10q10k10q10k.net

What changed in NEWMARKET CORP's 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of NEWMARKET CORP's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+214 added−214 removedSource: 10-K (2024-02-15) vs 10-K (2023-02-15)

Top changes in NEWMARKET CORP's 2023 10-K

214 paragraphs added · 214 removed · 180 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

51 edited+6 added−6 removed60 unchanged
Biggest changeFrom custom-formulated additive packages to market-general additives, we believe Afton provides customers with products and solutions that make engines run smoother, machines last longer, and fuels burn cleaner. Through an open, flexible, and collaborative style, Afton works closely with its customers to understand their business and help them meet their goals.
Biggest changeAfton is one of the largest lubricant and fuel additives companies in the world. Lubricant and fuel additives are necessary products for efficient and reliable operation of vehicles and machinery. From custom-formulated additive packages to market-general additives, we believe Afton provides customers with products and solutions that make engines run smoother, machines last longer, and fuels burn cleaner.
Key drivers of engine oil additives demand are the number of vehicles on the road, total vehicle miles driven, fuel economy, the average age of vehicles on the road, drain intervals, engine and crankcase size, changes in engine design, and temperature and specification changes driven by the OEMs.
Key drivers of engine oil additives demand are the number of vehicles on the road, total vehicle miles driven, fuel economy, the average age of vehicles on the road, drain intervals, engine and crankcase size, changes in engine design, and temperature and specification changes driven by OEMs.
Key drivers of the driveline additives marketplace are the number of vehicles manufactured, total number of vehicles in operation, drain intervals for transmission fluids and axle fluids, changes in engine and transmission design and temperatures, and specification changes driven by the OEMs.
Key drivers of the driveline additives marketplace are the number of vehicles manufactured, total number of vehicles in operation, drain intervals for transmission fluids and axle fluids, changes in engine and transmission design and temperatures, and specification changes driven by OEMs.
Our Values include: • unquestioned integrity, • respect for people, • safety and environmental responsibility, • partners with customers and suppliers, • continuously improving quality, • citizenship, and • economic viability. 8 Table of Contents We place the highest level of commitment on safety and strive to operate our business every day focused on its importance.
Our Values include: • unquestioned integrity, • respect for people, • safety and environmental responsibility, • partners with customers and suppliers, • continuously improving quality, • citizenship, and 8 Table of Contents • economic viability. We place the highest level of commitment on safety and strive to operate our business every day focused on its importance.
Additionally, in pursuit of our vision of zero incidents, we work with our employees and other key stakeholders to establish appropriate goals, objectives, and targets. "Responsible Care" is a registered service mark of the American Chemistry Council (ACC). Both Afton and Ethyl have implemented Responsible Care ® Management Systems (RC14001 ® ) at North American facilities.
Additionally, in pursuit of our vision of zero incidents, we work with our employees and other key stakeholders to establish appropriate goals, objectives, and targets. Both Afton and Ethyl have implemented Responsible Care ® Management Systems (RC14001 ® ) at North American facilities ("Responsible Care" is a registered service mark of the American Chemistry Council (ACC)).
In line with Afton’s vision, we continue to focus our technology to make the world a better place by reducing the use of chemicals of concern, using more raw materials from sustainable sources, developing additives that enable some of the world’s most fuel efficient fluids, creating fuels additives that enable engines to be more efficient, and being a market leader in transmission fluids for full battery electric vehicles.
In line with Afton’s vision, we continue to focus our technology to make the world a better place by reducing the use of chemicals of concern, using more raw materials from sustainable sources, developing additives that enable some of the world’s most fuel efficient fluids, creating fuel additives that enable engines to be more efficient, and being a market leader in transmission fluids for full battery electric vehicles.
We are committed to achieving our aspiration of zero injuries and incidents. As members of the ACC, Afton and Ethyl provide data on twelve metrics used to track environmental impact, safety, energy use, community outreach and emergency preparedness, greenhouse gas intensity, and product stewardship performance of the ACC member companies. These can be viewed at https://www.americanchemistry.com/chemistry-in-america/responsible-care-driving-safety-industry-performance/metrics-transparent-reporting/individual-member-company-performance-reporting.
We are committed to achieving our aspiration of zero injuries and incidents. 9 Table of Contents As members of the ACC, Afton and Ethyl provide data on twelve metrics used to track environmental impact, safety, energy use, community outreach and emergency preparedness, greenhouse gas intensity, and product stewardship performance of the ACC member companies. These can be viewed at https://www.americanchemistry.com/chemistry-in-america/responsible-care-driving-safety-industry-performance/metrics-transparent-reporting/individual-member-company-performance-reporting.
Our total accruals for environmental remediation, dismantling, and decontamination were approximately $10 million at December 31, 2022 and $11 million at December 31, 2021. As new technology becomes available, it may be possible to reduce accrued amounts.
Our total accruals for environmental remediation, dismantling, and decontamination were approximately $11 million at December 31, 2023 and $10 million at December 31, 2022. As new technology becomes available, it may be possible to reduce accrued amounts.
Our Global Responsible Care Policy Statement includes a commitment to conduct operations in a manner that protects our employees, communities, and the environment, to comply with all applicable laws and regulations, and to reduce our environmental impacts.
Our Global Responsible Care Policy Statement includes a commitment to conduct operations in a manner that protects our employees, communities, and the environment, to comply with all applicable laws and regulations, and to reduce our environmental impact.
The types of fuel additives we offer include: • gasoline performance additives, which clean and maintain key elements of the fuel delivery systems, including fuel injectors and intake valves, in gasoline engines; • diesel fuel performance additives, which perform similar cleaning functions in diesel engines; • cetane improvers, which increase the cetane number (ignition quality) in diesel fuel by reducing the delay between injection and ignition; • stabilizers, which reduce or eliminate oxidation in fuel; • corrosion inhibitors, which minimize the corrosive effects of combustion by-products and prevent rust; • lubricity additives, which restore lubricating properties lost in the refining process; • cold flow improvers, which improve the pumping and flow of distillate and diesel fuels in cold temperatures; • octane enhancers, which increase octane ratings and decrease emissions; and • static dissipating additives.
The types of fuel additives we offer include: • gasoline performance additives, which clean and maintain key elements of the fuel delivery systems, including fuel injectors and intake valves, in gasoline engines; • diesel fuel performance additives, which perform similar cleaning functions in diesel engines; • cetane improvers, which increase the cetane number (ignition quality) in diesel fuel by reducing the delay between injection and ignition; • stabilizers, which reduce or eliminate oxidation in fuel; • corrosion inhibitors, which minimize the corrosive effects of combustion by-products and prevent rust; • lubricity additives, which restore lubricating properties lost in the refining process; • cold flow improvers, which improve the pumping and flow of distillate and diesel fuels in cold temperatures; and • static dissipating additives.
Our San Juan del Rio, Mexico site is formally certified to RC 14001/ISO14001. Afton’s Sauget, Illinois plant continues to be an OSHA VPP (Voluntary Protection Program) “Star” worksite.
Our San Juan del Rio, Mexico site is formally certified to RC 14001/ISO 14001. Afton’s Sauget, Illinois plant continues to be an OSHA VPP (Voluntary Protection Program) “Star” worksite.
Paliotti 46 President, Afton Chemical Corporation Our officers, at the discretion of the Board of Directors, hold office until the meeting of the Board of Directors following the next annual shareholders’ meeting. Mr. Gottwald, Mr. Hazelgrove, and Mr. Warner have served in their capacity for at least the last five years. Mr. Skrobacz, Mr. Jewett, Mrs. Ridgeway, and Mr.
Paliotti 47 President, Afton Chemical Corporation Our officers, at the discretion of the Board of Directors, hold office until the meeting of the Board of Directors following the next annual shareholders’ meeting. Mr. Gottwald and Mr. Hazelgrove have served in their capacity for at least the last five years. Mr. Skrobacz, Mr. Jewett, Mrs. Ridgeway, and Mr.
Approximately 1,000 were located in the United States, 500 were in the Europe/Middle East/Africa/India region, 300 were in the Asia Pacific region, and 250 were in the Latin America region. Approximately 22% of our workforce is represented by unions. When we hire new employees, our goal is that they stay with our company for the remainder of their career.
Approximately 1,000 were located in the United States, 500 were in the Europe/Middle East/Africa/India region, 300 were in the Asia Pacific region, and 200 were in the Latin America region. Approximately 21% of our workforce is represented by unions. When we hire new employees, our goal is that they stay with our company for the remainder of their career.
Our SEC filings are available to the public on the SEC's website at www.sec.gov. Information about our Executive Officers The names and ages of all executive officers as of February 15, 2023 follow. Name Age Positions Thomas E. Gottwald 62 Chairman of the Board, President, and Chief Executive Officer (Principal Executive Officer) William J.
Our SEC filings are available to the public on the SEC's website at www.sec.gov. Information about our Executive Officers The names and ages of all executive officers as of February 15, 2024 follow. Name Age Positions Thomas E. Gottwald 63 Chairman of the Board, President, and Chief Executive Officer (Principal Executive Officer) William J.
The petroleum additives market is a global marketplace, with customers ranging from large, integrated oil companies to national, regional, and independent companies. 3 Table of Contents We believe our success in the petroleum additives market is largely due to our ability to deliver value to our customers through our products and our open, flexible, and collaborative working style.
The petroleum additives market is a global marketplace, with customers ranging from large, integrated oil companies to national, regional, and independent companies. We believe our success in the petroleum additives market is largely due to our ability to deliver value to our customers through our products and our open, flexible, and collaborative working style.
Afton’s state-of-the art testing capabilities enable customized research in all areas of performance needed by both OEMs and tier one suppliers. Our leading-edge capabilities and fundamental understanding in the areas of combustion, friction control, energy efficiency, electric motor compatibility, and wear prevention are used to set the stage for next-generation products in all areas.
Afton’s state-of-the art testing capabilities enable customized research in all areas of performance needed by both OEMs and tier one suppliers including the latest advancements in e-mobility. Our leading-edge capabilities and fundamental understanding in the areas of combustion, friction control, energy efficiency, electric motor compatibility, and wear prevention are used to set the stage for next-generation products in all areas.
Our corporate offices are included in this acreage, as well as a research and testing facility, and several acres dedicated to other uses. We are exploring various development opportunities for portions of the property as the demand warrants. This effort is ongoing in nature. We were incorporated in the Commonwealth of Virginia in 2004.
Our corporate offices are included in this acreage, as well as a research and testing facility, and several acres dedicated to other uses. We are exploring various development opportunities for portions of the property as the demand warrants. This effort is ongoing in nature.
In addition to the ongoing environmental compliance costs and the costs to remediate contaminated sites, worldwide capital expenditures for pollution prevention and safety projects were $11 million in 2022 and $17 million in both 2021 and 2020.
In addition to the ongoing environmental compliance costs and the costs to remediate contaminated sites, worldwide capital expenditures for pollution prevention and safety projects were $10 million in 2023, $11 million in 2022, and $17 million in 2021.
We spent approximately $37 million in 2022, $35 million in 2021, and $29 million in 2020 for ongoing environmental operating and clean-up costs, excluding depreciation of previously capitalized expenditures.
