Greetings and welcome to the NewMarket Corporation Conference Call and Webcast to review First Quarter 2023 Financial Results. [Operator Instructions] Please note this conference is being recorded. I will now turn the conference over to your host, Mr. Bill Skrobacz. You may begin..

Thank you, Ali and thanks to everyone for joining me this afternoon. As a reminder, some of the statements made during this conference call maybe 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, I will also discuss the non-GAAP financial measures included in our earnings release.

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

I will be referring to the data that was included in last night’s earnings release. Net income was $98 million or $10.09 a share compared to net income of $59 million or $5.75 a share for the first quarter last year.

Petroleum additives net sales for the first 3 months of 2023 were $700 million, compared to $660 million for the same period in 2022 or an increase of 6%. Sales increased $40 million, mainly due to increased selling prices, partially offset by decreased shipments and changes in foreign currency rates.

Shipments decreased 15% between periods with decreases in both lubricant additives and fuel additive shipments across all regions, except North America, which reported a small increase in fuel additive shipments. Shipments for the first quarter are about even with the fourth quarter of 2022.

Petroleum additives operating profit for the quarter was $132 million compared to $87 million for the first quarter of 2022. The increase was mainly due to increased selling prices, partially offset by higher raw material and operating costs and lower shipments.

Shipments have been lower than our expectations over the last few quarters due to general economic slowdown and customer destocking. While we have seen some wide swings in customer order patterns and demand over the past couple of years, the end use of our products does not vary significantly.

Supply disruptions, rapid oil price movements and customer expectations about future pricing can all contribute to destocking and restocking. As a reminder, we expect our overall market to grow annually in the low single-digit range and our goal is to exceed that growth rates.

During the quarter, we funded capital expenditures of $12 million and returned $49 million to our shareholders through dividends of $20 million and share repurchases of $29 million. We continue to operate with low leverage with our net debt-to-EBITDA at quarter end of 1.7x.

This ratio is within our normal range of 1.5x to 2x but we have stated there may be periods when we are outside the norm. We expect to see our capital investments in the $60 million to $70 million range this year. This is slightly lower than our previous range due to the operational timing of some of our products.

We are encouraged by the sequential movement in our petroleum additives operating profit for the last two quarters. After being below our historical norms for the past six quarters, our operating margin for the rolling four quarters ended March 31, 2023, was 15.2%, which is at the lower end of the range of our long-term expectations.

We have seen improvements in the supply chain disruptions, which have impacted the petrochemical industry and our company over the past several years. Inflation continues to be a concern and cost control and margin recovery will remain high priorities.

We continue to make decisions to promote long-term value for our shareholders and customers, and we remain focused on our long-term objectives.

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 a world-class supply chain capability, will continue to be beneficial for all our stakeholders. Thank you for joining me for the call today. Ali, that concludes our planned comments.

We are available for questions via e-mail or by phone. So please feel free to contact me directly. Thank you all again and we will talk to you next quarter..

Thank you. This concludes today’s conference, and you may disconnect your lines at this time. We thank you for your participation..