neu-20230630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 1-32190

NEWMARKET CORPORATION

(Exact name of registrant as specified in its charter)


Virginia		20-0812170
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

330 South Fourth Street		23219-4350
Richmond,	Virginia
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code - (804) 788-5000

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, with no par value	NEU	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No x

Number of shares of common stock, with no par value, outstanding as of June 30, 2023: 9,589,239

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NEWMARKET CORPORATION

INDEX


			Page Number
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements (unaudited)
Consolidated Statements of Income - Second Quarter and Six Months Ended June 3 0 , 2023 and June 3 0 , 2022			4
Consolidated Statements of Comprehensive Income - Second Quarter and Six Months Ended June 3 0 , 2023 and June 3 0 , 2022			5
Condensed Consolidated Balance Sheets - June 3 0 , 2023 and December 31, 2022			6
Consolidated Statements of Shareholders' Equity - Second Quarter and Six Months Ended June 3 0 , 2023 and June 3 0 , 2022			7
Condensed Consolidated Statements of Cash Flows - Six Months Ended June 3 0 , 2023 and June 3 0 , 2022			8
Notes to Condensed Consolidated Financial Statements			9
Financial Statement Presentation			9
Net Sales			9
Segment Information			10
Pension Plans and Other Postretirement Benefits			10
Earnings Per Share			11
Inventories			12
Intangibles (Net of Amortization) and Goodwill			12
Long-term Debt			13
Commitments and Contingencies			13
Other Comprehensive Income (Loss) and Accumulated Other Comprehensive Loss			14
Fair Value Measurements			14
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			16
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk			21
ITEM 4. Controls and Procedures			21
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings			22
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds			22
ITEM 5. Other Information			22
ITEM 6. Exhibits			22
SIGNATURES			23

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PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

NEWMARKET CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)


(in thousands, except per-share amounts)	Second Quarter Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Net sales	$	685,130	$	723,639	$	1,387,919	$	1,386,191
Cost of goods sold	489,492		566,163		994,237		1,073,552
Gross profit	195,638		157,476		393,682		312,639
Selling, general, and administrative expenses	37,438		38,489		77,285		74,111
Research, development, and testing expenses	33,958		35,396		67,114		71,647
Operating profit	124,242		83,591		249,283		166,881
Interest and financing expenses, net	10,255		7,084		21,028		16,490
Loss on early extinguishment of debt	0		0		0		7,545
Other income (expense), net	10,723		9,101		21,603		16,269
Income before income tax expense	124,710		85,608		249,858		159,115
Income tax expense	25,086		19,136		52,651		33,325
Net income	$	99,624	$	66,472	$	197,207	$	125,790
Earnings per share - basic and diluted	$	10.36	$	6.54	$	20.45	$	12.28
Cash dividends declared per share	$	2.25	$	2.10	$	4.35	$	4.20

See accompanying Notes to Condensed Consolidated Financial Statements

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NEWMARKET CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


(in thousands)	Second Quarter Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Net income	$	99,624	$	66,472	$	197,207	$	125,790
Other comprehensive income (loss):
Pension plans and other postretirement benefits:

Amortization of prior service cost (credit) included in net periodic benefit cost (income), net of income tax expense (benefit) of $(170) in second quarter 2023, $(157) in second quarter 2022, $(341) in six months 2023, and $(313) in six months 2022	(546)		(498)		(1,093)		(994)
Actuarial net gain (loss) arising during the period, net of income tax expense (benefit) of $0 in second quarter 2023, $0 in second quarter 2022, $0 in six months 2023, and $7 in six months 2022	0		0		0		16
Amortization of actuarial net loss (gain) included in net periodic benefit cost (income), net of income tax expense (benefit) of $(119) in second quarter 2023, $173 in second quarter 2022, $(237) in six months 2023, and $348 in six months 2022.	(374)		531		(749)		1,070
Total pension plans and other postretirement benefits	(920)		33		(1,842)		92




Foreign currency translation adjustments, net of income tax expense (benefit) of $491 in second quarter 2023, $(658) in second quarter 2022, $698 in six months 2023, and $473 in six months 2022.	7,714		(29,176)		19,080		(32,278)




Other comprehensive income (loss)	6,794		(29,143)		17,238		(32,186)
Comprehensive income	$	106,418	$	37,329	$	214,445	$	93,604