We spent approximately $41 million in 2023, $37 million in 2022, and $35 million in 2021 for ongoing environmental operating and clean-up costs, excluding depreciation of previously capitalized expenditures.
Further information on our operations in the various geographic areas is in Note 4 of the Notes to Consolidated Financial Statements. With approximately 500 employees in research, development, and testing, Afton is dedicated to developing additive formulations that are tailored to our customers’ and the end-users’ specific needs.
Dollar-denominated transactions, letters of credit, and prepaid transactions. Further information on our operations in the various geographic areas is in Note 4 of the Notes to Consolidated Financial Statements. With almost 500 employees in research, development, and testing, Afton is dedicated to developing additive formulations that are tailored to our customers’ and the end-users’ specific needs.
Lubricant additive components are generally classified based upon their intended functionality, including: • detergents, which clean moving parts of engines and machines, suspend oil contaminants and combustion by-products, and absorb acidic combustion products; • dispersants, which serve to inhibit the formation of sludge and particulates; • extreme pressure/antiwear agents, which reduce wear on moving engine and machinery parts; • viscosity index modifiers, which improve the viscosity and temperature characteristics of lubricants and help the lubricant flow evenly to all parts of an engine or machine; and • antioxidants, which prevent oil from degrading over time. 4 Table of Contents We are one of the leading global suppliers of specially formulated lubricant additives that combine some or all of the components described above to develop our products.
Lubricant additive components are generally classified based upon their intended functionality, including: • detergents, which clean moving parts of engines and machines, suspend oil contaminants and combustion by-products, and absorb acidic combustion products; • dispersants, which serve to inhibit the formation of sludge and particulates; 4 Table of Contents • extreme pressure/antiwear agents, which reduce wear on moving engine and machinery parts; • viscosity index modifiers, which improve the viscosity and temperature characteristics of lubricants and help the lubricant flow evenly to all parts of an engine or machine; and • antioxidants, which prevent oil from degrading over time.
Globally, approximately 17% of our employees have 20 years or more of service, and over the three-year period from 2020 to 2022, our resignation rate was approximately 4.6%. We believe these measures demonstrate our success in hiring the right employees for the long-term and establishing a culture where respect for people is an everyday value.
Globally, approximately 16% of our employees have 20 years or more of service, and over the three-year period from 2021 through 2023, our resignation rate was approximately 5.4%. We believe these measures demonstrate our success in hiring the right employees for the long-term and establishing a culture where respect for people is an everyday value.
In cases where we decide to source from a single supplier, we manage our risk by maintaining safety stock of the raw material or qualifying alternate suppliers, which could take additional time to implement, but we are confident we can ensure continued supply for our customers.
In such cases, we manage our risk by maintaining safety stock of the raw material or qualifying alternate suppliers, which could take additional time to implement, but we are confident we can ensure continued supply for our customers.
Skrobacz 63 Chief Financial Officer and Vice President (Principal Financial Officer) Bruce R. Hazelgrove, III 62 Executive Vice President and Chief Administrative Officer Bryce D. Jewett, III 48 Vice President and General Counsel Gail C. Ridgeway 48 Controller (Principal Accounting Officer) Cameron D. Warner, Jr. 64 Treasurer Brian D.
Skrobacz 64 Vice President and Chief Financial Officer (Principal Financial Officer) Bruce R. Hazelgrove, III 63 Executive Vice President and Chief Administrative Officer Bryce D. Jewett, III 49 Vice President and General Counsel Gail C. Ridgeway 49 Controller (Principal Accounting Officer) Brian D.
Afton continues to successfully implement techniques to drive efficiency in technology discovery and development, while expanding our internal testing, research, and customer support capabilities around the world in support of our goals of providing market-driven technical leadership and performance-based differentiation. In 2022, we continued to invest in and progress our technology plans.
Afton continues to successfully implement techniques to drive efficiency in technology discovery and development, while aligning our internal testing to market changes, research, customer support, and predictive capabilities around the world in support of our goals of providing market-driven technical leadership and performance-based differentiation.
The economies are generally stable in the countries where we do most of our business, although many of those countries experience economic challenges from time to time. In countries with more political or economic uncertainty, we generally minimize our risk of loss by utilizing U.S. Dollar-denominated transactions, letters of credit, and prepaid transactions.
We have operations in North America, Europe, Asia, and South America. The economies are generally stable in the countries where we do most of our business, although many of those countries experience economic challenges from time to time. In countries with more political or economic uncertainty, we generally minimize our risk of loss by utilizing U.S.
We continue to provide leading technology in the fuel additives area. In 2022, we developed new technology in both gasoline performance additives and diesel performance additives. This includes launching a new technology platform that is both more efficient and better performing.
We also provide leading technology in the fuel additives area. In 2023, we developed new technology in both gasoline performance additives and diesel performance additives. This includes launching a new technology platform designed for gasoline direct injection engines that is both more efficient and better-performing.
Afton manufactures and sells petroleum additives, while Ethyl markets antiknock compounds in North America and performs contracted manufacturing and related services. NewMarket Development manages the real property that we own in Virginia. NewMarket Services provides various administrative services to NewMarket, Afton, Ethyl, and NewMarket Development.
Each of our subsidiaries manages its own assets and liabilities. Afton manufactures and sells petroleum additives, while Ethyl markets antiknock compounds in North America and performs contracted manufacturing and related services. NewMarket Development manages the real property that we own in Virginia.
In 2022, we continued to enhance our “Actively Caring” safety program, where people look out for the safety and welfare of others with courage and compassion, enabling the achievement of an injury-free environment.
In 2023, we continued to enhance our “Actively Caring” safety program, where people look out for the safety and welfare of others with courage and compassion, enabling the achievement of an injury-free environment. Both Afton and Ethyl were top performers among their industry peers.
These products must conform to industry specifications, OEM requirements, and/or application and operating environment demands. Industrial additives are generally sold to oil companies, service dealers for after-market servicing, and distributors.
These products must 5 Table of Contents conform to industry specifications, OEM requirements, and/or application and operating environment demands. Industrial additives are generally sold to oil companies, service dealers for after-market servicing, and distributors. Key drivers of the industrial additives marketplace are gross domestic product levels and industrial production.
We make no sales directly to end-users or to original equipment manufacturers (OEMs). We view our participation in the lubricant marketplace in three primary areas: engine oil additives, driveline additives, and industrial additives. Our view is not necessarily the same way others view the market.
We view our participation in the lubricant marketplace in three primary areas: engine oil additives, driveline additives, and industrial additives. Our view is not necessarily the same way others view the market.
We launched new OEM specific technology for full battery electric passenger and commercial vehicles for industry-leading OEMs and are a top supplier in this new and growing market. We also developed new products for the service-fill sector to provide our customers with the latest additives technology available, with specific focus on the Asia Pacific region.
We continue to launch new OEM-specific technology for full battery electric passenger and commercial vehicles and are a top supplier in this new and growing market. Our market-leading battery electric vehicle transmission fluid promotes efficiency, and we developed new products for the service-fill sector to provide our customers with the latest additive technology available.
During the past three years, global supply chain disruptions negatively affected both supply, as well as distribution and transportation networks. We continuously monitor our raw material supply situation and adjust our procurement strategies as conditions require. Research, Development, and Testing Research, development, and testing (R&D) provides Afton with new performance-based solutions for our customers in the petroleum additives market.
While we have experienced improvement in the supply chain disruptions which impacted the petrochemicals industry over the past several years, we continuously monitor our raw material supply situation and adjust our procurement strategies as conditions require. Research, Development, and Testing Research, development, and testing (R&D) provides Afton with new performance-based solutions for our customers in the petroleum additives market.
The Ethyl facility is located in Houston, Texas and is substantially dedicated to terminal operations related to antiknock compounds and other fuel additives. The financial results of the petroleum additives activities by Ethyl are reflected in the petroleum additives segment results. The “All other” category financial results include a service fee charged by Ethyl for its production services to Afton.
The financial results of the petroleum additives activities performed by Ethyl are reflected in the petroleum additives segment results. The “All other” category financial results include a service fee charged by Ethyl for its production services to Afton.
We place a high value on diverse thoughts, skills, perspectives, cultures, and knowledge because we believe that such diversity results in better business decision making. We employed 2,058 people at the end of 2022.
Keeping our employees safe is a management priority. We have a diverse workforce, representative of the geographic regions in which we do business. We place a high value on diverse thoughts, skills, perspectives, cultures, and knowledge because we believe that such diversity results in better business decision making. We employed approximately 2,000 people at the end of 2023.
We also have several hundred trademark registrations throughout the world for our marks, including NewMarket ® , Afton Chemical ® , Ethyl ® , mmt ® , HiTEC ® , GREENBURN ® , Passion for Solutions ® , CleanStart ® , Microbotz ® , DriveMore ® , and Axcel ® .
We believe our patent position is strong, aggressively managed, and sufficient for the conduct of our business. We also have several hundred trademark registrations throughout the world for our marks, including NewMarket ® , Afton Chemical ® , Ethyl ® , HiTEC ® , Passion for Solutions ® , DriveMore ® , and Axcel ® .
Our principal executive offices are located at 330 South Fourth Street, Richmond, Virginia, and our telephone number is (804) 788-5000. Business Segments Our business is composed of one segment, petroleum additives, which is primarily represented by Afton. The antiknock compounds business of Ethyl is reflected in the “All other” category. Each of these is discussed below.
Our principal executive offices are located at 330 South Fourth Street, Richmond, Virginia, and our telephone number is (804) 788-5000. Business Segments For the periods presented in this Annual Report on Form 10-K, our business was composed of one segment, petroleum additives, which is primarily represented by Afton.
Research continued in our transmission fluid, axle oil, and tractor fluid product lines. This included the development of new OEM-specific additives used in factory-fill fluids installed during automotive component and vehicle assembly in the United States, Germany, Japan, India, and China.
This includes focusing on our next generation wind turbine technology to maintain our technology leadership in this important and growing market. Research continued in our transmission fluid, axle oil, and tractor fluid product lines. This included the development of new OEM-specific additives used in factory-fill fluids installed during automotive component and vehicle assembly.
Research is focused on the development of technologies that will provide differentiation to our customers in multiple performance areas including equipment life, reliability, and energy efficiency, as well as eliminating or reducing chemicals of concern. This includes focusing on our wind turbine technology to maintain our technology leadership in this important and growing market.
We continued to develop new products in multiple application areas in the industrial additives sector, including hydraulic, industrial gear, turbine, slideway, and grease additives. Research is focused on the development of technologies that will provide differentiation to our customers in multiple performance areas, including equipment life, reliability, and energy efficiency, as well as eliminating or reducing chemicals of concern.
The competition among the participants in these industries is characterized by the need to provide customers with cost effective, technologically-capable products that meet or exceed industry specifications.
The competition among the participants in these industries is characterized by the need to provide customers with cost effective, technologically-capable products that meet or exceed industry specifications. The need to continually increase 6 Table of Contents technology performance and lower cost through formulation technology and cost improvement programs is vital for success in this environment.
We developed new engine oil products for passenger cars and commercial trucks in support of our customers in all the major regions of the world in which we operate, including engine oil technology designed for the latest fuel-efficient passenger car specifications, as well as solutions for commercial vehicles. 7 Table of Contents We continued to develop new products in multiple application areas in the industrial additives sector, including hydraulic, industrial gear, turbine, slideway, and grease additives.
