NEWMARKET CORP (NEU)

CIK: 0001282637. SIC: 2860 Industrial Organic Chemicals. Latest 10-K as of: 2026-02-12.

SIC breadcrumb: Manufacturing > Chemicals And Allied Products > SIC 2860 Industrial Organic Chemicals

SEC company page: https://www.sec.gov/edgar/browse/?CIK=1282637. Latest filing source: 0001282637-26-000005.

Selected Fundamentals

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-12. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001282637.json. Derived margins are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Missing metrics are omitted rather than fabricated.

Financial Charts

Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-04-23. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001282637.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

Quarterly Charts

Macro Cross-References

• CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
• UNRATE - Unemployment Rate
• FEDFUNDS - Federal Funds Effective Rate
• CES0500000003 - Average Hourly Earnings of All Employees, Total Private
• DFEDTARU - Federal Funds Target Range - Upper Limit
• DFEDTARL - Federal Funds Target Range - Lower Limit
• DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
• DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
• DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
• DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
• T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
• CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
• CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
• CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
• CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
• PCEPI - Personal Consumption Expenditures: Chain-type Price Index
• PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
• PPIACO - Producer Price Index by Commodity: All Commodities
• T10YIE - 10-Year Breakeven Inflation Rate
• U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
• PAYEMS - All Employees, Total Nonfarm
• CIVPART - Labor Force Participation Rate
• EMRATIO - Employment-Population Ratio
• UNEMPLOY - Unemployed
• CE16OV - Employment Level
• ICSA - Initial Claims
• JTSJOL - Job Openings: Total Nonfarm
• JTSQUR - Quits: Total Nonfarm
• GDPC1 - Real Gross Domestic Product
• A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
• INDPRO - Industrial Production: Total Index
• TCU - Capacity Utilization: Total Index
• HOUST - New Privately-Owned Housing Units Started: Total Units
• PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
• RSAFS - Advance Retail Sales: Retail Trade
• PCE - Personal Consumption Expenditures
• DSPIC96 - Real Disposable Personal Income
• PSAVERT - Personal Saving Rate
• M2SL - M2
• BOPGSTB - U.S. International Trade in Goods and Services: Balance
• MSPUS - Median Sales Price of Houses Sold for the United States
• HSN1F - New One Family Houses Sold: United States
• RHORUSQ156N - Homeownership Rate in the United States
• TTLCONS - Total Construction Spending: Total Construction in the United States
• RRVRUSQ156N - Rental Vacancy Rate in the United States
• TOTALSL - Total Consumer Credit Owned and Securitized
• REVOLSL - Revolving Consumer Credit Owned and Securitized
• DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
• GDP - Gross Domestic Product
• GPDI - Gross Private Domestic Investment
• GCE - Government Consumption Expenditures and Gross Investment
• PCEC - Personal Consumption Expenditures
• NETEXP - Net Exports of Goods and Services
• GFDEBTN - Federal Debt: Total Public Debt
• GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
• FYFSD - Federal Surplus or Deficit
• FGRECPT - Federal Government Current Receipts
• FGEXPND - Federal Government: Current Expenditures
• MANEMP - All Employees, Manufacturing
• USCONS - All Employees, Construction
• USTRADE - All Employees, Retail Trade
• USFIRE - All Employees, Financial Activities
• USGOVT - All Employees, Government
• AWHAETP - Average Weekly Hours of All Employees, Total Private
• DGORDER - Manufacturers' New Orders: Durable Goods
• NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
• BUSINV - Total Business Inventories
• EXPGS - Exports of Goods and Services
• IMPGS - Imports of Goods and Services
• IR - Import Price Index (End Use): All Commodities
• PPIFIS - Producer Price Index by Commodity: Final Demand

Latest quarter (10-Q)

Latest 10-Q source: 0001282637-26-000009.

Extracted between Part I Item 2 and the next Item 3/4 or Part II heading after HTML sanitization. Confidence: high. Filing date: 2026-04-23. Report date: 2026-03-31.

ITEM 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) discusses NewMarket's results of operations, general financial condition, and liquidity. The MD&A should be read in conjunction with Item 1, "Business" of our 2025 Annual Report and the Consolidated Financial Statements in Item 1, "Financial Statements" of this Form 10-Q. Specific Note references within this Item are to the Notes to the Condensed Consolidated Financial Statements included in Item 1, "Financial Statements" of this Form 10-Q.

Forward-Looking Statements

This report contains forward-looking statements about future events and expectations within the meaning of the Private Securities Litigation Reform Act of 1995. We have based these forward-looking statements on our current expectations and projections about future results. When we use words in this document such as “anticipates,” “intends,” “plans,” “believes,” “estimates,” “projects,” “expects,” “should,” “could,” “may,” “will,” and similar expressions, we do so to identify forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements we make regarding future prospects of growth in the petroleum additives or specialty materials markets, other trends in these markets, our ability to maintain or increase our market share, our future capital expenditure levels, and our future financial results.

We believe our forward-looking statements are based on reasonable expectations and assumptions, within the bounds of what we know about our business and operations. However, we offer no assurance that actual results will not differ materially from our expectations due to uncertainties and factors that are difficult to predict and beyond our control.

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, including tariffs and trade policy; 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; the underperformance of our pension assets resulting in additional cash contributions to our pension plans; and other factors detailed from time to time in the reports that NewMarket files with the SEC, including the risk factors in Part I, Item 1A. “Risk Factors” of our 2025 Annual Report, which is available to shareholders at www.newmarket.com.

