Yahoo Finance NewMarket Corp (NEU) Q1 2024 Earnings Call Transcript Highlights: Strategic Moves and Financial ...
Release Date: April 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Can you provide an overview of NewMarket's financial performance in the first quarter of 2024? A: (William J. Skrobacz - NewMarket Corporation - VP & CFO) Net income for the first quarter of 2024 was $108 million, or $11.23 per share, compared to $98 million, or $10.09 per share, in the same quarter last year. Petroleum additives sales were $677 million, down from $700 million in the previous year, but operating profit in this segment increased to $151 million from $132 million due to lower raw material and operating costs.
Q: What were the main drivers behind the increase in operating profit for the petroleum additives segment? A: (William J. Skrobacz - NewMarket Corporation - VP & CFO) The increase in operating profit for the petroleum additives segment was primarily due to lower raw material and operating costs, which helped offset lower selling prices and changes in product mix. Additionally, shipments increased by 5% across most regions, contributing to the segment's strong performance.
Q: How has the acquisition of American Pacific Corporation (AMPAC) impacted NewMarket's financials in this quarter? A: (William J. Skrobacz - NewMarket Corporation - VP & CFO) The acquisition of AMPAC, completed on January 16, 2024, for approximately $700 million, added $17.0 million in sales to our new Specialty Materials segment. However, it also resulted in an operating loss of $5 million for the quarter, mainly due to the sale of finished goods inventory acquired at fair market value, which generated no margin.
Q: What are NewMarket's expectations for AMPAC's performance going forward? A: (William J. Skrobacz - NewMarket Corporation - VP & CFO) We expect substantial quarterly variations in AMPAC's results due to the nature of the business. However, we anticipate that the full-year results will be consistent with our pre-acquisition expectations.
Q: How did NewMarket fund the AMPAC acquisition, and what is the current debt situation? A: (William J. Skrobacz - NewMarket Corporation - VP & CFO) The AMPAC acquisition was funded through cash on hand and borrowings of approximately $690 million under our existing revolving credit facility. We then replaced this facility with a new $900 million revolving credit facility and entered into a $200 million unsecured term loan. As of March 31, 2024, our Net Debt to EBITDA ratio was 1.9, within our target range of 1.5 to 2.0.
Q: What strategic priorities has NewMarket set for 2024? A: (William J. Skrobacz - NewMarket Corporation - VP & CFO) Our priorities include managing operating costs, inventory levels, and portfolio profitability while continuing to invest in technology. We also aim to integrate AMPAC effectively into our operations, maintain long-term customer relationships, develop new products and technologies, and provide top-quality customer service.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
