Release Date: February 04, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Net income for the fourth quarter of 2024 increased to $111 million compared to $80 million in the same period of 2023.
• Full-year 2024 net income rose to $462 million from $389 million in 2023, indicating strong overall performance.
• Petroleum additives operating profit for the fourth quarter of 2024 increased to $136 million from $110 million in 2023, driven by lower operating costs.
• The acquisition of American Pacific Corporation (AMPAC) exceeded pre-acquisition expectations, contributing positively to the specialty materials segment.
• Significant improvement in net debt to EBITDA ratio, reducing from 1.9 times at the end of Q1 to 1.2 by year-end 2024.

Negative Points

• Petroleum additive sales for the fourth quarter of 2024 decreased to $626 million from $642 million in the same period of 2023.
• Full-year 2024 sales for the petroleum additive segment declined to $2.6 billion from $2.7 billion in 2023.
• The ongoing inflationary environment continues to pose challenges despite efforts to improve efficiency and manage costs.
• Shipments remained flat in 2024 compared to 2023, with a decline in fuel additives offsetting a small increase in lubricant additives.
• Specialty materials operating profit for the fourth quarter was only $1.5 million, indicating limited profitability in this segment.

Q & A Highlights

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Q: Can you elaborate on the factors that contributed to the increase in operating profit for the petroleum additives segment in 2024? A: Timothy Fitzgerald, President and CFO, explained that the increase in operating profit was primarily due to lower operating costs driven by efficiency efforts and reduced raw material costs. These gains were partially offset by lower selling prices and a decrease in shipments as customers managed year-end inventory levels.

Q: How did the acquisition of American Pacific Corporation (AMPAC) impact NewMarket's financials? A: Timothy Fitzgerald noted that the acquisition of AMPAC, a leading manufacturer of performance additives for solid rocket motors, was completed on January 16, 2024. The specialty materials segment, which includes AMPAC, reported sales of $27 million for Q4 2024 and $141 million for the full year, surpassing pre-acquisition expectations. The segment's operating profit was $1.5 million for Q4 and $17.5 million for the full year.

Q: What are the company's plans for managing debt following the AMPAC acquisition? A: Timothy Fitzgerald stated that NewMarket generated solid cash flows throughout the year and made payments of $373 million on its revolving credit facility since the AMPAC acquisition. The company returned $128 million to shareholders through dividends and share repurchases. As of December 31, 2024, the net debt to EBITDA ratio improved to 1.2 from 1.9 at the end of Q1.

Q: How does NewMarket plan to address the ongoing inflationary environment? A: Timothy Fitzgerald emphasized that despite the inflationary challenges, NewMarket remains focused on improving operational efficiency and managing costs. The company continues to invest in technology to meet customer needs, optimize inventory levels, and enhance portfolio profitability.

Q: What are NewMarket's expectations for 2025 and beyond? A: Timothy Fitzgerald expressed optimism for continued strength in the petroleum additives and specialty materials segments. The company is committed to long-term value creation for shareholders and customers, guided by core principles such as a long-term perspective, safety-first culture, customer-focused solutions, technology-driven products, and a world-class supply chain.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.