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What changed in NEWMARKET CORP's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of NEWMARKET CORP's 2023 and 2024 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 2024 report.

+234 added−211 removedSource: 10-K (2025-02-14) vs 10-K (2024-02-15)

Top changes in NEWMARKET CORP's 2024 10-K

234 paragraphs added · 211 removed · 186 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

50 edited+20 added−9 removed58 unchanged
Biggest changeThe safety performance affirmed our Vision of Zero improvement plans and actions across the sites, as well as the importance placed on our safety-first culture. We continue to leverage site-level safety improvement plans at key sites and emphasize reporting "good catches" and "near misses" to help reduce risk and drive improved performance.
Biggest changeWe have organized to provide increased environmental, health, and safety support at key sites and emphasize accountability, as well as reporting "good catches" and "near misses" to help reduce risk and drive improved performance. We are committed to achieving our aspiration of zero injuries and incidents.
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.
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; 4 Table of Contents • 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.
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.
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. 5 Table of Contents Key drivers of the industrial additives marketplace are gross domestic product levels and industrial production.
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)).
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 (RCMS) (RC14001 ® ) at North American facilities ("Responsible Care" is a registered service mark of the American Chemistry Council (ACC)).
A significant portion of our R&D investment is dedicated to the development of products that are differentiated by their ability to deliver improved fuel efficiency in addition to robust performance in a wide range of new vehicle and industrial equipment designs.
A significant portion of our R&D investment is dedicated to the development of products that are differentiated by their ability to deliver improved fuel efficiency and durability in addition to robust performance in a wide range of new vehicle and industrial equipment designs.
Intellectual Property Our intellectual property, including our patents, licenses, and trademarks, is an important component of our business. We actively protect our inventions, new technologies, and product developments by filing patent applications and maintaining trade secrets. We currently own approximately 1,500 issued or pending United States and foreign patents.
Intellectual Property Our intellectual property, including our patents, licenses, and trademarks, is an important component of our business. We actively protect our inventions, new technologies, and product developments by filing patent applications and maintaining trade secrets. We currently own approximately 1,400 issued or pending United States and foreign patents.
Raw Materials and Product Supply We use a variety of raw materials and chemicals in our manufacturing and blending processes and believe the sources of these are adequate for our current operations. The primary raw materials for Afton are base oil, polyisobutylene, antioxidants, alcohols, solvents, detergents, friction modifiers, olefins, and copolymers.
Raw Materials and Product Supply Petroleum Additives - We use a variety of raw materials and chemicals in our manufacturing and blending processes and believe the sources of these are adequate for our current operations. The primary raw materials for Afton are base oil, polyisobutylene, antioxidants, alcohols, solvents, detergents, friction modifiers, olefins, and copolymers.
Hiring the right people for the long-term and developing them for key roles is a critical focus area. To be successful, we must attract and retain a highly qualified and technically competent workforce, including key employees in leadership positions.
Hiring the right people for the long-term and developing them for key roles is a critical focus area. To be successful, we must attract and retain a highly qualified and technically competent workforce, including key employees in R&D and leadership positions.
Our Responsible Care ® management systems are certified by an independent third-party auditing process. Additionally, Afton’s Feluy, Belgium; Suzhou, China; Tsukuba, Japan; Rio de Janeiro, Brazil; Bracknell, England; and Singapore facilities are all certified to the environmental standard ISO 14001. The Suzhou and Singapore sites are also certified to ISO 45001, a global occupational health and safety standard.
Our Responsible Care ® management systems are certified by an independent third-party auditing process. Additionally, Afton’s Feluy, Belgium; Suzhou, China; Tsukuba, Japan; Rio de Janeiro, Brazil; Bracknell, England; and Singapore facilities are all certified to the environmental standard ISO 14001. The Singapore site is also certified to ISO 45001, a global occupational health and safety standard.
The costs of complying with existing environmental, health, and safety laws and regulations as they pertain to our products and operations, including remediation, closure, and postclosure costs, are primarily included in cost of goods sold.
The costs of complying with existing environmental, health, and safety laws and regulations as they pertain to our products and operations, including remediation, closure, and post-closure costs, are primarily included in cost of goods sold.
They may be imposed on us in a range of situations without regard to violation of law or regulations. They may also be imposed jointly and severally, where one party may be held liable for a disproportionate share of the damages, up to and including the entire loss.
They may be imposed on us in a range of situations without regard to 10 Table of Contents violation of law or regulations. They may also be imposed jointly and severally, where one party may be held liable for a disproportionate share of the damages, up to and including the entire loss.
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.
Afton has operations in North America, Europe, Asia, Africa, 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 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.
We spent approximately $37 million in 2024, $41 million in 2023, and $37 million in 2022 for ongoing environmental operating and clean-up costs, excluding depreciation of previously capitalized expenditures.
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.
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 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.
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 two segments, petroleum additives, which is primarily represented by Afton, and specialty materials, which is represented by AMPAC.
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.
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 $13 million in 2024, $10 million in 2023, and $11 million in 2022.
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.
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), American Pacific Corporation (AMPAC), NewMarket Services Corporation (NewMarket Services), and NewMarket Development Corporation (NewMarket Development). We acquired AMPAC on January 16, 2024, for approximately $697 million.
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.
Paliotti 48 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. Fitzgerald, Mr. Jewett, Mrs. Pietrantoni, 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 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.
Approximately 1,100 were located in the United States, 400 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 20% of our workforce is represented by unions. When we hire new employees, our goal is that they stay with us for the remainder of their career.
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.
As members of the ACC, we provide data on 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.
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.
This includes launching our next generation wind turbine technology which maintains our technology leadership in this important and growing market, as well as important new industrial gear products. 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.
While we believe that we are currently fully accrued for known environmental issues, it is possible that unexpected future costs could have a significant financial impact on our financial position, results of operations, and cash flows.
As new technology becomes available, it may be possible to reduce accrued amounts. While we believe that we are currently fully accrued for known environmental issues, it is possible that unexpected future costs could have a significant financial impact on our financial position, results of operations, and cash flows.
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.
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 passenger cars specifications such as GF-7.
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.
Our SEC filings are available to the public on the SEC's website at www.sec.gov. 11 Table of Contents Information about our Executive Officers The names and ages of all executive officers as of February 14, 2025 follow. Name Age Positions Thomas E. Gottwald 64 Chairman of the Board, President, and Chief Executive Officer (Principal Executive Officer) Timothy K.
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.
