NewMarket (NYSE:NEU) reported lower fourth-quarter and full-year 2025 net income compared with 2024, with CFO Tim Fitzgerald pointing to a higher effective tax rate as a primary driver of the year-over-year decline in earnings per share. Fitzgerald said the company’s 2025 Form 10-K provides additional detail on the factors behind the higher tax rate.
Profitability and tax impacts
Fitzgerald said pre-tax income for the fourth quarter of 2025 was $113 million, down from $134 million in the fourth quarter of 2024. For the full year, pre-tax income totaled $561 million in 2025 versus $584 million in 2024, which he characterized as a 4% decline.
While the company does not typically emphasize pre-tax income, Fitzgerald said it was notable in 2025 because “significantly higher income taxes booked throughout the year” weighed on net income and EPS. He said the factors driving the increased effective tax rate are outlined in the 10-K.
Petroleum Additives: softer market, lower shipments and pricing
In the Petroleum Additives segment, fourth-quarter 2025 sales were $585 million, down from $626 million in the fourth quarter of 2024. Segment operating profit was $107 million, compared with $136 million a year earlier, which Fitzgerald noted was a record fourth quarter for the business.
Fitzgerald attributed the year-over-year decline in fourth-quarter operating profit to several factors:
- A 6% decline in shipments, “mainly due to market softness.”
- Lower selling prices.
- Higher unit costs tied to lower production volumes, which the company undertook to manage inventory levels.
For the full year 2025, Petroleum Additives sales were $2.5 billion, compared with $2.6 billion in 2024. Operating profit for the segment was $520 million, down from $592 million in 2024.
Fitzgerald said the full-year decline reflected similar drivers to the fourth quarter. Shipments were down 4.9% year over year as the company faced market softness throughout 2025, alongside what he described as a strategic decision to improve profitability by “reducing low-margin business.”
Despite the year-over-year declines against what he called record 2024 performance, Fitzgerald said management was “very pleased” with Petroleum Additives results in 2025. He added that the company remains challenged by inflation and the impact of tariffs, as well as continued market softness affecting shipments. Management’s stated focus areas include investing in technology to meet customer needs, improving operating cost efficiency, optimizing inventory, and improving portfolio profitability.
Specialty Materials boosted by AMPAC demand and Calca acquisition
NewMarket reports results from its AMPAC business and newly acquired Calca Solutions business within the Specialty Materials segment. Specialty Materials sales in the fourth quarter of 2025 were $49 million, compared with $27 million in the same period of 2024. Fitzgerald said the increase was driven primarily by higher volume at AMPAC and the inclusion of Calca, which was acquired on Oct. 1, 2025.
Specialty Materials operating profit in the fourth quarter was $7 million, compared with about $2 million in the year-ago quarter. Fitzgerald cautioned that quarterly results in Specialty Materials can vary substantially due to the nature of the business.
For the full year, Specialty Materials sales were $182 million, up from $141 million in 2024. Operating profit rose to $47 million in 2025 from $17 million in 2024, which Fitzgerald said was mainly driven by increased volume demand at AMPAC.
Fitzgerald also highlighted the company’s capital commitments to the segment, saying that through the acquisitions of AMPAC and Calca and investments to expand capacity at both operations, NewMarket has committed approximately $1 billion to the “resilient, high-technology” Specialty Materials business.
Cash flow, capital return, and balance sheet
Fitzgerald said NewMarket generated “solid cash flows” in 2025, enabling $183 million in shareholder returns through $77 million in share repurchases and $106 million in dividends.
He added that the company reduced total debt by $88 million compared with 2024, including the borrowing associated with the Calca acquisition. As of Dec. 31, 2025, net debt to EBITDA was 1.1 times, slightly down from 1.2 at the end of 2024.
Fitzgerald said the company’s cash flow performance supports a range of capital allocation priorities, including reinvestment for growth and efficiency, acquisitions, share repurchases, and dividends.
Outlook and priorities
Looking ahead, Fitzgerald said NewMarket anticipates “continued strength” in both Petroleum Additives and Specialty Materials. He said the company remains focused on decisions intended to promote long-term value for shareholders and customers, guided by what he described as core principles including a long-term perspective, a safety-first culture, customer-focused solutions, technology-driven products, and a world-class supply chain.
The call concluded without a live question-and-answer session, with Fitzgerald noting that he was available for follow-up questions via email or phone.
About NewMarket (NYSE:NEU)
NewMarket Corporation is a specialty chemicals and lubricants company headquartered in Richmond, Virginia. Through its Valvoline business, the company markets a broad portfolio of automotive aftermarket products, including engine oils, transmission fluids, greases and vehicle care solutions. Valvoline products are distributed through retail and commercial channels as well as a network of quick-lube service centers that provide oil changes, preventive maintenance and related services.
In its chemical additives segment, NewMarket develops, manufactures and sells performance additives for fuels, lubricants and industrial fluids.
