NewMarket Corporation: Strong Q3 and Nine-Month Results Amidst AMPAC Integration

NewMarket Corporation (NYSE: NEU) has reported robust financial results for the third quarter and first nine months of 2024, driven by a strong performance in its petroleum additives segment and the successful integration of American Pacific Corporation (AMPAC). The company's focus on margin management and cost control has led to improved operating profits and a reduction in debt.

The petroleum additives segment, which operates in North America, Latin America, Asia Pacific, and Europe/Middle East/Africa/India (EMEAI) regions, has seen a significant increase in operating profit. This growth is primarily attributed to lower raw material and operating costs, partially offset by lower selling prices. The segment's shipments increased by 1.8% year-over-year, with increases in both lubricant additives and fuel additives shipments.

The integration of AMPAC, a manufacturer of specialty materials primarily used in solid rocket motors for the aerospace and defense industries, has had a substantial impact on NewMarket's overall operating costs and margins. The sale of AMPAC's finished goods inventory acquired at closing generated no margin but contributed to the company's strong cash flows during the first nine months of 2024. NewMarket has made net payments of $259 million on its revolving credit facility since the AMPAC acquisition, leading to a net debt to EBITDA ratio of 1.4, slightly below its target operating range of 1.5 to 2.0.

The variations in quarterly results for AMPAC have impacted NewMarket's total financial performance in 2024. The company expects to see substantial variation in quarterly results for AMPAC due to the nature of its business. However, NewMarket anticipates that full-year 2024 results will be consistent with its pre-acquisition expectations.

NewMarket's debt reduction strategy has been influenced by the AMPAC acquisition and its subsequent financial results. The company's strong cash flows and net payments on its revolving credit facility have contributed to a decrease in its net debt to EBITDA ratio, demonstrating its commitment to managing its financial health.

In conclusion, NewMarket Corporation's third quarter and first nine months of 2024 have been marked by strong financial performance in its petroleum additives segment and successful integration of AMPAC. The company's focus on margin management, cost control, and debt reduction has positioned it well for continued success in the future.