You should keep in mind that any forward-looking statement made by us in this report or elsewhere speaks only as of the date on which we make it. New risks and uncertainties arise from time to time, and it is impossible for us to predict these events or how they may affect us. We have no duty to, and do not intend to, update or revise the forward-looking statements in this discussion after the date hereof, except as may be required by law. In light of these risks and uncertainties, any forward-looking statement made in this report or elsewhere, might not occur.

Overview

When comparing the results of the petroleum additives segment for the first three months of 2026 with the first three months of 2025, net sales declined 5.5%, resulting primarily from lower lubricant additives product shipments. Operating profit declined 5.0% and was also unfavorably impacted for the three months comparison by lower product shipments. In addition, favorable raw material costs were partially offset by higher operating costs.

For the three months comparison periods of 2026 and 2025, the specialty materials segment reported higher net sales due to the acquisition of Calca in the fourth quarter of 2025, but lower operating profit primarily due to the impact of product shipment mix at AMPAC. Specialty materials net sales and operating profit for the first three months of 2025 do not reflect financial results of Calca since the acquisition of Calca occurred on October 1, 2025.

We continue to monitor the uncertain macroeconomic environment in which we operate, particularly the changes in international trade relations and tariffs, as well as the impact of the conflict in the Middle East, and assess the potential impacts to our operations. These impacts could include supply chain disruptions, customer demand fluctuations, and higher costs. Investing in technology to meet customer needs, enhancing our operational efficiency, and improving our portfolio profitability will remain priorities.

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Despite the challenging global environment, our financial position remains strong. 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. We continue to invest in and manage our business for the long-term with the goal of helping our customers succeed in their marketplaces. Our investments continue to be in organizational talent, technology development and processes, and global infrastructure.

Results of Operations

Net Sales

Consolidated net sales for the first three months of 2026 totaled $669.7 million, representing a decrease of $31.2 million, or 4.5%, from the first three months of 2025. The following table shows net sales by segment and product line. The net sales in the table below for the specialty materials segment do not include sales from Calca for the 2025 period as the acquisition occurred on October 1, 2025.

Three Months Ended March 31,

(in millions)

2026

2025

Petroleum additives

Lubricant additives

$

521.2 

$

559.2 

Fuel additives

88.6 

86.3 

Total

609.8 

645.5 

Specialty materials

58.1 

53.7 

All other

1.8 

1.7 

Net sales

$

669.7 

$

700.9 

Petroleum Additives Segment

The regions in which we operate include North America, Latin America, Asia Pacific, and EMEAI. While there is some fluctuation, the percentage of net sales generated by region remained fairly consistent when comparing the first three months of 2026 with both the same period in 2025 and the full year of 2025.

Petroleum additives net sales for the first three months of 2026 were $609.8 million, a decrease of $35.7 million, or 5.5%, compared to the first three months of 2025. Decreases in North America of 10.7% and Asia Pacific of 9.4% were partially offset by increases in EMEAI of 1.7% and Latin America of 0.7%.

The following table details the approximate components of the changes in petroleum additives net sales between the first three months of 2026 and 2025.

(in millions)

Three Months

Period ended March 31, 2025

$

645.5 

Lubricant additives shipments

(38.9)

Fuel additives shipments

3.1 

Selling prices, including product mix

(9.9)

Foreign currency impact, net

10.0 

Period ended March 31, 2026

$

609.8 

When comparing the first three months of 2026 and 2025, lower lubricant additives shipments, partially offset by an increase in fuel additives shipments, resulted in the decrease in petroleum additives net sales. Including the impact of foreign currency, selling prices were effectively unchanged between the comparison periods.

On a worldwide basis, the volume of product shipments for petroleum additives decreased 6.9% in the first three months of 2026 compared with the same period in 2025, reflecting lower lubricant additives shipments partially offset by a modest increase in fuel additives shipments. For the first three months comparison, lubricant additives product shipments were lower across all regions except for the Latin America region, which was substantially unchanged. For the fuel additives first three

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months comparison, both the EMEAI and North America regions reported increases in product shipments, which were partially offset by decreases in the Asia Pacific and Latin America regions.

The primary foreign currencies in which we transact include the Euro, Pound Sterling, Japanese Yen, Chinese Renminbi, and Indian Rupee. Comparing the first three months periods of 2026 and 2025, the United States Dollar strengthened against the Rupee and Yen and weakened against the Euro, Renminbi, and Pound Sterling, resulting in the favorable impacts to net sales shown in the table above.

Specialty Materials Segment

Total net sales for the specialty materials segment were $58.1 million for the first three months of 2026, compared to $53.7 for the first three months of 2025. The increase in net sales primarily reflects the inclusion of Calca's net sales following its acquisition on October 1, 2025, as there were no Calca net sales in the prior year period. This increase was partially offset by the impact of product shipment mix at AMPAC.

All Other

“All other” includes the operations of the antiknock compounds business, as well as certain contracted manufacturing and related services associated with Ethyl.

Segment Operating Profit

NewMarket evaluates the performance of the petroleum additives and specialty materials businesses based on segment operating profit. NewMarket Services Corporation expenses are charged to NewMarket and each subsidiary pursuant to services agreements between the companies. Depreciation of 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 presents reporting segment operating profit for the three months ended March 31, 2026 and March 31, 2025 for the petroleum additives and specialty materials segments, as well as the operating loss for the "All other" businesses. A reconciliation of segment operating profit to income before income tax expense is in Note 4.

