NEU
#Thank you, Audrey, and thanks to everyone for joining us this afternoon.
With me today is Teddy <UNK>, 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 in our SEC filings, including our most recent Form 10-K.
During this call, we may also discuss 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 measure.
We filed our 10-Q this morning.
It will contain significantly more details on the operations and performance of the company.
Please take time to review it.
I will be referring to the data that was included in last night's release in the following.
Net income was $64 million or $5.39 a share compared to net income of $62 million or $5.22 a share for the first quarter of last year.
This is an earnings increase of 3% and an earnings per share increase of 3% from last year's performance.
Petroleum additives operating profit for the quarter was $99 million, which is $1 million or 1.3% lower than last year.
Consolidated sales for the quarter increased 6.5% to $543 million compared to sales for the same period last year of $510 million.
The increase in revenue in petroleum additives in the quarterly comparison was driven mainly by higher volumes.
Petroleum additive shipments for the first quarter of 2017 were up 13.9% from the same period last year.
Lubricant additive shipments increased across all regions, except North America, while fuel additive shipment increases were driven by North America and Europe, partially offset by decreases in Latin America Of the $33 million increase in revenue, shipments was the predominant driver, partially offset by selling prices.
Operating margins at 18.3% remained within our typical range.
The effective income tax rate for the first quarter of 2017 was 27.5%, down from a rate of 30.4% in the same period last year.
The rate in the first quarter of 2017 was primarily lower due to an increase in earnings in foreign jurisdictions with lower tax rates.
On the cash flow for the quarter.
Items of note include funding our dividends of $21 million and using more cash to fund the normal variations in working capital.
We continue to operate with very low leverage, with net debt to EBITDA remaining below 1x.
In 2017, we expect to see an increase in the level of our capital expenditure to a higher level than 2016, which includes the anticipated spending on our Phase 2 Singapore investment as well as a number of improvements to our manufacturing and research and development infrastructure around the world.
In Q1 of 2017, we ramped up the capital spending to $46 million.
We announced also our intent to acquire Aditivos Mexicanos, or AMSA, which is a petroleum additives manufacturing sales and distribution company based in Mexico City.
We still expect to close the transaction in the first half of 2017 pending a regulatory review in Mexico.
Over the past several years, we have made significant investments to expand our capabilities around the world.
These investments have been in people, technology, technical centers and production capacity.
And we intend to use those new capabilities, along with new investments mentioned, to improve our ability to deliver goods and services that our customers value and to grow shareholder value.
Audrey, that concludes our planned comments.
We'd like to open up the lines for any questions, please.
Happy to answer that.
We don't talk a lot about pricing, but I do want to point out that we do get impacted by the relative price of crude oil, and oil's been down for some period.
And while our costs and our prices don't track crude oil exactly, directionally they tend to move in the same direction.
So if crude oil is down long enough, eventually it rolls through to our costs and our prices.
So that's what you're seeing.
The business will be integrated into our operation, and we don't plan to break it out separately as far as a financial segment or financial information.
They're in the petroleum additives business, and we expect them to perform inside of our operation as the other operations that we have do.
<UNK>, I don't have a specific answer for you on that because I just don't know that data.
But I'll tell you, I ---+ we participate in the full range of the market in the developed as well as developing parts of the world.
So we're in all of it.
<UNK>, if you look at new car sales across the world and the technology in those new cars, the technology from an additive perspective is the same, whether it ---+ the car sold in North America or it's sold in a different part of the world, in Asia.
So from that perspective, there's no discernible difference.
I would say that you would take a look at last year's full year tax rate is probably a good indication.
Again, don't read anything into 1 quarter, and that's probably equivalent to what we think it is going forward.
Yes, we did 29.1%.
We have an authorization that's good through the end of next year.
I guess you should think of it, if there's a choice between opportunistic and regular, it would be characterized as opportunistic.
We make the decision based on the relative prices of the stock and other uses of cash at the time.
Sorry, what period are you looking at.
Yes.
This calendar year.
All right.
Thank you, everyone, for calling in.
We'll talk to you next quarter.
Take care.