See accompanying Notes to Condensed Consolidated Financial Statements

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NEWMARKET CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


(in thousands, except share amounts)	June 30, 2023		December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	130,923	$	68,712

Trade and other accounts receivable, less allowance for credit losses	436,250		453,692
Inventories	537,380		631,383
Prepaid expenses and other current assets	35,550		38,338
Total current assets	1,140,103		1,192,125
Property, plant, and equipment, net	655,864		659,998
Intangibles (net of amortization) and goodwill	125,424		126,069
Prepaid pension cost	318,765		302,584
Operating lease right-of-use assets, net	62,381		62,417

Deferred charges and other assets	63,607		63,625
Total assets	$	2,366,144	$	2,406,818
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	222,969	$	273,289
Accrued expenses	72,923		89,508
Dividends payable	18,898		17,850
Income taxes payable	8,522		16,109
Operating lease liabilities	14,525		15,569

Other current liabilities	11,201		11,562
Total current liabilities	349,038		423,887
Long-term debt	916,179		1,003,737
Operating lease liabilities-noncurrent	47,715		46,968
Other noncurrent liabilities	160,472		169,819
Total liabilities	1,473,404		1,644,411
Commitments and contingencies (Note 9)
Shareholders’ equity:
Common stock and paid-in capital (with no par value; authorized shares - 80,000,000; issued and outstanding shares - 9,589,239 at June 30, 2023 and 9,702,147 at December 31, 2022)	0		0
Accumulated other comprehensive loss	(54,757)		(71,995)
Retained earnings	947,497		834,402
Total shareholders' equity	892,740		762,407
Total liabilities and shareholders’ equity	$	2,366,144	$	2,406,818

See accompanying Notes to Condensed Consolidated Financial Statements

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NEWMARKET CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited)


(in thousands, except share and per-share amounts)	Common Stock and Paid-in Capital			Accumulated Other Comprehensive Loss		Retained Earnings		Total Shareholders’ Equity
	Shares	Amount
Balance at March 31, 2022	10,254,703	$	0	$	(85,270)	$	845,360	$	760,090
Net income						66,472		66,472
Other comprehensive income (loss)				(29,143)				(29,143)
Cash dividends ($2.10 per share)						(21,290)		(21,290)
Repurchases of common stock	(173,941)	(678)				(54,820)		(55,498)

Stock-based compensation	(1,119)	678				26		704
Balance at June 30, 2022	10,079,643	$	0	$	(114,413)	$	835,748	$	721,335

Balance at March 31, 2023	9,625,959	$	0	$	(61,551)	$	883,351	$	821,800
Net income						99,624		99,624
Other comprehensive income (loss)				6,794				6,794
Cash dividends ($2.25 per share)						(21,587)		(21,587)
Repurchases of common stock	(36,589)	(634)				(13,894)		(14,528)

Stock-based compensation	(131)	634				3		637
Balance at June 30, 2023	9,589,239	$	0	$	(54,757)	$	947,497	$	892,740

Balance at December 31, 2021	10,362,722	$	0	$	(82,227)	$	844,356	$	762,129
Net income						125,790		125,790
Other comprehensive income (loss)				(32,186)				(32,186)
Cash dividends ($4.20 per share)						(42,860)		(42,860)
Repurchases of common stock	(289,737)	(1,275)				(91,570)		(92,845)


Stock-based compensation	6,658	1,275				32		1,307
Balance at June 30, 2022	10,079,643	$	0	$	(114,413)	$	835,748	$	721,335

Balance at December 31, 2022	9,702,147	$	0	$	(71,995)	$	834,402	$	762,407
Net income						197,207		197,207
Other comprehensive income (loss)				17,238				17,238
Cash dividends ($4.35 per share)						(41,879)		(41,879)
Repurchases of common stock	(119,075)	(1,857)				(41,419)		(43,276)

Tax withholdings related to stock-based compensation	(2,417)	0				(803)		(803)
Stock-based compensation	8,584	1,857				(11)		1,846
Balance at June 30, 2023	9,589,239	$	0	$	(54,757)	$	947,497	$	892,740

See accompanying Notes to Condensed Consolidated Financial Statements

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NEWMARKET CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