Three Months Ended March 31,

(in millions)

2026

2025

Petroleum additives

$

135.0 

$

142.1 

Specialty materials

$

12.4 

$

23.2 

All other

$

(1.1)

$

(0.5)

Petroleum Additives Segment

Petroleum additives segment gross profit decreased $7.4 million and operating profit decreased $7.1 million when comparing the first three months of 2026 to the first three months of 2025.

The decrease in both gross profit and operating profit primarily included the unfavorable impacts of lower product shipments, reflecting some softening in the market, as well as our portfolio profitability management efforts. In addition, favorable raw material costs were partially offset by higher operating costs.

The following table presents petroleum additives cost of goods sold as a percentage of net sales and the operating profit margin.

Three Months Ended March 31,

2026

2025

Cost of goods sold as a percentage of net

[Excerpt truncated for page length; source filing is linked above.]

Latest 10-K MD&A

Extracted between Item 7 and the next Item 7A/8 heading after HTML sanitization. Confidence: high. Filing date: 2026-02-12. Report date: 2025-12-31.

ITEM 7.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) discusses NewMarket's results of operations, general financial condition, and liquidity. The MD&A should be read in conjunction with Item 1, "Business" and the Consolidated Financial Statements in Item 8, "Financial Statements and Supplementary Data." Specific Note references within this Item are to the Notes to the Consolidated Financial Statements included in Item 8, "Financial Statements and Supplementary Data."

Forward-Looking Statements

The following discussion, as well as other discussions in this Annual Report on Form 10-K, contains forward-looking statements about future events and expectations within the meaning of the Private Securities Litigation Reform Act of 1995. We have based these forward-looking statements on our current expectations and projections about future results. When we use words in this document such as “anticipates,” “intends,” “plans,” “believes,” “estimates,” “projects,” “expects,” “should,” “could,” “may,” “will,” and similar expressions, we do so to identify forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements we make regarding future prospects of growth in the petroleum additives or specialty materials markets, other trends in these markets, our ability to maintain or increase our market share, and our future capital expenditure levels and our future financial results.

We believe our forward-looking statements are based on reasonable expectations and assumptions, within the bounds of what we know about our business and operations. However, we offer no assurance that actual results will not differ materially from our expectations due to uncertainties and factors that are difficult to predict and beyond our control.

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, including tariffs and trade policy; 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. Risk factors are discussed in Item 1A. “Risk Factors.”

You should keep in mind that any forward-looking statement made by us in this discussion or elsewhere speaks only as of the date on which we make it. New risks and uncertainties arise from time to time, and it is impossible for us to predict these events or how they may affect us. We have no duty to, and do not intend to, update or revise the forward-looking statements in this discussion after the date hereof, except as may be required by law. 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 2025 with 2024, net sales declined 3.9%, resulting primarily from lower product shipments. Petroleum additives operating profit decreased 12.1% when comparing the 2025 and 2024 periods, primarily reflecting lower product shipments and selling prices, as well as higher operating costs, which were partially offset by lower raw material costs. In addition to lower production at our manufacturing plants, the higher operating costs included higher technology investments for research, development and testing during the 2025 period as compared to the 2024 period, as well as one-time charges related to network optimization efforts.

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We completed the acquisition of Calca on October 1, 2025 and the acquisition of AMPAC on January 16, 2024, both of which are part of the specialty materials segment. See Note 2 for further information on the acquisitions. The 2025 and 2024 periods only include the results of AMPAC and Calca for the periods we owned each company. The specialty materials segment reported both higher net sales and higher operating profit for 2025 as compared to 2024.

We continue to monitor the uncertain macroeconomic environment in which we operate, particularly the changes in international trade relations and tariffs, and assess the potential impacts to our operations. These impacts could include supply chain disruptions, lower customer demand, and higher costs. Investing in technology to meet customer needs, enhancing our operational efficiency, and improving our portfolio profitability will remain priorities.

Despite the challenging economic environment, our financial position remains strong. 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. We continue to invest in and manage our business for the long-term with the goal of helping our customers succeed in their marketplaces. Our investments continue to be in organizational talent, technology development and processes, and global infrastructure.

RESULTS OF OPERATIONS

Management's discussion and analysis of our results of operations is presented below for the comparative periods of 2025 versus 2024. The discussion and analysis of our results of operations for 2024 compared to 2023 is available in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024.

Net Sales

Our consolidated net sales for 2025 amounted to $2.7 billion, a decrease of $61 million, or 2.2%, from 2024.

No single customer accounted for 10% or more of our total net sales in 2025, 2024, or 2023.

The following table shows net sales by segment and product line for each of the last three years. The net sales in the table below for the specialty materials segment include sales since the acquisitions of Calca on October 1, 2025 and AMPAC on January 16, 2024.

Years Ended December 31,

(in millions)

2025

2024

2023

Petroleum additives

     Lubricant additives

$

2,156 

$

2,246 

$

2,296 

     Fuel additives

378 

390 

394 

          Total

2,534 

2,636 

2,690 

Specialty materials

182 

141 

0 

All other

9 

9 

8 

Net sales

$

2,725 

$

2,786 

$

2,698 

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. The percentage of net sales being generated in the regions has remained fairly consistent over the past three years, with some limited fluctuation due to various factors, including the impact of regional economic trends. In 2025, 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, the percentage of 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.

