Brian Paliotti - Vice President and Chief Financial Officer Teddy Gottwald - Chairman and Chief Executive Officer.

Ivan Marcuse - KeyBanc Capital Markets Dmitry Silversteyn - Longbow Research.

Greetings and welcome to the NewMarket Corporation Third Quarter 2016 Financial Results Conference Call. At this time, all participants are in listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Mr. Brian Paliotti, Chief Financial Officer for NewMarket. Thank you. You may begin..

Thank you, Michelle, and thanks to everyone for joining us this afternoon. With me today is Teddy Gottwald, our Chairman and CEO. As a reminder, some of the statements made during this conference call may be forward looking.

Relevant factors that could cause actual results to differ materially from those forward-looking statements are contained in our earnings release and in our SEC filings, including our most recent Form 10-K. During this call, we may also discuss non-GAAP financial measures included in our earnings release.

The earnings release, which can be found on our website, includes a reconciliation of these non-GAAP financial measures to comparable GAAP financial measures. We filed our 10-Q earlier today. It contains significantly more details on the operations and performance of the Company. Please take time to review it.

Our comments today we'll be referring to the data that was included in last night's press release. Net income was $71.4 million or $6.03 a share, compared to net income of $62 million or $5.08 a share for the third quarter of last year. Earnings for both third quarter periods included the impact of valuing and interest rate swap at the fair value.

Excluding that special item from both periods, earnings for this year's third quarter would have been $71.1 million or $6.0 a share. Petroleum additives operating profit for the quarter was $106.4 million, which is about $6 million or 6% higher than last year.

Petroleum additive sales for the quarter decreased 4.4% or to $512 million compared to sales for the same period last year of $536 million of to $21 million reduction in revenue price and mix accounted for the majority of the change. Petroleum additives shipments for the third quarter of 2016 were flat with the same period last year.

We experienced decreases in lubricant additive shipments in North America, Europe and Latin America, with fuel additive shipments increases in North America and Asia-Pacific. Onto cash flow for the quarter, items of note including funding our normal dividend of $90 million and normal variations of working capital.

We continue to operate with very low leverage. For 2016, we expect to see an increase in the level of our capital expenditures to a higher level than 2015which includes the spending on our Phase 2 Singapore investment as well as a number of improvements to our manufacturing and research and development infrastructure around the world.

For the three quarters of 2016, we ramped up spending to $102 million. Our investments in Singapore are progressing well and are on schedule. We expect capital expenditures to remain in the higher the normal range for each of the next couple of years in support of our growth plans.

This is no change from the position we discussed over the last several quarters. In summary, our business continue to perform well and we are pleased with its overall performance as we continue to operate the business in a climate marked by a lower world economic growth and a strong U.S. dollar.

We’ve remained focused on the long term and we're investing to support our customers worldwide to meet our long term goals.

We’ve remained committed to our safety first culture providing customer focused technological lead driven solutions into a world class supply chain to meet our customer's growing needs and this approach will continue to be beneficial to our shareholders.

It show that concludes our planned comments, we would like to open up the lines for questions, please..

My question is real quick, it looks like on raw materials quite in didn't do much from second quarter to third quarter, oils bounced up a little bit.

Have you seen sort of signs that material costs are going to be rising anytime soon or is it still a pretty benign market from where you could tell?.

Ivan this is Brian. From a raw material perspective we see raw material costs holding slightly on the rise, but you know those changes daily, but nothing material..

Okay. And then a quick question, I understand you lay out some regions are doing better than others.

If you look at your lubricants business, do you have - is there any material difference between this subsector so like is there any signs that you know industrial or drive lines doing a lot better in your saying an improvement in your mix because of that, is there any sort of movement from that perspective?.

Ivan we’re not seeing any material change from a sub segment perspective across the product line portfolio in any region..

Great.

So they're all down the same or up the same region to region?.

Yeah I mean there as far as the regional overview statement we're making from lubricants and fuels perspective we’re not seeing any material change in any one of the segments in any region..

Okay. And the last question, I guess is have you seen is there any competitive changes within the landscape, I know really a normal sort of a no growth type of environment for several quarters now.

Have you seen any sort of there's been some investments and saying where people are - companies maybe gave more aggressive or certain regions or gave more aggressive in terms of pricing or trying to get some business at all?.

Ivan it’s, Teddy. There's nothing really new to report there, it’s the dynamics as they’ve been for some time..

Okay, great.

And last question tax rate is still sort of in this 29% to 30% range going forward?.