In 2024, we continued to invest in and progress our technology plans and have a team focused on adjacent spaces that can utilize our chemistry and technology.
The costs of complying with governmental pollution prevention and safety regulations are subject to: • potential changes in applicable statutes and regulations (or their enforcement and interpretation); • uncertainty as to the success of anticipated solutions to pollution problems; • uncertainty as to whether additional expense may prove necessary; and • potential for emerging technology to affect remediation methods and reduce associated costs. 10 Table of Contents Availability of Reports Filed with the Securities and Exchange Commission and Corporate Governance Documents Our internet website address is www.newmarket.com.
The costs of complying with governmental pollution prevention and safety regulations are subject to: • potential changes in applicable statutes and regulations (or their enforcement and interpretation); • uncertainty as to the success of anticipated solutions to pollution problems; • uncertainty as to whether additional expense may prove necessary; and • potential for emerging technology to affect remediation methods and reduce associated costs.
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.
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.
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 ® .
We also have several hundred trademark registrations throughout the world for our marks, including NewMarket ® , Afton Chemical ® , Ethyl ® , AMPAC ® , HiTEC ® , Passion for Solutions ® , Halotron ® , DriveMore ® , and Axcel ® .
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 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 2,060 people at the end of 2024.
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.
Fitzgerald 48 Vice President and Chief Financial Officer (Principal Financial Officer) Bruce R. Hazelgrove, III 64 Executive Vice President and Chief Administrative Officer Bryce D. Jewett, III 50 Executive Vice President and General Counsel Ann P. Pietrantoni 46 Controller (Principal Accounting Officer) Brian D.
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.
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. The AMPAC site in Cedar City, Utah has officially joined the ACC and embarked on its journey to RCMS certification.
We have policies and procedures in place that establish regular reviews of our regulatory and environmental compliance and product stewardship, and actively monitor any significant existing or potential regulatory changes or environmental issues that could materially affect the company.
We have policies and procedures in place that establish regular reviews of our regulatory and environmental compliance and product stewardship, and actively monitor any significant existing or potential regulatory changes or environmental issues that could materially affect us. Our total accruals for environmental remediation, dismantling, and decontamination were approximately $11 million at both December 31, 2024 and December 31, 2023.
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.
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.
We are committed to providing the most advanced products, comprehensive testing programs, and superior technical solutions tailored to the needs of our customers and OEMs worldwide.
In addition to developing new products, R&D provides our customers and OEMs with data to substantiate product differentiation and technical support to assure total customer satisfaction. We are committed to providing the most advanced products, comprehensive testing programs, and superior technical solutions tailored to the needs of our customers and OEMs worldwide.
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.
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. 7 Table of Contents 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.
Jewett joined NewMarket Corporation in July 2020 as Vice President and General Counsel. Prior to his employment at NewMarket, he was a partner at McGuireWoods LLP. Mrs. Ridgeway joined the company in December 2011 as Tax Compliance Manager, became Tax Director in April 2017, Assistant Controller in March 2021, and Controller on January 1, 2023. Mr.
Jewett joined NewMarket Corporation in July 2020 as Vice President and General Counsel and was appointed Executive Vice President and General Counsel on January 1, 2025. Prior to his employment at NewMarket, he was a partner at McGuireWoods LLP. Mrs.
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.
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. AMPAC is a manufacturer of specialty materials primarily used in solid rocket motors for the aerospace and defense industries.
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.
We continue to launch new OEM-specific technology for full battery electric passenger and commercial vehicles and are a top supplier in this growing market.
In addition to utilizing our internal network, contacts, and specialized recruiters to identify and attract qualified personnel, we have established relationships with a number of universities globally and have intern and co-op programs in many of our locations.
In addition to utilizing our internal network, contacts, and specialized recruiters to identify and attract qualified personnel, we have established relationships with a number of universities globally and have intern and co-op programs in many of our locations. 9 Table of Contents Globally, approximately 18% of our employees have 20 years or more of service, and over the three-year period from 2022 through 2024, our resignation rate was approximately 5.1%.
Petroleum Additives - Petroleum additives are used in lubricating oils and fuels to enhance their performance in machinery, vehicles, and other equipment. We manufacture chemical components that are selected to perform one or more specific functions and combine those chemicals with other chemicals or components to form additive packages for use in specified end-user applications.
We manufacture chemical components that are selected to perform one or more specific functions and combine those chemicals with other chemicals or components to form additive packages for use in specified end-user applications. The petroleum additives market is a global marketplace, with customers ranging from large, integrated oil companies to national, regional, and independent companies.
Human Capital Our Values are the foundation of our company and support the inclusive and respectful culture we have established in all of our locations around the world.
Human Capital Our Values are the foundation of our company and support the inclusive and respectful culture we have established in all of our locations around the world. Our Values include: • unquestioned integrity, • respect for people, • safety and environmental responsibility, • partnership with customers and suppliers, • continuously improving quality, • good citizenship, and • economic viability.
Paliotti have served in their capacities for less than five years. Mr. Skrobacz joined the company in May 2011 as Senior Manager, Business Assurance, was appointed Controller Designate in September 2012, appointed Principal Accounting Officer and Controller on May 1, 2013, and appointed Chief Financial Officer and Vice President on January 1, 2023. Mr.
Paliotti have served in their capacities for less than five years. Mr. Fitzgerald joined the company in November 2014 as Operations Finance Director, became Treasurer and Finance Director on January 1, 2024, and was appointed Vice President and Chief Financial Officer on January 1, 2025. Mr.
We develop products through a combination of chemical synthesis, formulation development, engineering design, and performance testing. In addition to developing new products, R&D provides our customers and OEMs with data to substantiate product differentiation and technical support to assure total customer satisfaction.
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. We develop products through a combination of chemical synthesis, formulation development, engineering design, and performance testing.
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.
In 2024, 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. The NewMarket worldwide injury/illness recordable rate (which is the number of injuries per 200,000 hours worked) was 0.77 in 2024.
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.
Dollar-denominated transactions, letters of credit, and prepaid transactions. With approximately 450 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. Afton’s portfolio of technologically-advanced, value-added products allows it to provide a full range of products, services, and solutions to its customers.
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.
NewMarket Development manages the real property that we own in Virginia. NewMarket Services provides various administrative services to NewMarket, Afton, Ethyl, AMPAC, and NewMarket Development. NewMarket Services expenses are billed to each subsidiary pursuant to services agreements between the companies.
In 2023, we successfully launched new technologies across all our lubricant additives and fuel additives product areas.
