NewMarket Corp. (NEU, Financial) filed Quarterly Report for the period ended 2010-09-30.
Newmarket Corp. has a market cap of $1.64 billion; its shares were traded at around $117 with a P/E ratio of 9.3 and P/S ratio of 1.1. The dividend yield of Newmarket Corp. stocks is 1.3%. Newmarket Corp. had an annual average earning growth of 69.5% over the past 5 years.NEU is in the portfolios of Irving Kahn of Kahn Brothers & Company Inc., Mario Gabelli of GAMCO Investors, Bruce Kovner of Caxton Associates, Prem Watsa of Fairfax Financial Holdings, Inc., George Soros of Soros Fund Management LLC, Jeremy Grantham of GMO LLC, Chuck Royce of Royce& Associates.
Income tax expense was $21.9 million for third quarter 2010 and $30.4 million for third quarter 2009. The effective tax rate was 32.3% for third quarter 2010 and 34.9% for third quarter 2009. The decrease in income before income tax expense resulted in a decrease of $6.8 million in income taxes, while the lower effective tax rate in 2010 as compared to 2009 resulted in a decrease of approximately $1.7 million in income taxes when comparing the third quarter 2010 and 2009 periods.
Cash used in investing activities was $85.5 million during nine months 2010 and included $41.3 million related to the acquisition of Polartech, as well as $25.1 million for capital expenditures and a net deposit of $16.6 million and a net settlement of $2.4 million related to the Goldman Sachs interest rate swap. Further information on the interest rate swap is discussed below and in Note 10. We estimate our total capital spending during 2010 will be approximately $30 million to $35 million. We expect to continue to finance capital spending through cash on hand and cash provided from operations, together with borrowing available under our revolving credit facility.
Cash used in financing activities during nine months 2010 amounted to $120.0 million, including the repayment of $99.1 million for the Foundry Park I construction loan and borrowing of $68.4 million for the Foundry Park I mortgage loan. We also borrowed $20.0 million under our revolving credit facility during the nine months 2010 and repaid $1.5 million on the mortgage loan. In addition, the use of cash included the repurchase of common stock of $89.0 million and funding of dividends of $16.4 million, as well as debt issuance costs of $1.5 million.
We had total long-term debt, including the current portion, of $237.3 million at September 30, 2010, representing a decrease of approximately $12.8 million in our total debt since December 31, 2009. The decrease resulted from borrowing $20.0 million under the revolving credit facility which was offset by the payment of the outstanding balance of $99.1 million under the construction loan agreement with proceeds of $68.4 million from the Foundry Park I mortgage loan agreement and cash on hand. We made principal payments of approximately $1.5 million on the mortgage loan, as well as $600 thousand on capital leases.
At September 30, 2010, we also had a $150 million revolving credit facility for working capital and other general corporate purposes for NewMarket and our subsidiaries, inclusive of a $75 million sub-facility for letters of credit. Borrowings bear interest at variable rates. The facility matures on December 21, 2011. At September 30, 2010, we had $20.0 million of outstanding borrowings under the revolving credit facility. We had outstanding letters of credit of $8.8 million at September 30, 2010, resulting in the unused portion of the revolver amounting to $121.2 million.
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Newmarket Corp. has a market cap of $1.64 billion; its shares were traded at around $117 with a P/E ratio of 9.3 and P/S ratio of 1.1. The dividend yield of Newmarket Corp. stocks is 1.3%. Newmarket Corp. had an annual average earning growth of 69.5% over the past 5 years.NEU is in the portfolios of Irving Kahn of Kahn Brothers & Company Inc., Mario Gabelli of GAMCO Investors, Bruce Kovner of Caxton Associates, Prem Watsa of Fairfax Financial Holdings, Inc., George Soros of Soros Fund Management LLC, Jeremy Grantham of GMO LLC, Chuck Royce of Royce& Associates.
Highlight of Business Operations:
SG&A increased approximately $6.4 million or 27.8% for third quarter 2010 compared to third quarter 2009 and $17.7 million or 26.2% when comparing the two nine months periods. The increase for both third quarter 2010 and nine months 2010 was primarily the result of certain growth-related costs, largely reflecting the inclusion of the Polartech operations in 2010, as well as higher personnel-related costs and professional fees. R&D increased approximately $1.1 million, or 5.2%, for third quarter 2010 when compared to the same 2009 period. Nine months 2010 R&D was $4.4 million, or 7.2%, higher than nine months 2009. The increase in combined SG&A and R&D included an approximate $900 thousand favorable foreign currency impact for third quarter 2010 as compared to third quarter 2009 and a $1.6 million unfavorable impact when comparing the two nine months periods. We continue to invest in SG&A and R&D to support our customers programs and to develop the technology required to remain a leader in this industry.Income tax expense was $21.9 million for third quarter 2010 and $30.4 million for third quarter 2009. The effective tax rate was 32.3% for third quarter 2010 and 34.9% for third quarter 2009. The decrease in income before income tax expense resulted in a decrease of $6.8 million in income taxes, while the lower effective tax rate in 2010 as compared to 2009 resulted in a decrease of approximately $1.7 million in income taxes when comparing the third quarter 2010 and 2009 periods.
Cash used in investing activities was $85.5 million during nine months 2010 and included $41.3 million related to the acquisition of Polartech, as well as $25.1 million for capital expenditures and a net deposit of $16.6 million and a net settlement of $2.4 million related to the Goldman Sachs interest rate swap. Further information on the interest rate swap is discussed below and in Note 10. We estimate our total capital spending during 2010 will be approximately $30 million to $35 million. We expect to continue to finance capital spending through cash on hand and cash provided from operations, together with borrowing available under our revolving credit facility.
Cash used in financing activities during nine months 2010 amounted to $120.0 million, including the repayment of $99.1 million for the Foundry Park I construction loan and borrowing of $68.4 million for the Foundry Park I mortgage loan. We also borrowed $20.0 million under our revolving credit facility during the nine months 2010 and repaid $1.5 million on the mortgage loan. In addition, the use of cash included the repurchase of common stock of $89.0 million and funding of dividends of $16.4 million, as well as debt issuance costs of $1.5 million.
We had total long-term debt, including the current portion, of $237.3 million at September 30, 2010, representing a decrease of approximately $12.8 million in our total debt since December 31, 2009. The decrease resulted from borrowing $20.0 million under the revolving credit facility which was offset by the payment of the outstanding balance of $99.1 million under the construction loan agreement with proceeds of $68.4 million from the Foundry Park I mortgage loan agreement and cash on hand. We made principal payments of approximately $1.5 million on the mortgage loan, as well as $600 thousand on capital leases.
At September 30, 2010, we also had a $150 million revolving credit facility for working capital and other general corporate purposes for NewMarket and our subsidiaries, inclusive of a $75 million sub-facility for letters of credit. Borrowings bear interest at variable rates. The facility matures on December 21, 2011. At September 30, 2010, we had $20.0 million of outstanding borrowings under the revolving credit facility. We had outstanding letters of credit of $8.8 million at September 30, 2010, resulting in the unused portion of the revolver amounting to $121.2 million.
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