NEWMARKET CORP

NewMarket Corporation is a holding company whose subsidiaries operate in the specialty chemicals industry, specifically the petroleum additives market and the specialty materials market. The petroleum additives market is a global marketplace where customers range from large, integrated oil companies to national, regional, and independent companies. The specialty materials segment is principally engaged in the production of perchlorates, including ammonium perchlorate used in solid rocket motors for the aerospace and defense industries, and hydrazine, including Ultra Pure and high-purity hydrazine used in aerospace, defense, and space propulsion applications. The company believes it is one of the four largest manufacturers and suppliers in the petroleum additives marketplace and a leading manufacturer and seller of ammonium perchlorate globally, as well as the leading producer of Ultra Pure and high-purity hydrazine in the U.S.

In the lubricant additives submarket, NewMarket's major competitors are The Lubrizol Corporation, Infineum, and Chevron Oronite Company LLC. In the gasoline detergent market, the company competes mainly against BASF, Chevron Oronite Company LLC, Innospec Inc., and The Lubrizol Corporation. In the diesel and refinery markets, competitors include The Lubrizol Corporation, Infineum, BASF, Clariant Ltd., Dorf Ketal, and Innospec Inc. The company believes its success is largely due to its ability to deliver value through an open, flexible, and collaborative working style, technical capabilities, formulation expertise, broadly differentiated product solutions, and global supply capabilities. The company views the petroleum additives marketplace as comprising two broad product applications: lubricant additives and fuel additives.

NewMarket generates revenue through the manufacture and sale of highly formulated lubricant and fuel additive packages, specialty materials including perchlorates and hydrazine, and antiknock compounds. The petroleum additives segment, primarily represented by Afton Chemical Corporation, develops and manufactures additive packages for lubricating oils and fuels, selling to integrated oil companies or independent compounders and blenders with no direct sales to end-users or OEMs. The specialty materials segment, represented by AMPAC and Calca, manufactures and sells specialty materials used in solid rocket motors and hydrazine products for aerospace and defense applications, with customers consisting of rocket motor manufacturers, U.S. government agencies, and commercial aerospace customers. The company's revenue is predominantly derived from the manufacture and sale of petroleum additives products, with contracts generally including one performance obligation satisfied at a point in time when products are shipped, delivered, or consumed by the customer.

The petroleum additives segment is composed of lubricant additives and fuel additives. Lubricant additives are highly formulated chemical solutions used in engine oils, transmission fluids, off-road powertrain and hydraulic systems, gear oils, and hydraulic oils, with the engine oil additives submarket representing approximately 70% ¹ of the overall lubricant additives market volume. Fuel additives include gasoline performance additives, diesel fuel performance additives, cetane improvers, stabilizers, corrosion inhibitors, lubricity additives, cold flow improvers, and static dissipating additives. For the year ended December 31, 2025, petroleum additives net sales were $2.5 billion ², with lubricant additives contributing $2,155,972,000 ³ and fuel additives contributing $377,638,000 ⁴. The specialty materials segment reported net sales of $182,482,000 ⁵ for 2025, and the 'All other' category, which includes the antiknock compounds business, reported net sales of $9,077,000 ⁶.

The specialty materials segment is principally engaged in the production of perchlorates, including several grades of ammonium perchlorate, sodium perchlorate, and potassium perchlorate, and hydrazine, including Ultra Pure and high-purity hydrazine. Ammonium perchlorate is a key component of solid rocket motors, booster motors, and missiles utilized in U.S. Department of War tactical and strategic missile programs and space exploration programs for NASA and commercial space launch vehicles. Hydrazine is a highly reactive chemical used primarily in aerospace, defense, and space propulsion applications, serving as a critical component in satellite propulsion systems for orbit insertion, station-keeping, attitude control, and deorbiting functions. The company believes it is a leading manufacturer and seller of ammonium perchlorate globally and the leading producer of Ultra Pure and high-purity hydrazine in the U.S.

On October 1, 2025, NewMarket completed the acquisition of Mars TopCo, LLC, the ultimate parent company of Calca Solutions, LLC, for approximately $218 million ⁷. On January 16, 2024, the company completed the acquisition of all issued and outstanding ownership units of AMPAC Intermediate Holdings, LLC, the ultimate parent company of American Pacific Corporation, for approximately $697 million ⁸. During 2025, the company repurchased 133,658 ⁹ shares of its common stock for $72,463,000 ¹⁰ and paid cash dividends of $105,931,000 ¹¹ at $11.25 ¹² per share. The company also repaid the $250 million ¹³ term loan in full and made a $50 million ¹⁴ principal payment on the 3.78% senior notes. On December 12, 2024, the Board of Directors approved a share repurchase program authorizing management to repurchase up to $500 million ¹⁵ of outstanding common stock beginning January 1, 2025 and until December 31, 2027, with approximately $428 million ¹⁶ remaining available at December 31, 2025.

For the year ended December 31, 2025, consolidated net sales were $2,725,169,000 ¹⁷, a decrease of $61,389,000 ¹⁸, or 2.2% ¹⁹, from $2,786,558,000 ²⁰ in 2024. Net income was $418,747,000 ²¹ in 2025 compared to $462,413,000 ²² in 2024. Diluted earnings per share were $44.44 ²³ in 2025 versus $48.22 ²⁴ in 2024. Operating profit was $543,725,000 ²⁵ in 2025 compared to $590,036,000 ²⁶ in 2024. Cash provided from operating activities was $568,967,000 ²⁷ in 2025 compared to $519,592,000 ²⁸ in 2024.

