Innospec Inc. (NASDAQ: IOSP) today announced its financial results
for the first quarter ended March 31, 2023. The Company
also announced the declaration of its semi-annual dividend of 69
cents per common share for the first half of 2023, representing an
increase of 10 percent. This dividend will be paid on May 31, 2023
to shareholders of record on May 22, 2023.
Total revenues for the first quarter were $509.6
million, an increase of 8 percent from $472.4 million in the
corresponding period last year. Net income for the quarter was
$33.2 million or $1.33 per diluted share compared to $36.5 million
or $1.46 cents per diluted share recorded last year. EBITDA for the
quarter was $53.9 million compared to $59.0 million reported in the
same period a year ago.
Results for this quarter include some special
items, which are summarized in the table below. Excluding these
items, adjusted non-GAAP EPS in the first quarter was $1.38 per
diluted share, compared to $1.53 per diluted share a year ago.
Cash generation was broadly neutral for the
quarter with cash from operating activities of $21.8 million before
capital expenditures of $17.7 million and internally developed ERP
software costs of $4.3 million. The quarter closed with
net cash of $147.5 million.
EBITDA, income before income taxes and net
income excluding special items, and related per-share amounts, are
non-GAAP financial measures that are defined and reconciled with
GAAP results herein and in the schedules below.
|
Quarter ended March 31, 2023 |
Quarter ended March 31, 2022 |
(in millions, except
share and per share data) |
|
Income beforeincome taxes |
|
|
Netincome |
|
|
Diluted EPS |
|
|
|
Income beforeincome taxes |
|
|
Net income |
|
|
Diluted EPS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported GAAP amounts |
$ |
45.0 |
|
$ |
33.2 |
|
$ |
1.33 |
|
$ |
48.2 |
|
$ |
36.5 |
|
$ |
1.46 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of acquired
intangible assets |
|
2.6 |
|
|
2.0 |
|
|
0.08 |
|
|
3.6 |
|
|
2.9 |
|
|
0.12 |
|
Foreign currency exchange
gains |
|
(2.0 |
) |
|
(1.5 |
) |
|
(0.06 |
) |
|
(3.1 |
) |
|
(2.3 |
) |
|
(0.09 |
) |
Legacy costs of closed
operations |
|
0.8 |
|
|
0.6 |
|
|
0.02 |
|
|
1.1 |
|
|
0.9 |
|
|
0.04 |
|
Adjustment of income tax
provisions |
|
- |
|
|
0.2 |
|
|
0.01 |
|
|
- |
|
|
- |
|
|
- |
|
|
|
1.4 |
|
|
1.3 |
|
|
0.05 |
|
|
1.6 |
|
|
1.5 |
|
|
0.07 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted non-GAAP
amounts |
$ |
46.4 |
|
$ |
34.5 |
|
$ |
1.38 |
|
$ |
49.8 |
|
$ |
38.0 |
|
$ |
1.53 |
|
|
Commenting on the first quarter results, Patrick
S. Williams, President and Chief Executive Officer, said, “This was
a good start to the year for Innospec. We again benefited from our
balanced business portfolio as the short-term negative impact of
volume and margin headwinds in Performance Chemicals was partially
offset by growth and margin expansion in Oilfield Services.
In Performance Chemicals, as predicted,
destocking and weaker demand negatively impacted volumes and
margins in the quarter. This business has been affected the most by
near-term economic uncertainty as customers exhibit cautious and
conservative order patterns. While we believe these conditions will
continue in the short-term, we expect sequential volume and margin
improvement in the coming quarters. In addition, new personal care
contracts are scheduled to begin in the third quarter which we
believe will support continued growth, as our focus remains on
recovering to 2022 operating income run rates, in the second half
of this year.
In Fuel Specialties, gross margins improved
sequentially from last quarter towards our targeted 32 to 35
percent range. Continued price action, strong sales mix and slowing
inflation all contributed to sequential gross margin improvement
dampened by a $7.4 million inventory misappropriation in
Brazil. Through the balance of 2023, we expect gross
margins to recover to the lower end of our target range, as the
global business team continues to focus on a variety of margin
improvement actions and opportunities.
