NewMarket Corporation (NYSE:NEU) Q2 2020 Earnings Conference Call - Final Transcript

Jul 30, 2020 • 03:00 pm ET

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NewMarket Corporation (NYSE:NEU) Q2 2020 Earnings Conference Call - Final Transcript

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Executive
Brian Paliotti

Q2 of 2019.

During the quarter, we funded capital expenditures of $20 million, paid dividends of $20.8 million as we continue to operate with very low leverage with the net-debt-to-EBITDA ending the quarter at 1.5 times.

Now, on to some additional comments. We would like to first and foremost say and continue to say, thank you to our 2,000-and-plus team members who have adjusted to the life in the COVID-19 world for the past multiple months and who have made the necessary sustained changes so we are able to operate safely around the world. This has not been easy on anyone and our team is no exception.

Our primary focus besides keeping everyone safe continues to be meeting our customer needs through this crisis. As we have communicated last quarter, operations continue to run without interruption. We've worked with our customers to help them through this challenging business environment. And our R&D projects are moving forward, so we don't lose time developing new products for their future needs.

Helping our customers through these uncertain times continues to be our focus. Our business continuity planning process has us well prepared to manage through these challenging times. We began to see negative trends in mid-April as the number of miles driven dropped and many auto company suspended production. Also in April, gasoline consumption in the United States reached the lowest point it has been in over 50 years. And at one point in the month, miles driven in the United States reached a level that was about 50% lower than levels seen in the first quarter and miles driven in most areas of Western Europe reached levels that were about 80% to 90% lower than levels seen in the first quarter.

While all three months, we saw decreased shipments, our overall low point was in May. In June, we saw some improvement, particularly in North America. And in Asia Pacific region shipments were on par with June of 2019. We are seeing the petroleum additives market to improve as government restrictions on people's movements are eased.

In the U.S., for example, gasoline demand has recovered to within 15% of pre-virus levels, up 50% from the reduction we saw in April. In Western European countries, personal miles traveled have returned to within 10% of pre-virus levels. Further improvement will depend heavily on the rate and extent to which restrictions are lifted and stay lifted.

Most OEMs have resumed manufacturing of vehicles, which is certainly a positive. And further improvement will also be driven by a resumption of overall world industrial activity. Modern transportation and machinery cannot function without our products. And this unprecedented reduction of activity will not last.

Knowing this, we are continuing to manage for the long term. We remain committed to our research and development investments to support our customers' future needs with new products and services. We are continuing to invest in capital improvements to increase reliability, quality and flexibility. And most of all, we remain committed to our