We developed new engine oil products for passenger cars and commercial trucks in support of our customers in all the major regions of the world in which we operate, including engine oil technology designed for hybrid vehicles, as well as solutions for commercial vehicles.
This style has allowed Afton to develop long-term relationships with its customers in every major region of the world, which Afton serves through our manufacturing facilities across the globe. We have operations in North America, Europe, Asia, and South America.
Through an open, flexible, and collaborative style, Afton works closely with its customers to understand their business and help them meet their goals. This style has allowed Afton to develop long-term relationships with its customers in every major region of the world, which Afton serves through its manufacturing facilities across the globe.
The need to continually increase technology performance and lower cost through formulation technology and cost improvement programs is vital for success in this environment. 6 Table of Contents All Other - The “All other” category includes the operations of the antiknock compounds business (primarily sales of antiknock compounds in North America), as well as certain contracted manufacturing and related services performed by Ethyl.
All Other - The “All other” category includes the operations of the antiknock compounds business (primarily sales of antiknock compounds in North America), as well as certain contracted manufacturing and related services performed by Ethyl. The Ethyl facility is located in Houston, Texas and is substantially dedicated to terminal operations related to antiknock compounds and other fuel additives.
Additionally, during 2022 we had zero serious injuries across all sites, as well as zero recordable injuries at our Houston, Port Arthur, Ashland, Bracknell, Feluy, Rio de 9 Table of Contents Janeiro, San Juan del Rio, Singapore, Suzhou, and Tsukuba facilities.
The NewMarket worldwide injury/illness recordable rate (which is the number of injuries per 200,000 hours worked) in 2023 was 0.45. Additionally, during 2023 we had zero serious injuries across all sites, as well as zero recordable injuries at our Port Arthur, Ashland, Richmond R&D, Rio de Janeiro, San Juan del Rio, Singapore, Suzhou, and Tsukuba facilities.
Our fuel additives are extensively tested and designed to meet stringent industry, government, OEM, and individual customer requirements. Many different types of additives are used in fuels. Their use is generally determined by customer, industry, OEM, and government specifications, and often differs from country to country.
Their use is generally determined by customer, industry, OEM, and government specifications, and often differs from country to country.
Our products are highly formulated, complex chemical compositions derived from extensive research and testing to ensure all additive components work together to provide the intended results. Our products are engineered to meet specifications prescribed by either the industry or a specific customer. Purchasers of lubricant additives tend to be integrated oil companies or independent compounders/blenders.
We are one of the leading global suppliers of specially formulated lubricant additives that combine some or all of the components described above to develop our products. Our products are highly formulated, complex chemical compositions derived from extensive research and testing to ensure all additive components work together to provide the intended results.
Key drivers of the industrial additives marketplace are gross domestic product levels and industrial production. 5 Table of Contents Fuel Additives Fuel additives are chemical compounds that are used to improve both the oil refining process and the performance of gasoline, diesel, biofuels, and other fuels.
Fuel Additives Fuel additives are chemical compounds that are used to improve both the oil refining process and the performance of gasoline, diesel, biofuels, and other fuels. Benefits of fuel additives in the oil refining process include reduced use of crude oil, lower processing costs, and improved fuel storage properties.
NewMarket Services departmental and other expenses are billed to each subsidiary pursuant to services agreements between the companies. References in this Annual Report on Form 10-K to “we,” “us,” “our,” and “NewMarket” are to NewMarket Corporation and its consolidated subsidiaries, unless the context indicates otherwise.
References in this Annual Report on Form 10-K to “we,” “us,” “our,” and “NewMarket” are to NewMarket Corporation and its consolidated subsidiaries, unless the context indicates otherwise. As a specialty chemicals company, Afton develops and manufactures highly formulated lubricant and fuel additive packages and markets and sells these products worldwide.
ITEM 1. BUSINESS NewMarket Corporation (NewMarket) (NYSE: NEU) is a holding company and is the parent company of Afton Chemical Corporation (Afton), Ethyl Corporation (Ethyl), NewMarket Services Corporation (NewMarket Services), and NewMarket Development Corporation (NewMarket Development). Each of our subsidiaries manages its own assets and liabilities.
ITEM 1. BUSINESS NewMarket Corporation (NewMarket) (NYSE: NEU) is a holding company and is the parent company of Afton Chemical Corporation (Afton), Ethyl Corporation (Ethyl), NewMarket Services Corporation (NewMarket Services), and NewMarket Development Corporation (NewMarket Development). NewMarket is also the ultimate parent company of American Pacific Corporation (AMPAC), which we acquired for approximately $700 million on January 16, 2024.
Benefits of fuel additives in the oil refining process include reduced use of crude oil, lower processing costs, and improved fuel storage properties. Fuel performance additives enhance fuel economy, improve ignition and combustion efficiency, reduce emission particulates, maintain engine cleanliness, and protect against deposits in fuel injectors, intake valves, and the combustion chamber.
Fuel performance additives enhance fuel economy, improve ignition and combustion efficiency, reduce emission particulates, maintain engine cleanliness, and protect against deposits in fuel injectors, intake valves, and the combustion chamber. Our fuel additives are extensively tested and designed to meet stringent industry, government, OEM, and individual customer requirements. Many different types of additives are used in fuels.
In addition, we are continuing to see benefits from our waste minimization efforts with a 33% reduction in hazardous waste generation from R&D operations in Richmond, Virginia when compared to last year. In 2022, we successfully launched new technologies across all our lubricant additives and fuel additives product areas.
In 2023, we successfully launched new technologies across all our lubricant additives and fuel additives product areas.
Removed
As a specialty chemicals company, Afton develops and manufactures highly formulated lubricant and fuel additive packages and markets and sells these products worldwide. Afton is one of the largest lubricant and fuel additives companies in the world. Lubricant and fuel additives are necessary products for efficient and reliable operation of vehicles and machinery.
Added
AMPAC manufactures and sells critical performance additives used in solid rocket motors for space launch and military defense applications. NewMarket Services provides various administrative services to NewMarket, Afton, Ethyl, and NewMarket Development. Going forward, NewMarket Services will also provide such services to AMPAC. NewMarket Services expenses are billed to each subsidiary pursuant to services agreements between the companies.
Removed
We believe our patent position is strong, aggressively managed, and sufficient for the conduct of our business.
Added
AMPAC manufactures and sells critical performance additives used in solid rocket motors for space launch and military defense applications. AMPAC also manufactures and sells Halotron BrX, a fire extinguishing agent that replaces legacy high ozone-depleting fire extinguishing agents. We were incorporated in the Commonwealth of Virginia in 2004.
Removed
Keeping our employees safe is a management priority, and the past three years were particularly challenging in that regard because of the COVID-19 pandemic.
Added
The antiknock compounds business of Ethyl is reflected in the “All 3 Table of Contents other” category. Each of these is discussed below. We intend to present AMPAC as a separate segment beginning with the Quarterly Report on Form 10-Q for the quarter ending March 31, 2024.
Removed
While some of our employees were required to work from home due to government mandates, all of our facilities continued to be operational throughout 2020 to 2022 since the chemical industry and our products are considered essential for the transportation of people, goods, and services.
Added
Our products are engineered to meet specifications prescribed by either the industry or a specific customer. Purchasers of lubricant additives tend to be integrated oil companies or independent compounders/blenders. We make no sales directly to end-users or to original equipment manufacturers (OEMs).
Removed
For employees working onsite at our facilities, management invested significant time and effort to ensure the safety of our employees, above and beyond local government requirements and guidance, and to help mitigate risk. We have a diverse workforce, representative of the geographic regions in which we do business.
Added
In 2023, we continued to invest in and progress our technology plans and established a new team to focus on adjacent spaces that can utilize our chemistry and technology.
Removed
Both Afton and Ethyl were top performers among their industry peers with our worldwide injury/illness recordable rate (which is the number of injuries per 200,000 hours worked) in 2022 at 0.44.
Added
We continue to have strong results in our environmental initiatives. For example, a year over year comparison (2023 versus 2022) of our Richmond site shows a 24% reduction 7 Table of Contents in hazardous waste generation and an energy usage decrease of over 8% due to LED light installations and changes in laboratory operating procedures.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

18 edited+1 added−3 removed83 unchanged
Biggest changeNoncompliance could subject us to material liabilities, such as government fines, damages arising from third-party lawsuits, or the suspension and potential cessation of non-compliant operations. We may also be required to make significant site or operational modifications at substantial cost. Future developments could also restrict or eliminate the use of or require us to make modifications to our products.
Biggest changeAlthough we cannot predict the ultimate cost of compliance with any such requirements, the costs could be material. Noncompliance could subject us to material liabilities, such as government fines, damages arising from third-party lawsuits, or the suspension and potential cessation of non-compliant operations. We may also be required to make significant site or operational modifications at substantial cost.
In addition, we may not be able to realize the expected benefits from future acquisitions or from investments in our infrastructure, or it may take longer to realize those benefits than originally planned. The inability to achieve our objectives related to these activities could result in unanticipated expenses and losses.
In addition, we may not be able to realize the expected benefits from acquisitions or from investments in our infrastructure, or it may take longer to realize those benefits than originally planned. The inability to achieve our objectives related to these activities could result in unanticipated expenses and losses.
Any disruptions in this infrastructure network, whether caused by human error, accidents, deliberate acts of violence, limitations on capacity, repairs and improvements to infrastructure components, earthquakes, storms, or other natural disasters, could adversely affect our ability to meet customer demand. • A significant disruption or disaster at one of our production facilities, including those facilities which are sole producers of certain of our products, could result in our inability to meet production requirements and projected customer demand resulting in a negative impact to our profitability and relationships with our customers.
Any disruptions in this infrastructure network, whether caused by human error, accidents, armed conflicts, deliberate acts of violence, limitations on capacity, repairs and improvements to infrastructure components, earthquakes, storms, or other natural disasters, could adversely affect our ability to meet customer demand. • A significant disruption or disaster at one of our production facilities, including those facilities which are sole producers of certain of our products, could result in our inability to meet production requirements and projected customer demand resulting in a negative impact to our profitability and relationships with our customers.
A significant or protracted information technology system failure may adversely affect our results of operations, financial condition, or cash flows. Furthermore, we are subject both to changing cybersecurity rules and evolving data privacy rules and regulations, such as the European Union's General Data Protection Regulation, in countries, states, and other jurisdictions where we conduct business.
A significant or protracted information technology system failure may adversely affect our results of operations, financial condition, or cash flows. Furthermore, we are subject to evolving cybersecurity and data privacy rules and regulations, such as the European Union's General Data Protection Regulation, in countries, states, and other jurisdictions where we conduct business.
Acquisition and Investment Risks • We may be unable to consummate a proposed acquisition transaction due to a lack of regulatory approval or the failure of one or more parties to satisfy conditions to close.
Acquisition and Investment Risks • We may be unable to complete a proposed acquisition transaction due to a lack of regulatory approval or the failure of one or more parties to satisfy conditions to close.
