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Good day, ladies and gentlemen, and thank you for joining us for the NewMarket Corporation Schedules Conference Call and Webcast to review first quarter 2019 financial results. [Operator Instructions]. Also as a reminder, today's meeting is being recorded.
And now to get us started with opening remarks and introductions. I'm pleased to turn the floor to Mr. Brian Paliotti. Welcome, Brian.
Thank you, Jim, and thanks, 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 will be forward looking. Relevant factors that 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 10-K.
During the call, we'll 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 contained significantly more detail on the operations and performance of our company. Please take time to read and review it. I'll be referring to the data that was included in last night's release.
So net income was $62.2 million or $5.57 a share compared to $60.6 million or $5.14 a share for the first quarter of last year. This is an earnings increase of 2.7% and an EPS increase of 8.4% from last year's performance. On the petroleum additives, net sales for the first three months of 2019 were $532.7 million compared to $586.9 million for the same period in 2018 or a decrease of 9.2%. The sales decreased about $73 million due to a 12.5% decreased in shipments, which contributed to a short-term softening of demand of our products that we believe will turn around this year.
We saw decreases in both lubricant and fuel additive shipments across all regions except for Asia Pacific, which had an increase in shipments of fuel additives. The decrease in shipments was partially offset by changes in our selling prices. Petroleum additives operating profit for the quarter was $87.9 million or 4.4% higher than the first quarter profit for last year of $84.1 million. The increase was due to changes in selling price and raw materials, partially offset by lower shipments, foreign exchange and higher conversion costs. The operating margin was 14.1% for the rolling four quarters including the first quarter of 2019.
We've seen some improvement this year, but we still see pressure on our margins due to the increases of raw materials over the past two years, mainly because of the lag between when we raise our prices and when margins begin to improve and stabilize. Margin improvement will continue to be a priority in 2019 until we see margins consistently within our historical ranges. The effective income tax rate for the first quarter of 2019 was 23%, which was down from 25.5% for the same period last year.
Onto cash flow for the quarter. Items of note include CapEx of $10.4 million, funding our dividends of $19.6 million and using more cash to fund the normal variations in our working capital. We continue to operate with very low leverage with our net debt-to-EBITDA remaining below 2x. For 2019, we expect to see our capital expenditures in the $75 million to $85 million range, consistent with our levels of 2018. Over the past several years we have made significant investments to extend our capabilities around the world. These investments have been in people, technology, technical centers and production capacities, and we intend to use these new capabilities to improve our ability to deliver the goods and services our customer's value and grow shareholder value.
Jim, that concludes our planned comments, we'd like to open up the lines for questions.
[Operator Instructions]. We'll go first to Dmitry Silversteyn with Buckingham Research.
First of all, I just -- I know you guys don't like talking about what happened in the quarter. But you have two quarter now, six months, where you have double-digit declines in volumes. In a market that's growing 1% to 2% and is not known for this level of volatility, what do you think is going on in the market assuming that this is not new market specific phenomenon?
Dmitry, this is Teddy. It's like you said, this is unusual in our industry. And our industry demand really doesn't vary greatly year-to-year. So we do see this as a short-term issue and we expect it to come around. We've been in contact with customers all over the world to see if we can sense any kind of pattern to this, and we don't see a particular pattern or a specific explanation. It's about a quarter of the softness that we can identify to specific one-off issues. But other than that, it's just a general softness that the industry demand doesn't support over a long period of time.
So other than this longer-term, sort of, recovery to the mean that will happen at some point in the future. Where does your confidence that we're going to see a reversal of this year comes from?
My confidence, then it is in the fact that we haven't lost a significant amount of business, and the industry demand just doesn't vary plus or minus 10%, like we've seen here in the recent quarters.
Right. So I think the last time we saw this type of a decline in volume. I mean you have to go back to the 2008, 2009 and a couple of bad quarter in there when people were thinking the world was coming to an end, and everybody was trimming down their inventories off the channel. Is that -- is what's happening now maybe somewhat similar to that of a sense that this is not so much market slowing down by 10% but people are really maybe cutting their inventories in half in anticipation of just slower growth forward? Or in anticipation of you guys and your competitors or your peers, I should say, lowering pricing with some raw material relief. It -- like I said, I'm just trying to -- I understand that it's a combination of things. I'm just trying to see how much of those things are 1 to 2 quarter long, and how much of those things are -- could be a year or two before they reverse.