(in thousands)	Six Months Ended June 30,
	2023		2022
Cash and cash equivalents at beginning of year	$	68,712	$	83,304
Cash flows from operating activities:
Net income	197,207		125,790
Adjustments to reconcile net income to cash flows from operating activities:
Depreciation and amortization	40,558		41,670
Deferred income tax benefit	(11,301)		(21,036)
Loss on early extinguishment of debt	0		7,545

Working capital changes	52,494		(114,665)
Loss on marketable securities	0		2,977
Cash pension and postretirement contributions	(5,020)		(4,863)
Other, net	(11,548)		(13,052)
Cash provided from (used in) operating activities	262,390		24,366
Cash flows from investing activities:
Capital expenditures	(26,006)		(27,807)
Purchases of marketable securities	0		(787)
Proceeds from sales and maturities of marketable securities	0		372,846

Cash provided from (used in) investing activities	(26,006)		344,252
Cash flows from financing activities:
Net (repayments) borrowings under revolving credit facility	(88,000)		121,000

Dividends paid	(41,879)		(42,860)
Repurchases of common stock	(42,864)		(90,782)
Redemption of 4.10% senior notes	0		(350,000)
Cash costs of 4.10% senior notes redemption	0		(7,099)

Other, net	(2,986)		(1,955)
Cash provided from (used in) financing activities	(175,729)		(371,696)
Effect of foreign exchange on cash and cash equivalents	1,556		(735)
Increase (decrease) in cash and cash equivalents	62,211		(3,813)
Cash and cash equivalents at end of period	$	130,923	$	79,491

See accompanying Notes to Condensed Consolidated Financial Statements

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NEWMARKET CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Financial Statement Presentation

In the opinion of management, the accompanying consolidated financial statements of NewMarket Corporation and its subsidiaries contain all necessary adjustments for the fair presentation of, in all material respects, our consolidated financial position as of June 30, 2023 and December 31, 2022, and our consolidated results of operations, comprehensive income, and changes in shareholders' equity for the second quarter and six months ended June 30, 2023 and June 30, 2022, and our cash flows for the six months ended June 30, 2023 and June 30, 2022. All adjustments are of a normal, recurring nature, unless otherwise disclosed. These financial statements should be read in conjunction with the consolidated financial statements and related notes included in the NewMarket Corporation Annual Report on Form 10-K for the year ended December 31, 2022 (2022 Annual Report), as filed with the Securities and Exchange Commission (SEC). The results of operations for the six month period ended June 30, 2023 are not necessarily indicative of the results to be expected for the full year ending December 31, 2023. The December 31, 2022 condensed consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America.

Unless the context otherwise indicates, all references to “we,” “us,” “our,” the “company,” and “NewMarket” are to NewMarket Corporation and its consolidated subsidiaries.

We offer our vendors a supplier finance program, which allows our vendors to receive payment from a third-party finance provider earlier than our normal payment terms would provide. NewMarket and its subsidiaries are not a party to the arrangement between our vendor and the finance provider, and there are no assets pledged as security or other forms of guarantees provided by NewMarket to the finance provider. For those vendors who opt to participate in the program, we pay the finance provider the full amount of the invoices on the normal due date. At June 30, 2023, the amount of confirmed invoices under the supplier finance program was not material.

2. Net Sales

Our revenues are primarily derived from the manufacture and sale of petroleum additives products. We sell petroleum additives products across the world to customers located in the North America (the United States and Canada), Latin America (Mexico, Central America, and South America), Asia Pacific, and EMEAI (Europe/Middle East/Africa/India) regions. Our customers primarily consist of global, national, and independent oil companies. Our contracts generally include one performance obligation, which is providing petroleum additives products. The performance obligation is satisfied at a point in time when products are shipped, delivered, or consumed by the customer, depending on the underlying contracts.

In limited cases, we collect funds in advance of shipping product to our customers and recognizing the related revenue. These prepayments from customers are recorded as a contract liability to our customer until we ship the product and recognize the revenue. Some of our contracts include variable consideration in the form of rebates or business development funds. We regularly review both rebates and business development funds and make adjustments to estimated amounts when necessary, recognizing the full amount of any adjustment in the period identified.

The following table provides information on our net sales by geographic area. Information on net sales by segment is presented in Note 3.