Our ability to implement these components of our growth strategy will be limited by our ability to identify appropriate acquisition or joint venture candidates; our ability to consummate proposed transactions, which may be subject to, among other things, regulatory approval or the parties satisfaction of conditions required for closing; and the availability of financial resources, including cash and borrowing capacity.
Our ability to implement these components of our growth strategy will be limited by our ability to identify appropriate acquisition or joint venture candidates; our ability to complete proposed transactions, which may be subject to, among other things, regulatory approval or the parties' satisfaction of conditions required for closing; and the availability of financial resources, including cash and borrowing capacity.
We cannot assure that the resolution of these environmental matters will not have an adverse effect on our results of operations, financial condition, or cash flows. 16 Table of Contents • Environmental matters could have a substantial negative impact on our business.
We cannot assure that the resolution of these environmental matters will not have an adverse effect on our results of operations, financial condition, or cash flows. • Environmental matters could have a substantial negative impact on our business.
The expenses incurred in completing these types of activities, the time it takes to integrate the activities into our 18 Table of Contents ongoing business, or our failure to realize the expected benefits from the activities in the planned time frames could result in unanticipated expenses and losses.
The expenses incurred in completing these types of activities, the time it takes to integrate the activities into our ongoing business, or our failure to realize the expected benefits from the activities in the planned time frames could result in unanticipated expenses and losses.
The occurrence of any one or a combination of these factors may increase our costs or have other adverse effects on our business. • The insurance we maintain may not fully cover all potential exposures.
The occurrence of any one or a combination of these factors may increase our costs or have other adverse effects on our business. 15 Table of Contents • The insurance we maintain may not fully cover all potential exposures.
In 2022, sales to customers outside of the United States accounted for approximately 65% of consolidated net sales. We do business in all major regions of the world, some of which do not have stable economies or governments.
In 2023, sales to customers outside of the United States accounted for approximately 64% of consolidated net sales. We do business in all major regions of the world, some of which do not have stable economies or governments.
Substantial amounts of indebtedness could, among other things, require us to dedicate a substantial portion of our cash flow to repaying and servicing our indebtedness, thus reducing the amount of funds available for other general corporate purposes; limit our ability to borrow additional funds necessary for working capital, capital expenditures or other general corporate purposes; and limit our flexibility in planning for, or reacting to, changes in our business. 17 Table of Contents Our ability to make payments on or refinance our indebtedness will depend on our ability to generate cash from operations in the future.
Substantial amounts of indebtedness could, among other things, require us to dedicate a substantial portion of our cash flow to repaying and servicing our indebtedness, thus reducing the amount of funds available for other general corporate purposes; limit our ability to borrow additional funds necessary for working capital, capital expenditures or other general corporate purposes; and limit our flexibility in planning for, or reacting to, changes in our business.
There may be environmental problems associated with our properties of which we are unaware. The discovery of environmental liabilities attached to our properties could have an adverse effect on our business even if we did not create or cause the problem.
Future developments could also restrict or eliminate the use of or require us to make modifications to our products. There may be environmental problems associated with our properties of which we are unaware. The discovery of environmental liabilities attached to our properties could have an adverse effect on our business even if we did not create or cause the problem.
We cannot guarantee that we will be able to refinance any of our indebtedness on commercially reasonable terms or at all. Additionally, our debt instruments contain restrictive covenants. These covenants may constrain our activities and limit our operational and financial flexibility. Failure to comply with these covenants could result in an event of default.
We cannot guarantee that we will be able to refinance any of our indebtedness on commercially reasonable terms or at all. 17 Table of Contents Additionally, our debt instruments contain restrictive covenants. These covenants may constrain our activities and limit our operational and financial flexibility.
However, we cannot assure that we have been or will be at all times in compliance with all of these requirements. In addition, these requirements, and the enforcement or interpretation of these requirements, may become more stringent in the future. Although we cannot predict the ultimate cost of compliance with any such requirements, the costs could be material.
However, we cannot assure that we have been or will be at all times in compliance with all of these requirements. 16 Table of Contents In addition, these requirements, and the enforcement or interpretation of these requirements, may become more stringent in the future.
In addition, the damage from a direct attack on our facilities or other assets or facilities or other assets used by us could include loss of life or property damage, and our insurance coverage may not be sufficient to cover all of the damage incurred or securing coverage for these types of events may be prohibitively expensive. • The COVID-19 pandemic has had an impact on our financial results and could have a material adverse effect on our results of operations, financial position, and cash flows in the future.
In addition, the damage from a direct attack on our facilities or other assets or facilities or other assets used by us could include loss of life or property damage, and our insurance coverage may not be sufficient to cover all of the damage incurred or securing coverage for these types of events may be prohibitively expensive. • We face risks related to our foreign operations that may negatively affect our business.
The process of integrating acquired operations into our existing operations may result in unforeseen operating difficulties and may require significant financial resources that would otherwise be available for the ongoing development or expansion of existing operations. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
The process of integrating acquired operations into our existing operations may result in unforeseen operating difficulties and may require significant financial resources that would otherwise be available for the ongoing development or expansion of existing operations. In addition, our ability to realize the expected benefits from our acquisition of AMPAC is subject to several factors.
The use of SOFR in place of LIBOR could result in an increase in the cost of borrowings under the revolving credit facility. • We are exposed to fluctuations in foreign exchange rates, which may adversely affect our results of operations. We conduct our business in the local currency of many of the countries in which we operate.
Failure to comply with these covenants could result in an event of default. • We are exposed to fluctuations in foreign exchange rates, which may adversely affect our results of operations. We conduct our business in the local currency of many of the countries in which we operate.
This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory, and other factors that are beyond our control.
Our ability to make payments on or refinance our indebtedness will depend on our ability to generate cash from operations in the future. This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory, and other factors that are beyond our control.
Removed
The COVID-19 pandemic has created significant uncertainty and economic disruption. The extent to which it will continue to impact our business, results of operations, financial position, and cash flows is difficult to predict, varies by region, and is dependent upon many factors over which we have no control.
Added
These include our ability to retain key AMPAC personnel, our ability to maintain relationships with suppliers and customers of AMPAC, and our ability to integrate AMPAC into certain information technology systems, operational systems, procedures, or controls without disrupting its operations.
Removed
These factors include, but are not limited to, the duration and severity of the pandemic; the effectiveness, acceptance, and speed of application of vaccines; government restrictions on businesses and individuals; the impact of the pandemic on our customers’ businesses and the resulting demand for our products; the impact on our suppliers and supply chain network; the impact on U.S. and global economies and the timing and rate of economic recovery; and potential adverse effects on the financial markets. 15 Table of Contents • We face risks related to our foreign operations that may negatively affect our business.
Removed
In January 2023, we replaced LIBOR as an interest rate option under our revolving credit facility with the Secured Overnight Financing Rate (SOFR).

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−0 removed3 unchanged
Biggest changeResearch, Development, and Testing Richmond, Virginia Bracknell, England Tsukuba, Japan Ashland, Virginia Suzhou, China Manufacturing and Distribution Feluy, Belgium (lubricant additives; also storage and distribution) Houston, Texas (lubricant and fuel additives; also storage and distribution) Jurong Island, Singapore (lubricant and fuel additives; leased land) Port Arthur, Texas (lubricant additives) Rio de Janeiro, Brazil (lubricant and fuel additives storage and distribution; equipment is owned; building is leased) San Juan del Rio, Mexico (lubricant additives) Sauget, Illinois (lubricant additives) Suzhou, China (lubricant additives) We own our corporate headquarters located in Richmond, Virginia, and generally lease our regional and sales offices located in a number of areas worldwide.
Biggest changeResearch, Development, and Testing Richmond, Virginia Bracknell, England Tsukuba, Japan Ashland, Virginia Suzhou, China Manufacturing and Distribution Feluy, Belgium (lubricant additives; also storage and distribution) Houston, Texas (lubricant and fuel additives; also storage and distribution) Jurong Island, Singapore (lubricant and fuel additives; leased land) Port Arthur, Texas (lubricant additives) Rio de Janeiro, Brazil (lubricant and fuel additives storage and distribution; equipment is owned; building is leased) San Juan del Rio, Mexico (lubricant additives) Sauget, Illinois (lubricant additives) Suzhou, China (storage and distribution) We own our corporate headquarters located in Richmond, Virginia, and generally lease our regional and sales offices in a number of locations worldwide.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

2 edited+0 added−0 removed0 unchanged
Biggest changeWhile it is not possible to predict or determine with certainty the outcome of any legal proceeding, we believe the outcome of any of these proceedings, or all of them combined, will not result in a material adverse effect on our consolidated results of operations, financial condition, or cash flows. 19 Table of Contents
Biggest changeWhile it is not possible to predict or determine with certainty the outcome of any legal proceeding, we believe the outcome of any of these proceedings, or all of them combined, will not result in a material adverse effect on our consolidated results of operations, financial condition, or cash flows. 20 Table of Contents
ITEM 3. LEGAL PROCEEDINGS We are involved in legal proceedings that are incidental to our business and may include administrative or judicial actions. Some of these legal proceedings involve governmental authorities and relate to environmental matters. For further information, see the Environmental section in Note 21.
ITEM 3. LEGAL PROCEEDINGS We are involved in legal proceedings that are incidental to our business and may include administrative or judicial actions. Some of these legal proceedings involve governmental authorities and relate to environmental matters. For further information, see the Environmental section in Note 20.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+0 added−1 removed2 unchanged
Biggest changeThe declaration and payment of dividends is subject to the discretion of our Board of Directors.
Biggest changeCash dividends declared and paid totaled $8.85 per share for the year ended December 31, 2023 and $8.40 per share for the year ended December 31, 2022. The declaration and payment of dividends is subject to the discretion of our Board of Directors.
Future dividends will depend on various factors, including our financial condition, earnings, cash requirements, legal requirements, restrictions in agreements governing our outstanding indebtedness, and other factors deemed relevant by our Board of Directors. 21 Table of Contents The performance graph showing the five-year cumulative total return on our common stock as compared to chemical companies in the S&P 1500 Specialty Chemicals Index and the S&P 500 is shown below.
Future dividends will depend on various factors, including our financial condition, earnings, cash requirements, legal requirements, restrictions in agreements governing our outstanding indebtedness, and other factors deemed relevant by our Board of Directors. 22 Table of Contents The performance graph of the five-year cumulative total return on our common stock as compared to chemical companies in the S&P 1500 Specialty Chemicals Index and the S&P 500 is shown below.
The graph assumes $100 invested on the last day of December 2017, and the reinvestment of all dividends. The graph is based on historical data and is not intended to be a forecast or indication of future pe rform ance of our common stock.
The graph assumes $100 invested on the last day of December 2018, and the reinvestment of all dividends. The graph is based on historical data and is not intended to be a forecast or indication of future pe rform ance of our common stock.
We had 1,862 shareholders of record at January 31, 2023. On October 28, 2021, our Board of Directors approved a share repurchase program authorizing management to repurchase up to $500 million of NewMarket's outstanding common stock until December 31, 2024, as market conditions warrant and covenants under our existing debt agreements permit.
We had 1,797 shareholders of record as of January 31, 2024. On October 28, 2021, our Board of Directors approved a share repurchase program authorizing management to repurchase up to $500 million of NewMarket's outstanding common stock until December 31, 2024, as market conditions warrant and covenants under our existing debt agreements permit.
