Earnings call transcript: NewMarket Q2 2025 sees slight revenue decline

NewMarket Corporation reported its earnings for the second quarter of 2025, revealing a slight decline in revenue compared to the previous year. The company’s earnings per share (EPS) stood at $2.75, while revenue reached $698.51 million. The stock price experienced a subtle movement, closing at $677.35 in after-hours trading, a 0.46% decrease from the last close. According to InvestingPro analysis, NewMarket maintains strong financial health with a "GREAT" overall score, supported by robust profitability metrics and cash flow generation. Despite these results, the company maintains a positive outlook for its petroleum additives and specialty materials segments.

Key Takeaways

• NewMarket’s Q2 2025 EPS was $2.75, with revenue at $698.51 million.
• Petroleum additives sales decreased by 2.4% from the previous year.
• The company is focusing on technology investments and strategic capacity expansion.
• The stock price decreased slightly by 0.46% in after-hours trading.
• NewMarket expects continued strength in its core segments.

Company Performance

NewMarket Corporation’s performance in the second quarter of 2025 showed resilience amid challenging market conditions. The company reported a net income of $111 million, a slight decrease from $112 million in the same quarter of 2024. Year-to-date net income increased to $237 million, up from $219 million in 2024. InvestingPro data reveals impressive financial metrics, including a strong return on equity of 36% and a healthy gross profit margin of 32.5%. The company continues to focus on technology-driven products and strategic investments to support its growth.

Financial Highlights

• Revenue: $698.51 million, slightly down from $670 million in Q2 2024.
• Earnings per share: $11.84, with a year-to-date EPS of $25.11.
• Net Debt to EBITDA Ratio improved to 1.0 from 1.2 in 2024.

Earnings vs. Forecast

NewMarket’s actual EPS of $2.75 was closely aligned with market expectations, while revenue reached $698.51 million. The company’s slight revenue decline was in line with the broader industry trends, reflecting ongoing challenges in the market.

Market Reaction

Following the earnings release, NewMarket’s stock experienced a minor decline of 0.46% in after-hours trading, closing at $677.35. The stock remains within its 52-week range, with a high of $743.52 and a low of $480, indicating stability despite the slight dip. InvestingPro analysis indicates the stock is currently trading near its Fair Value, with notably low price volatility (Beta: 0.44) and an attractive PEG ratio of 0.65, suggesting reasonable valuation relative to growth. For comprehensive valuation insights and 12 additional ProTips, explore the detailed Pro Research Report available on InvestingPro.

Outlook & Guidance

NewMarket remains optimistic about its future prospects, anticipating continued strength in its petroleum additives and specialty materials segments. The company’s commitment to shareholder value is evident in its 6-year consecutive dividend growth streak and strong free cash flow yield of 7%. The company plans to enhance its technology-driven product offerings and supply chain capabilities, supported by a solid current ratio of 2.84 and an impressive Altman Z-Score of 5.43, indicating strong financial stability.

Executive Commentary

CEO Tim Fitzgerald expressed satisfaction with the performance of the petroleum additives business, highlighting its strategic importance. He emphasized the role of AMPAC as a critical national asset, stating, "We view AMPAC as a strategic national asset with a mission-critical role in global safety, security, and space programs."

Risks and Challenges

• Inflationary pressures continue to impact operations.
• Tariffs remain a challenge for the company’s global business.
• Shipment declines and inventory optimization efforts could affect short-term profitability.
• The competitive landscape in specialty materials requires ongoing strategic positioning.
• Macroeconomic uncertainties could influence future performance.

Q&A

The earnings call transcript did not include a specific Q&A session, leaving some analyst questions unanswered. However, the company reiterated its commitment to strategic growth and long-term value creation for shareholders and customers.

Full transcript - NewMarket Corp (NEU) Q2 2025:

Conference Moderator: Good day, everyone, and welcome to the Newmarket Corporation Conference Call and Webcast to review Second Quarter twenty twenty five Financial Results. At this time, all participants are on a listen only mode. It is now my pleasure to turn the floor over to your host, Tim Fitzgerald. Sir, the floor is yours.