We continue to operate our laboratories safely, and for the second year in a row, we achieved zero injuries across our R&D team globally. In 2024, we successfully launched new technologies across all our lubricant additives and fuel additives product areas.
Commitment to Environmental and Safety Excellence Our commitment to the environment and safety excellence applies to every employee, contractor, and visitor every day, at every site.
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. Commitment to Environmental and Safety Excellence Our commitment to the environment and safety excellence applies to every employee, contractor, and visitor every day, at every site.
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.
In 2024, we developed new technology in both gasoline performance additives and diesel performance additives. This includes launching new products related to our next generation diesel technology that is designed for not only conventional, but also renewable diesel.
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.
The antiknock compounds business of Ethyl is reflected in the “All other” category. Each of these is discussed below. 3 Table of Contents Petroleum Additives - Petroleum additives are used in lubricating oils and fuels to enhance their performance in machinery, vehicles, and other equipment.
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Afton’s portfolio of technologically-advanced, value-added products allows it to provide a full range of products, services, and solutions to its customers. Ethyl provides contracted manufacturing and related services to Afton and to third parties and is a marketer of antiknock compounds in North America. NewMarket Development manages the real property we own in Richmond, Virginia consisting of approximately 50 acres.
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Ethyl provides contracted manufacturing and related services to Afton and to third parties and is a marketer of antiknock compounds in North America. AMPAC has operations in the United States and manufactures and sells specialty materials used in solid rocket motors for space launch and military defense applications.
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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.
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AMPAC has long-term relationships with customers and the ability to formulate products to meet the various specification requirements of its customers, resulting in AMPAC being a global leader in specialty materials for use in solid rocket motors. NewMarket Development manages the real property we own in Richmond, Virginia consisting of approximately 50 acres.
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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.
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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 Specialty Materials - Our specialty materials segment is principally engaged in the production of perchlorates, which include several grades of ammonium perchlorate, sodium perchlorate, and potassium perchlorate.
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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.
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Ammonium perchlorate is a key component of solid rocket motors, booster motors, and missiles that are utilized in U.S. Department of Defense (DOD) tactical and strategic missile programs.
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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.
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Currently, there is no alternative to the use of these solid rocket motors for national security applications, and due to the critical role of ammonium perchlorate in such motors, we believe that the U.S. government views us as a strategic national resource.
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As technology changes in the petroleum additives industry are ongoing, the success of our business is very dependent upon our ability to attract and retain highly qualified scientific and technical personnel.
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Ammonium perchlorate is also used in space exploration programs for the National Aeronautics and Space Administration (NASA) and commercial space launch vehicles. We supply ammonium perchlorate for use in a number of defense and space launch programs of the U.S. and U.S. allies via U.S. government agencies, government contractors and foreign contractors.
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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.
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Exporting ammonium perchlorate is subject to federal regulation that permits our foreign sales of ammonium perchlorate. We obtain export licenses on a case-by-case basis, which are dependent upon the ultimate use of our product.
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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.
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Customers of ammonium perchlorate primarily consist of rocket motor manufacturers supplying the DOD and NASA programs, as well as entities providing commercial space launch applications and foreign military applications. Demand for ammonium perchlorate is program-specific and dependent upon, among other things, governmental appropriations.
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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.
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The need for tactical rockets, strategic missiles, and solid rocket boosters is anticipated to provide the base demand over the coming five-year period and beyond. We also produce and sell different types and grades of sodium and potassium perchlorates, which have a wide variety of applications, including munitions, explosives, propellants, perchloric acid, initiators, electronics, batteries, plastics, electro-machining, and porcelain.
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Competition We believe we are the largest manufacturer and seller of ammonium perchlorate globally. We are aware of other production capacity in the United States for perchlorate chemicals, including ammonium perchlorate, as well as production capacity in France, Japan, Brazil, China, India, and Taiwan.
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While we have limited information with respect to these facilities, we believe that these producers are not qualified as ammonium perchlorate suppliers for most DOD and NASA programs, which represents the majority of domestic ammonium perchlorate demand.
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Competition among producers of ammonium perchlorate is characterized by the ability to meet customer specifications including unique particle size requirements, reasonable lead times, and qualification of a given production process. The need to maintain a qualified production process and meet changing demand requirements is vital for success in this environment.
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Specialty Materials - The primary raw materials for AMPAC are electricity, sodium chlorate, ammonia, and hydrochloric acid. Graphite is utilized in the fabrication of the electrolytic cells used in the manufacturing process and which are replaced on a periodic basis. All of the raw materials used in the manufacturing process are available in commercial quantities from multiple sources.
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We developed new products for the service-fill sector to provide our customers with 8 Table of Contents the latest additive technology available and continue to advance our market-leading and technology-leading battery electric vehicle transmission fluid which pushes the forefront of efficiency. We also provide leading technology in the fuel additives area.
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We believe our patent position is strong, aggressively managed, and sufficient for the conduct of our business.
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We place the highest level of commitment on safety and strive to operate our business every day focused on its importance. Keeping our employees safe is a management priority. We have a diverse workforce, representative of the geographic regions in which we do business.
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While we had one serious injury from a trip at the Sauget site in 2024, there were zero recordable injuries at our Port Arthur, Ashland, Richmond R&D, Houston, Suzhou, and Tsukuba facilities. The safety performance affirmed our Vision of Zero improvement plans and actions across the sites, as well as the importance placed on our safety-first culture.
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Our specialty materials segment is subject to the International Traffic in Arms Regulations, a set of U.S. government regulations that controls the export of defense and military technologies, and its international sales require export licenses on a case-by-case basis.
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Availability of Reports Filed with the Securities and Exchange Commission and Corporate Governance Documents Our website address is www.newmarket.com.
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Pietrantoni joined the company in September 2022 as Accounting Director, became Assistant Controller on January 1, 2023, and was appointed Controller on January 1, 2025. Mr.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe loss of a significant customer or a material reduction in purchases by a significant customer could reduce our revenues and negatively affect our profitability. 12 Table of Contents Operational Risks • A disruption in the availability or capacity of distribution systems could negatively impact our ability to meet our customers’ needs and affect our competitive position.
Biggest changeA shift in governmental priorities, programs, strategies, or funding levels impacting the defense and space industries more generally or the specific areas of those industries in which we operate could negatively affect our results of operations, financial condition, or cash flows. 13 Table of Contents Operational Risks • A disruption in the availability or capacity of distribution systems could negatively impact our ability to meet our customers’ needs and affect our competitive position.