	Second Quarter Ended June 30,				Six Months Ended June 30,
(in thousands)	2023		2022		2023		2022
Net sales
United States	$	242,610	$	249,594	$	499,008	$	474,282
Europe, Middle East, Africa, India	202,860		203,343		407,070		399,330
Asia Pacific	152,239		175,725		304,188		333,269
Other foreign	87,421		94,977		177,653		179,310
Net sales	$	685,130	$	723,639	$	1,387,919	$	1,386,191

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NEWMARKET CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

3. Segment Information

The tables below show our consolidated segment results. The “All other” category includes the operations of the antiknock compounds business, as well as certain contracted manufacturing and related services associated with Ethyl Corporation (Ethyl).

Net Sales by Segment


	Second Quarter Ended June 30,				Six Months Ended June 30,
(in thousands)	2023		2022		2023		2022
Petroleum additives
Lubricant additives	$	588,506	$	622,973	$	1,191,080	$	1,193,015
Fuel additives	95,463		98,048		192,880		188,310
Total	683,969		721,021		1,383,960		1,381,325
All other	1,161		2,618		3,959		4,866
Net sales	$	685,130	$	723,639	$	1,387,919	$	1,386,191

Segment Operating Profit


	Second Quarter Ended June 30,				Six Months Ended June 30,
(in thousands)	2023		2022		2023		2022
Petroleum additives	$	132,138	$	91,185	$	264,206	$	178,107
All other	(1,022)		(262)		(1,997)		(164)
Segment operating profit	131,116		90,923		262,209		177,943
Corporate, general, and administrative expenses	(6,810)		(7,332)		(13,301)		(11,222)
Interest and financing expenses, net	(10,255)		(7,084)		(21,028)		(16,490)

Loss on early extinguishment of debt	0		0		0		(7,545)
Other income (expense), net	10,659		9,101		21,978		16,429
Income before income tax expense	$	124,710	$	85,608	$	249,858	$	159,115

4. Pension Plans and Other Postretirement Benefits

The table below shows cash contributions made during the six months ended June 30, 2023, as well as the remaining cash contributions we expect to make during the year ending December 31, 2023, for our domestic and foreign pension plans and domestic postretirement benefit plan.


(in thousands)	Actual Cash Contributions for Six Months Ended June 30, 2023		Expected Remaining Cash Contributions for Year Ending December 31, 2023
Domestic plans
Pension benefits	$	1,198	$	1,198
Postretirement benefits	612		612
Foreign plans
Pension benefits	3,210		3,463

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NEWMARKET CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The tables below present information on net periodic benefit cost (income) for our domestic and foreign pension plans and domestic postretirement benefit plan. The service cost component of net periodic benefit cost (income) is reflected in cost of goods sold; selling, general, and administrative expenses; or research, development, and testing expenses, according to where other compensation costs arising from services rendered by the pertinent employee are recorded on the Consolidated Statements of Income. The remaining components of net periodic benefit cost (income) are recorded in other income (expense), net on the Consolidated Statements of Income.


	Domestic
	Pension Benefits				Postretirement Benefits
	Second Quarter Ended June 30,
(in thousands)	2023		2022		2023		2022
Service cost	$	2,659	$	4,856	$	130	$	261
Interest cost	4,536		3,388		391		289
Expected return on plan assets	(11,510)		(10,940)		(201)		(204)
Amortization of prior service cost (credit)	6		68		(757)		(757)
Amortization of actuarial net (gain) loss	(412)		536		(75)		9
Net periodic benefit cost (income)	$	(4,721)	$	(2,092)	$	(512)	$	(402)


	Domestic
	Pension Benefits				Postretirement Benefits
	Six Months Ended June 30,
(in thousands)	2023		2022		2023		2022
Service cost	$	5,317	$	9,712	$	260	$	521
Interest cost	9,072		6,777		782		578
Expected return on plan assets	(23,019)		(21,880)		(403)		(408)
Amortization of prior service cost (credit)	12		136		(1,514)		(1,514)
Amortization of actuarial net (gain) loss	(823)		1,072		(151)		17
Net periodic benefit cost (income)	$	(9,441)	$	(4,183)	$	(1,026)	$	(806)


	Foreign
	Pension Benefits
	Second Quarter Ended June 30,				Six Months Ended June 30,
(in thousands)	2023		2022		2023		2022
Service cost	$	1,074	$	2,252	$	2,128	$	4,612
Interest cost	1,577		1,050		3,121		2,148
Expected return on plan assets	(2,899)		(2,509)		(5,740)		(5,144)
Amortization of prior service cost (credit)	34		35		68		72
Amortization of actuarial net (gain) loss	(6)		162		(12)		331
Net periodic benefit cost (income)	$	(220)	$	990	$	(435)	$	2,019

