neu-20210331

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 March 31, 2021


☐			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. ¨


			Page Number
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements (unaudited)
Consolidated Statements of Income - Th ree Months Ended Ma rch 3 1 , 202 1 and March 3 1 , 20 20			4
Consolidated Statements of Comprehensive Income - Th ree Months Ended March 3 1 , 202 1 and March 3 1 , 20 20			5
Condensed Consolidated Balance Sheets - March 3 1 , 202 1 and December 31, 20 20			6
Consolidated Statements of Shareholders' Equity - Th ree Months Ended March 3 1 , 202 1 and March 3 1 , 20 20			7
Condensed Consolidated Statements of Cash Flows - Three Months Ended March 3 1 , 202 1 and March 3 1 , 20 20			8
Notes to Condensed Consolidated Financial Statements			9
Financial Statement Presentation			9
Net Sales			9
Segment Information			10
Pension Plans and Other Postretirement Benefits			11
Earnings Per Share			12
Inventories			12
Intangibles (Net of Amortization) and Goodwill			13
Long-term Debt			14
Commitments and Contingencies			15
Other Comprehensive Income (Loss) and Accumulated Other Comprehensive Loss			15
Fair Value Measurements			16
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			17
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk			22
ITEM 4. Controls and Procedures			22
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings			23
ITEM 6. Exhibits			23
SIGNATURES			24


(in thousands, except per-share amounts)	Three Months Ended March 31,
		2021		2020
Net sales		$	566,615	$	559,417
Cost of goods sold		404,862		378,510
Gross profit		161,753		180,907
Selling, general, and administrative expenses		36,915		35,715
Research, development, and testing expenses		36,337		35,506
Operating profit		88,501		109,686
Interest and financing expenses, net		6,343		7,104

Other income (expense), net		7,212		7,496
Income before income tax expense		89,370		110,078
Income tax expense		19,658		24,537
Net income		$	69,712	$	85,541
Earnings per share - basic and diluted		$	6.38	$	7.67
Cash dividends declared per share		$	1.90	$	1.90


(in thousands)	Three Months Ended March 31,
		2021		2020
Net income		$	69,712	$	85,541
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 $(159) in 2021 and $(170) in 2020		(491)		(531)
Actuarial net gain (loss) arising during the period, net of income tax expense (benefit) of $(219) in 2021 and $0 in 2020		(657)		0
Amortization of actuarial net loss (gain) included in net periodic benefit cost (income), net of income tax expense (benefit) of $529 in 2021 and $397 in 2020		1,790		1,267
Total pension plans and other postretirement benefits		642		736




Foreign currency translation adjustments, net of income tax expense (benefit) of $(464) in 2021 and $(841) in 2020		467		(14,331)




Other comprehensive income (loss)		1,109		(13,595)
Comprehensive income		$	70,821	$	71,946


(in thousands, except share amounts)	March 31, 2021		December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	522,405	$	125,172
Trade and other accounts receivable, less allowance for credit losses	373,655		336,395
Inventories	414,737		401,031
Prepaid expenses and other current assets	41,670		35,480
Total current assets	1,352,467		898,078
Property, plant, and equipment, net	671,955		665,147
Intangibles (net of amortization) and goodwill	129,248		129,944
Prepaid pension cost	139,104		137,069
Operating lease right-of-use assets	65,307		61,329

Deferred charges and other assets	41,308		42,308
Total assets	$	2,399,389	$	1,933,875
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	218,211	$	189,937
Accrued expenses	73,264		78,422
Dividends payable	18,612		15,184
Income taxes payable	5,949		3,760
Operating lease liabilities	14,307		13,410
Other current liabilities	5,510		11,742
Total current liabilities	335,853		312,455
Long-term debt	990,189		598,848
Operating lease liabilities-noncurrent	50,928		48,324
Other noncurrent liabilities	212,064		214,424
Total liabilities	1,589,034		1,174,051
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 - 10,928,154 at March 31, 2021 and 10,921,377 at December 31, 2020)	1,190		717
Accumulated other comprehensive loss	(172,055)		(173,164)
Retained earnings	981,220		932,271
Total shareholders' equity	810,355		759,824
Total liabilities and shareholders’ equity	$	2,399,389	$	1,933,875


(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 December 31, 2019	11,188,549	$	1,965	$	(162,748)	$	843,881	$	683,098
Net income						85,541		85,541
Other comprehensive income (loss)				(13,595)				(13,595)
Cash dividends ($1.90 per share)						(21,160)		(21,160)
Repurchases of common stock	(252,383)	(1,627)				(92,711)		(94,338)

Tax withholdings related to stock-based compensation	(1,547)	(633)						(633)
Stock-based compensation	4,125	295				41		336
Balance at March 31, 2020	10,938,744	$	0	$	(176,343)	$	815,592	$	639,249

Balance at December 31, 2020	10,921,377	$	717	$	(173,164)	$	932,271	$	759,824
Net income						69,712		69,712
Other comprehensive income (loss)				1,109				1,109
Cash dividends ($1.90 per share)						(20,763)		(20,763)



Stock-based compensation	6,777	473						473
Balance at March 31, 2021	10,928,154	$	1,190	$	(172,055)	$	981,220	$	810,355


