Innospec Inc. · NASDAQ:IOSP
Innospec — Q2 2014 Earnings Presentation
27 slides from Innospec's earnings presentation, Aug 6, 2014
Slide 1: Investor Presentation Quarter 2, 2014
Investor Presentation Quarter 2, 2014 6th August 2014 Patrick Williams President & Chief Executive Officer Ian Cleminson Executive Vice President & Chief Financial Officer
Slide 2: Forward-Looking Statements
2 Forward-Looking Statements This presentation 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.
Slide 3: Use of Non-GAAP Financial Measures
3 Use of Non-GAAP Financial Measures The information presented in this presentation 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 befo
Slide 4: Innospec – Summary of 2nd Quarter Performance
4 Innospec – Summary of 2nd Quarter Performance Good second quarter with 20% revenue growth Fuel Specialties maintains growth momentum; Bachman acquisition continues to augment top-line growth Performance Chemicals driven by volume growth and margin strength in Personal Care markets and by Chemsil a
Slide 5: Financial Presentation
Financial Presentation Ian Cleminson Executive Vice President & Chief Financial Officer
Slide 6: Q2 2014 Consolidated Results
6 Q2 2014 Consolidated Results Total revenues up 20% to $221.3 million driven by strong contributions from growth in the core business and acquisitions GAAP EPS of $0.75 EBITDA increases 22% to $31.6 million Q2 2013 Q2 2014 Growth $m $m % Net sales 185.0 221.3 20% Gross profit 59.4 68.6 15% Gross ma
Slide 7: Q2 2014 Fuel Specialties
7 Q2 2014 Fuel Specialties Revenue increased 15% to $145.1 million Bachman acquisition contributed 16% to top-line growth Gross profit up 8% to $43.9 million; gross margin of 30.3% Q2 2013 Q2 2014 Growth $m $m % Net sales 126.2 145.1 15% Gross profit 40.5 43.9 8% Gross margin 32.1% 30.3% (1.8%)pt Op
Slide 8: Q2 2014 Performance Chemicals
8 Q2 2014 Performance Chemicals Net sales increase 33% to $59.4 million; strong sales growth across all regions Acquisitions add 17% to sales growth Gross margin improves to 25.8%; gross profit rises 35% Q2 2013 Q2 2014 Growth $m $m % Net sales 44.5 59.4 33% Gross profit 11.3 15.3 35% Gross margin 2
Slide 9: Q2 2014 Octane Additives
9 Q2 2014 Octane Additives As predicted, performance rebounded in Q2 with 17% increase in year-over-year sales Gross margin of 56.0% improved 2.9 points from last year Limited medium and long-term visibility Q2 2013 Q2 2014 Growth $m $m % Net sales 14.3 16.8 17% Gross profit 7.6 9.4 24% Gross margin
Slide 10: Q2 2014 Corporate Items
10 Q2 2014 Corporate Items Corporate costs of $7.4 million for the quarter Effective tax rate of 22.3%, in line with full-year expectations Q2 2013 Q2 2014 $m $m Corporate costs (8.5) (7.4) Pension charge (0.7) (0.9) Effective tax rate 18.2% 22.3%
Slide 11: Q2 2014 Balance Sheet
11 Q2 2014 Balance Sheet Closed quarter in net debt position of $42.1 million Generated $12.9 million in cash from operations $97.4 in cash and cash equivalents as of June 30; total debt of $139.5 million Q4 2013 Q2 2014 $m $m Total cash and cash equivalents 86.8 97.4 Total debt (148.0) (139.5) Net
Slide 12: Concluding Comments
Concluding Comments Patrick Williams President & Chief Executive Officer
Slide 13: Additional Highlights
13 Additional Highlights Pleasing second quarter performance; fundamentals of core businesses remain strong Recent acquisitions are integrating smoothly and starting to deliver to our high expectations Added US Bank to the banking group – broaden the banking base Prudently evaluating prospective opp
Slide 14: Your opportunity to ask questions
Your opportunity to ask questions
Slide 15: Final Comments • Thank you
Ne Final Comments ¢ Thank you innospecl>
Slide 16: Appendix