5. Earnings Per Share

We had 34,448 shares of nonvested restricted stock at June 30, 2023 and 33,230 shares of nonvested restricted stock at June 30, 2022 that were excluded from the calculation of diluted earnings per share. The nonvested restricted stock is considered a participating security since the restricted stock contains nonforfeitable rights to dividends. As such, we use the two-class method to compute basic and diluted earnings per share for all periods presented since this method yields the most dilutive result. The following table illustrates the earnings allocation method utilized in the calculation of basic and diluted earnings per share.

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NEWMARKET CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


	Second Quarter Ended June 30,				Six Months Ended June 30,
(in thousands, except per-share amounts)	2023		2022		2023		2022
Earnings per share numerator:
Net income attributable to common shareholders before allocation of earnings to participating securities	$	99,624	$	66,472	$	197,207	$	125,790
Earnings allocated to participating securities	(356)		(193)		(662)		(368)
Net income attributable to common shareholders after allocation of earnings to participating securities	$	99,268	$	66,279	$	196,545	$	125,422
Earnings per share denominator:
Weighted-average number of shares of common stock outstanding - basic and diluted	9,577		10,136		9,610		10,213


Earnings per share - basic and diluted	$	10.36	$	6.54	$	20.45	$	12.28

6. Inventories


(in thousands)	June 30, 2023		December 31, 2022
Finished goods and work-in-process	$	427,228	$	497,652
Raw materials	89,136		113,484
Stores, supplies, and other	21,016		20,247
	$	537,380	$	631,383

7. Intangibles (Net of Amortization) and Goodwill

The net carrying amount of intangibles and goodwill was $125 million at June 30, 2023 and $126 million at December 31, 2022. The gross carrying amount and accumulated amortization of each type of intangible asset and goodwill are presented in the table below.


	June 30, 2023				December 31, 2022
(in thousands)	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Amortizing intangible assets
Formulas and technology	$	6,200	$	6,200	$	6,200	$	5,683
Contract	2,000		1,300		2,000		1,200
Customer base	5,440		4,444		5,440		4,350

Goodwill	123,728				123,662
	$	137,368	$	11,944	$	137,302	$	11,233

All of the intangibles relate to the petroleum additives segment. The change in the gross carrying amount of goodwill between December 31, 2022 and June 30, 2023 is due to foreign currency fluctuation. There is no accumulated goodwill impairment.

Amortization expense was (in thousands):


Second quarter ended June 30, 2023	$	355
Six months ended June 30, 2023	711
Second quarter ended June 30, 2022	356
Six months ended June 30, 2022	711

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NEWMARKET CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Estimated amortization expense for the remainder of 2023, as well as estimated annual amortization expense related to our intangible assets for the next five years, is expected to be (in thousands):


2023	$	196
2024	390
2025	390
2026	390
2027	190
2028	140

We amortize the formulas and technology over 6 years, the contract over 10 years, and the customer base over 20 years.

8. Long-term Debt


(in thousands)	June 30, 2023		December 31, 2022
Senior notes - 2.70% due 2031 (net of related deferred financing costs)	$	393,179	$	392,737
Senior notes - 3.78% due 2029	250,000		250,000
Revolving credit facility	273,000		361,000
	$	916,179	$	1,003,737

Senior Notes - The 2.70% senior notes, which were issued in 2021, are unsecured with an aggregate principal amount of $400 million. The offer and sale of the notes were registered under the Securities Act of 1933, as amended.

The 3.78% senior notes are unsecured and were issued in a 2017 private placement with The Prudential Insurance Company of America and certain other purchasers.

We were in compliance with all covenants under all issuances of senior notes as of June 30, 2023 and December 31, 2022.

Revolving Credit Facility - The revolving credit facility has a borrowing capacity of $900 million, a term of five years, and matures on March 5, 2025. The obligations under the revolving credit facility are unsecured. The average interest rate for borrowings under the credit agreement was 6.0% during the first six months of 2023 and 3.5% during the year ended December 31, 2022.

We were in compliance with all covenants under the revolving credit facility as of June 30, 2023 and December 31, 2022.