(in thousands)	Actual Cash Contributions for Three Months Ended March 31, 2021		Expected Remaining Cash Contributions for Year Ending December 31, 2021
Domestic plans
Pension benefits	$	716	$	2,148
Postretirement benefits	287		861
Foreign plans
Pension benefits	1,574		4,797


	Domestic
	Pension Benefits				Postretirement Benefits
	Three Months Ended March 31,
(in thousands)	2021		2020		2021		2020
Service cost	$	4,814	$	4,197	$	250	$	217
Interest cost	3,241		3,508		292		345
Expected return on plan assets	(9,670)		(9,305)		(233)		(241)
Amortization of prior service cost (credit)	68		66		(757)		(757)
Amortization of actuarial net (gain) loss	1,390		1,316		12		0
Net periodic benefit cost (income)	$	(157)	$	(218)	$	(436)	$	(436)


		Foreign
		Pension Benefits
	Three Months Ended March 31,
(in thousands)			2021		2020
Service cost			$	2,757	$	2,146
Interest cost			827		984
Expected return on plan assets			(2,666)		(2,461)
Amortization of prior service cost (credit)			38		(11)
Amortization of actuarial net (gain) loss			901		353
Net periodic benefit cost (income)			$	1,857	$	1,011


	March 31,		December 31,
(in thousands)	2021		2020
Finished goods and work-in-process	$	333,192	$	325,588
Raw materials	65,080		59,413
Stores, supplies, and other	16,465		16,030
	$	414,737	$	401,031


	March 31, 2021				December 31, 2020
(in thousands)	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Amortizing intangible assets
Formulas and technology	$	6,200	$	3,875	$	6,200	$	3,617
Contract	2,000		850		2,000		800
Customer bases	14,240		12,450		14,240		12,037

Goodwill	123,983				123,958
	$	146,423	$	17,175	$	146,398	$	16,454


(in thousands)	Three Months Ended March 31,
	2021		2020
Cash and cash equivalents at beginning of year	$	125,172	$	144,397
Cash flows from operating activities:
Net income	69,712		85,541
Adjustments to reconcile net income to cash flows from operating activities:
Depreciation and amortization	20,631		21,369
Deferred income tax expense	2,455		3,379

Working capital changes	(41,421)		(42,058)
Cash pension and postretirement contributions	(2,577)		(2,557)
Other, net	571		(1,213)
Cash provided from (used in) operating activities	49,371		64,461
Cash flows from investing activities:
Capital expenditures	(20,524)		(20,106)


Cash provided from (used in) investing activities	(20,524)		(20,106)
Cash flows from financing activities:
Net borrowings under revolving credit facility	0		97,424
Issuance of 2.70% senior notes	395,052		0
Dividends paid	(20,763)		(21,160)
Repurchases of common stock	0		(79,473)
Debt issuance costs	(2,932)		(1,308)
Other, net	(1,915)		(1,377)
Cash provided from (used in) financing activities	369,442		(5,894)
Effect of foreign exchange on cash and cash equivalents	(1,056)		(4,196)
Increase in cash and cash equivalents	397,233		34,265
Cash and cash equivalents at end of period	$	522,405	$	178,662


	Three Months Ended March 31,
(in thousands)		2021		2020
Net sales
United States		$	170,324	$	181,844
China		73,988		45,798
Europe, Middle East, Africa, India		176,650		190,623
Asia Pacific, except China		82,597		79,413
Other foreign		63,056		61,739
Net sales		$	566,615	$	559,417


	Three Months Ended March 31,
(in thousands)		2021		2020
Petroleum additives
Lubricant additives		$	494,556	$	463,686
Fuel additives		70,342		93,686
Total		564,898		557,372
All other		1,717		2,045
Net sales		$	566,615	$	559,417


2021	$	1,435
2022	1,423
2023	907
2024	390
2025	390
2026	390



Three months ended March 31, 2021	$	721

Three months ended March 31, 2020	727


(in thousands)	Pension Plans and Other Postretirement Benefits		Foreign Currency Translation Adjustments		Accumulated Other Comprehensive (Loss) Income
Balance at December 31, 2019	$	(69,795)	$	(92,953)	$	(162,748)
Other comprehensive income (loss) before reclassifications	0		(14,331)		(14,331)
Amounts reclassified from accumulated other comprehensive loss (a)	736		0		736
Other comprehensive income (loss)	736		(14,331)		(13,595)
Balance at March 31, 2020	$	(69,059)	$	(107,284)	$	(176,343)

Balance at December 31, 2020	$	(92,771)	$	(80,393)	$	(173,164)
Other comprehensive income (loss) before reclassifications	(657)		467		(190)
Amounts reclassified from accumulated other comprehensive loss (a)	1,299		0		1,299
Other comprehensive income (loss)	642		467		1,109
Balance at March 31, 2021	$	(92,129)	$	(79,926)	$	(172,055)


	Three Months Ended March 31,
(in millions)		2021		2020
Petroleum additives
Lubricant additives		$	494.6	$	463.7
Fuel additives		70.3		93.7
Total		564.9		557.4
All other		1.7		2.0
Net sales		$	566.6	$	559.4


(in millions)	Three Months
Period ended March 31, 2020	$	557.4
Lubricant additives shipments	39.7
Fuel additives shipments	(21.1)
Selling prices	(22.7)
Foreign currency impact, net	11.6
Period ended March 31, 2021	$	564.9

SEC Form 10-Q filed by NewMarket Corporation