Our international operations are subject to international business risks, including unsettled political conditions, war, expropriation, import and export restrictions, trade policies, increases in royalties, exchange controls, national and regional labor strikes, taxes, government royalties, inflationary or unstable economies, currency exchange rate fluctuations, and changes in laws and policies governing operations of foreign-based companies (such as restrictions on repatriation of earnings or proceeds from liquidated assets of foreign subsidiaries).
Our international operations are subject to international business risks, including unsettled political conditions, war, expropriation, import and export restrictions, tariffs, trade policies, increases in royalties, exchange controls, national and regional labor strikes, taxes, government royalties, inflationary or unstable economies, currency exchange rate fluctuations, and changes in laws and policies governing operations of foreign-based companies (such as restrictions on repatriation of earnings or proceeds from liquidated assets of foreign subsidiaries).
Political and economic conditions globally have caused, and may continue to cause, our demand for and the cost of our raw materials to fluctuate. War, armed hostilities, terrorist acts, civil unrest, inclement weather events, or other incidents may also cause a sudden, sharp, or prolonged change in our demand for and the cost of our raw materials.
Political and economic conditions globally have caused, and may continue to cause, our demand for and the cost of our raw materials to fluctuate. War, armed hostilities, terrorist acts, civil unrest, inclement weather events, tariffs, or other incidents may also cause a sudden, sharp, or prolonged change in our demand for and the cost of our raw materials.
While we generally enter into confidentiality agreements with our employees and third parties to protect our intellectual property, we cannot assure that our confidentiality agreements will not be breached, that they will provide meaningful protection for our trade secrets and proprietary manufacturing expertise, or that adequate remedies will be available in the event of an unauthorized use or disclosure of our trade secrets or manufacturing expertise. 14 Table of Contents In addition, our trade secrets and know-how may be improperly obtained by other means, such as a breach of our information technology security systems or direct theft.
While we generally enter into confidentiality agreements with our employees and third parties to protect our intellectual property, we cannot assure that our confidentiality agreements will not be breached, that they will provide meaningful protection for our trade secrets and proprietary manufacturing expertise, or that adequate remedies will be available in the event of an unauthorized use or disclosure of our trade secrets or manufacturing expertise. 15 Table of Contents In addition, our trade secrets and know-how may be improperly obtained by other means, such as a breach of our information technology security systems or direct theft.
The success of our business is highly dependent on our ability to attract and retain highly qualified personnel to support our research and development efforts and our agility in effectively responding to technological changes in our industry.
The success of our business is highly dependent on our ability to attract and retain highly qualified personnel to support our research and development efforts and our agility in effectively responding to technological changes in our business.
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.
We cannot guarantee that we will be able to refinance any of our indebtedness on commercially reasonable terms or at all. 18 Table of Contents Additionally, our debt instruments contain restrictive covenants. These covenants may constrain our activities and limit our operational and financial flexibility.
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.
The occurrence of any one or a combination of these factors may increase our costs or have other adverse effects on our business. 16 Table of Contents • The insurance we maintain may not fully cover all potential exposures.
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.
However, we cannot assure that we have been or will be at all times in compliance with all of these requirements. 17 Table of Contents In addition, these requirements, and the enforcement or interpretation of these requirements, may become more stringent in the future.
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. • Lack of availability of raw materials, including sourcing from some single suppliers, could negatively impact our ability to meet customer demand.
If our demand for raw materials were to decline such that we would not have need for the quantities 12 Table of Contents required to be purchased under commitment agreements, we could incur additional charges that would affect our profitability. • Lack of availability of raw materials, including sourcing from some single suppliers, could negatively impact our ability to meet customer demand.
Moreover, new products may have lower margins than the products they replace. 13 Table of Contents • In order to be successful, we must attract and retain a highly qualified workforce, including key employees in leadership positions.
Moreover, new products may have lower margins than the products they replace. 14 Table of Contents • In order to be successful, we must attract and retain a highly qualified workforce, including key employees in R&D and leadership positions.
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.
In 2024, sales to customers outside of the United States accounted for approximately 61% of consolidated net sales. We do business in all major regions of the world, some of which do not have stable economies or governments.
To the extent that the demand for skilled personnel exceeds supply, we could experience higher labor, recruiting, or training costs in order to attract and retain such a work force. We compete with other companies, both within and outside of our industry, for qualified technical and scientific personnel such as chemical, mechanical, and industrial engineers.
To the extent that the demand for skilled personnel exceeds supply, we could experience higher labor, recruiting, or training costs in order to attract and retain such a work force. We compete with other companies for qualified technical and scientific personnel such as chemical, mechanical, and industrial engineers.
Those risk factors are outlined below. 11 Table of Contents Market and Supply Chain Risks • Sudden, sharp, or prolonged changes in the prices of and/or demand for raw materials may adversely affect our profit margins.
Those risk factors are outlined below. Market and Supply Chain Risks • Sudden, sharp, or prolonged changes in the prices of and/or demand for raw materials may adversely affect our profit margins. 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.
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. We may also enter into contracts which commit us to purchase some of our more critical raw materials based on anticipated demand.
We may also enter into contracts which commit us to purchase some of our more critical raw materials based on anticipated demand.
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The loss of a significant customer or a material reduction in purchases by a significant customer could reduce our revenues and negatively affect our profitability. • A significant portion of our specialty materials business is under contracts with contractors or subcontractors of the U.S. government.
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These contracts are impacted by governmental priorities and are subject to potential fluctuations in funding or early termination, including for convenience, any of which could have a material adverse effect on our results of operations, financial condition, or cash flows.
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Sales to U.S. government contractors and subcontractors, as well as directly to the U.S. government, represent a significant portion of our specialty materials business. Funding of U.S. governmental programs is generally subject to annual congressional appropriations, which are subject to change. In the case of major programs, U.S. government contracts are usually incrementally funded.
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In addition, U.S. government expenditures for defense and space programs may fluctuate from year to year, and specific programs may be terminated or curtailed. The U.S. government often has the ability to terminate contracts, in whole or in part, for convenience. If this were to occur, the full profit anticipated under a given contract is unlikely to be realized.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThis enables faster response and effective communication, including public disclosure if a material cybersecurity event were to occur. 19 Table of Contents Board of Directors Oversight The Board of Directors oversees risks related to cybersecurity, including the security of corporate information and the steps management is taking to monitor and control these risks.