In Oilfield Services, strength in production
chemicals and further sequential improvements in our other segments
drove excellent results in the quarter. We continue to pursue
topline and margin expansion opportunities across the business, and
we feel optimistic that we can deliver full year operating income
growth in 2023.”
In Performance Chemicals, revenues of $151.4
million were down 9 percent from $167.1 million in the first
quarter last year. A positive price/mix of 6 percent was offset by
a volume decline of 13 percent and an adverse currency impact of 2
percent. Gross margins reduced by 8.5 percentage points from the
same quarter last year, to 15.9 percent. Operating income for the
quarter of $10.4 million decreased 59 percent on the prior
year.
Revenues in Fuel Specialties of $190.3 million
for the quarter were down slightly from $191.8 million a year ago.
A 20 percent reduction in volume and an adverse currency impact of
3 percent were partially offset by a positive price/mix of 22
percent. Gross margins of 30.2 percent were 1.4 percentage points
below last year. Operating income of $32.4 million was down from
$35.5 million a year ago. Adjusting for the $7.4 million inventory
issue in Brazil gross margins were 34.1 percent and operating
income was $39.8 million.
Revenues in Oilfield Services were $167.9
million for the quarter, up 48 percent from $113.5 million in the
first quarter last year. Gross margins improved by 6.2 percentage
points from the same quarter last year to 39.5 percent. Operating
income of $15.9 million was a $13.4 million increase over the $2.5
million in the prior year.
Corporate costs for the quarter were $17.7
million, compared with $19.0 million a year ago, due mainly to
lower share-based compensation accruals.
The effective tax rate for the quarter was 26.2
percent compared to 24.3 percent in the same period last year.
For the quarter, net cash provided by operating
activities was $21.8 million compared to net cash used in operating
activities of $29.0 million a year ago. As of March 31, 2023,
Innospec had $147.5 million in cash and cash equivalents and no
debt.
Mr. Williams concluded,
“We are very pleased with our start to 2023 as
operating income growth and margin expansion in Oilfield Services
more than offset volume and margin headwinds in Performance
Chemicals. The inventory issue in Fuel Specialties dampened what
was otherwise a very strong quarter, and we are pursuing all legal
options open to us.
Despite the potential for recession in the near
term, we remain focused on technology development and margin
improvement initiatives which will deliver organic growth over the
medium to long-term across our diversified business portfolio.
Our outlook for technology and
sustainability-driven organic growth opportunities remains strong
in all businesses. With over $147 million in net cash, we feel that
Innospec has the flexibility to fund organic opportunities, pursue
complimentary M&A and continue dividend growth and share
repurchases. This quarter our Board approved a further 10 percent
increase in our semi-annual dividend to 69 cents per share
continuing our record of returning value to shareholders.”
Use of Non-GAAP Financial
Measures
The information presented in this press release
includes financial measures that are not calculated or presented in
accordance with Generally Accepted Accounting Principles in the
United States (GAAP). These non-GAAP financial measures comprise
EBITDA, income before income taxes excluding special items, net
income excluding special items and related per share amounts
together with net cash. EBITDA is net income per our consolidated
financial statements adjusted for the exclusion of charges for
interest expense, net, income taxes, depreciation, and
amortization. Income before income taxes, net income and diluted
EPS, excluding special items, per our consolidated financial
statements are adjusted for the exclusion of amortization of
acquired intangible assets, foreign currency exchange gains, legacy
costs of closed operations and adjustment of income tax provisions.
Net cash is cash and cash equivalents less total debt.
Reconciliations of these non-GAAP financial measures to their most
directly comparable GAAP financial measures are provided herein and
in the schedules below. The Company believes that such non-GAAP
financial measures provide useful information to investors and may
assist them in evaluating the Company’s underlying performance and
identifying operating trends. In addition, these non-GAAP measures
address questions the Company routinely receives from analysts and
investors and the Company has determined that it is appropriate to
make this data available to all investors. While the Company
believes that such measures are useful in evaluating the Company’s
performance, investors should not consider them to be a substitute
for financial measures prepared in accordance with GAAP. In
addition, these non-GAAP financial measures may differ from
similarly titled non-GAAP financial measures used by other
companies and do not provide a comparable view of the Company’s
performance relative to other companies in similar industries.
