Greetings, and welcome to the NewMarket Corporation's Second Quarter 2014 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, David Fiorenza, CFO. Thank you. You may begin.

Thank you, Jesse, and thanks to everyone for joining our newly elected chairman, Teddy Gottwald and me today to discuss our second quarter performance. As we announced yesterday, Teddy was elected Chairman of the Board, and Mr. Charles Walker was elected Independent Lead Director. Teddy is succeeding his father, Bruce, who will remain on the board. We are much appreciative and fortunate to have had Bruce as our Chairman for the last 20 years. During his tenure, we have seen good times, tough times and good times again. The 400% growth in EPS under his reign mentioned in the press release is very impressive. Teddy has been a board member for 20 years, so there would no discontinuities with understanding our business or how we do business. Again, we thank Mr. Bruce Gottwald for his innumerable contribution. As a reminder, some of the comments we will make today are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We believe we based our statements on reasonable expectations and assumptions within the bounds of what we know about our business and our 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. A full discussion of these factors can be found in our 2013 10-K. We filed our 10-Q earlier this morning. It contains 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. Net income for the quarter was $66.8 million or $5.24 a share. For the first half, net income was $124.3 million or $9.66 share. Net income for all periods included the…

[Operator Instructions] Our first question is coming from the line of Ivan Marcuse with KeyBanc Capital Markets.

In terms of the volumes, can you draw some pretty strong volumes despite -- it seems like the customers that report public data and everyone else in the industry are growing at pretty low growth rates. How sustainable do you think these mid to high-single digits in several quarters now -- I know it's not a one-off type of thing, for you guys to keep it up? And is there a certain market or certain technology where maybe you've taken some share or you're growing at a rate significantly higher than the overall market?

Ivan, it's Teddy. As David said, we think the market, over the long term, is growing at, would call it, 2%. In the more recent term, the short-term growth may have, have exceeded that for the market. It's a little hard to say as there's been some recovery from the down years. Every indication for us is that a number of our customers are growing their volumes. As we've said in the past, our presence historically has been -- our market share has been greater in North America and Western Europe than in the rest of the world. And we've put a concerted effort to grow in the geographic areas where our presence has lagged. And that growth, that activity is paying off, and we're seeing growth in those regions, Asia-Pacific in particular. We've also seen some product line expansion efforts pay off. Those are harder to see in the overall volume because they tend to be smaller areas than the engine oil area. But still it's an important bit of progress for us. So it's a combination of factors. We've stated that we hope to exceed the industry growth rate over time by a couple of percentage points. And we feel that, that is sustainable for us.

Do you think that your -- because I know you're adding capacity in Asia, and I know Asia is -- the Asian region is really where the growth -- is where a lot of the growth is relative to North America and Europe. However, over night will resolve -- there's been a lot of capacity added in that region over the past couple of years and also looking forward for over the next couple of years. Do you think these investments that everyone is making in this region and the market that maybe instead of grow 1% to 2%, it's going to grow 3% to 4%. Is this going to increase the overall competitiveness in the industry or change the dynamics that we've experienced over the past, call it, 7 to 10 years? Or do you think that the demand out there is enough to absorb all of this capacity that is -- or investments that all the additive makers are investing in the region?

Yes, we think the -- even at 1% to 2% growth, the industry needs additional capacity to keep up with demand, and we're all running pretty tight right now, I believe. And I don't believe that the announced capacity additions or the ones that have come on shift the competitive picture from the way it is now. We're all running hard and the industry needs more capacity. It needs the capacity that's coming on.

And then lastly, on -- and I'll jump off here -- is that there is -- from my understanding, there was price increases announcement first half of this year for the -- in the additive industry, yet in your pricing for you and maybe it's a function of mix, was down a bit for the first 6 months. Would you expect that to reverse in the second half? Or with raw material sort of being benign, that maybe the price increases haven't been all that successful?

We've given you all an indication that our margins will be in the mid to upper teens. That's where we see them and that's where we expect to continue to see them.

The next question is coming from the line of Todd Vencil with Sterne Agee. L. Todd Vencil - Sterne Agee & Leach Inc., Research Division: You mentioned spending more on R&D. And should we be thinking -- first of all, just to set this out, I mean, do you guys think about it in terms of percentage of your top line? Or is it just more of a general, absolute amount that you're looking at as you think about it? And the second question is to know how to approach it then is -- on either basis, how much of a step up are you looking at in R&D?

We generally build the R&D budget from the ground up, looking at what's needed to support our customers and what's needed to support our improvements in technology. R&D, David, do you want to comment on the increase?