The repurchase program does not require the Company to acquire any specific number of shares and may be terminated or suspended at any time. At December 31, 2022 , approximately $274 million remained available under the 2021 authorization. The following table outlines the purchases during the fourth quarter of 2022 under this authorization.
The repurchase program does not require the Company to acquire any specific number of shares and may be terminated or suspended at any time. At December 31, 2023 , approximately $231 million remained available under the 2021 authorization. There were no purchases during the fourth quarter of 2023 under this authorization.
Performance Graph Comparison of Five-Year Cumulative Total Return Performance Through December 31, 2022 December 31, 2017 2018 2019 2020 2021 2022 NewMarket Corporation $ 100.00 $ 105.52 $ 126.64 $ 105.78 $ 93.16 $ 86.92 S&P 1500 Specialty Chemicals Index 100.00 85.82 98.98 116.69 147.47 109.70 S&P 500 100.00 95.62 125.72 148.85 191.58 156.88 The graph and table above are not deemed “filed” with the SEC for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section, nor are they incorporated by reference into other filings made by us with the SEC.
Performance Graph Comparison of Five-Year Cumulative Total Return Performance Through December 31, 2023 December 31, 2018 2019 2020 2021 2022 2023 NewMarket Corporation $ 100.00 $ 120.02 $ 100.22 $ 88.29 $ 82.40 $ 147.58 S&P 1500 Specialty Chemicals Index 100.00 118.29 137.60 175.78 132.06 151.74 S&P 500 100.00 131.49 155.68 200.37 164.08 207.21 The graph and table above are not deemed “filed” with the SEC for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section, nor are they incorporated by reference into other filings made by us with the SEC.
Removed
Issuer Purchases of Equity Securities Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs October 1 to October 31 72,841 $ 305.95 72,841 $ 304,344,445 November 1 to November 30 31,676 312.30 31,676 294,452,135 December 1 to December 31 64,761 310.49 64,761 274,344,541 Total 169,278 $ 308.87 169,278 $ 274,344,541 Cash dividends declared and paid totaled $8.40 per share for the year ended December 31, 2022 and $8.00 per share for the year ended December 31, 2021.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

97 edited+26 added−23 removed29 unchanged
Biggest changeThe small decrease in debt resulted from the redemption of the 4.10% senior notes which was mostly offset by additional borrowings on the revolving credit facility during 2022. As a percentage of total capitalization (total long-term debt and shareholders’ equity), our total long-term debt percentage decreased from 59.9% at the end of 2021 to 56.8% at the end of 2022.
Biggest changeAs a percentage of total capitalization (total long-term debt and shareholders’ equity), our total long-term debt percentage decreased from 56.8% at the end of 2022 to 37.4% at the end of 2023. The change in the percentage was primarily the result of the decrease in outstanding revolving credit facility borrowings, along with an increase in shareholders' equity.
During 2022, we used the $109 million of cash generated from operations along with the proceeds of $373 million from the sale of marketable securities, $213 million of borrowings under the revolving credit facility, and $15 million of cash on hand to redeem $350 million of our 4.10% senior notes, repurchase $207 million of our common stock, pay $84 million of dividends on our common stock, and fund $56 million of capital expenditures.
During 2022, we used the $109 million of cash generated from operations along with the proceeds of $373 million from the sale of marketable securities, $213 million of borrowings under the revolving credit facility, and $15 million of cash on hand to redeem $350 million of our 4.10% senior notes, repurchase $207 million of our common stock, pay dividends of $84 million, and fund $56 million of capital expenditures.
Factors that could cause actual results to differ materially from expectations include, but are not limited to, the availability of raw materials and distribution systems; disruptions at production facilities, including single-sourced facilities; hazards common to chemical businesses; the ability to respond effectively to technological changes in our industry; failure to protect our intellectual property rights; sudden, sharp, or prolonged raw material price increases; competition from other manufacturers; current and future governmental regulations; the loss of significant customers; failure to attract and retain a highly-qualified workforce; an information technology system failure or security breach; the occurrence or threat of extraordinary events, including natural disasters, terrorist attacks, wars, and health-related epidemics such as the COVID-19 pandemic; risks related to operating outside of the United States; political, economic, and regulatory factors concerning our products; the impact of substantial indebtedness on our operational and financial flexibility; the impact of fluctuations in foreign exchange rates; resolution of environmental liabilities or legal proceedings; limitation of our insurance coverage; our inability to realize expected benefits from investment in our infrastructure or from future acquisitions, or our inability to successfully integrate future acquisitions into our business; and the underperformance of our pension assets resulting in additional cash contributions to our pension plans.
Factors that could cause actual results to differ materially from expectations include, but are not limited to, the availability of raw materials and distribution systems; disruptions at production facilities, including single-sourced facilities; hazards common to chemical businesses; the ability to respond effectively to technological changes in our industry; failure to protect our intellectual property rights; sudden, sharp, or prolonged raw material price increases; competition from other manufacturers; current and future governmental regulations; the loss of significant customers; failure to attract and retain a highly-qualified workforce; an information technology system failure or security breach; the occurrence or threat of extraordinary events, including natural disasters, terrorist attacks, wars, and health-related epidemics; risks related to operating outside of the United States; political, economic, and regulatory factors concerning our products; the impact of substantial indebtedness on our operational and financial flexibility; the impact of fluctuations in foreign exchange rates; resolution of environmental liabilities or legal proceedings; limitation of our insurance coverage; our inability to realize expected benefits from investment in our infrastructure or from acquisitions, or our inability to successfully integrate acquisitions into our business; and the underperformance of our pension assets resulting in additional cash contributions to our pension plans.
Rate of Projected Compensation Increase - Our rate of projected compensation increase at December 31, 2022 is 3.5%. The rate assumption was based on an analysis of our projected compensation increases for the foreseeable future. Liquidity - Cash contribution requirements to the U.K. pension plan are sensitive to changes in assumed interest rates and investment gains or losses.
Rate of Projected Compensation Increase - Our rate of projected compensation increase at December 31, 2023 is 3.5%. The rate assumption was based on an analysis of our projected compensation increases for the foreseeable future. Liquidity - Cash contribution requirements to the U.K. pension plan are sensitive to changes in assumed interest rates and investment gains or losses.
Substantially all investments in new product development are incurred in the United States and the U.K., with approximately 70% of total R&D being attributable to the North America and EMEAI regions. The remaining R&D is attributable to the Asia Pacific and Latin America regions and represents customer technology support services in those regions.
Substantially all investments in new product development are incurred in the United States and the United Kingdom (U.K.), with approximately 70% of total R&D attributable to the North America and EMEAI regions. The remaining R&D is attributable to the Asia Pacific and Latin America regions and represents customer technology support services in those regions.
We were in compliance with all covenants under the 3.78% senior notes as of December 31, 2022 and December 31, 2021. Revolving Credit Facilit y - On March 5, 2020, NewMarket and certain foreign subsidiary borrowers entered into a Credit Agreement (the Credit Agreement) with a term of five years.
We were in compliance with all covenants under the 3.78% senior notes as of December 31, 2023 and December 31, 2022. Revolving Credit Facilit y - On March 5, 2020, NewMarket and certain foreign subsidiary borrowers entered into a Credit Agreement (the Credit Agreement) with a term of five years.
As part of the review and to develop expected rates of return, we considered an analysis of expected returns based on the U.S. plans’ asset allocation as of both January 1, 2023 and January 1, 2022. This analysis reflects our expected long-term rates of return for each significant asset class or economic indicator.
As part of the review and to develop expected rates of return, we considered an analysis of expected returns based on the U.S. plans’ asset allocation as of both January 1, 2024 and January 1, 2023. This analysis reflects our expected long-term rates of return for each significant asset class or economic indicator.
Debt A summary of our debt instruments follows. A full discussion is in Note 14. 2.70% Senior Notes - On March 18, 2021, we issued $400 million aggregate principal amount of 2.70% senior notes due 2031 at an issue price of 98.763%.
Debt A summary of our debt instruments follows. A full discussion is in Note 13. 2.70% Senior Notes - On March 18, 2021, we issued $400 million aggregate principal amount of 2.70% senior notes due 2031 at an issue price of 98.763%.
Examples of forward-looking statements include, but are not limited to, statements we make regarding future prospects of growth in the petroleum additives market, other trends in the petroleum additives market, our ability to maintain or increase our market share, and our future capital expenditure levels.
Examples of forward-looking statements include, but are not limited to, statements we make regarding future prospects of growth in the petroleum additives market, other trends in the petroleum additives market, our ability to maintain or increase our market share, our future capital expenditure levels, and our future financial results.
Through the ongoing monitoring of our investments and review of market data, we have determined that we should maintain the expected long-term rate of return for our U.S. pension plans at 8.0% at December 31, 2022.
Through the ongoing monitoring of our investments and review of market data, we have determined that we should maintain the expected long-term rate of return for our U.S. pension plans at 8.0% at December 31, 2023.
Although we 32 Table of Contents believe our estimates and judgments are reasonable, actual results could differ, resulting in gains or losses that may be material to our results of operations and financial position. At each interim reporting period, we estimate an effective income tax rate that is expected to be applicable for the full year.
Although we believe our estimates and judgments are reasonable, actual results could differ, resulting in gains or losses that may be material to our results of operations and financial position. At each interim reporting period, we estimate an effective income tax rate that is expected to be applicable for the full year.
Our approach to R&D investments, as it is with SG&A, is one of purposeful spending on programs to support our current product base and to ensure that we develop products to support our customers' programs in the future. R&D investments include personnel-related costs, as well as costs for internal and external testing of our products.
Our approach to R&D investments, as it is with SG&A, is one of purposeful spending on programs to support our current product base and to ensure that we develop 26 Table of Contents products to support our customers' programs in the future. R&D investments include personnel-related costs, as well as costs for internal and external testing of our products.
Information is provided on the pension and postretirement plans in Note 18. In addition, further disclosure of the effect of changes in these assumptions is provided in the Financial Position and Liquidity section of Item 7.
Information is provided on the pension and postretirement plans in Note 17. In addition, further disclosure of the effect of changes in these assumptions is provided in the Financial Position and Liquidity section of Item 7.
The Credit Agreement provides for a $900 million, multicurrency revolving credit facility with a $500 million sublimit for foreign currency borrowings, a $50 million sublimit for letters of credit, and a $20 million sublimit for swingline loans.
The Credit Agreement provided for a $900 million, multicurrency revolving credit facility with a $500 million sublimit for foreign currency borrowings, a $50 million sublimit for letters of credit, and a $20 million sublimit for swingline loans.
Environmental and Legal Proceedings We have disclosed our environmental matters in Item 1 of this Annual Report on Form 10-K, as well as in Note 21.
Environmental and Legal Proceedings We have disclosed our environmental matters in Item 1 of this Annual Report on Form 10-K, as well as in Note 20.
Cash and cash equivalents held by our foreign subsidiaries amounted to approximately $65 million at December 31, 2022 and $81 million at December 31, 2021. Periodically, we repatriate cash from our foreign subsidiaries to the United States through intercompany dividends and loans. We do not anticipate significant tax consequences of future distributions of foreign earnings.