Yes. I wish I had some better insight for you, Dmitry. Most of those factors you mentioned are likely to be contributors. I wouldn't say trimming, our customers trimming inventories in anticipation of weak demand is a concern because that's just not how our industry works. Our industry, our customer's demand is not greatly dependent on small changes and the economic outlook. You referred to 2008, that was a major abrupt change and our customers and even consumers, I think, at that time took a big pause to see what was going to happen next, I don't really compare it to then. So I think it's just multiple factors. There's probably been some de-stocking in there, but that can't last for so long. And now of course, we've seen base oil moving up, raw materials moving up, so there wouldn't be a de-stocking impact expected in that scenario.
Right. Okay. Again, try to understand sort of the cadence of revenues. You've provided geographic breakdown by revenue or revenue breakdown by geography, I should say. And kind of jumped out at me that United State and China saw kind of mid-single digit -- mid- to high single-digit declines in revenues, but EMEA and other foreign saw low teens type of a decline in revenue. Is there anything that we can take away from that as far as whether it's economic situation or whether there's specific customer exposure that should we have in those regions that's accounting for this difference in rates of decline.
Well, Dmitry, this is Brian, the only thing that I would say is, as Teddy referenced, that we can attribute 25% of what the change was from a shipments perspective to kind of identifiable one-offs. And I can tell you that the regions that saw -- the larger regions that saw the larger declines, those -- that 25% can be more attributable to those areas then balance of the world.
Okay. And any granularity on what those one-offs were?
It's about 25% of the total change in shipments.
No, I understand that, Paliotti, what was it related to?
Oh, well, one can be related to, as you know, we divested a small business last year. So from a comparative perspective that is not in the comparative anymore. And then the other would be, there is some places in the world that we could sell product into last year and this year we cannot.
[Operator Instructions]. And we do have just one signal in the queue and it's a follow up from Mr. Silversteyn.
Apparently, I'll just continue to ask questions. On Asia Pacific you talked about fuel additives as the only real part in geography that had a positive volume performance for you. Is it a matter of just the economy growing faster in the regions where you're selling it? Or have you gotten some share or new products, sort of, why is that the outlier of this quarter -- positive outlier?
I think it's a little bit of a combination of everything you just said Dmitry. It's -- from a Asia Pacific perspective, we continue to see from a macro perspective not as much in China, obviously, from a car sales perspective. But continue to see transportation and modes of transportation continue to increase which drives more fuel consumption.
Got you. Okay. Is there -- just looking back over the history that I have here with you guys, it doesn't seem to be that much seasonal -- sort of predictable seasonal marginal behavior first quarter to second quarter. But in most years there was a decline in margin sequentially. With raw materials doing what they're doing and once you're pricing, I'm assuming, still layering in, how should we think about the margin progression sequentially?
Yes, from a margin perspective, Dmitry, I can just tell you that we've had continued effort to make sure that margin recovery is top in mind, and we're going to take the necessary actions to ensure that the margins get back to the ranges of mid- to high-teens. The rolling still only at 14.1%, so we're going to continue to work towards getting that range from a rolling perspective, from a long-term perspective inside of the mid- to high-teens range.
Okay. All right. So the fact that I couldn't observe any seasonality there probably means that there is not much seasonality there.
Yes, from a quarter-to-quarter, nothing that sort of.
Got you. In your press release all you mentioned higher conversion costs, what do you mean by that? Are you talking about like getting shipments in and out, or packaging costs, or just manufacturing costs in general?
Just manufacturing costs in general.
Okay. And what's driving the higher conversion costs? Is it the new plant in Singapore being brought online? Is it just normal sort of first of the year increases in compensation and insurance and medical stuff?
It would be a combination of a multitude, it won't be one driver, but just in general the cost of production across the network continues to increase.
Got you. Okay. Last question, your tax rate sort of declined through the year, last year. Starting out in the 24%, 25% range, ending up just in low double-digits. How should we think about the tax rate for 2019?
Yes. The tax rate for 2019 is -- we expect the tax rate to be in the 23% to 24% range for full 2019, fairly equivalent to what we saw in the first quarter. 2018 and '17, as you know, there was a lot of moving parts with tax reforms. So from a go-forward perspective, I'd use the first quarter rate is a pretty good rate for the balance of the year.
[Operator Instructions]. And gentlemen, we have no signals from the group. I will turn it back to you for any additional or closing remarks.
Thank you, everyone, for calling in, and we'll talk to you next quarter. Thank you.