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Slide 17: Innospec Income Statement - Quarter 2
17 Innospec Income Statement - Quarter 2 Q2 2013 Q2 2014 Variance Pr. Yr. $m $m $m Net sales 185.0 221.3 36.3 Sales growth 3.6% 19.6% N/A Gross profit 59.4 68.6 9.2 Gross margin 32.1% 31.0% (1.1%)pt SAR expenses (36.8) (43.3) (6.5) Operating income pre impairment 22.6 25.3 2.7 Operating margin 12.2%
Slide 18: Innospec Income Statement - YTD
18 Innospec Income Statement - YTD 2013 2014 Variance Pr. Yr. $m $m $m Net sales 384.4 442.0 57.6 Sales growth 1.3% 15.0% N/A Gross profit 123.2 134.3 11.1 Gross margin 32.0% 30.4% (1.6%)pt SAR expenses (78.1) (91.0) (12.9) Operating income pre impairment 45.1 43.3 (1.8) Operating margin 11.7% 9.8%
Slide 19: Fuel Specialties - Quarter 2
19 Fuel Specialties - Quarter 2 Q2 2013 Q2 2014 Variance Pr. Yr. $m $m $m Net sales 126.2 145.1 18.9 Sales growth 10.2% 15.0% N/A Gross profit 40.5 43.9 3.4 Gross margin 32.1% 30.3% (1.8%)pt Selling (12.2) (17.8) (5.6) Administrative (4.7) (4.2) 0.5 Research (4.4) (4.4) - SAR expenses (21.3) (26.4)
Slide 20: Fuel Specialties - YTD
20 Fuel Specialties - YTD 2013 2014 Variance Pr. Yr. $m $m $m Net sales 266.2 309.3 43.1 Sales growth 8.6% 16.2% N/A Gross profit 87.5 95.9 8.4 Gross margin 32.9% 31.0% (1.9%)pt Selling (25.3) (35.2) (9.9) Administrative (9.1) (8.3) 0.8 Research (9.0) (9.1) (0.1) SAR expenses (43.4) (52.6) (9.2) SAR
Slide 21: Performance Chemicals - Quarter 2
21 Performance Chemicals - Quarter 2 Q2 2013 Q2 2014 Variance Pr. Yr. $m $m $m Net sales 44.5 59.4 14.9 Sales growth (0.9%) 33.5% N/A Gross profit 11.3 15.3 4.0 Gross margin 25.4% 25.8% 0.4%pt Selling (1.8) (4.0) (2.2) Administrative (2.1) (2.3) (0.2) Research (0.9) (1.2) (0.3) SAR expenses (4.8) (7
Slide 22: Performance Chemicals - YTD
22 Performance Chemicals - YTD 2013 2014 Variance Pr. Yr. $m $m $m Net sales 92.3 115.5 23.2 Sales growth 1.0% 25.1% N/A Gross profit 21.8 28.9 7.1 Gross margin 23.6% 25.0% 1.4%pt Selling (3.9) (7.7) (3.8) Administrative (4.5) (4.7) (0.2) Research (1.9) (2.2) (0.3) SAR expenses (10.3) (14.6) (4.3) S
Slide 23: Octane Additives - Quarter 2
23 Octane Additives - Quarter 2 Q2 2013 Q2 2014 Variance Pr. Yr. $m $m $m Net sales 14.3 16.8 2.5 Sales growth (25.1%) 17.5% N/A Gross profit 7.6 9.4 1.8 Gross margin 53.1% 56.0% 2.9%pt Selling (0.4) (0.4) - Administrative (1.1) (0.7) 0.4 SAR expenses (1.5) (1.1) 0.4 SAR % (10.5%) (6.5%) 4.0%pt Oper
Slide 24: Octane Additives - YTD
24 Octane Additives - YTD 2013 2014 Variance Pr. Yr. $m $m $m Net sales 25.9 17.2 (8.7) Sales growth (39.3%) (33.6%) N/A Gross profit 13.9 9.5 (4.4) Gross margin 53.7% 55.2% 1.5%pt Selling (0.8) (0.9) (0.1) Administrative (2.2) (1.5) 0.7 SAR expenses (3.0) (2.4) 0.6 SAR % (11.6%) (14.0%) (2.4%)pt Op
Slide 25: GAAP Reconciliation EBITDA - Quarter 2
25 GAAP Reconciliation EBITDA - Quarter 2 Q2 2013 Q2 2014 $m $m Net income 17.1 18.5 Interest expense, net 0.4 0.8 Income taxes 3.8 5.3 Depreciation and amortization 4.2 7.0 Impairment of Octane Additives segment goodwill 0.3 - EBITDA 25.8 31.6
Slide 26: GAAP Reconciliation EBITDA - YTD
26 GAAP Reconciliation EBITDA - YTD 2013 2014 $m $m Net Income 35.1 35.4 Interest expense, net 0.7 1.7 Income taxes 8.7 7.4 Depreciation and amortization 8.6 14.2 Impairment of Octane Additives segment goodwill 0.6 - EBITDA 53.7 58.7
Slide 27: GAAP Reconciliation: Net income excluding special items - Quarter 2
27 GAAP Reconciliation: Net income excluding special items - Quarter 2 Q2 2013 Q2 2014 Income before Income before income taxes Net income Diluted EPS income taxes Net income Diluted EPS $m $m $ $m $m $ Reported GAAP amounts 20.9 17.1 0.71 23.8 18.5 0.75 Foreign currency exchange losses 1.0 0.8 0.03