Biggest changeBoard of Directors Oversight The Board of Directors oversees risks related to cybersecurity, including the security of corporate information and the steps management is taking to monitor and control these risks. Management regularly briefs the Board on our 20 Table of Contents cybersecurity risk profile, emerging threats, and the efficacy of our risk mitigation strategies, including our continuous improvement initiatives.
Management regularly briefs the Board on our cybersecurity risk profile, emerging threats, and the efficacy of our risk mitigation strategies, including our continuous improvement initiatives. These initiatives aim to enhance the resiliency of our cybersecurity program as well as our broader operational risk management strategies.
These initiatives aim to enhance the resiliency of our cybersecurity program as well as our broader operational risk management strategies.
We maintain robust policies and procedures focused on cybersecurity incident management, ensuring timely communication and escalation to all relevant stakeholders.
We maintain robust policies and procedures focused on cybersecurity incident management, ensuring timely communication and escalation to all relevant stakeholders. This enables faster response and effective communication, including public disclosure if a material cybersecurity event were to occur.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES Our principal operating properties are shown below. Unless indicated, we own the research, development, and testing facilities, as well as the manufacturing and distribution properties, which primarily support the petroleum additives business segment.
Biggest changeITEM 2. PROPERTIES Our principal operating properties are shown below. Unless indicated, we own the research, development, and testing facilities, which primarily support the petroleum additives business segment, as well as the manufacturing and distribution properties.
Research, 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.
Research, 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) Cedar City, Utah ( specialty materials ) 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

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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
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. 21 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 20.
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 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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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.
Biggest changeThe 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. 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.
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. 23 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 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.
The graph assumes $100 invested on the last day of December 2019, 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 1,797 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.
We had 1,734 shareholders of record as of January 31, 2025. 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 warranted and covenants under our existing debt agreements permitted.
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.
The repurchase program does not require us to acquire any specific number of shares and may be terminated or suspended at any time. The following table outlines the purchases during the fourth quarter of 2024 under the 2021 authorization.
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.
Performance Graph Comparison of Five-Year Cumulative Total Return Performance Through December 31, 2024 December 31, 2019 2020 2021 2022 2023 2024 NewMarket Corporation $ 100.00 $ 83.50 $ 73.56 $ 68.65 $ 122.96 $ 121.16 S&P 1500 Specialty Chemicals Index 100.00 116.33 148.60 111.65 128.28 126.04 S&P 500 100.00 118.40 152.39 124.79 157.59 197.02 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.
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Approximately $194 million remained unused under this authorization upon its expiration on December 31, 2024.
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On December 12, 2024, our Board of Directors approved a new share repurchase program authorizing management to repurchase up to $500 million of NewMarket's outstanding common stock beginning January 1, 2025 and until December 31, 2027, as market conditions warrant and covenants under our existing debt agreements permit. The 2024 authorization replaced the 2021 authorization upon its expiration.
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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 18,401 $ 518.75 18,401 $ 221,935,409 November 1 to November 30 123 531.01 123 221,870,095 December 1 to December 31 52,446 528.67 52,446 194,143,319 Total 70,970 $ 526.10 70,970 $ 194,143,319 Cash dividends declared and paid totaled $10.00 per share for the year ended December 31, 2024 and $8.85 per share for the year ended December 31, 2023.

Item 7. Management's Discussion & Analysis

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

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Biggest changeAs 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. 33 Table of Contents Intangibles (net of amortization) and Goodwill We have certain identifiable intangibles amounting to $1 million and goodwill amounting to $124 million at December 31, 2023 that are discussed in Note 10.
Biggest changeIntangibles (net of amortization) and Goodwill We have certain identifiable intangibles amounting to $371 million and goodwill amounting to $379 million at December 31, 2024 that are discussed in Note 11. Of these intangibles and goodwill, $124 million is attributable to the petroleum additives segment and $626 million to the specialty materials segment.
We utilize the sex distinct Pri-2012 table with separate rates for annuitants, non-annuitants, and contingent annuitants, projected generationally using Scale MP-2021 in determining the impact of the U.S. benefit plans on our financial statements. Investment Return Assumptions and Asset Allocation - We periodically review our assumptions for the long-term expected return on pension plan assets.
We utilize the sex distinct Pri-2012 table with separate rates for annuitants, non-annuitants, and contingent annuitants, projected generationally using Scale MP-2021 in determining the impact of mortality on the U.S. benefit plans in our financial statements. Investment Return Assumptions and Asset Allocation - We periodically review our assumptions for the long-term expected return on pension plan assets.
We used the net proceeds from the offering for the repayment or redemption of our 4.10% senior notes and for general corporate purposes. We incurred financing costs in 2021 of approximately $4 million related to the 2.70% senior notes, which are being amortized over the term of the notes.
We used the net proceeds from the offering for the repayment and redemption of our 4.10% senior notes and for general corporate purposes. We incurred financing costs in 2021 of approximately $4 million related to the 2.70% senior notes, which are being amortized over the term of the notes.
While our recent AMPAC acquisition is outside of our core petroleum additives business, we believe it is an excellent opportunity to provide long-term value for our shareholders. Nonetheless, our primary focus in the acquisition area remains on the petroleum additives industry.
While our AMPAC acquisition is outside of our core petroleum additives business, we believe it is an excellent opportunity to provide long-term value for our shareholders. Nonetheless, our primary focus in the acquisition area remains on the petroleum additives industry.
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%.
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, 2024, our expected long-term rate of return on our postretirement plans was 4.0%.
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.
Rate of Projected Compensation Increase - Our rate of projected compensation increase at December 31, 2024 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.
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 were in compliance with all covenants under the indenture governing the 2.70% senior notes as of December 31, 2024 and December 31, 2023. 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.
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.
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, 2025 and January 1, 2024. This analysis reflects our expected long-term rates of return for each significant asset class or economic indicator.
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.
Environmental Expenses We spent approximately $37 million in 2024 and $41 million in 2023 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.
During 2023, we used the $577 million of cash generated from operating activities to make net payments of $361 million on our revolving credit facility, pay dividends of $85 million, fund capital expenditures of $48 million, and repurchase 119,075 shares of our common stock for $43 million.
During 2023, we used the $577 million of cash generated from operating activities to make net payments of $361 million on our revolving credit facility, pay dividends of $85 million, fund capital expenditures of $48 million, and repurchase shares of our common stock for $43 million.
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.
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. 31 Table of Contents The debt-related contractual obligations include both principal payments on outstanding long-term debt and the related interest payments.
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.
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, 2024.