Petroleum additives net sales for 2025 of $2.5 billion were 3.9% lower than 2024. Decreases in Asia Pacific of 10.3% and North America of 6.2% were partially offset by increases of 2.4% in EMEAI and 0.8% in Latin America.

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The approximate components of the petroleum additives decrease in net sales of $102 million when comparing 2025 to 2024 are shown below in millions.

Net sales for the year ended December 31, 2024

$

2,636 

Lubricant additives shipments

(88)

Fuel additives shipments

(13)

Selling prices, including product mix

(6)

Foreign currency impact, net

5 

Net sales for the year ended December 31, 2025

$

2,534 

When comparing petroleum additives net sales for 2025 with 2024, the primary driver was lower product shipments in both lubricant additives and fuel additives, along with a smaller unfavorable impact from lower selling prices.

On a worldwide basis, when comparing 2025 with 2024, the volume of product shipments for petroleum additives was 4.9% lower with decreases in both lubricant additives and fuel additives but primarily driven by lower lubricant additives shipments. Both the North America and Asia Pacific regions reported decreases in lubricant additives shipments, which were partially offset by increases in the EMEAI and Latin America regions. The Asia Pacific and Latin America regions reported increases in fuel additives shipments, which were more than offset by decreases in the North America and EMEAI regions. Overall, the decrease in product shipments reflects some softness in the market, as well as our strategic decision to examine and reduce low-margin business.

The primary foreign currencies in which we transact include the Euro, Pound Sterling, Japanese Yen, Chinese Renminbi, and India Rupee. Comparing 2025 and 2024, the United States Dollar weakened against the Euro, Pound Sterling, and Yen, while it strengthened against the Renminbi and Rupee, all combined resulting in the favorable impact to net sales. The favorable dollar impact from foreign currency was primarily from the Euro, which was partially offset by the unfavorable impact from the Renminbi and Rupee.

Specialty Materials - The specialty materials segment comprises the operations of AMPAC and Calca, both of which operate predominantly in the North America region. Total net sales for the specialty materials segment were $182 million for 2025 and $141 million for 2024. In addition to the inclusion of Calca in 2025 net sales, the increase between 2025 and 2024 resulted primarily from increased shipment volumes.

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 2025 and 2024.

Segment Operating Profit

NewMarket evaluates the performance of the petroleum additives and specialty materials businesses based on segment operating profit. 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. The amounts for the specialty materials segment include operating profit since the acquisitions of Calca on October 1, 2025 and AMPAC on January 16, 2024. A reconciliation of segment operating profit to income before income tax expense is in Note 5.

Years Ended December 31,

(in millions)

2025

2024

2023

Petroleum additives

$

520 

$

592 

$

514 

Specialty materials

$

47 

$

17 

$

0 

All other

$

(5)

$

(2)

$

(5)

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Petroleum Additives - Petroleum additives segment gross profit decreased $60 million, and segment operating profit decreased $72 million when comparing 2025 to 2024. The following table presents the petroleum additives segment's cost of goods sold as a percentage of net sales and its operating profit margin.

Years Ended December 31,

2025

2024

2023

Cost of goods sold as a percentage of net sales

69.0 

%

68.0 

%

71.2 

%

Operating profit margin

20.5 

%

22.5 

%

19.1 

%

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.

When comparing 2025 and 2024, the decrease in both gross profit and operating profit primarily includes the unfavorable impacts of lower product shipments and selling prices, as well as higher operating costs. The increased operating costs result primarily from lower production at our manufacturing plants and an increase in technology investments, as well as one-time charges related to our efforts to become more efficient by optimizing our global manufacturing network. These factors were partially offset by lower raw material costs.

The petroleum additives segment's selling, general, and administrative expenses (SG&A) increased by $5 million, or 3.8%, in 2025 compared to 2024. SG&A as a percentage of net sales was 5.2% in 2025 and 4.8% in 2024. Our SG&A costs are primarily personnel-related and include salaries, benefits, and other costs associated with our workforce, including travel-related expenses. While personnel-related costs fluctuate from year to year, there were no significant changes in the drivers of these costs when comparing 2025 and 2024.

Our investment in petroleum additives research, development, and testing (R&D) increased approximately $7 million when comparing 2025 with 2024. As a percentage of net sales, R&D was 5.2% in 2025 and 4.7% in 2024. Our R&D investments reflect our efforts to support the development of solutions that meet our customers' needs, meet new and evolving standards, and support our expansion into new product areas. 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. Substantially all investments in new product development are incurred in the United States and the United Kingdom (U.K.), with approximately 70% of total R&D attributable to the North America and EMEAI regions. The remaining R&D is attributable to the Asia Pacific and Latin America regions and represents customer technology support services in those regions. All of our consolidated R&D investment is related to the petroleum additives segment.

Specialty Materials - The specialty materials segment reported operating profit of $47 million for 2025 as compared to $17 million for 2024. The 2025 and 2024 periods only included the results of AMPAC and Calca for the period we owned each company - since January 16, 2024 for AMPAC and since October 1, 2025 for Calca.

