million five-year unsecured
      revolving credit facility which replaced our previous $300 million
      unsecured revolving credit facility. In April 2012, we used a portion of
      this new credit facility to fund the early redemption of all of our
      outstanding 7.125% senior notes due 2016 (senior notes), representing an
      aggregate principal amount of $150 million. In May 2012, we used a
(b)   portion of the new credit facility to repay the outstanding principal
      amount on the Foundry Park I, LLC mortgage loan agreement (mortgage
      loan). As a result, we recognized a loss on early extinguishment of debt
      of $9.9 million during the twelve months ended December 31, 2012 from
      accelerated amortization of financing fees associated with the prior
      revolving credit facility, the senior notes, and the mortgage loan, as
      well as from costs associated with redeeming the senior notes prior to
      maturity.
      
      On June 25, 2009 we entered into an interest rate swap. The gain on the
      interest rate swap was $0.3 million for the fourth quarter ended
      December 31, 2012 and the loss on the interest rate swap was $5.3
      million for the twelve months ended December 31, 2012. The loss on the
(c)   interest rate swap was $1.4 million for the fourth quarter ended
      December 31, 2011 and $17.5 million for the twelve months ended December
      31, 2011. 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,
                                                  2012          2011      
ASSETS
                                                                 
Current assets:
Cash and cash equivalents                        $ 89,129        $ 50,370
Trade and other accounts receivable, less
allowance for doubtful accounts ($319 - 2012;      297,055         278,332
$516 - 2011)
Inventories                                        322,674         306,785
Deferred income taxes                              8,452           7,261
Prepaid expenses and other current assets         18,185        36,983    
Total current assets                              735,495       679,731   
                                                                 
Property, plant, and equipment, at cost            1,070,967       1,034,472
Less accumulated depreciation and amortization    712,596       681,506   
Net property, plant, and equipment                358,371       352,966   
                                                                 
Prepaid pension cost                               12,710          11,494
Deferred income taxes                              48,385          35,805
Other assets and deferred charges                  72,007          73,619
Intangibles (net of amortization) and goodwill    30,542        38,047    
Total assets                                     $ 1,257,510    $ 1,191,662 
                                                                 
LIABILITIES AND SHAREHOLDERS' EQUITY
                                                                 
Current liabilities:
Accounts payable                                 $ 119,298       $ 103,217
Accrued expenses                                   79,061          78,546
Dividends payable                                  -               8,529
Book overdraft                                     3,906           1,680
Long-term debt, current portion                    4,382           10,966
Income taxes payable                              10,024        13,086    
Total current liabilities                         216,671       216,024   
                                                                 
Long-term debt                                     424,407         232,601
Other noncurrent liabilities                       214,227         193,444
                                                                 
Shareholders' equity
Common stock and paid-in capital (without par
value); issued and outstanding shares -            721             64
13,417,877 in 2012 and 13,404,831 in 2011
Accumulated other comprehensive loss               (110,689  )     (98,732   )
Retained earnings                                 512,173       648,261   
                                                  402,205       549,593   
Total liabilities and shareholders' equity       $ 1,257,510    $ 1,191,662 

                                                                
NEWMARKET CORPORATION AND SUBSIDIARIES
SELECTED CONSOLIDATED CASH FLOW DATA
(In thousands, unaudited)
                                                                   
                                                                   
                                                                   
                                                    Twelve Months Ended
                                                    December 31,
                                                     2012         2011    
                                                                   
Net income                                          $ 239,593      $ 206,907
Depreciation and amortization                         43,389         43,352
Loss on early extinguishment of debt                  9,932          0
Cash payment for 7.125% senior notes redemption       (5,345   )     0
Cash pension and postretirement contributions         (32,431  )     (31,376 )
Noncash pension and postretirement expense            18,855         16,499
Gain on legal settlement, net                         0              (38,656 )
Proceeds from legal settlements                       5,050          25,000
Proceeds from sale of equity securities               6,303          0
Working capital changes                               (14,243  )     (62,011 )
Capital expenditures                                  (38,753  )     (53,515 )
Issuance of 4.10% senior notes                        349,405        0
Repayment of 7.125% senior notes and mortgage         (213,544 )     (2,731  )
loan
Net borrowings under revolving credit facility        53,000         18,000
Repurchases of common stock                           0              (98,093 )
Dividends paid                                        (375,681 )     (32,588 )
All other                                            (6,771   )    10,390  
                                                                   
Increase in cash and cash equivalents               $ 38,759      $ 1,178   

                                                             
NEWMARKET CORPORATION
AND SUBSIDIARIES
NON-GAAP FINANCIAL
INFORMATION
(In thousands,
unaudited)
                                                                   
                                                                   
                                                                   
                           Fourth Quarter Ended      Twelve Months Ended
                           December 31,              December 31,
                            2012       2011       2012        2011    
                                                                   
Net Income                 $ 53,063     $ 33,698     $ 239,593     $ 206,907
                                                                   
Add:
Interest and financing       2,317        4,685        10,815        18,820
expenses
Income tax expense           14,776       16,967       101,798       96,810
Depreciation and            10,364     10,600     41,314      41,749  
amortization
                                                                   
EBITDA                       80,520       65,950       393,520       364,286
                                                                   
Less: gain on legal          0            0            0             (38,656 )
settlement
Less gain / plus loss:
interest rate swap           (304   )     1,363        5,346         17,516
agreement
Plus: loss on early         0          0          9,932       0       
extinguishment of debt
                                                                   
EBITDA, as adjusted        $ 80,216    $ 67,313    $ 408,798    $ 343,146 

Contact:

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