Good day, ladies and gentlemen. And to the NewMarket Corporation's Conference Call and Webcast to review Fourth Quarter 2018 and Year End Financial Results. All lines have been placed on listen-only mode. [Operator Instructions] At this time, its my pleasure to turn the floor over to your host Brian Paliotti. Sir, the floor is yours.

Thank you, Angelica, 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 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 intend to file our 2018 10-K toward the middle of February. 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 today. Now onto the fourth quarter results. Our profit before tax was $71.1 million, a 9.5% increase, compared to the profit before tax for the fourth quarter of 2017 of $64.9 million. With the Tax Reform Act on the quarterly earnings per share numbers, this profit before tax number is a good way to compare our periods. The next set of numbers I'll mention does include the impact of the Tax Reform Act. Net income for the fourth quarter of 2018 was $62.8 million, or $5.58 per share, compared to net income of $4.1 million, or $0.35 per share for the fourth quarter of 2017. Income tax expense was $8.3 million for the fourth quarter of 2018, compared to $60.9 million for the fourth quarter of 2017, and $55.6 million for 2018, compared to $124.9 million for 2017. The main driver for the difference between the comparative…

Thank you. The floor is now open for questions. [Operator Instructions] Okay. Our first question comes from Adam Taub of Stants Capital [ph] You may now state your question, Adam?

Hi, thanks for taking my question. I was hoping to better understand long-term shipment trends for lubricant additives in North America. Since 2014, the lubricant additive shipments have been either flat or down each year based on your 10-Ks. If the industry in the US in a slow annual decline or have there been any market share shifts? If the industry is in decline, what do you think has been driving that? And do you expect declines to continue or is there something that will flip the industry back to growth?

First and foremost, thanks for the question. I'm not sure exactly what you're referring to. We don't disclose shipments in the 10-K, we disclose revenue. And so from a shipments perspective, I can tell you that the goal for the organization is to grow a few percentage points greater than the market. Last year, our shipments grew in total 8.7%, this year our shipments were down -- the compounded rate of growth for shipments over the last few years has been 2.1%. And so from a regional perspective, we don't have that information to share. But I can tell you from a general perspective shipments are in line with our long-term view.

Our next question comes from Dietrich Silver ([ph] of Washington Research. Please state your question, please. Dietrich are you muted?

I'm sorry. Are you asking for Dmitry from Buckingham Research?

From Washington Research, yes.

Oh, no, that's not me then.

No, you're last, sir.

I'm last? So, it is me?

Yeah.

Okay. Hi. So, this is Dmitry Silversteyn of Buckingham Research. Yeah, couple of questions, and I apologize, I jumped in the call little bit late. The -- can you talk a little bit about sort of the difference in profitability between your lube and your fuel additives business? And I'm just trying to understand your margins came in a little bit better than expected, given where the raw material pricing is. So, I'm just trying to understand, if this is a question of you -- of your pricing catching up with raw materials or is it a question of mix that impacted your margins in this quarter? I'm assuming in the call, but I'm just looking at the order of magnitude?

Yeah. Hey, Dmitry, it's Brian. Definitely was pricing catching up with raw materials, we've been in the lag position as you know, and we've talked a lot about margin recovery and some of the actions that we've taken. So, from the perspective of what we saw in the quarter, the last two quarters, that is pricing catching up with other raw's.

Okay, So there is not -- you talked about your lube shipments being down 10%. Is that -- was that a function of sort of customers expecting lower pricing in 2019, so working down their inventories or what -- did you have any disruptions or difficult to shipping products and something got pushed off into the next quarter? For your industry 10% is a pretty big drop. So, I'm just trying to understand what's driving that?

Yeah. Just to clarify, Dmitry, the 10% was across both lubes and fuels, wasn't just lubes. And we had a record in the fourth quarter of last year. So, the compare was really strong. The second half we've stated in both the third quarter and in this quarter we saw a little bit of slowdown in the second half. Don't see any fundamental change in the marketplace. And so, there was nothing there that was any different that we've normally seen. And so from the perspective of being down in the quarter, we don't read too much into that. Again, I go back to the trend over the last three years, this were up a couple -- were up 2% and that's directly in line with where we think the -- we want to be from a market perspective.

Dmitry, this is Teddy. The only thing I'd add to that is, it's hard for us to get a real read on any destocking that's going on. But anecdotally, we do think that there was some of that in the fourth quarter as crude oil and base oil saw some drop. So, we expect some of that contributed to the 10% because like you said, that's a big swing for our market.

All right. And Teddy, with that in mind, I mean, your raw material pricing is going to be coming down I would assume as well, because it's to some extent or some way the size of the barrel of oil. Is there -- how is your inventory position. And is there a need to maybe work off some inventory that you may have built during the inflationary part of your raw material cycle?

Well, we haven't seen any relief in raw materials in our results. We've seen -- we see -- we've seen more stability in costs than decrease. When you look at the full-year, our volume was off 2.8%. Our operating profit was off 9.9%. So, we feel good about the stability and starting to -- and catching back up in the second half, but for the year our margin are still below historical norms.

Okay. But I guess my question is, you haven't been carrying sort of higher than normal inventory in an inflationary cycle that you would now need to right size that we are sort of crusting that cycle and maybe looking forward to some lower pricing for your inputs in a quarter or two?

No, Dmitry. No, we're not seeing that.

Okay. And then the last question. You mentioned in your prepared remarks that you're still sort of trying to catch up with pricing, obviously you made a lot of headway in the last couple of quarters. As I think about 2019, should I be just kind of annualizing the pricing you got in 2018 or do you guys expect to get maybe one more price increase here in the first quarter to sort of finish this inflationary cycle with?

Hey, Dmitry, I can tell you that over long periods of time, we've talked about this business being mid to high teens, we're working toward trying to get the margins back to that historical range.

Okay. But I mean, my question is would that require you to continue to push pricing or just hold the price where it is, and have -- based on other costs come in to get to the high-teens level?

That's more detail than we'd like to get into.

All right. That is fair enough. Thank you. That's all the questions I have.

Thanks.

Thank you.

Thank you. [Operator Instructions] Okay, there appear to be no further questions at this time.

All right, thank you everyone for your support and we'll talk to you next quarter.

Thank you. This does conclude today's conference. We thank you for your participation. You may now disconnect your lines at this time and have a great day.