Tim Fitzgerald, Executive (likely CFO or CEO), Newmarket Corporation: Thank you, Matt, and thanks to everyone for joining me this afternoon. As a reminder, some of the statements made during this conference call may be forward looking. Relevant factors that could cause actual results to differ materially from those forward looking statements are contained in our earnings release and in our SEC filings, including our most recent Form 10 ks. During this call, we will also discuss the non GAAP financial measures included in our earnings release. The earnings release, which can be found on our website, includes a reconciliation of non GAAP financial measures to the comparable GAAP financial measures.

We filed our 10 Q for the 2025 earlier today, and it contains significantly more details on the operations and performance of our company. Today, I will be referring to the data that was included in last night’s press release. Net income for the 2025 was a $111,000,000 or $11.84 per share compared to net income of a $112,000,000 or $11.63 per share for the 2024. Net income for the 2025 was a record $237,000,000 or $25.11 per share compared to net income of $219,000,000 or $22.87 per share for the 2024. Petroleum additives sales for the 2025 were $654,000,000 compared to $670,000,000 for the same period in 2024.

Petroleum additives operating profit for the 2025 was $140,000,000 compared to $148,000,000 for the 2024. The decrease in operating profit compared to prior year was mainly due to a 2.5% decline in shipments, along with an increase in research and development investments to support our customers’ needs. For the 2025, sales for the petroleum additives segment were $1,300,000,000 essentially flat compared to the same period in 2024. Petroleum additives operating profit for the 2025 was $282,000,000 compared to $299,000,000 for 2024. The drivers for the decrease in operating profit were consistent with those affecting the second quarter comparison.

Shipments were down by 4.9% when comparing the 2025 with the same period in 2024. We are very pleased with the performance of our petroleum additives business during the 2025. Our team’s focus on enhancing efficiency has resulted in strong operating profit margins this year. However, we remain challenged by the ongoing inflationary environment and the impact of tariffs, despite our efforts to improve efficiency and manage our operating costs. We continue to focus on investing in technology to meet customer needs, optimizing our inventory levels, and improving our portfolio profitability.

We report the financial results of our Impact business in our Specialty Materials segment. Specialty Materials sales for the 2025 were $42,000,000 compared to $38,000,000 for the same period in 2024. Specialty Materials operating profit for the 2025 was $11,000,000 compared to $5,000,000 for the 2024. The increase in operating profit was mainly due to an increase in volume within the quarter. As previously stated, we will see substantial variation in quarterly results for the Specialty Materials segment on an ongoing basis due to the nature of the business.

For the 2025, sales for the Specialty Materials segment were $96,000,000 compared to $55,000,000 for the same period in 2024. Specialty Materials operating profit for the 2025 was $34,000,000 compared to slightly above breakeven for the 2024. We view AMPAC as a strategic national asset with a mission critical role in global safety, security, and space programs. As we announced in April, we are committed to investing in additional capacity at Ampac to meet our customers’ growing needs while adding additional redundancy and security of supply into our production system. Our company generated solid cash flows throughout the 2025, which allowed us to return $129,000,000 to our shareholders through share repurchases of $77,000,000 and dividends of $52,000,000 The share repurchases includes $20,000,000 that was completed in the 2025.

As of 06/30/2025, our net debt to EBITDA ratio is one point zero, which is an improvement over the 1.2 times we reported at the 2024. As we look ahead to the 2025 and beyond, we anticipate continued strength in our petroleum additives and specialty materials segments. We are committed to making decisions that promote long term value for our shareholders and customers while staying focused on our long term objectives. We believe that the core principles guiding our business, a long term perspective, a safety first culture, customer focused solutions, technology driven products, and a world class supply chain will continue to benefit all of our stakeholders. Matt, that concludes our planned comments.

We are available for questions via email or by phone, so please feel free to contact me directly. Thank you all again, and we will talk to you next quarter.

Conference Moderator: Thank you. Everyone, this concludes today’s event. You may disconnect at this time, and have a wonderful day. Thank you for your participation.

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