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NEWMARKET CORP (NEU)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 net sales were $654.6M (-1.7% y/y) and EPS was $11.56 (+38% y/y), with petroleum additives operating profit up 23% y/y to $135.7M, driven by lower operating costs despite year-end shipment softness .
  • EBITDA rose to $179.3M in Q4 (+36% y/y), and Net Debt/EBITDA improved to 1.2x, below the 1.5–2.0x target range, positioning balance sheet flexibility into 2025 .
  • Specialty Materials (AMPAC) delivered Q4 sales of $27.1M and operating profit of $1.5M; full-year results surpassed pre-acquisition expectations, though 2024 included zero-margin sales of acquired inventory at fair value .
  • Post-quarter, the Board increased the quarterly dividend 10% to $2.75 (from $2.50) and renewed a $500M share repurchase authorization through 2027—key shareholder-return catalysts .
  • Street consensus via S&P Global was unavailable during this session; we cannot assess beats/misses vs estimates. Management commentary points to operational efficiency and lower raw material costs as primary drivers of profit expansion .

What Went Well and What Went Wrong

What Went Well

  • Cost discipline: “The increase in petroleum additives operating profit was primarily driven by lower operating costs,” with continued focus on operational efficiency while investing in technology solutions .
  • Margin strength: Q4 operating profit and EBITDA both expanded y/y (Operating profit $132.8M vs $101.3M; EBITDA $179.3M vs $131.7M), reflecting improved cost structure and lower input costs .
  • Balance sheet progress: Net Debt/EBITDA improved to 1.2x, with $373M net payments on the revolving credit facility since the AMPAC acquisition, providing flexibility for continued investments and returns .

What Went Wrong

  • Top-line softness: Petroleum additives Q4 sales declined to $626.1M from $642.0M y/y, with shipments down as customers managed year-end inventory levels .
  • Inflationary backdrop: Management noted ongoing inflationary environment challenges despite efficiency initiatives, a persistent macro headwind into 2025 .
  • Higher financing costs: Interest and financing expenses rose to $11.6M in Q4 from $7.1M y/y (and $57.4M in FY 2024), partly reflecting post-acquisition leverage and rate environment .

Financial Results

Consolidated Results by Quarter (oldest → newest)

MetricQ2 2024Q3 2024Q4 2024
Net Sales ($USD Millions)$710.2 $724.9 $654.6
Gross Profit ($USD Millions)$218.5 $243.8 $207.7
Operating Profit ($USD Millions)$147.0 $169.5 $132.8
Net Income ($USD Millions)$111.6 $132.3 $110.7
Diluted EPS ($)$11.63 $13.79 $11.56
EBITDA ($USD Millions, Non-GAAP)$187.8 $212.7 $179.3

Margin Comparison (derived from reported figures)

MarginQ2 2024Q3 2024Q4 2024
Gross Margin %30.8% (218.5/710.2) 33.6% (243.8/724.9) 31.7% (207.7/654.6)
Operating Margin %20.7% (147.0/710.2) 23.4% (169.5/724.9) 20.3% (132.8/654.6)
Net Income Margin %15.7% (111.6/710.2) 18.3% (132.3/724.9) 16.9% (110.7/654.6)

Segment Breakdown

Segment MetricQ2 2024Q3 2024Q4 2024
Petroleum Additives Net Sales ($M)$669.8 $663.0 $626.1
Petroleum Additives Operating Profit ($M)$147.8 $157.5 $135.7
Specialty Materials Net Sales ($M)$38.0 $59.1 $27.1
Specialty Materials Operating Profit ($M)$5.0 $16.0 $1.5

KPIs

KPIQ2 2024Q3 2024Q4 2024
EBITDA ($M)$187.8 $212.7 $179.3
Net Debt/EBITDA (x)1.6 1.4 1.2
Cash Dividends Declared per Share ($)$2.50 $2.50 $2.50

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Dividend per shareQ1 2025$2.50 (last quarterly dividend) $2.75Raised 10%
Net Debt/EBITDA TargetOngoing1.5–2.0x 1.5–2.0xMaintained
Capital ExpendituresFY 2024$50–$70M range Actual $57.3M (not guidance)Achieved within range
Revenue/Margins/OpEx/OI&E/TaxFY 2025Not providedNot providedNo quantitative guidance
Share Repurchase AuthorizationThrough 2027Prior $500M program expiring 12/31/24New $500M authorizationRenewed