Cash and cash equivalents held by our foreign subsidiaries amounted to approximately $87 million at December 31, 2023 and $65 million at December 31, 2022. Periodically, we repatriate cash from our foreign subsidiaries to the United States through intercompany dividends and loans. We do not anticipate significant tax consequences of future distributions of foreign earnings.
Environmental Expenses We spent approximately $37 million in 2022 and $35 million in 2021 for ongoing environmental operating and clean-up costs, excluding depreciation of previously capitalized expenditures. These environmental operating and clean-up expenses are included in cost of goods sold. We expect to continue to fund these costs through cash provided by operations.
Environmental Expenses We spent approximately $41 million in 2023 and $37 million in 2022 for ongoing environmental operating and clean-up costs, excluding depreciation of previously capitalized expenditures. These environmental operating and clean-up expenses are included in cost of goods sold. We expect to continue to fund these costs through cash provided by operations.
In determining the impact of the U.K. pension plans on our financial statements, we utilize the S3P (Light) mortality tables weighted by 103% for males and 106% for females and allow for future projected improvements in life expectancy in line with the CMI 2021 model with the core smoothing parameter, an initial addition to mortality improvements of 0.3% per year, and an experience weighting of 7.5% on 2020 and 2021 data, with a long-term rate of improvement of 1% per year based on the membership of the plan.
In determining the impact of the U.K. pension plans on our financial statements, we utilize the S3PxA (Light) mortality tables weighted by 103% for males and 106% for females and allow for future projected improvements in life expectancy in line with the CMI 2022 model with the core smoothing parameter, an initial addition to mortality improvements of 0.3% per year, and an experience weighting of 0% on 2020 and 2021 data and 20% on 2022 data, with a long-term rate of improvement of 1.25% per year for males and 1.00% per year for females based on the membership of the plan.
The Credit Agreement includes an expansion feature which allows us, subject to certain conditions, to request an increase in the aggregate amount of the revolving credit facility or obtain incremental term loans in an amount up to $425 million.
The Credit Agreement included an expansion feature which allowed us, subject to certain conditions, to request an increase in the aggregate amount of the revolving credit facility or obtain incremental term loans in an amount up to $425 million.
While we do not expect to make a cash contribution to our U.S. qualified pension plans, we expect our aggregate cash contributions to the U.S. pension plans will be approximately $3 million in 2023. We expect our contributions to the postretirement benefit plans will be approximately $2 million in 2023.
While we do not expect to make a cash contribution to our U.S. qualified pension plans, we expect our aggregate cash contributions to the U.S. pension plans will be approximately $3 million in 2024. We expect our contributions to the postretirement benefit plans will be approximately $1 million in 2024.
Similarly, a 100 basis point increase in the expected rate of return to 7.7% (while holding other assumptions constant) would reduce forecasted 2023 pension expense by approximately $2 million. Discount Rate Assumption - We utilize a yield curve based on AA-rated corporate bond yields in developing a discount rate assumption.
Similarly, a 100 basis point increase in the expected rate of return to 7.9% (while holding other assumptions constant) would increase forecasted 2024 pension income by approximately $2 million. Discount Rate Assumption - We utilize a yield curve based on AA-rated corporate bond yields in developing a discount rate assumption.
We were in compliance with all covenants under the indenture governing the 4.10% senior notes as of December 31, 2021. 3.78% Senior Notes - On January 4, 2017, we issued $250 million in senior unsecured notes in a private placement with The Prudential Insurance Company of America and certain other purchasers.
We were in compliance with all covenants under the indenture governing the 2.70% senior notes as of December 31, 2023 and December 31, 2022. 3.78% Senior Notes - On January 4, 2017, we issued $250 million in senior unsecured notes in a private placement with The Prudential Insurance Company of America and certain other purchasers.
We continue to have confidence in our customer-focused strategy and approach to the market. We believe the fundamentals of how we run our business - 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 of our stakeholders over the long term.
We believe the fundamentals of how we run our business - 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 of our stakeholders over the long term.
Pension and Postretirement Benefit Plans —The average remaining service period of active participants for our U.S. plans is 13.2 years, while the average remaining life expectancy of inactive participants is 22.7 years.
Pension and Postretirement Benefit Plans —The average remaining service period of active participants for our U.S. plans is 13.1 years, while the average remaining life expectancy of inactive participants is 22.6 years.
We currently estimate capital expenditures in 2023 will be in the range of $70 million to $80 million as we anticipate spending on several improvements to our manufacturing and R&D infrastructure around the world. We expect to continue to finance capital spending through cash provided from operations, as well as with borrowing available under our revolving credit facility.
We estimate capital expenditures in 2024 will be in the range of $50 million to $60 million as we anticipate spending on several improvements to our manufacturing and R&D infrastructure around the world. We expect to continue to finance capital spending through cash provided from operations, as well as with borrowing available under our revolving credit facility.
At December 31, 2022, these costs were estimated at $1 million in each of 2023 through 2027, and $9 million thereafter. 29 Table of Contents We expect that cash from operations, together with borrowing available under our credit facilities, will continue to be sufficient for our operating needs and planned capital expenditures for both a short-term and long-term horizon.
At December 31, 2023, these costs were estimated at approximately $1 million in each of 2024 through 2028 and $9 million thereafter. We expect that cash from operations, together with borrowing available under our credit facilities, will continue to be sufficient for our operating needs and planned capital expenditures for both a short-term and long-term horizon.
We plan to exceed that growth rate over the long-term. Over the past several years we have made significant investments in our business as the industry fundamentals remain positive. These investments have been and will continue to be in organizational talent, technology development and processes, and global infrastructure, consisting of technical centers, production capability and geographic expansion.
Over the past several years we have made significant investments in our business as the industry fundamentals remain positive. These investments have been and will continue to be in organizational talent, technology development and processes, and global infrastructure, consisting of technical centers, production capability and geographic expansion.
We expect that there will be continued volatility in pension expense as actual investment returns vary from the expected return, but we continue to believe the potential long-term benefits justify the risk premium for equity investments. At December 31, 2022, our expected long-term rate of return on our postretirement plans was 4.0%.
We expect that there will be continued volatility in net periodic benefit cost (income) for our pension plans as actual investment returns vary from the expected return, but we continue to believe the potential long-term benefits justify the risk premium for equity investments. At December 31, 2023, our expected long-term rate of return on our postretirement plans was 4.0%.
For example, decreasing the expected rate of return by 100 basis points to 7.0% for pension assets and 3.0% for postretirement benefit assets (while holding other assumptions constant) would increase the forecasted 2023 expense for our U.S. pension and postretirement plans by approximately $6 million.
For example, decreasing the expected rate of return by 100 basis points to 7.0% for pension assets and 3.0% for postretirement benefit assets (while holding other assumptions constant) would reduce the forecasted 2024 income for our U.S. pension and postretirement plans by approximately $7 million.
The average remaining service period of active participants for our U.K. plan is 14 years, while the average remaining life expectancy of inactive participants is 22 years.
The average remaining service period of active participants for our U.K. plan is 15 years, while the average remaining life expectancy of inactive participants is 23 years.
Outstanding letters of credit amounted to $2 million at both December 31, 2022 and December 31, 2021 resulting in the unused portion of the applicable credit facility amounting to $537 million at December 31, 2022 and $750 million at December 31, 2021. The average interest rate for borrowings under the credit facilities was 3.5% during 2022 and 1.6% during 2021.
Outstanding letters of credit amounted to $2 million at both December 31, 2023 and December 31, 2022, resulting in the unused portion of the credit facility amounting to $898 million at December 31, 2023 and $537 million at December 31, 2022. The average interest rate for borrowings under the credit facility was 6.2% during 2023 and 3.5% during 2022.
Years Ended December 31, (in millions) 2022 2021 2020 Petroleum additives Lubricant additives $ 2,342 $ 1,999 $ 1,687 Fuel additives 412 345 315 Total 2,754 2,344 2,002 All other 11 12 9 Consolidated revenue $ 2,765 $ 2,356 $ 2,011 Petroleum Additives - The regions in which we operate include North America (the United States and Canada), Latin America (Mexico, Central America, and South America), Asia Pacific, and the Europe/Middle East/Africa/India (EMEAI) region.
Years Ended December 31, (in millions) 2023 2022 2021 Petroleum additives Lubricant additives $ 2,296 $ 2,342 $ 1,999 Fuel additives 394 412 345 Total 2,690 2,754 2,344 All other 8 11 12 Consolidated revenue $ 2,698 $ 2,765 $ 2,356 Petroleum Additives - The regions in which we operate include North America (the United States and Canada), Latin America (Mexico, Central America, and South America), Asia Pacific, and the Europe/Middle East/Africa/India (EMEAI) region.
Similarly, a 100 basis point increase in the expected rate of return to 9.0% for pension assets and 5.0% for postretirement benefit assets (while holding other assumptions constant) would reduce forecasted 2023 pension and postretirement expense by $6 million.
Similarly, a 100 basis point increase in the expected rate of return to 9.0% for pension assets and 5.0% for postretirement benefit assets (while holding other assumptions constant) would increase forecasted 2024 pension and postretirement income by $7 million.
We continue to invest in and manage our business for the long-term with the goal of helping our customers succeed in their marketplaces. Our investments continue to be in organizational talent, technology development and processes, and global infrastructure, consisting of technical centers, production capability, and geographic expansion.
We continue to invest in and manage our business for the long-term with the goal of helping our customers succeed in their marketplaces. Our investments continue to be in organizational talent, technology development and processes, and global infrastructure.
NewMarket's obligations under the Credit Agreement are unsecured and the obligations of foreign subsidiary borrowers are fully and unconditionally guaranteed by NewMarket. The revolving credit facility is available on a revolving basis until March 5, 2025. Effective January 11, 2023, the revolving credit facility was amended to eliminate the use of LIBOR on borrowings, replacing it with SOFR.
NewMarket's obligations under the Credit Agreement were unsecured and the obligations of foreign subsidiary borrowers were fully and unconditionally guaranteed by NewMarket. The revolving credit facility was scheduled to mature on March 5, 2025. Effective January 11, 2023, the revolving credit facility was amended to eliminate the use of LIBOR on borrowings, replacing it with SOFR.
Cash flows from operating activities included a decrease of $205 million from higher working capital requirements, which is further discussed in the Working Capital section below, and cash contributions of $10 million to our pension and postretirement plans.
Cash flows from operating activities included an increase of $134 million from lower working capital requirements, which is further discussed in the Working Capital section below, and a decrease of $10 million for cash contributions to our pension and postretirement plans.
A 100 basis point increase in the discount rate to 6.625% (while holding other assumptions constant) would reduce forecasted 2023 pension and postretirement benefit expense by approximately $4 million. 30 Table of Contents Rate of Projected Compensation Increase - We have maintained our rate of projected compensation increase at December 31, 2022 at 3.5%.
A 100 basis point increase in the discount rate to 6.375% (while holding other assumptions constant) would increase forecasted 2024 pension and postretirement benefit income by approximately $4 million. Rate of Projected Compensation Increase - We have maintained our rate of projected compensation increase at December 31, 2023 at 3.5%.