The specialty materials results for the 2024 period include the sale of AMPAC finished goods inventory that we acquired at closing. The acquired inventory was recorded at fair value on the acquisition date and sold during 2024, generating no margin. The remaining increase in specialty materials operating profit for the year comparison resulted from the same factors as those outlined in the net sales discussion.

We may experience substantial variation in quarterly results for the specialty materials segment on an ongoing basis due to the nature of its business.

The following discussion references certain captions on the Consolidated Statements of Income.

Interest and Financing Expenses

Interest and financing expenses were $40 million in 2025 and $57 million in 2024. The decrease in interest and financing expense between 2025 and 2024 resulted primarily from lower average debt outstanding, along with a lower average interest rate.

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Other Income (Expense), Net

Other income (expense), net reflected income of $57 million in 2025 and $51 million in 2024. 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, which also represent most of the difference between the two years. See Note 18 for further information on total periodic benefit cost (income).

Income Tax Expense

Income tax expense was $142 million in 2025 and $122 million in 2024. The effective tax rate was 25.3% in 2025 and 20.8% in 2024. When comparing 2025 and 2024, income tax expense increased $25 million due to the higher effective tax rate and decreased $5 million due to lower income before income taxes.

The increase in the effective tax rate was primarily due to a lower foreign derived intangible income deduction and an increase in U.S. state tax expense in 2025 as compared to 2024.

The One Big Beautiful Bill Act (OBBBA) was enacted in the United States on July 4, 2025. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework, and the restoration of favorable tax treatment for certain business provisions, including permanently restoring 100 percent bonus depreciation for qualifying property and reinstating the ability for entities to immediately expense domestic research and development expenditures. These provisions will favorably impact our U.S. federal cash taxes.

The OBBBA has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. We are continuing to assess the impact of the provisions of the OBBBA that are effective in future years.

CASH FLOWS DISCUSSION

We generated cash from operating activities of $569 million in 2025 and $520 million in 2024.

During 2025, we used the $569 million of cash generated from operating activities to acquire Calca for $213 million (net of $6 million cash acquired), pay dividends of $106 million, fund capital expenditures of $78 million, and repurchase shares of our common stock for $77 million. We also paid off the $250 million term loan and made a principal payment of $50 million on the 3.78% senior notes. These payments were partially offset by additional net borrowings of $211 million on the revolving credit facility. Cash flows from operating activities included an increase of $22 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.

During 2024, we used the $520 million of cash generated from operating activities, along with proceeds from the term loan and net borrowings of $77 million on the revolving credit facility to acquire AMPAC for $681 million (net of $16 million cash acquired), pay dividends of $96 million, fund capital expenditures of $57 million, and repurchase shares of our common stock for $32 million. Cash flows from operating activities included a decrease of $23 million from higher working capital requirements and a decrease of $12 million for cash contributions to our pension and postretirement plans.

FINANCIAL POSITION AND LIQUIDITY

Cash

At December 31, 2025, we had cash and cash equivalents of $77.6 million as compared to $77.5 million at the end of 2024.

Cash and cash equivalents held by our foreign subsidiaries amounted to approximately $68 million at December 31, 2025 and $71 million at December 31, 2024. 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.

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A portion of our foreign cash balances is associated with earnings that we have asserted are indefinitely reinvested. We plan to use these indefinitely reinvested earnings to support growth outside of the United States through funding of operating expenses, research and development expenses, capital expenditures, and other cash needs of our foreign subsidiaries.

Debt

A summary of our debt instruments follows. A full discussion is in Note 14.

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%. 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. We were in compliance with all covenants under the indenture governing the 2.70% senior notes as of December 31, 2025 and December 31, 2024.

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. These notes bear interest at 3.78% with interest payable semiannually. We have made two principal payments of $50 million each on January 4, 2025 and January 5, 2026. We have three 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. We were in compliance with all covenants under the 3.78% senior notes as of December 31, 2025 and December 31, 2024.

Term Loan - On January 22, 2024, we entered into a credit agreement for an unsecured $250 million term loan (the Term Loan Credit Agreement), which had a maturity date of January 22, 2026. We borrowed the entire $250 million available under the Term Loan Credit Agreement and paid financing costs of $0.4 million, which were amortized over the term that principal was outstanding under the agreement. Under the agreement, we were required to repay the principal amount borrowed under the term loan in full at maturity. Subject to the conditions set forth in the Term Loan Credit Agreement, we had the option to prepay, without penalty, amounts borrowed under the term loan, together with any accrued and unpaid interest, prior to maturity. Any amounts prepaid prior to maturity were not available for additional borrowings by us. We repaid the Term Loan Credit Agreement in full during 2025.

The Term Loan Credit Agreement contained certain customary covenants, including financial covenants, which required 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). We were in compliance with all covenants under the term loan at the time we repaid it in 2025 and as of December 31, 2024.

Revolving Credit Facility - On January 22, 2024, we entered into a credit agreement for a $900 million revolving credit facility (the Revolving Credit Agreement). The revolving credit facility matures on January 22, 2029 and includes a $500 million sublimit for multicurrency borrowings, an initial letter of credit sublimit of $25 million, and a $20 million sublimit for swingline loans. 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. Certain of our foreign subsidiaries may, from time to time, become borrowers under the Revolving Credit Agreement. The obligations under the Revolving Credit Agreement are unsecured and are fully and unconditionally guaranteed by NewMarket.