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
Margin management & operating costsFocus on margin management; lower raw material and operating costs boosted profit Continued margin focus; lower raw material/operating costs; higher shipments Lower operating costs drove profit; investing in technology Improving margins via cost discipline
Shipments & customer inventoryQ2 shipments +~1% y/y First nine months shipments +1.8% y/y; both lubricant and fuel additives up Q4 shipments down as customers managed year-end inventory Seasonal/inventory-driven volatility
AMPAC (Specialty Materials) integrationQ2 sales $38M; OP $5M; zero-margin FG sold Q3 sales $59.1M; OP $16M; expect quarterly variation Q4 sales $27.1M; OP $1.5M; FY above pre-acquisition expectations On track, quarterly variability
Balance sheet & leverageNet Debt/EBITDA 1.6x; revolver payments since acquisition Net Debt/EBITDA 1.4x; $259M revolver net payments Net Debt/EBITDA 1.2x; $373M revolver net payments Deleveraging steadily
Inflation & macroNoted forward-looking risks broadly Continued note of macro risks in filings “Ongoing inflationary environment” remains a challenge Persistent headwind

Management Commentary

  • “The increase in petroleum additives operating profit was primarily driven by lower operating costs… while still making investments in technology solutions for our customers.” — Thomas E. Gottwald, CEO .
  • “Specialty materials… surpassed our pre-acquisition expectations… [Full year results] include the sale of AMPAC finished goods inventory… recorded at fair value and sold during 2024, generating no margin.” — CEO .
  • “As of December 31, 2024, our Net Debt to EBITDA ratio was 1.2, which is below our target operating range of 1.5 to 2.0.” — Company release .
  • “We remain challenged by the ongoing inflationary environment despite our efforts to improve efficiency and manage our operating costs.” — Tim Fitzgerald, CFO .

Q&A Highlights

  • The Q4 call consisted of prepared remarks with no live Q&A; management invited investors to contact via email or phone for questions .
  • No quantitative guidance ranges were provided; emphasis remained on operational efficiency, technology investments, and inventory optimization .
  • Balance sheet progress and shareholder returns (dividends/repurchases) were reiterated as priorities .

Estimates Context

  • Wall Street consensus estimates via S&P Global (EPS, revenue) were unavailable during this session due to data access limits; as a result, we cannot assess Q4 beats/misses versus Street or provide estimate comparisons at this time. We will monitor S&P Global for updates to consensus and revisions following the report and dividend increase [GetEstimates errors].
MetricQ4 2024 ConsensusQ4 2024 Actual
EPS ($)Unavailable (S&P Global)$11.56
Revenue ($M)Unavailable (S&P Global)$654.6
EBITDA ($M)Unavailable (S&P Global)$179.3

Note: Consensus values were unavailable via S&P Global during this session.

Key Takeaways for Investors

  • Profit quality improving: Q4 operating profit and EBITDA expanded y/y on lower operating costs and input costs, even with softer shipments—an indicator of resilient margins and disciplined execution .
  • Seasonal inventory effects: Q4 shipment declines were driven by customer year-end inventory management; watch for volume normalization into early 2025 .
  • Balance sheet flexibility: Net Debt/EBITDA at 1.2x and $373M net revolver repayments since AMPAC acquisition provide room for continued shareholder returns and investment .
  • Shareholder returns as catalysts: Dividend raised to $2.75 (+10%), plus renewed $500M buyback authorization through 2027—potential near-term stock support .
  • AMPAC tracking above plan: FY specialty materials performance exceeded pre-acquisition expectations, though quarterly variability and zero-margin fair-value inventory sales affected 2024; monitor 2025 margin trajectory as inventory normalization completes .
  • Watch inflation and financing costs: Inflation remains a headwind; interest expense elevated y/y—keep an eye on rate environment and leverage trajectory .
  • No quantitative FY25 guidance: Management focuses on efficiency, technology investment, and portfolio profitability without explicit revenue/margin ranges; lack of guidance may increase reliance on quarterly execution and external estimate revisions .