We expect to have pension income during 2024 related to our U.K. plan, as the expected return on assets is higher than the offsetting pension costs. Net periodic benefit cost (income) for the U.K. pension plan is sensitive to changes in the expected return on assets.
We expect to have pension income during 2025 related to our U.K. plan, as the expected return on assets is higher than the offsetting pension costs. Net periodic benefit cost (income) for the U.K. pension plan is sensitive to changes in the expected return on assets.
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.
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 34 Table of Contents evaluate any future opportunities. We will continue to evaluate all alternative uses of cash to enhance shareholder value, including stock repurchases and dividends.
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.
Our approach to R&D investments, as it is with SG&A costs, 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.
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.
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 industries; 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; termination or changes to contracts with contractors and subcontractors of the U.S. government or directly with the U.S. government; 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.
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.
At December 31, 2024, these costs were estimated at approximately $1 million in each of 2025 through 2029 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.
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.
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 2025 income for our U.S. pension and postretirement plans by approximately $8 million.
The assets of the postretirement plan are held in an insurance contract, which results in a lower assumed rate of investment return. 30 Table of Contents We expect to have net periodic benefit income for our pension and postretirement plans during 2024, as the expected return on assets and amortization is higher than the offsetting pension costs.
The assets of the postretirement plan are held in an insurance contract, which results in a lower assumed rate of investment return. 32 Table of Contents We expect to have net periodic benefit income for our pension and postretirement plans during 2025, as the expected return on assets and amortization is higher than the offsetting benefit costs.
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.
We estimate capital expenditures in 2025 will be in the range of $60 million to $70 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.
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.
Similarly, a 100 basis point increase in the expected rate of return to 8.7% (while holding other assumptions constant) would increase forecasted 2025 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.
In 2023, North America represented approximately 40% of our petroleum additives net sales, while EMEAI contributed approximately 30%, Asia Pacific approximately 20%, and Latin America the remaining amount. As shown in the table above, lubricant additives net sales and fuel additives net sales compared to total petroleum additives net sales has remained substantially consistent over the past three years.
In 2024, North America represented approximately 40% of our petroleum additives net sales, while EMEAI contributed approximately 30%, Asia Pacific approximately 20%, and Latin America the remaining amount. As shown in the table above, lubricant additives net sales and fuel additives net sales compared to total petroleum additives net sales have remained substantially consistent over the past three years.
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.
Cash and cash equivalents held by our foreign subsidiaries amounted to approximately $71 million at December 31, 2024 and $87 million at December 31, 2023. 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.
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.
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. Further information on purchase commitments, including those for purchases of property, plant, and equipment, is in Note 21.
However, if conditions were to substantially deteriorate in the petroleum additives market, it could possibly cause a decrease in the estimated useful lives of the intangible assets or result in a noncash write-off of all or a portion of the intangibles and goodwill carrying amounts.
However, if conditions were to substantially deteriorate in the petroleum additives or specialty material markets, it could possibly cause a decrease in the estimated useful lives of the intangible assets or result in a noncash write-off of all or a portion of the intangibles and goodwill carrying amounts.
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.
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 2025 pension and postretirement income by $8 million.
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%.
A 100 basis point increase in the discount rate to 6.875% (while holding other assumptions constant) would increase forecasted 2025 pension and postretirement benefit income by approximately $5 million. Rate of Projected Compensation Increase - We have maintained our rate of projected compensation increase at December 31, 2024 at 3.5%.
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 5.
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%.
Debt A summary of our debt instruments follows. A full discussion is in Note 14. 29 Table of Contents 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%.
RECENTLY ISSUED ACCOUNTING STANDARDS For a full discussion of the more significant recently issued accounting standards, see Note 22.
RECENTLY ISSUED ACCOUNTING STANDARDS For a full discussion of the more significant recently issued accounting standards, see Note 23.
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.
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 $4 million in 2025. We expect our contributions to the postretirement benefit plans will be approximately $1 million in 2025.
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.
The average remaining service period of active participants for our U.K. plan is approximately 15 years, while the average remaining life expectancy of inactive participants is 21 years.
The United States Dollar strengthened against all of the major currencies in which we transact, except for the Euro, resulting in the unfavorable impact to net sales for the 2023 and 2022 comparison.
Comparing 2024 and 2023, the United States Dollar strengthened against all of the major currencies in which we transact, except for the Pound and Euro, resulting in the unfavorable impact to net sales for the 2024 and 2023 comparison.
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 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.
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 discount rate at December 31, 2024 was 5.875% for all plans. Net periodic benefit cost (income) for pension and postretirement benefit plans is also sensitive to changes in the discount rate.
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 discount rate by 100 basis points to 4.875% (while holding other assumptions constant) would reduce the forecasted 2025 income for our U.S. pension and postretirement benefit plans by approximately $6 million.
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.
Working Capital Including cash and cash equivalents and the impact of foreign currency on the balance sheet, at December 31, 2024, we had working capital of $655 million, resulting in a current ratio of 2.75 to 1. Our working capital at December 31, 2023 on the same basis was $675 million, resulting in a current ratio of 2.85 to 1.
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.
RESULTS OF OPERATIONS Management's discussion and analysis of our results of operations is presented below for the comparative periods of 2024 versus 2023. The discussion and analysis of our results of operations for 2023 compared to 2022 is available in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023.
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.
In determining the impact of mortality on the U.K. pension plan in our financial statements, we utilize the S3PxA mortality tables weighted by 92% for males and 100% for females and allow for future projected improvements in life expectancy in line with the CMI 2023 model with the core smoothing parameter, an initial addition to mortality improvements of 0.3% per year, and an experience weighting of 0% on both 2020 and 2021 data and 20% on both 2022 and 2023 data, with a long-term rate of improvement of 1.65% per year for males and 1.15% per year for females based on the membership of the plan.
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.
For example, decreasing the expected rate of return by 100 basis points to 6.7% (while holding other assumptions constant) would decrease the forecasted 2025 income for our U.K. pension plan by approximately $2 million.
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.
The yield appropriate to the duration of the U.K. plan liabilities is then used. The discount rate at December 31, 2024 was 5.50%. Net periodic benefit cost (income) for the U.K. pension plan is also sensitive to changes 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 2023 was 49% in pooled equities funds, 29% in pooled government bonds, 21% in pooled diversified growth funds, and 1% in cash.
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 2024 was 51% in pooled equities funds, 27% in pooled government bonds, 21% in pooled diversified growth funds, and 1% in cash.
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.
