NewMarket Corp (NEU) Reports Strong Q1 2024 Earnings, EPS Climbs to $11.23

• Net Income: $107.7M for Q1 2024, up from $97.6M in Q1 2023, an increase of approximately 10.4% year-over-year.

• Earnings Per Share (EPS): $11.23 in Q1 2024, compared to $10.09 in Q1 2023.

• Petroleum Additives Revenue: $677.3M in Q1 2024, a decrease from $700.0M in Q1 2023.

• Petroleum Additives Operating Profit: Increased to $150.9M in Q1 2024 from $132.1M in Q1 2023.

• Specialty Materials Sales: Reported at $17.0M with an operating loss of $5.0M in Q1 2024 following the acquisition of American Pacific Corporation.

• Dividend: Increased by 11% in February 2024; $24.0M paid in dividends during Q1 2024.

• Net Debt to EBITDA Ratio: Stood at 1.9 as of March 31, 2024, within the target operating range of 1.5 to 2.0.

On April 24, 2024, NewMarket Corp (NYSE:NEU) released its quarterly financial results through an 8-K filing, showcasing a robust performance with a notable increase in earnings per share and net income. The company, a renowned player in the petroleum additives market, reported a net income of $107.7 million or $11.23 per share for the first quarter of 2024, an increase from $97.6 million or $10.09 per share in the same period last year.

Company Overview

NewMarket Corp operates primarily through its subsidiaries, manufacturing and selling advanced petroleum additives used in a variety of lubricating oils and fuels. These additives enhance performance in vehicles, machinery, and other equipment, ensuring efficiency and longevity. The company's product line includes lubricant additives and fuel additives, which are essential for improving the quality and performance of oils and fuels across global markets.

Financial Performance Highlights

The first quarter results were positively impacted by a 4.7% increase in petroleum additives shipments, with growth noted in both lubricant and fuel additives across multiple regions. Despite a slight decline in sales from $700.0 million in Q1 2023 to $677.3 million in Q1 2024, the operating profit for petroleum additives rose to $150.9 million from $132.1 million, attributed to lower raw material and operating costs.

The period also marked the completion of the acquisition of American Pacific Corporation (AMPAC) on January 16, 2024, for approximately $700 million. AMPAC has been integrated into NewMarket's new specialty materials segment, contributing $17.0 million in sales but also a $5.0 million operating loss due to inventory valuation impacts post-acquisition.

Strategic Developments and Financial Health

NewMarket's strategic acquisition of AMPAC not only diversifies its business portfolio but also positions the company to leverage synergies and enhance its market footprint in specialty materials. Financially, the company remains robust with a Net Debt to EBITDA ratio of 1.9, reflecting healthy leverage and financial stability. The company also reported strong cash flows, enabling it to fund capital expenditures of $13.6 million and pay dividends of $24.0 million during the quarter, following an 11% increase in its quarterly dividend rate approved in February.

Outlook and Management Commentary

We are pleased with the strong performance of our petroleum additives business during the first quarter of 2024 the sixth consecutive quarter with operating profit over $100 million. We are seeing evidence that our efforts to control operating costs are taking hold. Managing our operating costs, our inventory levels, and our portfolio profitability will remain priorities throughout 2024.

Looking ahead, NewMarket anticipates continued strength in its petroleum additives segment and successful integration of AMPAC. The company remains committed to its long-term strategic objectives, focusing on delivering value to shareholders and enhancing customer satisfaction through innovative, high-quality products.

Investor and Analyst Information

NewMarket has scheduled a conference call and webcast for April 25, 2024, to discuss the detailed financial results and engage with stakeholders. This proactive approach in transparency and engagement highlights the company's commitment to maintaining open lines of communication with its investor community.

In conclusion, NewMarket Corp's first quarter of 2024 reflects a period of significant achievements and robust financial health, underpinned by strategic growth initiatives and operational excellence. As the company continues to navigate the complexities of the global additives market, its focus on innovation, cost management, and strategic acquisitions is expected to drive continued success.

Explore the complete 8-K earnings release (here) from NewMarket Corp for further details.

This article first appeared on GuruFocus.