Concurrently with entering into the Revolving Credit Agreement, we terminated our former revolving credit facility dated as of March 5, 2020. Upon termination, we repaid the amount then outstanding under the former revolving credit facility, plus accrued and unpaid interest.

Outstanding borrowings under the revolving credit facility amounted to $288 million at December 31, 2025 and $77 million at December 31, 2024. Outstanding letters of credit under the revolving credit facility amounted to approximately $4 million at both December 31, 2025 and December 31, 2024. The unused portion of the revolving credit facility amounted to $608 million at December 31, 2025 and $819 million at December 31, 2024.

The average interest rate for borrowings under the revolving credit facility was 5.3% during 2025 and 6.5% during 2024.

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The Revolving Credit Agreement contains certain customary covenants, including financial covenants, which require us to maintain a consolidated Leverage Ratio (as defined in the Revolving Credit Agreement) of no more than 3.75 to 1.00 except during an Increased Leverage Period (as defined in the Revolving Credit Agreement). The Leverage Ratio was 1.27 at December 31, 2025 and 1.33 at December 31, 2024. We were in compliance with all covenants under the revolving credit facility as of December 31, 2025 and December 31, 2024.

Other Borrowings - Two of our subsidiaries, one in Singapore and one China, have access to separate short-term lines of credit of $10 million each. There was no activity on these lines of credit in 2025 or 2024.

***

We had long-term debt of $883 million at December 31, 2025 and $971 million at December 31, 2024. As a percentage of total capitalization (total long-term debt and shareholders’ equity), our total long-term debt percentage decreased from 39.9% at the end of 2024 to 33.2% at the end of 2025. The change resulted from the increase in shareholders' equity along with a net decrease in outstanding long-term debt. The increase in shareholders’ equity primarily reflects our earnings, favorable impact from foreign currency translation adjustments, and an increase in the funded position of our retirement plans partially offset by repurchases of shares of our common stock and dividend payments. Generally, we repay any outstanding long-term debt with cash from operations or refinancing activities.

Working Capital

Including cash and cash equivalents and the impact of foreign currency on the balance sheet, at December 31, 2025, we had working capital of $640 million, resulting in a current ratio of 2.53 to 1. Our working capital at December 31, 2024 on the same basis was $655 million, resulting in a current ratio of 2.75 to 1.

The working capital of Calca is included in our consolidated balance sheet at December 31, 2025. Excluding the impact of Calca working capital, the most significant change in working capital since December 31, 2024 included increases in both trade and other accounts receivable and accrued expenses.

The increase in trade and other accounts receivable primarily represents a short-term income tax receivable as a result of the enactment of the OBBBA in July 2025. The OBBBA provided for immediate expensing of domestic research and development expenditures and 100 percent bonus depreciation on qualifying property, with retroactive application to January 2025. The increase in accrued expenses is primarily the result of customer contract liabilities.

Capital Expenditures

Capital expenditures were $78 million for 2025 and $57 million for 2024. We estimate capital expenditures in 2026 will be in the range of $100 million to $150 million as we anticipate spending on several improvements to our manufacturing and R&D infrastructure around the world.

Included in the expected capital expenditures for 2026 is a capital investment to expand AMPAC's ammonium perchlorate production capabilities in support of growing solid rocket motor demand. The project of up to $100 million, which began in 2025, is currently scheduled to be completed towards the end of 2026 and includes the construction of an additional production line, increasing capacity by more than 50%. The increased capacity will allow AMPAC to meet the anticipated future demand of U.S. military and space launch programs, while also addressing the needs of U.S. allies in these critical areas.

We expect to continue to finance capital spending through cash provided from operations, as well as with borrowing available under our revolving credit facility.

Environmental Expenses

We spent approximately $44 million in 2025 and $37 million in 2024 for ongoing environmental operating and clean-up costs, excluding depreciation of previously capitalized expenditures. These environmental operating and clean-up expenses are primarily included in cost of goods sold. We expect to continue to fund these costs through cash provided by operations.

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Liquidity and Contractual Obligations

We have both current and long-term obligations that have known payment streams and are discussed throughout this Annual Report on Form 10-K. 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.

The debt-related contractual obligations include both principal payments on outstanding long-term debt and the related interest payments. 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, 2025, all of our long-term debt was at fixed rates, except for the revolving credit facility. 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. 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.

The annual operating expenses and capital expenditures associated with compliance with environmental, health, and safety regulations are included in Item 1, Governmental and Environmental Regulations. In addition to these costs, there are expected cash flows for dismantling and decontamination of environmental sites. At December 31, 2025, these costs were estimated at approximately $1.0 million to $1.5 million in each of 2026 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.

Pension and Postretirement Benefit Plans

Our U.S. and foreign benefit plans are discussed separately below. The information below for our U.S. plans applies to all of our U.S. benefit plans on a combined basis. 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. 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 approximately 13 years, while the average remaining life expectancy of inactive participants is approximately 22 years. 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. 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, 2026 and January 1, 2025. This analysis reflects our expected long-term rates of return for each significant asset class or economic indicator. The range of returns developed relies both on forecasts and on broad-market historical benchmarks for expected return, correlation, and volatility for each asset class. The asset allocation for our U.S. pension plans is predominantly weighted toward equities. 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, 2025.

