NewMarket Corporation (NYSE:NEU) Q2 2020 Earnings Conference Call - Final Transcript
Jul 30, 2020 • 03:00 pm ET
Good day, ladies and gentlemen, and welcome to the NewMarket Corporation Conference Call and Webcast to review Second Quarter 2020 Financial Results. [Operator Instructions]
At this time, it is my pleasure to turn the floor over to your host to Mr. Brian Paliotti. Sir, the floor is yours.
Thank you, Jeff, and thanks, 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-K.
During this call, we may also discuss non-GAAP financial measure included in our earnings release. The earnings release, which can be found on our website, includes a reconciliation of the non-GAAP financial measure to the comparable GAAP financial measure. We filed our 10-Q this morning. It contains significantly more detail on the operations and performance of our company. Please take time to review it. I will be referring to the data that was included in last night's earnings release.
Net income was $22.3 million or $2.05 a share compared to net income of $74.2 million or $6.63 per share for the second quarter of last year. Petroleum additives net sales for the second quarter of 2020 were $408.7 million compared to $560.8 million for the same period in 2019.
Petroleum additives operating profit for the quarter was $33.1 million, lower than the second quarter operating profit of last year of $103 million. Overall, the story for the second quarter is simple: our shipments were significantly impacted by the COVID-19 pandemic. With dramatically less miles driven and travel, and with less industrial production specifically with automobile plant closures, global demand for both lubricants and fuel additives declined substantially. Our sales volume was of an unprecedented 24% versus the same quarter last year and down 25% versus the first quarter of 2020.
Lower shipments drove lower sales revenue and lower profit. All of the financial and operational comparisons were muted by this impact. During our report to you on a very strong first quarter, we said we expected to see our operations to be impacted by the pandemic. Government restrictions to combat the spread of COVID-19 would lead to reduced movement of people, goods and services, which will reduce the demand for both fuel and lubricant additives. This is exactly what we saw in the second quarter.
The 24% reduction in demand was driven by decreases in all regions, with North America accounting for over half of the drop and our European region accounting for about another 30%. Latin America and Asia regions both saw smaller reductions. A few other financial items of note for the quarter. The effective income tax rate for the second quarter of 2020 was 18%, down from the rate of 23.3% in the same period last year, because we generated more income from foreign sources in Q2 this year than we did in