neu-20210930

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 September 30, 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. ¨

Table of Contents

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 September 30, 2021: 10,637,047

Table of Contents

NEWMARKET CORPORATION

INDEX


			Page Number
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements (unaudited)
Consolidated Statements of Income - T hird Quarter and Nine Months Ended September 30, 2021 and September 30, 2020			4
Consolidated Statements of Comprehensive Income - Third Quarter and Nine Months Ended September 30, 2021 and September 30, 2020			5
Condensed Consolidated Balance Sheets - September 30, 2021 and December 31, 2020			6
Consolidated Statements of Shareholders' Equity - Third Quarter and Nine Months Ended September 30, 2021 and September 30, 2020			7
Condensed Consolidated Statements of Cash Flows - Nine Months Ended September 30, 2021 and September 30, 2020			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
Marketable Securities			13
Inventories			13
Intangibles (Net of Amortization) and Goodwill			14
Long-term Debt			15
Commitments and Contingencies			16
Other Comprehensive Income (Loss) and Accumulated Other Comprehensive Loss			16
Fair Value Measurements			17
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			18
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk			24
ITEM 4. Controls and Procedures			24
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings			25
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds			25
ITEM 6. Exhibits			25
SIGNATURES			26

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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)	Third Quarter Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Net sales	$	622,207	$	512,869	$	1,779,543	$	1,483,150
Cost of goods sold	483,986		346,262		1,338,570		1,038,898
Gross profit	138,221		166,607		440,973		444,252
Selling, general, and administrative expenses	39,729		34,690		111,379		105,837
Research, development, and testing expenses	35,387		33,113		107,241		102,168
Operating profit	63,105		98,804		222,353		236,247
Interest and financing expenses, net	9,345		6,466		24,557		20,575
Other income (expense), net	7,393		25,280		19,785		39,292
Income before income tax expense	61,153		117,618		217,581		254,964
Income tax expense	9,115		21,824		43,879		51,280
Net income	$	52,038	$	95,794	$	173,702	$	203,684
Earnings per share - basic and diluted	$	4.80	$	8.77	$	15.94	$	18.52
Cash dividends declared per share	$	2.10	$	1.90	$	5.90	$	5.70

See accompanying Notes to Condensed Consolidated Financial Statements

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NEWMARKET CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


(in thousands)	Third Quarter Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Net income	$	52,038	$	95,794	$	173,702	$	203,684
Other comprehensive income (loss):
Pension plans and other postretirement benefits:
Prior service credit (cost) arising during the period, net of income tax expense (benefit) of $8 in third quarter and nine months 2021, $(7) in third quarter and nine months 2020	27		(23)		27		(23)
Amortization of prior service cost (credit) included in net periodic benefit cost (income), net of income tax expense (benefit) of $(157) in third quarter 2021, $(169) in third quarter 2020, $(472) in nine months 2021, and $(510) in nine months 2020	(496)		(528)		(1,481)		(1,590)
Actuarial net gain (loss) arising during the period, net of income tax expense (benefit) of $(433) in third quarter 2021, $977 in third quarter 2020, $(652) in nine months 2021, and $977 in nine months 2020	(1,363)		3,008		(2,020)		3,008
Amortization of actuarial net loss (gain) included in net periodic benefit cost (income), net of income tax expense (benefit) of $593 in third quarter 2021, $297 in third quarter 2020, $1,697 in nine months 2021, and $1,090 in nine months 2020	1,806		941		5,345		3,468
Total pension plans and other postretirement benefits	(26)		3,398		1,871		4,863




Foreign currency translation adjustments, net of income tax expense (benefit) of $(535) in third quarter 2021,$(118) in third quarter 2020, $(214) in nine months 2021, and $(1,110) in nine months 2020	(7,401)		10,356		(1,081)		(5,013)




Other comprehensive income (loss)	(7,427)		13,754		790		(150)
Comprehensive income	$	44,611	$	109,548	$	174,492	$	203,534

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)	September 30, 2021		December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	59,613	$	125,172
Marketable securities	378,902		0
Trade and other accounts receivable, less allowance for credit losses	414,847		336,395
Inventories	479,039		401,031
Prepaid expenses and other current assets	34,459		35,480
Total current assets	1,366,860		898,078
Property, plant, and equipment, net	677,481		665,147
Intangibles (net of amortization) and goodwill	128,125		129,944
Prepaid pension cost	139,760		137,069
Operating lease right-of-use assets	67,586		61,329

Deferred charges and other assets	57,404		42,308
Total assets	$	2,437,216	$	1,933,875
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	250,658	$	189,937
Accrued expenses	86,677		78,422
Dividends payable	20,600		15,184
Income taxes payable	5,202		3,760
Operating lease liabilities	15,231		13,410
Other current liabilities	13,029		11,742
Total current liabilities	391,397		312,455
Long-term debt	991,919		598,848
Operating lease liabilities-noncurrent	52,319		48,324
Other noncurrent liabilities	228,808		214,424
Total liabilities	1,664,443		1,174,051
Commitments and contingencies (Note 10)
Shareholders’ equity:
Common stock and paid-in capital (with no par value; authorized shares - 80,000,000; issued and outstanding shares - 10,637,047 at September 30, 2021 and 10,921,377 at December 31, 2020)	0		717
Accumulated other comprehensive loss	(172,374)		(173,164)
Retained earnings	945,147		932,271
Total shareholders' equity	772,773		759,824
Total liabilities and shareholders’ equity	$	2,437,216	$	1,933,875

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 June 30, 2020	10,923,999	$	281	$	(176,652)	$	811,656	$	635,285
Net income						95,794		95,794
Other comprehensive income (loss)				13,754				13,754
Cash dividends ($1.90 per share)						(20,751)		(20,751)
Repurchases of common stock	(3,835)	(870)				(564)		(1,434)

Stock-based compensation	1,225	876				2		878
Balance at September 30, 2020	10,921,389	$	287	$	(162,898)	$	886,137	$	723,526

Balance at June 30, 2021	10,928,129	$	1,748	$	(164,947)	$	1,012,409	$	849,210
Net income						52,038		52,038
Other comprehensive income (loss)				(7,427)				(7,427)
Cash dividends ($2.10 per share)						(22,590)		(22,590)
Repurchases of common stock	(292,392)	(2,748)				(96,712)		(99,460)

Stock-based compensation	1,310	1,000				2		1,002
Balance at September 30, 2021	10,637,047	$	0	$	(172,374)	$	945,147	$	772,773

Balance at December 31, 2019	11,188,549	$	1,965	$	(162,748)	$	843,881	$	683,098
Net income						203,684		203,684
Other comprehensive income (loss)				(150)				(150)
Cash dividends ($5.70 per share)						(62,667)		(62,667)
Repurchases of common stock	(270,963)	(2,630)				(98,804)		(101,434)

Tax withholdings related to stock-based compensation	(1,547)	(641)						(641)
Stock-based compensation	5,350	1,593				43		1,636
Balance at September 30, 2020	10,921,389	$	287	$	(162,898)	$	886,137	$	723,526

Balance at December 31, 2020	10,921,377	$	717	$	(173,164)	$	932,271	$	759,824
Net income						173,702		173,702

SEC Form 10-Q filed by NewMarket Corporation