Management uses adjusted EPS (the most directly comparable GAAP
financial measure for which is GAAP EPS) and adjusted net income
and EBITDA (the most directly comparable GAAP financial measure for
which is GAAP net income) to allocate resources and evaluate the
performance of the Company’s operations. Management believes the
most directly comparable GAAP financial measure is GAAP net income
and has provided a reconciliation of EBITDA and net income
excluding special items, and related per share amounts, to GAAP net
income herein and in the schedules below.
About Innospec Inc.
Innospec Inc. is an international specialty
chemicals company with approximately 2,100 employees in 25
countries. Innospec manufactures and supplies a wide range of
specialty chemicals to markets in the Americas, Europe, the Middle
East, Africa and Asia-Pacific. The Performance Chemicals
business creates innovative technology-based solutions for our
customers in the Personal Care, Home Care, Agrochemical, Mining and
Industrial markets. The Fuel Specialties business specializes in
manufacturing and supplying fuel additives that improve fuel
efficiency, boost engine performance and reduce harmful emissions.
Oilfield Services provides specialty chemicals to all elements of
the oil and gas exploration and production industry.
Forward-Looking Statements
This press release contains certain
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. All statements
other than statements of historical facts included or incorporated
herein may constitute forward-looking statements. Such
forward-looking statements include statements (covered by words
like “expects,” “estimates,” “anticipates,” “may,” “could,”
“believes,” “feels,” “plans,” “intends” or similar words or
expressions, for example) which relate to earnings, growth
potential, operating performance, events or developments that we
expect or anticipate will or may occur in the future.
Although forward-looking statements are believed by management to
be reasonable when made, they are subject to certain risks,
uncertainties and assumptions, and our actual performance or
results may differ materially from these forward-looking
statements. Additional information regarding risks,
uncertainties and assumptions relating to Innospec and affecting
our business operations and prospects are described in Innospec’s
Annual Report on Form 10-K for the year ended December 31, 2022 and
other reports filed with the U.S. Securities and Exchange
Commission. You are urged to review our discussion of risks
and uncertainties that could cause actual results to differ from
forward-looking statements under the heading "Risk Factors” in such
reports. Innospec undertakes no obligation to publicly update
or revise any forward-looking statements, whether as a result of
new information, future events or otherwise.
Contacts:
Corbin BarnesInnospec
Inc.+44-151-355-3611corbin.barnes@innospecinc.com
INNOSPEC INC. AND SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
|
Schedule 1 |
|
(in
millions, except share and per share data) |
|
Three Months EndedMarch 31 |
2023 |
|
|
2022 |
|
|
|
|
|
|
Net sales |
$ |
509.6 |
|
$ |
472.4 |
|
Cost of goods sold |
|
(361.8 |