The Credit Agreement contains financial covenants that require NewMarket to maintain a consolidated Leverage Ratio (as defined in the Credit Agreement) of no more than 3.75 to 1.00 except during an Increased Leverage Period (as defined in the Credit Agreement). At December 31, 2022, the Leverage Ratio was 2.23.
The Credit Agreement contained financial covenants that required NewMarket to maintain a consolidated Leverage Ratio (as defined in the Credit Agreement) of no more than 3.75 to 1.00 except during an Increased Leverage Period (as defined in the Credit Agreement). At December 31, 2023, the Leverage Ratio was 1.13.
For example, decreasing the discount rate by 100 basis points to 4.625% (while holding other assumptions constant) would increase the forecasted 2023 expense for our U.S. pension and postretirement benefit plans by approximately $4 million.
For example, decreasing the discount rate by 100 basis points to 4.375% (while holding other assumptions constant) would reduce the forecasted 2024 income for our U.S. pension and postretirement benefit plans by approximately $4 million.
For example, decreasing the expected rate of return by 100 basis points to 5.7% (while holding other assumptions constant) would increase the forecasted 2023 expense for our U.K. pension plan by approximately $2 million.
For example, decreasing the expected rate of return by 100 basis points to 5.9% (while holding other assumptions constant) would decrease the forecasted 2024 income for our U.K. pension plan by approximately $2 million.
CASH FLOWS DISCUSSION We generated cash from operating activities of $109 million in 2022 and $165 million in 2021.
CASH FLOWS DISCUSSION We generated cash from operating activities of $577 million in 2023 and $109 million in 2022.
Cash flows from operating activities included cash contributions of $10 million to our pension and postretirement plans, as well as a decrease of $116 million from higher working capital requirements. FINANCIAL POSITION AND LIQUIDITY Cash At December 31, 2022, we had cash and cash equivalents of $69 million as compared to $83 million at the end of 2021.
Cash flows from operating activities included a decrease of $205 million from higher working capital requirements and a decrease of $10 million for cash contributions to our pension and postretirement plans. 27 Table of Contents FINANCIAL POSITION AND LIQUIDITY Cash At December 31, 2023, we had cash and cash equivalents of $112 million as compared to $69 million at the end of 2022.
An actuarial gain on the assets occurred during 2021 as the actual investment return for all of our U.S. qualified pension plans exceeded the expected return by approximately $83 million. Investment gains and losses are recognized in earnings on an amortized basis over a period of 5 years.
An actuarial loss on the assets occurred during 2022 as the actual investment return for all of our U.S. qualified pension plans was less than the expected return by $149 million. Investment gains and losses are recognized in earnings on an amortized basis over a period of 5 years.
Based on the actual asset allocation and the expected yields available in the U.K. markets, the expected long-term rate of return for the U.K. pension plan was 6.7% at December 31, 2022. An actuarial loss on the assets occurred during 2022 as the actual investment return was less than the expected investment return by approximately $44 million.
Based on the actual asset allocation and the expected yields available in the U.K. markets, the expected long-term rate of return for the U.K. pension plan was 6.9% at December 31, 2023. An actuarial gain on the assets occurred during 2023 as the actual investment return exceeded the expected investment return by approximately $4 million.
The amortization of the actuarial net gain is expected to be approximately $2 million in 2023 resulting primarily from the actuarial gain related to the increase in discount rate, which was only partially offset by actuarial losses on plan assets.
The amortization of the actuarial net gain is expected to be approximately $2 million in 2024 resulting primarily from the actuarial gain related to the investment gains on plan assets, which was partially offset by actuarial losses associated with the decrease in the discount rate.
The target asset allocation in the U.K. is 40% in pooled equities funds, 40% in pooled government bonds, and 20% in pooled diversified growth funds. The actual allocation at the end of 2022 was 47% in pooled equities funds, 32% in pooled government bonds, and 21% in pooled diversified growth funds.
The target asset allocation in the U.K. is 40% in pooled equities funds, 40% in pooled government bonds, and 20% in pooled diversified growth funds. The actual allocation at the end of 2023 was 49% in pooled equities funds, 29% in pooled government bonds, 21% in pooled diversified growth funds, and 1% in cash.
RECENTLY ISSUED ACCOUNTING STANDARDS For a full discussion of the more significant recently issued accounting standards, see Note 23. 33 Table of Contents
RECENTLY ISSUED ACCOUNTING STANDARDS For a full discussion of the more significant recently issued accounting standards, see Note 22.
We use a December 31 measurement date to determine our pension and postretirement expenses and related financial disclosure information. Additional information on our pension and postretirement plans is in Note 18 . U.S.
We use a December 31 measurement date to determine our net periodic benefit cost (income) for our pension and postretirement benefit plans and related financial disclosure information. Additional information on our pension and postretirement plans is in Note 17 . U.S.
There was $361 million outstanding borrowings under the revolving credit facility at December 31, 2022 compared to $148 million outstanding borrowings at December 31, 2021.
There were no outstanding borrowings under the revolving credit facility at December 31, 2023, compared to $361 million outstanding borrowings at December 31, 2022.
Segment Operating Profit NewMarket evaluates the performance of the petroleum additives business based on segment operating profit. NewMarket Services expenses are charged to each subsidiary pursuant to services agreements between the companies. Depreciation on segment property, plant, and equipment, as well as amortization of segment intangible assets and lease right-of-use assets, is included in segment operating profit.
NewMarket Services expenses are charged to NewMarket and each subsidiary pursuant to services agreements between the companies. Depreciation on segment property, plant, and equipment, as well as amortization of segment intangible assets and lease right-of-use assets, is included in segment operating profit. The following table reports segment operating profit for the last three years.
The amounts for both periods included the components of net periodic benefit cost (income), except for service costs, from defined benefit pension and postretirement plans. See Note 18 for further information on total periodic benefit cost (income).
The amounts for both periods included the components of net periodic benefit cost (income), except for service costs, from defined benefit pension and postretirement plans. See Note 17 for further information on total periodic benefit cost (income). The 2022 amount also included a loss on marketable securities of $3 million.
All of our R&D is related to the petroleum additives segment. The following discussion references certain captions on the Consolidated Statements of Income. Interest and Financing Expenses Interest and financing expenses were $35 million in 2022 and $34 million in 2021. The increase in interest and financing expense between 2022 and 2021 resulted primarily from lower capitalized interest.
All of our R&D is related to the petroleum additives segment. The following discussion references certain captions on the Consolidated Statements of Income. Interest and Financing Expenses Interest and financing expenses were $37 million in 2023 and $35 million in 2022.
Further information on purchase commitments, including those for purchases of property, plant, and equipment, is in Note 21. The annual operating expenses and capital expenditures associated with compliance with environmental, health, and safety regulations are included in Item 1, Governmental and Environmental Regulations. In addition to these costs, there are expected cash flows for dismantling and decontamination of environmental sites.
The annual operating expenses and capital expenditures associated with compliance with environmental, health, and safety regulations are included in Item 1, Governmental and Environmental Regulations. In addition to these costs, there are expected cash flows for dismantling and decontamination of environmental sites.
The discount rate at December 31, 2022 was 5.625% for all plans. Pension and postretirement benefit expense is also sensitive to changes in the discount rate.
The discount rate at December 31, 2023 was 5.375% for all plans. Net periodic benefit cost (income) for pension and postretirement benefit plans is also sensitive to changes in the discount rate.
The yield appropriate to the duration of the U.K. plan liabilities is then used. The discount rate at December 31, 2022 was 4.8%. Pension expense is also sensitive to changes in the discount rate.
The yield appropriate to the duration of the U.K. plan liabilities is then used. The discount rate at December 31, 2023 was 4.55%. Net periodic benefit cost (income) for the U.K. pension plan is also sensitive to changes in the discount rate.
In light of these risks and uncertainties, any forward-looking statement made in this discussion or elsewhere, might not occur. OVERVIEW When comparing the results of the petroleum additives segment for 2022 with 2021, net sales increased 17.5% primarily due to higher selling prices, partially offset by decreases in product shipments and an unfavorable foreign currency impact.
In light of these risks and uncertainties, any forward-looking statement made in this discussion or elsewhere, might not occur. OVERVIEW When comparing the results of the petroleum additives segment for 2023 with 2022, net sales were 2.4% lower resulting from a decrease in product shipments and an unfavorable foreign currency impact, which were mostly offset by higher selling prices.
For example, decreasing the discount rate by 100 basis points to 3.8% (while holding other assumptions constant) would increase the forecasted 2023 expense for our U.K. pension plans by approximately $0.5 million. A 100 basis point increase in the discount rate to 5.8% (while holding other assumptions constant) would reduce forecasted 2023 pension expense by approximately $0.4 million.
For example, decreasing the discount rate by 100 basis points to 3.55% (while holding other assumptions constant) would decrease the forecasted 2024 income for our U.K. pension plans by approximately $500 thousand. A 100 basis point increase in the discount rate to 5.55% (while holding other assumptions constant) would increase forecasted 2024 pension income by approximately $400 thousand.
No single customer accounted for 10% or more of our total net sales in 2022, 2021, or 2020. The following table shows net sales by segment and product line for each of the last three years.
Net Sales Our consolidated net sales for 2023 amounted to $2.7 billion, a decrease of $66 million, or 2.4% from 2022. No single customer accounted for 10% or more of our total net sales in 2023, 2022, or 2021. The following table shows net sales by segment and product line for each of the last three years.
Any significant impact as a result of changes in underlying facts, law, tax rates, or tax audits could lead to adjustments to our income tax expense, effective tax rate, financial position, or cash flow.
Significant judgment is required in determining our worldwide provision for income taxes and recording the related tax assets and liabilities. Any significant impact as a result of changes in underlying facts, law, tax rates, or tax audits could lead to adjustments to our income tax expense, effective tax rate, financial position, or cash flow.
An actuarial loss on the assets occurred during 2022 as the actual investment return for all of our U.S. qualified pension plans was less than the expected return by $149 million.
An actuarial gain on the assets occurred during 2023 as the actual investment return for all of our U.S. qualified pension plans exceeded the expected return by approximately $47 million in 2023.
The following table reports segment operating profit for the last three years. A reconciliation of segment operating profit to income before income tax expense is in Note 4.
A reconciliation of segment operating profit to income before income tax expense is in Note 4.
Additionally, interpretations of tax laws, court decisions, or other guidance provided by taxing authorities influence our estimate of the effective income tax rate. As a result, our actual effective income tax rate and related income tax liabilities may differ materially from our estimated effective tax rate and related income tax liabilities.
Additionally, interpretations of tax laws, court decisions, or other guidance provided by taxing authorities influence our estimate of the effective income tax rate.
We regularly review our many internal opportunities to utilize excess cash from technological, geographic, production capability, and product line perspectives. We believe our capital spending is creating the capability we need to grow and support our customers worldwide, and our research and development investments are positioning us well to provide added value to our customers.
We believe our capital spending is creating the capability we need to grow and support our customers worldwide, and our research and development investments are positioning us well to provide added value to our customers.
The change in the percentage was primarily the result of the decrease in long-term debt, along with a small increase in shareholders' equity. The change in shareholders’ equity primarily reflects our earnings and an increase in the funded position of our defined benefit plans mostly offset by stock repurchases, dividend payments, and the impact of the foreign currency translation adjustment.