Outstanding borrowings under the revolving credit facility amounted to $273 million at June 30, 2023 and $361 million at December 31, 2022. Outstanding letters of credit amounted to approximately $2 million at both June 30, 2023 and December 31, 2022. The unused portion of the credit facility amounted to $625 million at June 30, 2023 and $537 million at December 31, 2022.

9. Commitments and Contingencies

Legal Matters

We are involved in legal proceedings that are incidental to our business and may include administrative or judicial actions. Some of these legal proceedings involve governmental authorities and relate to environmental matters. For further information, see Environmental below.

While it is not possible to predict or determine with certainty the outcome of any legal proceeding, we believe the outcome of any of these proceedings, or all of them combined, will not result in a material adverse effect on our consolidated results of operations, financial condition, or cash flows.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Environmental

We are involved in environmental proceedings and potential proceedings relating to soil and groundwater contamination, disposal of hazardous waste, and other environmental matters at several of our current or former facilities, or at third-party sites where we have been designated as a potentially responsible party. While we believe we are currently adequately accrued for known environmental issues, it is possible that unexpected future costs could have a significant impact on our consolidated financial position, results of operations, and cash flows. Our total accruals for environmental remediation, dismantling, and decontamination were approximately $10 million at both June 30, 2023 and December 31, 2022. Of the total accrual, the current portion is included in accrued expenses and the noncurrent portion is included in other noncurrent liabilities on the Condensed Consolidated Balance Sheets.

Our more significant environmental sites include a former plant site in Louisiana and a Houston, Texas plant site. Together, the amounts accrued on a discounted basis related to these sites represented approximately $7 million of the total accrual above at June 30, 2023 and $8 million at December 31, 2022, using discount rates ranging from 3% to 9% for both periods. The aggregate undiscounted amount for these sites were $10 million at both June 30, 2023 and December 31, 2022.

10. Other Comprehensive Income (Loss) and Accumulated Other Comprehensive Loss

The balances of, and changes in, the components of accumulated other comprehensive loss, net of tax, consist of the following:


(in thousands)	Pension Plans and Other Postretirement Benefits		Foreign Currency Translation Adjustments		Accumulated Other Comprehensive (Loss) Income
Balance at December 31, 2021	$	1,522	$	(83,749)	$	(82,227)
Other comprehensive income (loss) before reclassifications	16		(32,278)		(32,262)
Amounts reclassified from accumulated other comprehensive loss (a)	76		0		76
Other comprehensive income (loss)	92		(32,278)		(32,186)
Balance at June 30, 2022	$	1,614	$	(116,027)	$	(114,413)

Balance at December 31, 2022	$	54,562	$	(126,557)	$	(71,995)
Other comprehensive income (loss) before reclassifications	0		19,080		19,080
Amounts reclassified from accumulated other comprehensive loss (a)	(1,842)		0		(1,842)
Other comprehensive income (loss)	(1,842)		19,080		17,238
Balance at June 30, 2023	$	52,720	$	(107,477)	$	(54,757)

(a) The pension plan and other postretirement benefit components of accumulated other comprehensive loss are included in the computation of net periodic benefit cost (income). See Note 4 in this Quarterly Report on Form 10-Q and Note 18 in our 2022 Annual Report for further information.

11. Fair Value Measurements

The carrying amount of cash and cash equivalents in the Consolidated Balance Sheets, as well as the fair value, was $131 million at June 30, 2023 and $69 million at December 31, 2022. The fair value is classified as Level 1 in the fair value hierarchy.

No material events occurred during the six months ended June 30, 2023 requiring adjustment to the recognized balances of assets or liabilities which are recorded at fair value on a nonrecurring basis.

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NEWMARKET CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Long-term debt – We record the carrying amount of our long-term debt at historical cost, less deferred financing costs related to our 2.70% senior notes. The estimated fair value of our long-term debt is shown in the table below and is based primarily on estimated current rates available to us for debt of the same remaining duration and adjusted for nonperformance risk and credit risk. The estimated fair value of our 2.70% senior notes included in the table below is based on the last quoted price closest to June 30, 2023. The fair value of our debt instruments is classified as Level 2.

June 30, 2023

December 31, 2022

(in thousands)

Carrying
Amount

Fair
Value

Carrying
Amount

Fair
Value

Long-term debt

916,179

SEC Form 10-Q filed by NewMarket Corp