) |
|
(333.1 |
) |
Gross profit |
|
147.8 |
|
|
139.3 |
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
Selling, general and administrative |
|
(96.2 |
) |
|
(84.9 |
) |
Research and development |
|
(10.6 |
) |
|
(10.1 |
) |
Total operating expenses |
|
(106.8 |
) |
|
(95.0 |
) |
Operating income |
|
41.0 |
|
|
44.3 |
|
Other income, net |
|
3.7 |
|
|
4.3 |
|
Interest income/(expense),
net |
|
0.3 |
|
|
(0.4 |
) |
Income before income taxes |
|
45.0 |
|
|
48.2 |
|
Income taxes |
|
(11.8 |
) |
|
(11.7 |
) |
Net income |
$ |
33.2 |
|
$ |
36.5 |
|
|
|
|
|
|
Earnings per share: |
|
|
|
|
Basic |
$ |
1.34 |
|
$ |
1.47 |
|
Diluted |
$ |
1.33 |
|
$ |
1.46 |
|
|
|
|
|
|
Weighted average shares
outstanding (in thousands): |
|
|
|
|
Basic |
|
24,801 |
|
|
24,791 |
|
Diluted |
|
24,962 |
|
|
24,956 |
|
|
INNOSPEC INC. AND SUBSIDIARIES |
|
Schedule 2A |
|
SEGMENTAL ANALYSIS OF
RESULTS |
|
Three Months Ended March 31 |
(in millions) |
|
2023 |
|
|
2022 |
|
|
|
|
|
|
Net sales: |
|
|
|
|
Performance Chemicals |
$ |
151.4 |
|
$ |
167.1 |
|
Fuel Specialties |
|
190.3 |
|
|
191.8 |
|
Oilfield Services |
|
167.9 |
|
|
113.5 |
|
|
|
509.6 |
|
|
472.4 |
|
|
|
|
|
|
Gross profit: |
|
|
|
|
Performance Chemicals |
|
24.1 |
|
|
40.8 |
|
Fuel Specialties |
|
57.4 |
|
|
60.7 |
|
Oilfield Services |
|
66.3 |
|
|
37.8 |
|
|
|
147.8 |
|
|
139.3 |
|
|
|
|
|
|
Operating income: |
|
|
|
|
Performance Chemicals |
|
10.4 |
|
|
25.3 |
|
Fuel Specialties |
|
32.4 |
|
|
35.5 |
|
Oilfield Services |
|
15.9 |
|
|
2.5 |
|
Corporate costs |
|
(17.7 |
) |
|
(19.0 |
) |
Total operating income |
$ |
41.0 |
|
$ |
44.3 |
|
Schedule 2B |
|
NON-GAAP
MEASURES |
|
Three Months Ended March 31 |
(in millions) |
|
2023 |
|
|
2022 |
|
|
|
|
|
|
Net income |
$ |
33.2 |
|
$ |
36.5 |
|
Interest (income)/expense,
net |
|
(0.3 |
) |
|
0.4 |
|
Income taxes |
|
11.8 |
|
|
11.7 |
|
Depreciation and
amortization: |
|
|
|
|
Performance Chemicals |
|
4.1 |
|
|
5.4 |
|
Fuel Specialties |
|
1.5 |
|
|
1.6 |
|
Oilfield Services |
|
3.0 |
|
|
2.9 |
|
Corporate costs |
|
0.6 |
|
|
0.5 |
|
EBITDA |
|
53.9 |
|
|
59.0 |
|
|
|
|
|
|
EBITDA: |
|
|
|
|
Performance Chemicals |
|
14.5 |
|
|
30.7 |
|
Fuel Specialties |
|
33.9 |
|
|
37.1 |
|
Oilfield Services |
|
18.9 |
|
|
5.4 |
|
Corporate costs |
|
(17.1 |
) |
|
(18.5 |
) |
|
|
50.2 |
|
|
54.7 |
|
Other income, net |
|
3.7 |
|
|
4.3 |
|
EBITDA |
$ |
53.9 |
|
$ |
59.0 |
|
|
EBITDA by segment includes operating income relating to the
segments, excluding depreciation and amortization. |
|
Schedule 3 |
|
INNOSPEC INC. AND SUBSIDIARIES |
CONDENSED CONSOLIDATED BALANCE SHEETS |
|
(in millions) |
|
March 31,2023 |
|
December 31,2022 |
Assets |
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
$ |
147.5 |
$ |
147.1 |
Trade and other accounts receivable |
|
342.4 |
|
334.6 |
Inventories |
|
365.7 |
|
373.1 |
Prepaid expenses |
|
15.4 |
|
14.1 |
Prepaid income taxes |
|
3.6 |
|
3.3 |
Other current assets |
|
0.4 |
|
0.4 |
Total current assets |
|
875.0 |
|
872.6 |
|
|
|
|
|
Net property, plant and
equipment |
|
233.6 |
|
220.9 |
Operating lease right-of-use
assets |
|
49.0 |
|
45.3 |
Goodwill |
|
360.2 |
|
358.8 |
Other intangible assets |
|
46.9 |
|
45.0 |
Deferred tax assets |
