NewMarket Corp (NEU) Q3 2018 Earnings Conference Call Transcript
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NewMarket Corp (NYSE: NEU)
Q3 2018 Earnings Conference Call
Oct. 25, 2018, 3:00 p.m. ET
Contents:
Prepared Remarks
Questions and Answers
Call Participants
Prepared Remarks:
Operator
Greetings and welcome to NewMarket Corporation's Scheduled Conference Call and Webcast to review Third Quarter 2018 Financial Results. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator Instructions). As a reminder, this conference is being recorded.
I would now like to turn the conference over to your host Mr. Brian Paliotti. Thank you. You may begin.
Brian Paliotti -- Vice President and Chief Financial Officer
Thank you, Rob, 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 our SEC filings, including our most recent Form 10-K. During this call, we may also discuss non-GAAP financial measure included in our earnings release. The earnings release which can be found on our website, includes a reconciliation of the non-GAAP financial measure to the comparable GAAP financial measure.
We filed our 10-Q this morning. It will contain 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 release.
Net income was $58 million or $5.12 a share compared to net income of $60 million or $5.04 a share for the third quarter of last year. This is an earnings decrease of 2.2% and an EPS increase of 1.6% from last year's performance. Petroleum additives operating profit for the quarter was $76 million, which is an $8.3 million or 10% lower than last year. Consolidated sales for the quarter increased 2.7% to $563 million compared to sales for the same period last year of $548 million. The increase in revenue in petroleum additives in the quarterly comparison was mainly driven by price including foreign exchange. Petroleum additives shipments for the third quarter of 2018 were down 3.6% from the same period last year and are down slightly year-to-date by 0.3%.
Shipments of lubricant additives decreased for the third quarter and are up slightly on a year-to-date basis. The decrease in lubricant additive shipments was all -- in all regions except Asia Pacific for both the third quarter and year-to-date. Fuel additives shipments also decreased when comparing to third quarters of 2018 and '17, as well as for the first nine months across all regions except Latin America. Petroleum additives operating profit margin was 13.5% for the third quarter of '18 compared to 15.4% for the third quarter of 2017, and was 13.3% for the first nine months of '18 as compared to 16.3% for the first nine months of '17. For the rolling four quarters ended September 30, 2018, the operating profit margin for petroleum additives was 13.3%.
Increase of the raw material cost as well as unfavorable impacts from conversion and foreign currency have continued to put downward pressure on margins and our actions with regard to pricing have not kept pace. The story is the same as the last several quarters. Raw material costs have been rising faster than our selling prices had been on a prolonged rise throughout multiple quarters. Typically we are able to pass on the increases and recover margins, but there is normally a two to five month lag between when we see the cost increases and when we are able to implement margin recovery. Although we have made some progress, margin improvement will remain our top priority throughout the rest of this year.
The effective income tax rate for the third quarter of 2018 was 14.4%, down from a rate of 22.4% in the same period last year. The 21.6% year-to-date rate is down versus last year, primarily due to US tax reform.
On the cash flow for the quarter, items of note including our funding of normal dividends of $20 million, and we also brought back 62,428 shares of stock for $25 million in the quarter at an average price of $393.57. Our capital spending for the quarter was $12 million, bringing the year-to-date spend to $55 million. 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 the industry as a whole remain unchanged and the petroleum additives market growing at 1% or 2% annually for the foreseeable future. We continue to believe that we will see that growth rate over the long term.
Rob, that concludes our planned comments. We'd like to open up the lines for questions.
Questions and Answers:
Operator
Thank you. At this time, we'll be conducting a question-and-answer session. (Operator Instructions) There are no questions at this time. At this point, I'd like to turn the call back to Brian Paliotti for closing comments.
Brian Paliotti -- Vice President and Chief Financial Officer
Thank you all for calling in this quarter, and we'll talk to you next quarter.
Operator
This concludes today's conference. You may disconnect your lines at this time and we thank you for your participation.
Duration: 7 minutes
Call participants:
Brian Paliotti -- Vice President and Chief Financial Officer
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