The increase in shareholders' equity primarily reflects our earnings and an increase in the funded position of our retirement plans, partially offset by dividend payments, repurchases of shares of our common stock, and an unfavorable change in the impact from foreign currency translation adjustments. Generally, we repay any outstanding long-term debt with cash from operations or refinancing activities.
We continue to assess the market related to the intangibles and goodwill, as well as their specific values and evaluate the intangibles and goodwill for any potential impairment when significant events or circumstances occur that might impair the value of these assets. We have concluded the values are appropriate, as are the amortization periods for the intangibles.
We continue to assess the market related to the intangibles and goodwill, as well as their specific values and evaluate the intangibles and goodwill for any potential impairment when significant events or circumstances occur that might impair 35 Table of Contents the value of these assets.
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.
Cash flows from operating activities included a decrease of $23 million from higher working capital requirements, which is further discussed in the Working Capital section below, and a decrease of $12 million for cash contributions to our pension and postretirement plans.
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.
We expect that there will be continued volatility in the net periodic benefit cost (income) for our U.K. pension plan as actual 33 Table of Contents 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 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.
Additional information on our pension and postretirement plans is in Note 18. U.S. 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 22.3 years.
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.
For example, decreasing the discount rate by 100 basis points to 4.50% (while holding other assumptions constant) would decrease the forecasted 2025 income for our U.K. pension plans by approximately $400 thousand. A 100 basis point increase in the discount rate to 6.50% (while holding other assumptions constant) would increase forecasted 2025 pension income by approximately $300 thousand.
The maturity dates and interest rates, as well as information on the repayment of the principal on our long-term debt is detailed above in the Debt section, as well as in Note 13. At December 31, 2023, all of our long-term debt was at fixed rates, except for the revolving credit facility which had no outstanding borrowings.
The maturity dates and interest rates, as well as information on the repayment of the principal on our long-term debt is detailed above in the Debt section, as well as in Note 14. At December 31, 2024, all of our long-term debt was at fixed rates, except for the revolving credit facility and the term loan agreement.
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.
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 2024 with 2023, net sales declined 2.0%, resulting primarily from a decrease in selling prices and a small unfavorable foreign currency impact. Product shipments were flat.
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.
Net Sales Our consolidated net sales for 2024 amounted to $2.8 billion, an increase of $88 million, or 3.3%, from 2023. No single customer accounted for 10% or more of our total net sales in 2024, 2023, or 2022. The following table shows net sales by segment and product line for each of the last three years.
All Other - The “All other” category includes the operations of the antiknock compounds business, as well as certain contracted manufacturing and related services associated with Ethyl and did not have a material impact to consolidated net sales when comparing 2023 and 2022. Segment Operating Profit NewMarket evaluates the performance of the petroleum additives business based on segment operating profit.
All Other - The “All other” category includes the operations of the antiknock compounds business, as well as certain contracted manufacturing and related services associated with Ethyl and did not have a material impact to consolidated net sales when comparing 2024 and 2023.
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.
Cash flows from operating activities included an increase of $134 million from lower working capital requirements and a decrease of $10 million for cash contributions to our pension and postretirement plans. FINANCIAL POSITION AND LIQUIDITY Cash At December 31, 2024, we had cash and cash equivalents of $77 million as compared to $112 million at the end of 2023.
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.
An actuarial gain on the assets occurred during 2024 and 2023 as the actual investment return for all of our U.S. qualified pension plans exceeded the expected return by approximately $54 million in 2024 and $47 million in 2023. Investment gains and losses are recognized in earnings on an amortized basis over a period of 5 years.
On October 8, 2021, almost all members of the Organisation for Economic Co-operation and Development (OECD) reached an agreement on a two-pillar approach to international tax reform, including the establishment of a 15% global minimum tax for large multinational entities.
On October 8, 2021, almost all members of the Organisation for Economic Co-operation and Development (OECD) reached an agreement on a two-pillar approach to international tax reform, including the establishment of a 15% global minimum tax for large multinational entities. Several jurisdictions in which we operate have adopted or are in the process of adopting this global minimum tax.
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.
The increase in interest and financing expense between 2024 and 2023 resulted primarily from both higher average debt outstanding and a higher average interest rate. Other Income (Expense), Net Other income (expense), net was income of $51 million in 2024 and $43 million in 2023.
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.
Years Ended December 31, (in millions) 2024 2023 2022 Petroleum additives Lubricant additives $ 2,246 $ 2,296 $ 2,342 Fuel additives 390 394 412 Total 2,636 2,690 2,754 Specialty materials 141 0 0 All other 9 8 11 Net sales $ 2,786 $ 2,698 $ 2,765 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.
Cost of goods sold as a percentage of net sales was 71.2% in 2023 and 76.8% in 2022. The operating profit margin was 19.1% in 2023 and 13.7% in 2022. While operating margins will fluctuate from quarter to quarter due to multiple factors, we believe the fundamentals of our business and industry as a whole are unchanged.
The following table presents petroleum additives cost of goods sold as a percentage of net sales and the operating profit margin. 27 Table of Contents Years Ended December 31, 2024 2023 2022 Cost of goods sold as a percentage of net sales 68.0 % 71.2 % 76.8 % Operating profit margin 22.5 % 19.1 % 13.7 % While operating margins will fluctuate from quarter to quarter due to multiple factors, we believe the fundamentals of our business and industry as a whole are unchanged.
These notes bear interest at 3.78% and mature on January 4, 2029. Interest is payable semiannually. Principal payments of $50 million are payable annually beginning on January 4, 2025. We have the right to make optional prepayments on the notes at any time, subject to certain limitations.
These notes bear interest at 3.78% with interest payable semiannually. We made the first principal payment of $50 million on January 4, 2025 and have four remaining principal payments of $50 million due January 4 of each year through 2029. We have the right to make optional prepayments on the notes at any time, subject to certain limitations.
These assumptions include the discount rate and the expected long-term rate of return on plan assets. A change in any of these assumptions could cause different results for the plans and therefore, impact our results of operations, cash flows, and financial condition. We develop these assumptions after considering available information that we deem relevant.
A change in any of these assumptions could cause different results for the plans and therefore, impact our results of operations, cash flows, and financial condition. We develop these assumptions after considering available information that we deem relevant. Information is provided on the pension and postretirement plans in Note 18.
Interest is paid semi-annually on our fixed rate long-term debt agreements. See Note 23 for additional information on our debt structure in 2024. Note 16 provides information by year on our lease obligations which have commenced, as well as any lease commitments which have not yet commenced.