An actuarial gain on the assets occurred during 2025 and 2024 as the actual investment return for all of our U.S. qualified pension plans exceeded the expected return by approximately $37 million in 2025 and $54 million in 2024. Investment gains and losses are recognized in earnings on an amortized basis over a period of 5 years. The amortization of the actuarial net gain is expected to be approximately $5 million in 2026 resulting primarily from the actuarial gain related to the investment gains on plan assets. We expect that there will be continued volatility in net periodic benefit cost

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(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, 2025, our expected long-term rate of return on our postretirement plans was 4.0%. This rate varies from the pension rate of 8.0% primarily because of the difference in investment of plan assets. The assets of the postretirement plan are held in an insurance contract, which results in a lower assumed rate of investment return.

We expect to have net periodic benefit income for our pension and postretirement plans during 2026, as the expected return on assets and amortization is higher than the offsetting benefit costs. Net periodic benefit cost (income) for the pension and the life insurance portion of postretirement plans is sensitive to changes in the expected return on assets. 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 2026 income for our U.S. pension and postretirement plans by approximately $8 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 2026 pension and postretirement income by $8 million.

Discount Rate Assumption - We develop the discount rate assumption by determining the single effective discount rate for a unique hypothetical bond portfolio constructed from investment-grade bonds that, in the aggregate, match the projected cash flows of each of our retirement plans. The discount rate is developed based on the hypothetical bond portfolio on the last day of December. The discount rate at December 31, 2025 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 4.875% (while holding other assumptions constant) would reduce the forecasted 2026 income for our U.S. pension and postretirement benefit plans by approximately $6 million. A 100 basis point increase in the discount rate to 6.875% (while holding other assumptions constant) would increase forecasted 2026 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, 2025 at 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 pension plan are sensitive to changes in assumed interest rates and investment gains or losses in the same manner as pension expense. While we do not expect to make a cash contribution to our U.S. qualified pension plans, we expect our aggregate cash contributions to all U.S. pension plans will be approximately $4 million in 2026. We expect our contributions to the postretirement benefit plans will be approximately $1 million in 2026.

Foreign Pension Benefit Plans - Our foreign pension plans are quite diverse. The following information applies only to our U.K. pension plan, which represents the majority of the amounts recorded in our financial statements for our foreign pension plans. 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 20 years. In determining the impact of mortality on the U.K. pension plan in our financial statements, we utilize the S4PxA mortality tables weighted by 99% for male members and 88% for female members and S4DxA mortality tables weighted by 106% for male dependents and 107% for female dependents. Future projected improvements in life expectancy are allowed for in line with the CMI 2024 model with an initial addition to mortality improvements of 0.2% and a half-life parameter of 1 year with a long-term rate of improvement of 1.65% per year for males and 1.25% per year for females based on the membership of the plan.

Investment Return Assumptions and Asset Allocation - We periodically review our assumptions for the long-term expected return on the U.K. pension plan assets. The expected long-term rate of return is based on both the asset allocation and yields available in the U.K. markets.

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 2025 was 53% in pooled equities funds, 25% in pooled government bonds, and 22% in pooled diversified growth funds. 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 7.8% at December 31, 2025.

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An actuarial gain on the assets occurred during both 2025 and 2024 as the actual investment return exceeded the expected investment return by approximately $6 million in 2025 and $1 million in 2024. Actuarial gains of $6 million occurred during 2025 and $16 million during 2024 on plan liabilities primarily due to changes in the assumptions. Investment and liability gains and losses are recognized in earnings on an amortized basis over a period of years. The combined net gains result in an expected amortization of $1 million in 2026. We expect that there will be continued volatility in the net periodic benefit cost (income) for our U.K. pension plan as 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 to have pension income during 2026 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. For example, decreasing the expected rate of return by 100 basis points to 6.8% (while holding other assumptions constant) would decrease the forecasted 2026 income for our U.K. pension plan by approximately $2 million. Similarly, a 100 basis point increase in the expected rate of return to 8.8% (while holding other assumptions constant) would increase forecasted 2026 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. The yield appropriate to the duration of the U.K. plan liabilities is then used. The discount rate at December 31, 2025 was 5.60%.

Net periodic benefit cost (income) for the U.K. pension plan is also sensitive to changes in the discount rate. For example, decreasing the discount rate by 100 basis points to 4.60% (while holding other assumptions constant) would decrease the forecasted 2026 income for our U.K. pension plans by approximately $300 thousand. A 100 basis point increase in the discount rate to 6.60% (while holding other assumptions constant) would increase forecasted 2026 pension income by approximately $300 thousand.

Rate of Projected Compensation Increase - Our rate of projected compensation increase at December 31, 2025 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 assessed every three years by a formal actuarial valuation, which will be completed in 2026. Contributions are sensitive to the assumptions adopted and market conditions at each assessment date. We expect our aggregate U.K. cash contributions will be approximately $3 million in 2026.

OUTLOOK

Our goal is to provide a 10% compounded return per year for our shareholders over any ten-year period (defined as 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 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 expect our petroleum additives segment will continue to experience impacts to its operating performance during 2026 due to market softness and the uncertain global economic environment in which we operate. Nonetheless, we anticipate continued solid results from this segment in 2026. We will continue to focus on investing in technology for our customers, cost control, and operating profit margin management, while advancing our initiatives to build a global manufacturing network that will enable more efficient product delivery to our customers in the years ahead.