Management's goal is to provide a 10% ²⁹ compounded return per year for shareholders over any ten-year period, defined as earnings per share growth plus dividend yield, although the company may not necessarily achieve a 10% ³⁰ return each year. The company expects its petroleum additives segment will continue to experience impacts to its operating performance during 2026 due to market softness and the uncertain global economic environment, but anticipates continued solid results from this segment in 2026. The company also anticipates solid results from both AMPAC and Calca in the specialty materials segment, though it may experience substantial variation in quarterly results due to the nature of the business, including any impact from shutdowns of the U.S. government.

The company has made significant investments in its petroleum additives business focused on operational efficiencies, organizational talent, technology development and processes, and global infrastructure, including technical centers, production capabilities, and geographic expansion. Since 2024, the company has completed the acquisition of two companies — AMPAC and Calca — which constitute the specialty materials segment, and through these acquisitions and investments in expanding capacity at both operations, has committed approximately $1 billion ³¹ to this resilient, high-technology segment. The company continues to focus on the integration of these companies into its business and intends to utilize these investments to improve its ability to deliver solutions that customers value, expand its global reach, and enhance operating results.

The company's primary focus in the acquisition area remains on the petroleum additives industry, as it believes this industry will provide the greatest opportunity for solid returns on investments while minimizing risk. The company will continue to evaluate all alternative uses of cash to enhance shareholder value, including stock repurchases and dividends. The company regularly reviews its many internal opportunities to utilize excess cash from technological, geographic, production capability, and product line perspectives.

The company estimates capital expenditures in 2026 will be in the range of $100 million ³² to $150 million ³³ as it anticipates spending on several improvements to its manufacturing and R&D infrastructure around the world. Included in the expected capital expenditures for 2026 is a capital investment to expand AMPAC's ammonium perchlorate production capabilities in support of growing solid rocket motor demand, a project of up to $100 million ³⁴ which began in 2025 and is currently scheduled to be completed towards the end of 2026, including the construction of an additional production line, increasing capacity by more than 50% ³⁵. The company expects to continue to finance capital spending through cash provided from operations, as well as with borrowing available under its revolving credit facility.

The company will continue to focus on investing in technology for its customers, cost control, and operating profit margin management, while advancing its initiatives to build a global manufacturing network that will enable more efficient product delivery to its customers in the years ahead. The company believes its capital spending is creating the capability it needs to grow and support its customers worldwide, and its research and development investments are positioning it well to provide added value to its customers.

The company's business typically generates significant amounts of cash beyond its operational needs. The company will continue to evaluate all alternative uses of cash to enhance shareholder value, including stock repurchases and dividends. At December 31, 2025, approximately $428 million ³⁶ remained available under the share repurchase authorization approved on December 12, 2024. Cash dividends declared and paid totaled $11.25 ³⁷ per share for the year ended December 31, 2025.

The company expects its petroleum additives segment will continue to experience impacts to its operating performance during 2026 due to market softness and the uncertain global economic environment in which it operates. The company may experience substantial variation in quarterly results for the specialty materials segment on an ongoing basis due to the nature of the business, including any impact from shutdowns of the U.S. government. The company continues to monitor the uncertain macroeconomic environment in which it operates, particularly the changes in international trade relations and tariffs, and assess the potential impacts to its operations, which could include supply chain disruptions, lower customer demand, and higher costs.

The company's ability to implement components of its growth strategy will be limited by its ability to identify appropriate acquisition or joint venture candidates, its ability to complete proposed transactions which may be subject to regulatory approval or the parties' satisfaction of conditions required for closing, and the availability of financial resources including cash and borrowing capacity. The company's ability to realize the expected benefits from its recent acquisitions is subject to several factors including its ability to retain key personnel, maintain relationships with suppliers and customers, and integrate them into certain information technology systems, operational systems, procedures, or controls without disrupting their operations.

The company relies on a small number of significant customers concentrated in the lubricant and fuel industries, and the loss of a significant customer or a material reduction in purchases could significantly reduce revenues and negatively affect profitability. A significant portion of the specialty materials business is under contracts with contractors or subcontractors of the U.S. government or directly with the U.S. government, and these contracts are impacted by governmental priorities and subject to potential fluctuations in funding or early termination, including for convenience. The company faces competitive pressures from major competitors in the petroleum additives marketplace, including The Lubrizol Corporation, Infineum, and Chevron Oronte Company LLC, and price competition could compel the company to reduce prices for some products, adversely affecting margins and profitability. The company is exposed to fluctuations in foreign exchange rates, with primary currency exposures including the European Union Euro, British Pound Sterling, Japanese Yen, Chinese Renminbi, Indian Rupee, Singapore Dollar, Mexican Peso, Australian Dollar, and Canadian Dollar, and changes in exchange rates will affect recorded amounts of assets, liabilities, revenues, costs, and operating margins. The company has a substantial amount of indebtedness, with long-term debt of $883,391,000 ³⁸ at December 31, 2025, which could require a substantial portion of cash flow to be dedicated to repaying and servicing indebtedness, limit the ability to borrow additional funds, and limit flexibility in planning for or reacting to changes in the business.

Management's message emphasizes confidence in the company's customer-focused strategy and approach to the market, believing the fundamentals of how the business is run — a long-term view, safety-first culture, customer-focused solutions, technology-driven product offerings, and world-class supply chain capability — will continue to be beneficial for all stakeholders over the long term. Management states the goal is to provide a 10% ³⁹ compounded return per year for shareholders over any ten-year period, defined as earnings per share growth plus dividend yield, though the company may not necessarily achieve a 10% ⁴⁰ return each year. The three strategic priorities emphasized for the period ahead are: continuing to invest in technology for customers, cost control, and operating profit margin management; advancing initiatives to build a global manufacturing network for more efficient product delivery; and focusing on the integration of AMPAC and Calca into the business while anticipating solid results from both companies.