Yes. Todd, I mean, if you look back historically, I think R&D has probably grown in the 7%-a-year rate. And our indications, most of the time, as you should think of R&D growing at inflation plus, so whatever that means to you. So we have 3% inflation. Maybe R&D grows at 5%. And as Teddy said, it's project dependent and there's no real clue to look at a quarter. But over a longer period of time, it's inevitable that it's going up.

And we don't -- we look at it in terms of percent of sales, but we don't set it based on that. As I look forward at our plans, there are going to be years, where we'll see the increase is faster than other years. I think the next couple of years, in particular, we'll see increased spending. We have a lot of opportunities that we're looking at, a lot of new technology and also some new spec changes that are coming to -- for the industry. And even though changes in specifications are just a ticket to the game and not what drive our products, big changes in industry specs tend to drive heavy investment in R&D to meet them. L. Todd Vencil - Sterne Agee & Leach Inc., Research Division: That makes a ton of sense. And then the only other question, and this is going to be speculative, but I guess, I'll ask it anyway. I mean, as you guys mentioned, your leverage is sub-1. I know you're spending money on the buyback. And I know you spend the money on the R&D. Where would you -- any thoughts on where the board might be in terms of special dividends or other uses of capital beyond? I mean, and again, you got the CapEx coming up, so it's not like you're not spending money, but just any thoughts as you continue to delever over time?

Certainly. Our view is consistent with our behavior the last few years. We still are seeing investment -- reinvestment in the businesses, the primary use. We've mentioned that stepping up this year and over the next couple. We're still out there looking for acquisitions, mainly focused in petroleum additives, almost exclusively focused in petroleum additives. And that's a preferred use of cash, but they're few and far between. Certainly, looking at our regular dividend, special dividends and buybacks are all tools that we use and have used, and we'll continue to consider all of the above.

Our next question is coming from the line of Edward Yang with Oppenheimer. Edward H. Yang - Oppenheimer & Co. Inc., Research Division: Teddy, just to follow up on your answer right there. When I look at your dividend payout, as a percentage of your earnings, that's risen fairly steadily. From 2009, it was about 10% of your earnings per share. Last year, it went up to 21% of your earnings per share. Is that a metric that you look at? And longer term, would you like to grow that? And what's the level a dividend payout ratio that you'll be comfortable with?

Yes, it's something we look at and we talk about. As you rightly point out, it has risen, and that's been a conscious effort on our part. We'd like to see it in the 20% to 30% range. We're having discussions around what's the appropriate level. Is that still the right range we should be considering and at what rate do we get it up toward the higher end of that range. But yes, it's certainly part of our consideration. Edward H. Yang - Oppenheimer & Co. Inc., Research Division: Okay. And maybe a question for David. Just on, also on the fluctuations in the quarterly shipment rates that you're seeing. Is there anything to read into that? Can you talk a little bit more about the cadence of customer order patterns? Last year, you had a couple of quarters that were up a lot and then a couple of quarters that were weaker and then it kind of evened out. Are you seeing anything change in terms of customer inventory patterns?

No, I can't cite anything. We kind of view these as pretty much normal variation in the patterns of this business. So I can't read anything into it.

Our next question is coming from the line of Dmitry Silversteyn with Longbow Research.

A couple of questions, if I may. Can you talk a little bit about your raw material situation in light of lower pricing that you delivered in the quarters, sort of, what the year-over-year comps look like and what do you expect for the second half of the year, in terms of raw material pricing?

Well, yes, our near-term outlook for raw material is flattish. But I think you should really focus on what Teddy mentioned earlier, in that we're comfortable talking to you about operating profit margins and that our businesses operating in that range, and we expect it to continue to do so.

Is there a sort of -- as you look out longer term, let's say into 2015 and beyond, is there anything going on in the industry that would lead you to believe that outside of the crude oil pricing that raw material may be moving one way or the other for you as a longer term sort of planning tool?

No, Dmitry. As a matter fact, as Teddy mentioned a second ago, we just finished our planning cycle. And our planning cycle is around flattish for raw materials for the next several years.

Fair enough. And then perhaps a question for Teddy. You mentioned working on the -- continue to work on M&A and looking at petroleum additives as an area of focus. It's been many quarters since the last small deal what you guys did. Can you update us on sort of what's in the hopper and how should we think about M&A over the next 12 months? Is it sort of high probability or opportunistic low-probability type of an event?

I think you should look at any acquisition being fairly low probability. And the ones that are most likely would be incremental and small in nature, nothing earth shaking, say under $100 million in purchase price.

[Operator Instructions] It appears there are no further questions at this time. I would like to turn the floor back over to management for any additional concluding comments.

I don't have any closing comments. I appreciate everyone joining us, and we'll talk to you next quarter. Have a good day.

Thank you. Ladies and gentlemen, this does conclude today's teleconference. We thank you for your participation, and you may disconnect your lines at this time.