|
5.9 |
|
5.9 |
Pension asset |
|
48.6 |
|
48.1 |
Other non-current assets |
|
4.9 |
|
7.1 |
Total assets |
$ |
1,624.1 |
$ |
1,603.7 |
Liabilities and Stockholders’
Equity |
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable |
$ |
177.7 |
$ |
165.3 |
Accrued liabilities |
|
163.5 |
|
202.9 |
Current portion of operating lease liabilities |
|
15.2 |
|
13.9 |
Current portion of plant closure provisions |
|
5.0 |
|
5.3 |
Current portion of accrued income taxes |
|
20.2 |
|
18.4 |
Total current liabilities |
|
381.6 |
|
405.8 |
|
|
|
|
|
Operating lease liabilities, net
of current portion |
|
33.8 |
|
31.4 |
Plant closure provisions, net of
current portion |
|
52.0 |
|
51.9 |
Accrued income taxes, net of
current portion |
|
20.8 |
|
21.0 |
Unrecognized tax benefits |
|
13.7 |
|
13.4 |
Deferred tax liabilities |
|
27.4 |
|
26.2 |
Pension liabilities and
post-employment benefits |
|
12.7 |
|
12.2 |
Other non-current
liabilities |
|
1.5 |
|
1.4 |
Equity |
|
1,080.6 |
|
1,040.4 |
Total liabilities and equity |
$ |
1,624.1 |
$ |
1,603.7 |
|
Schedule 4 |
|
INNOSPEC INC. AND SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
|
|
|
Three Months EndedMarch 31 |
(in millions) |
|
2023 |
|
|
2022 |
|
Cash Flows from Operating
Activities |
|
|
|
|
|
|
|
|
|
Net income |
$ |
33.2 |
|
$ |
36.5 |
|
Adjustments to reconcile net
income to cash provided by operating activities: |
|
|
|
|
Depreciation and amortization |
|
9.3 |
|
|
10.5 |
|
Deferred taxes |
|
1.2 |
|
|
0.9 |
|
Non-cash movements on defined benefit pension plans |
|
(0.8 |
) |
|
(0.7 |
) |
Stock option compensation |
|
1.9 |
|
|
1.7 |
|
Changes in working capital |
|
(26.1 |
) |
|
(79.3 |
) |
Movements in plant closure provisions |
|
(0.3 |
) |
|
- |
|
Movements in accrued income taxes |
|
0.8 |
|
|
3.4 |
|
Movements in unrecognized tax benefits |
|
0.3 |
|
|
- |
|
Movements in other assets and liabilities |
|
2.3 |
|
|
(2.0 |
) |
Net cash provided by/(used in)
operating activities |
|
21.8 |
|
|
(29.0 |
) |
Cash Flows from Investing
Activities |
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
(17.7 |
) |
|
(8.4 |
) |
Internally developed
software |
|
(4.3 |
) |
|
- |
|
Net cash used in investing
activities |
|
(22.0 |
) |
|
(8.4 |
) |
Cash Flows from Financing
Activities |
|
|
|
|
|
|
|
|
|
Repayment of finance leases |
|
- |
|
|
(0.1 |
) |
Issue of treasury stock |
|
0.7 |
|
|
1.9 |
|
Repurchase of common stock |
|
(0.3 |
) |
|
(0.9 |
) |
Net cash provided by financing
activities |
|
0.4 |
|
|
0.9 |
|
Effect of foreign currency
exchange rate changes on cash |
|
0.2 |
|
|
0.3 |
|
Net change in cash and cash
equivalents |
|
0.4 |
|
|
(36.2 |
) |
Cash and cash equivalents at
beginning of period |
|
147.1 |
|
|
141.8 |
|
Cash and cash equivalents at end
of period |
$ |
147.5 |
|
$ |
105.6 |
|
|
Amortization of deferred finance costs of $0.1
million (2022 - $0.1 million) are included in depreciation and
amortization in the condensed consolidated statements of cash flows
and in interest expense, net in the condensed consolidated
statements of income.
Grafico Azioni Innospec (NASDAQ:IOSP)
Storico
Da Apr 2024 a Mag 2024
Grafico Azioni Innospec (NASDAQ:IOSP)
Storico
Da Mag 2023 a Mag 2024