I would say that's a good range to be in Ivan from a go forward..

Great thanks..

Thank you..

Thank you..

[Operator Instructions] Our next question comes from the line of Dmitry Silversteyn with Longbow Research. Please proceed with your question..

Good morning or good afternoon, I should say thanks for taking my questions. Couple of them. First of all I want to revisit or it may be ask Ivan’s question a little differently. It looks like raw materials benefit have you roughly speaking about $30 million in the quarter offset by about $19 million to $20 million or lower pricing.

We're seeing raw materials to copper as you mentioned a little bit here in the September quarter flattening out flat year-over-year, should we expect this to be the fourth quarter to really be the last quarter where you enjoy material raw material benefit upon assuming prices obviously stay at these levels?.

Dmitry, it’s Brian. I would say that from a margin profile perspective in reference to what you’re talking about for a raw material, we see it raw materials holding, we don’t have any better insight into the forward view and what raw materials are going to do.

We have seen a slight uptick but from the perspective of what we think margins will be we think we’re going to be that mid to high teens, sometimes will be outside of that range for a little period of time on either end. And that’s kind of where we see things today and over the future..

Okay. Brian, that’s helpful. Okay, switching gears to volumes a little bit, just as your volume performance you call it flattish according to my calculations down about 1% but regardless it’s significantly better than it’s been the last several quarters.

Can you discuss sort of volume trends through the third quarter whether or not you’ve seen some kind of a pickup towards the end of the quarter, whether was pretty steady through the quarter? And then did you see any impact from our kind of the extended shutdowns in European automotive OEM that’s interfere at around August timeframe and sort of the overall slowdown in the European economy?.

Dmitry, this is Teddy. We really haven’t seen anything outside of the normal patterns. As you know, our business very, the volume varies quite a bit from quarter-to-quarter.

The factory fuel business that you reference fairly small proportion of our business, so it’s hard for us to see the impacted of any auto company changes and the span of a quarter or two..

Okay.

Well Teddy, I mean just slightly different way to ask the same question, was the was the market conditions are how the order patterns fall at the beginning of the quarter pretty similar by the end of the quarter or was there any pattern that you can identify that would help us sort of gauge with the December quarter may look like?.

No, I mean it’s hard not honestly to look at the volume trends from a quarter-to-quarter versus month-to-month, but inside of the quarter there was nothing discernible you could say with a major change from month-to-month..

Fair enough, okay.

Quick update on a Singapore facility progress, I think Phase 1 went live during this quarter if I remember correctly, was there any impact on the gross margin as a result of that and sort of how do you see does the Phase 2 coming online and sort of what’s your timetable for that plant ramp up, can you update us on that?.

I can speak to the schedule where we’re on schedule with physical completion in the second half next year and production ramping up after that. Brian you want to comment on cost implication..

Yeah, Dmitry from a cost perspective, we are - Phase 1 is already operational, so that’s already - that’s in there as far as the quarters concerned and then from a go forward perspective, you know Teddy told you, the next Phase will come online, so from a cost perspective, it’s in the figures for the quarter..

Okay, alright. So we already seen that the impact of increased depreciation and operating expenses for the plan that you use to capitalize in the third quarter already. Okay..

Thanks correct..

And final question just M&A pipeline, are things getting easier to buy, harder to buy or people becoming more reasonable on their multiple expectation, so they expect to receive for their business, any update as far as you kind of the size of your hopper is concern and what your view on getting something out the other end?.

Dmitry, there is really nothing new report. Our focus continues to be on the petroleum additives industry. For acquisitions the pool of possibility hasn’t grown or shrunk since we last commented on it and it’s just small pool and that’s why we stress patience there.

We are still actively interesting in acquisitions and petroleum additives, it’s just not a very big pool..

I got you.

If your provide me a little bit more granularity in kind of what the market looks like in terms of, are you looking more at privately on kind of family owned businesses or portions of bigger companies, bigger divisions, is there regional focused?.

I think it’s probably some of all of the above, but it’s mostly portions of larger companies that can feed in this segments of our business whether it’s fuels or certain industrial segment. That tends to be where most of them are..

Okay. Okay, Teddy, thank you. That’s all the questions I had..

Thank you..

Thank you..

Thank you. [Operator Instructions] There are no further questions at this time. I would like to turn the floor back over to Mr. Brian Paliotti for closing remarks..

I would like to thank everyone for calling in and we will take to you next quarter. Thank you..

This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participating and have a wonderful day..