The change in shareholders’ equity primarily reflects our earnings, an increase in the funded position of our defined benefit plans, and the impact of the foreign currency translation adjustment partially offset by stock repurchases and dividend payments. Normally, we repay any outstanding long-term debt with cash from operations or refinancing activities.
Years Ended December 31, (in millions) 2022 2021 2020 Petroleum additives $ 378 $ 281 $ 333 All other $ (2) $ (1) $ 0 25 Table of Contents Petroleum Additives - Petroleum additives segment operating profit increased $97 million and gross profit increased $86 million when comparing 2022 to 2021.
Years Ended December 31, (in millions) 2023 2022 2021 Petroleum additives $ 514 $ 378 $ 281 All other $ (5) $ (2) $ (1) Petroleum Additives - Petroleum additives segment gross profit, as well as segment operating profit, increased $136 million when comparing 2023 to 2022.
Our primary focus in the acquisition area remains on the petroleum additives industry. It is our view that this industry segment will provide the greatest opportunity for solid returns on our investments while minimizing risk. We remain focused on this strategy and will evaluate any future opportunities.
It is our view that the petroleum additives industry will provide the greatest opportunity for solid returns on our investments while minimizing risk. We remain focused on this strategy and will evaluate any future opportunities. We will continue to evaluate all alternative uses of cash to enhance shareholder value, including stock repurchases and dividends.
Normally, we repay any outstanding long-term debt with cash from operations or refinancing activities. 28 Table of Contents Working Capital Including cash and cash equivalents and the impact of foreign currency on the balance sheet, at December 31, 2022, we had working capital of $768 million, resulting in a current ratio of 2.81 to 1.
Working Capital Including cash and cash equivalents and the impact of foreign currency on the balance sheet, at December 31, 2023, we had working capital of $675 million, resulting in a current ratio of 2.85 to 1. Our working capital at December 31, 2022 on the same basis was $768 million, resulting in a current ratio of 2.81 to 1.
The percentage of net sales being generated in the regions has remained fairly consistent over the past three years, with some limited fluctuation due to various factors, including the impact of regional economic trends. 24 Table of Contents North America represents around 35% of our petroleum additives net sales, while EMEAI contributes about 30%, Asia Pacific about 25%, and Latin America the remaining amount.
The percentage of net sales being generated in the regions has remained fairly consistent over the past three years, with some limited fluctuation due to various factors, including the impact of regional economic trends.
Our investment in petroleum additives research, development, and testing (R&D) decreased approximately $4 million when comparing 2022 with 2021. As a percentage of net sales, R&D was 5.1% in 2022 and 6.1% in 2021.
While personnel-related costs fluctuate from year to year, there were no significant changes in the drivers of these costs when comparing 2023 and 2022. Our investment in petroleum additives research, development, and testing (R&D) decreased approximately $2 million when comparing 2023 with 2022. As a percentage of net sales, R&D was 5.1% in both 2023 and 2022.
The average interest rate was lower in 2022 resulting in a favorable impact to interest and financing expenses but was substantially offset by an unfavorable impact from higher outstanding debt in 2022 than in 2021. Other Income (Expense), Net Other income (expense), net was income of $35 million in 2022 and $24 million in 2021.
The increase in interest and financing expense between 2023 and 2022 resulted primarily from a higher average interest rate, which was partially offset by lower average outstanding debt. Other Income (Expense), Net Other income (expense), net was income of $43 million in 2023 and $35 million in 2022.
We will continue to evaluate all alternative uses of cash to enhance shareholder value, including stock repurchases and dividends. CRITICAL ACCOUNTING POLICIES AND ESTIMATES The following discussion highlights some of the more critical areas where a significant change in facts and circumstances in our operating and financial environment could cause a change in future reported financial results.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES The following discussion highlights some of the more critical areas where a significant change in facts and circumstances in our operating and financial environment could cause a change in future reported financial results. Income Taxes We file United States, foreign, state, and local income tax returns.
We expect that there will be continued volatility in pension expense as actual investment returns vary from the expected return, but we continue to believe the potential benefits justify the risk premium for the target asset allocation. Pension expense is sensitive to changes in the expected return on assets.
The combined investment gain and actuarial loss on plan liabilities results in no expected amortization in 2024 We expect that there will be continued volatility in the net periodic benefit cost (income) for our U.K. pension plan as 31 Table of Contents actual investment returns vary from the expected return, but we continue to believe the potential benefits justify the risk premium for the target asset allocation.
Note 17 provides information by year on our lease obligations which have commenced, as well as lease commitments which have not yet commenced. Note 18 includes information on contributions to pension and postretirement benefit plans, as well as benefit payments to participants. Benefit payments under these plans are predominantly paid from assets held in trust.
Note 17 includes information on contributions to pension and postretirement benefit plans, as well as benefit payments to participants. Benefit payments under these plans are predominantly paid from assets held in trust. Further information on purchase commitments, including those for purchases of property, plant, and equipment, is in Note 20.
Liquidity and Contractual Obligations We have both current and long-term obligations that have known payment streams and are discussed throughout this Annual Report on Form 10-K. These include debt-related obligations, lease obligations, purchase commitments, including those for property, plant, and equipment, contributions to pension and postretirement benefit plans, and environmental dismantling and decontamination.
These include debt-related obligations, lease obligations, purchase commitments, including those for property, plant, and equipment, contributions to pension and postretirement benefit plans, and environmental dismantling and decontamination. 29 Table of Contents The debt-related contractual obligations include both principal payments on outstanding long-term debt and the related interest payments.
Intangibles (net of amortization) and Goodwill We have certain identifiable intangibles amounting to $2 million and goodwill amounting to $124 million at December 31, 2022 that are discussed in Note 11. These intangibles and goodwill relate to our petroleum additives business. The intangibles are being amortized over periods with up to approximately 6 years of remaining life.
These intangibles and goodwill relate to our petroleum additives business. The intangibles are being amortized over periods with up to approximately 5 years of remaining life.
We intend to utilize these investments to improve our ability to deliver the solutions that our customers value, expand our global reach, and enhance our operating results. We will continue to invest in our capabilities to provide even better value, service, technology, and customer solutions. Our business generates significant amounts of cash beyond its operational needs.
We intend to utilize these investments to improve our ability to deliver the solutions that our customers value, expand our global reach, and enhance our operating results.
The discussion and analysis of our results of operations for 2021 compared to 2020 is available in Item 7 of our 2021 Annual Report on Form 10-K. Net Sales Our consolidated net sales for 2022 amounted to $2.8 billion, an increase of $409 million, or 17.3% from 2021.
RESULTS OF OPERATIONS Management's discussion and analysis of our results of operations is presented below for the comparative periods of 2023 versus 2022. The discussion and analysis of our results of operations for 2022 compared to 2021 is available in Item 7 of our 2022 Annual Report on Form 10-K.
Cost of goods sold as a percentage of net sales was 76.8% in 2022 and 76.7% in 2021. The operating profit margin was 13.7% in 2022 and 12.0% in 2021. When comparing 2022 and 2021, both operating profit and gross profit included the favorable impact of significantly higher selling prices, which were partially offset by significantly higher raw material costs.
When comparing 2023 and 2022, both gross profit and operating profit included the favorable impact of significantly higher selling prices, including favorable product mix, which were partially offset by lower shipments, higher raw material costs, and higher operating costs.
One of our subsidiaries in the U.K. has access to a short-term line of credit of 10 million Euro. There was no activity on these lines of credit in 2022 or 2021. *** We had long-term debt of $1.0 billion at December 31, 2022 and $1.1 billion at December 31, 2021.
There was no activity on these lines of credit in 2023 or 2022. *** We had long-term debt of $644 million at December 31, 2023 and $1.0 billion at December 31, 2022. The decrease resulted from the net repayments of $361 million on the revolving credit facility during 2023.
We expect our petroleum additives segment to experience impacts to its operating performance due to the current economic environment, as we continue to see challenges with the global supply network, inflationary trends, and raw material price escalation and volatility. We expect that the petroleum additives market will grow in the 1% to 2% range annually for the foreseeable future.
We expect our petroleum additives segment to experience impacts to its operating performance during 2024 due to the uncertain economic environment in which we operate, as we continue to see challenges with inflationary trends impacting our operating costs and raw material prices.

… 66 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

5 edited+1 added−1 removed8 unchanged
Biggest changeInterest Rate Risk At December 31, 2022, we had total long-term debt of $1 billion. All of the long-term debt is at fixed rates except for debt outstanding under the revolving credit facility. There was no interest rate risk at the end of the year associated with the fixed rate debt.
Biggest changeThere was no interest rate risk at the end of the year associated with the fixed rate debt. At December 31, 2023, we had no outstanding variable rate debt under our revolving credit facility. As such, we had no interest rate risk on variable rate debt at December 31, 2023.
At December 31, 2022, we had no outstanding forward contracts. Raw Material Price Risk We utilize a variety of raw materials in the manufacture of our products, including base oil, polyisobutylene, antioxidants, alcohols, solvents, detergents, friction modifiers, olefins, and copolymers.
At December 31, 2023, we had no outstanding forward contracts. Raw Material Price Risk We utilize a variety of raw materials in the manufacture of our products, including base oil, polyisobutylene, antioxidants, alcohols, solvents, detergents, friction modifiers, olefins, and copolymers.
In addition, if our demand for raw materials were to decline such that we would not have need for the quantities required to be purchased under commitment agreements, we could incur additional charges that would affect our profitability. 34 Table of Contents
In addition, if our demand for raw materials were to decline such that we would not have need for the quantities required to be purchased under commitment agreements, we could incur additional charges that would affect our profitability. 35 Table of Contents
A hypothetical 100 basis point decrease in interest rates, holding all other variables constant, would have resulted in a change of $41 million in fair value of our debt at December 31, 2022. Foreign Currency Risk We sell to customers in foreign markets through our foreign subsidiaries, as well as through export sales from the United States.
A hypothetical 100 basis point decrease in interest rates, holding all other variables constant, would have resulted in a change of $35 million in fair value of our debt at December 31, 2023. Foreign Currency Risk We sell to customers in foreign markets through our foreign subsidiaries, as well as through export sales from the United States.
The following analysis presents the effect on our results of operations, cash flows, and financial position as if the hypothetical changes in market risk factors occurred at December 31, 2022. We analyzed only the potential impacts of our hypothetical assumptions. This analysis does not consider other possible effects that could impact our business.
The following analysis presents the effect on our results of operations, cash flows, and financial position as if the hypothetical changes in market risk factors occurred at December 31, 2023. We analyzed only the potential impacts of our hypothetical assumptions.
Removed
At December 31, 2022, we had $361 million outstanding variable rate debt under our revolving credit facility. Holding all other variables constant, if the variable portion of the interest rates hypothetically increased 10%, the effect on our earnings and cash flow would have been additional interest expense of $2 million.
Added
This analysis does not consider other possible effects that could impact our business. 34 Table of Contents Interest Rate Risk At December 31, 2023, we had total long-term debt of $644 million. All of our long-term debt is at fixed rates except for debt outstanding under the revolving credit facility.

Other NEU 10-K year-over-year comparisons