Over the past several years we have made significant investments in our petroleum additives business as the industry fundamentals remain positive. These investments have been, and will continue to be, focused on operational efficiencies, organizational talent, and technology development and processes, as well as global infrastructure, including technical centers, production capabilities and geographic expansion. We intend to utilize these investments to improve our ability to deliver the solutions that our customers value, expand our global reach, and enhance our operating results. We will continue to invest in our capabilities to provide even better value, service, technology, and customer solutions.

In addition to the ongoing investments we make in our petroleum additives business, we have, since 2024, completed the acquisition of two companies - AMPAC and Calca - which constitute our specialty materials segment. Through these

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acquisitions and our investments in expanding capacity at both operations, we have committed approximately $1 billion to this resilient, high-technology segment. We continue to focus on the integration of these companies into our business, and we anticipate solid results from both companies. We may experience substantial variation in quarterly results for the specialty materials segment on an ongoing basis due to the nature of the business, including any impact from shutdowns of the U.S. government.

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. We believe our capital spending is creating the capability we need to grow and support our customers worldwide, and our research and development investments are positioning us well to provide added value to our customers.

While our recent acquisitions of AMPAC and Calca were outside of our core petroleum additives business, we believe both presented 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. 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.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The following discussion highlights some of the more critical areas where a significant change in facts and circumstances in our operating and financial environment could cause a change in future reported financial results.

Income Taxes

We file United States, foreign, state, and local income tax returns. Significant judgment is required in determining our worldwide provision for income taxes and recording the related tax assets and liabilities. Any significant impact as a result of changes in underlying facts, laws, tax rates, or tax audits could lead to adjustments to our income tax expense, effective tax rate, financial position, or cash flow.

Deferred income taxes are provided for the estimated income tax effect of temporary differences between the financial statement carrying amounts and the tax basis of existing assets and liabilities, as well as for net operating losses and tax credit carryforwards. When recording these deferred tax assets and liabilities, we must estimate the tax rates we expect will apply to taxable income in the periods in which the deferred tax liability or asset is expected to be settled or realized. In addition, we may record valuation allowances to reduce deferred tax assets if it is more likely than not that some portion or all of the deferred tax assets will not be realized. Judgment is required as we consider the scheduled reversal of deferred tax assets and liabilities, projected future taxable income, and tax planning strategies in making this assessment. If our estimates and assumptions change from those used when we recorded deferred tax assets and liabilities, the effect on our results of operations and financial position could be material.

The income tax returns for our entities in the United States and in foreign jurisdictions are open for examination by tax authorities. We assess our income tax positions and record a liability for all years open for examination based upon our evaluation of the facts, circumstances, and information available at the reporting date. The economic benefit associated with a tax position will be recognized only if we determine it is more likely than not to be upheld on audit. Although we believe our estimates and judgments are reasonable, actual results could differ, resulting in gains or losses that may be material to our results of operations and financial position.

At each interim reporting period, we estimate an effective income tax rate that is expected to be applicable for the full year. Our provision for income taxes is impacted by the income tax rates of the countries where we operate. A change in the geographical source of our income can affect the effective tax rate. Significant judgment is involved regarding the application of global income tax laws and regulations when projecting the jurisdictional mix of income. 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.

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Intangibles (net of amortization) and Goodwill

We have certain intangibles amounting to $517 million and goodwill amounting to $424 million at December 31, 2025 that are discussed in Note 11. Of these intangibles and goodwill, $124 million is attributable to the petroleum additives segment and $817 million to the specialty materials segment. The finite-lived intangible assets are being amortized over remaining useful lives up to approximately 20 years. Water rights are indefinite-lived and non-amortizing.

We estimate fair value for these identifiable intangibles using an income valuation approach for customer bases, backlog, formulas and technology, and trademarks and trade names. The cash flow projections include significant judgments and assumptions relating to revenue growth rates; earnings before interest, taxes, depreciation, and amortization; discount rate; contributory asset charges; customer attrition rate; and royalty rates, as applicable. We use a market valuation approach for estimating water rights and our significant judgments and assumptions included comparable sales data.

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. However, if conditions were to substantially deteriorate in the petroleum additives or specialty materials 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. 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.

Pension Plans and Postretirement Benefits

The impact of the pension and postretirement benefit plan obligations recorded in the financial statements is dependent upon utilizing actuarial methods and requires the use of estimates and assumptions. These assumptions include the discount rate, rate of projected compensation increase, 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. Further discussion on how we develop these assumptions and the effect of changes in these assumptions on our financial results is provided in the Financial Position and Liquidity section of Item 7. In addition, information is provided on the pension and postretirement plans in Note 18.

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. Our estimates for costs that will be incurred to satisfy our obligations related to environmental matters are affected by many variables, including our judgment regarding the extent of remediation that will be required, future changes in and enforcement and interpretation of laws and regulations, current and future technology available, and timing of remediation activities. While we currently do not anticipate significant changes to the many factors that could impact our environmental requirements, we continue to keep our accruals consistent with these requirements as they change.

Also, as noted in the discussion of Legal Proceedings in Item 3 of this Annual Report on Form 10-K, while it is not possible to predict or determine with certainty the outcome of any legal proceeding, it is our opinion, based on our current knowledge, that we will not experience any material adverse effects on our results of operations, cash flows, or financial condition as a result of any pending or threatened proceeding.

RECENT ACCOUNTING PRONOUNCEMENTS

For a discussion of recently issued accounting standards, see Note 23.