A discussion of interest rate sensitivity is in Item 7A. Interest is paid semi-annually on our fixed rate long-term debt agreements. Note 17 provides information by year on our lease obligations which have commenced, as well as any lease commitments which have not yet commenced.
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.
The Term Loan Credit Agreement contains certain customary covenants, including financial covenants, which require NewMarket to maintain a consolidated Leverage Ratio (as defined in the Term Loan Credit Agreement) of no more than 3.75 to 1.00 except during an Increased Leverage Period (as defined in the Term Loan Credit Agreement). At December 31, 2024, the Leverage Ratio was 1.33.
Income Tax Expense Income tax expense was $100 million in 2023 and $68 million in 2022. The effective tax rate was 20.5% in 2023 and 19.6% in 2022. When comparing 2023 and 2022, income tax expense increased $28 million due to the higher income before income taxes and $4 million from the higher effective tax rate.
The effective tax rate was 20.8% in 2024 and 20.5% in 2023. When comparing 2024 and 2023, income tax expense increased $20 million due to the higher income before income taxes and $2 million from the slightly higher effective tax rate.
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 amortization of the actuarial net gain is expected to be approximately $4 million in 2025 resulting primarily from the actuarial gain related to the investment gains on plan assets and the actuarial gains associated with the increase in the discount rate.
We have sufficient access to capital, if needed, and do not anticipate any issues with meeting the covenants for all our debt agreements for the foreseeable future. 24 Table of Contents Our operations generate cash that is in excess of the needs of the business.
We have sufficient access to capital, if needed, and do not anticipate any issues with meeting the covenants for all our debt agreements for the foreseeable future. Our business typically generates significant amounts of cash beyond its operational needs.
Additionally, interpretations of tax laws, court decisions, or other guidance provided by taxing authorities influence our estimate of the effective income tax rate.
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.
As 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.
As a percentage of total capitalization (total long-term debt and shareholders’ equity), our total long-term debt percentage increased from 37.4% at the end of 2023 to 39.9% at the end of 2024. The change resulted primarily from the increase in outstanding term loan and revolving credit facility borrowings, partially offset by an increase in shareholders’ equity.
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.
Years Ended December 31, (in millions) 2024 2023 2022 Petroleum additives $ 592 $ 514 $ 378 Specialty materials $ 17 $ 0 $ 0 All other $ (2) $ (5) $ (2) Petroleum Additives - Petroleum additives segment gross profit increased $69 million, and segment operating profit increased $78 million when comparing 2024 to 2023.
We expect AMPAC will be accretive to our net income in 2024. Our business generates significant amounts of cash beyond its operational needs. We regularly review our many internal opportunities to utilize excess cash from technological, geographic, production capability, and product line perspectives.
We will continue to invest in our capabilities to provide even better value, service, technology, and customer solutions. Our business typically generates significant amounts of cash beyond its operational needs. We regularly review our many internal opportunities to utilize excess cash from technological, geographic, production capability, and product line perspectives.
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.
The Revolving Credit Agreement includes an expansion feature allowing 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 $450 million. We may also request an extension of the maturity date as provided for in the Revolving Credit Agreement.
A reduction in the amortization period of the intangibles would have no effect on cash flows. We do not anticipate such a change in the market conditions in the near term. Pension Plans and Other Postretirement Benefits We use assumptions to record the impact of the pension and postretirement benefit plans in the financial statements.
A reduction in the amortization period or write-off of the intangibles would have no effect on cash flows. We do not anticipate such a change in the market conditions in the near term.
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.
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 7.7% at December 31, 2024.
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.
There was no activity on these lines of credit in 2024 or 2023. *** We had long-term debt of $971 million at December 31, 2024 and $644 million at December 31, 2023.
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.
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). 28 Table of Contents Income Tax Expense Income tax expense was $122 million in 2024 and $100 million in 2023.
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.
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 amount reported for specialty materials is for the period from January 16, 2024 to December 31, 2024.
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.
In addition, further disclosure of the effect of changes in these assumptions is provided in the Financial Position and Liquidity section of Item 7. 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.
During this period, we have remained focused on managing our operating costs, our inventory levels, and our portfolio profitability, while continuing our investment in technology. Despite the challenging economic environment, our financial position remains strong.
We remain challenged by the uncertain global economic environment, but continue to focus on managing our operating costs, our inventory levels, and our portfolio profitability, while continuing our investment in technology. 25 Table of Contents Despite the challenging economic environment, our financial position remains strong.
Pension and Postretirement Benefit Plans Our U.S. and foreign benefit plans are discussed separately below. The information applies to all of our U.S. benefit plans. Our foreign plans are quite diverse, and the actuarial assumptions used by the various foreign plans are based upon the circumstances of each particular country and retirement plan.
Our foreign plans are quite diverse, and the actuarial assumptions used by the various foreign plans are based upon the circumstances of each particular country and retirement plan. We use a December 31 measurement date to determine our net periodic benefit cost (income) for all of our pension and postretirement benefit plans and related financial disclosure information.
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.
An actuarial gain on the assets occurred during both 2024 and 2023 as the actual investment return exceeded the expected investment return by approximately $1 million in 2024 and $4 million in 2023.
See Note 23 for additional information. OUTLOOK Our goal is to provide a 10% compounded return per year for our shareholders over any ten-year period (defined by earnings per share growth plus dividend yield), although we may not necessarily achieve a 10% return each year. We continue to have confidence in our customer-focused strategy and approach to the market.
We expect our aggregate U.K. cash contributions will be approximately $3 million in 2024. OUTLOOK Our goal is to provide a 10% compounded return per year for our shareholders over any ten-year period (defined by earnings per share growth plus dividend yield), although we may not necessarily achieve a 10% return each year.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThis 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.
Biggest changeThis analysis does not consider other possible effects that could impact our business. 36 Table of Contents Interest Rate Risk At December 31, 2024, we had total long-term debt of $971 million. All of the long-term debt is at fixed rates except for $77 million outstanding under the revolving credit facility and $250 million outstanding under the term loan agreement.
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.
At December 31, 2024, 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. 35 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. 37 Table of Contents
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.
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, 2024. We analyzed only the potential impacts of our hypothetical assumptions.
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.
Holding all other variables constant, a hypothetical 100 basis point decrease in interest rates would have resulted in a change of $30 million in fair value of our debt at December 31, 2024. Foreign Currency Risk We sell to customers in foreign markets through our foreign subsidiaries, as well as through export sales from the United States.
Removed
There 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.
Added
There was no interest rate risk at the end of the year associated with the fixed rate debt. 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.

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