Innospec Inc. · NASDAQ:IOSP
Innospec — Q1 2016 Earnings Presentation
23 slides from Innospec's earnings presentation, May 4, 2016
Slide 1: Investor Presentation Quarter 1, 2016
Investor Presentation Quarter 1, 2016 May 4, 2016 Patrick S. Williams President & CEO 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 1st Quarter Performance
4 Innospec – Summary of 1st Quarter Performance Delivered improved EPS in very tough market conditions Oilfield Services customer activity remains challenging Soft demand in Fuels due to very warm winter Phasing of major customer demand in Oilfield Services– now back on track Personal Care continues
Slide 5: Financial Presentation
Financial Presentation Ian Cleminson Executive Vice President & Chief Financial Officer
Slide 6: Q1 2016 Consolidated Results
6 Q1 2016 Consolidated Results Sales decline driven mainly by volume in Oilfield Services Gross margin strong in all business units EPS up – both diluted and adjusted Q1 2015 Q1 2016 Growth $m $m % Net sales 269.2 212.1 (21)% Gross profit 81.8 76.2 (7)% Gross margin 30.4% 35.9% 5.5%pt Operating inco
Slide 7: Q1 2016 Fuel Specialties
7 Q1 2016 Fuel Specialties Volume decline in Oilfield Services Some phasing of orders – normalizing in Q2 Gross margins remain strong Q1 2015 Q1 2016 Growth $m $m % Net sales 199.4 149.8 (25)% Gross profit 61.5 51.2 (17)% Gross margin 30.8% 34.2% 3.4%pt Operating income 23.5 16.7 (29)% EBITDA 28.6 2
Slide 8: Q1 2016 Performance Chemicals
8 Q1 2016 Performance Chemicals Good underlying growth – prior year contains Aromas business Personal Care strategy on track – driven by new products Margins continue at good levels Q1 2015 Q1 2016 Growth $m $m % Net sales 57.6 44.5 (23)% Gross profit 14.5 13.2 (9)% Gross margin 25.2% 29.7% 4.5%pt O
Slide 9: Q1 2016 Octane Additives
9 Q1 2016 Octane Additives Current order largely fulfilled in Q1 Small final portion delivered in April Further order expected to be delivered in the next few months Q1 2015 Q1 2016 Growth $m $m % Net sales 12.2 17.8 46% Gross profit 5.8 11.8 103% Gross margin 47.5% 66.3% 18.8%pt Operating income 5.
Slide 10: Q1 2016 Corporate Items
10 Q1 2016 Corporate Items Corporate costs close to expected run rate ($10m-$11m per quarter) Comparative quarter was low Tax rate at 22.9% - expect 20% for full year Q1 2015 Q1 2016 $m $m Corporate costs (8.1) (10.2) Pension credit - 1.8 Adjustment to fair value of contingent consideration (3.5) 1.
Slide 11: Q1 2016 Cash Flow & Balance Sheet
11 Q1 2016 Cash Flow & Balance Sheet Second payment for Independence Oilfield Chemicals completed in Q1 Net debt now $41.0 million Balance sheet remains very strong Q4 2015 Q1 2016 $m $m Total cash and cash equivalents 141.7 115.0 Total debt (136.1) (156.0) Net cash/(debt) 5.6 (41.0) Total working c
Slide 12: New Reporting Format
12 New Reporting Format Separate Fuel Specialties and Oilfield Services Move Polymers into Fuel Specialties – asset optimization More visible Personal Care business PERFORMANCE OILFIELD OCTANE FUEL SPECIALTIES CHEMICALS SERVICES ADDITIVES FUEL SPECIALTIES PERSONAL CARE POLYMERS
Slide 13: Concluding Comments
Concluding Comments Patrick Williams President & CEO
Slide 14: Concluding Comments
14 Concluding Comments Balanced Portfolio Delivering improved EPS in tough market conditions Controlling costs Oilfield Services gaining customers, despite downturn New Technology continues to drive growth Both Fuel Specialties and Personal Care Share Repurchase Program continues Dividend raised by
Slide 15: Your Opportunity To Ask Questions
Your Opportunity To Ask Questions
Slide 16: Final Comments
16 Final Comments Thanks to investors, customers and employees for their continued support Q2 2016 results timetable (provisional) Results announced after close on August 2, 2016 Conference Call at 10am ET on Wednesday August 3, 2016
Slide 17: Appendix
IX Append IN innospec
Slide 18: Innospec Income Statement - Quarter 1
18 Innospec Income Statement - Quarter 1 Q1 2015 Q1 2016 Variance Pr. Yr. $m $m $m Net sales 269.2 212.1 (57.1) Sales growth 22.0% (21.2)% N/A Gross profit 81.8 76.2 (5.6) Gross margin 30.4% 35.9% 5.5%pt SAR expenses (54.9) (50.8) 4.1 Operating income 26.9 25.4 (1.5) Operating margin 10.0% 12.0% 2.0
Slide 19: Fuel Specialties - Quarter 1
19 Fuel Specialties - Quarter 1 Q1 2015 Q1 2016 Variance Pr. Yr. $m $m $m Net sales 199.4 149.8 (49.6) Sales growth 21.4% (24.9%) N/A Gross profit 61.5 51.2 (10.3) Gross margin 30.8% 34.2% 3.4%pt Selling (25.9) (21.6) 4.3 Administrative (7.1) (7.2) (0.1) Research (5.0) (5.7) (0.7) SAR expenses (38.0
Slide 20: Performance Chemicals - Quarter 1
20 Performance Chemicals - Quarter 1 Q1 2015 Q1 2016 Variance Pr. Yr. $m $m $m Net sales 57.6 44.5 (13.1) Sales growth 2.7% (22.7%) N/A Gross profit 14.5 13.2 (1.3) Gross margin 25.2% 29.7% 4.5%pt Selling (3.8) (4.1) (0.3) Administrative (3.1) (1.9) 1.2 Research (1.2) (1.1) 0.1 SAR expenses (8.1) (7
Slide 21: Octane Additives - Quarter 1
21 Octane Additives - Quarter 1 Q1 2015 Q1 2016 Variance Pr. Yr. $m $m $m Net sales 12.2 17.8 5.6 Sales growth N/A 45.9% N/A Gross profit 5.8 11.8 6.0 Gross margin 47.5% 66.3% 18.8%pt Selling (0.3) (0.1) 0.2 Administrative (0.4) (0.7) (0.3) SAR expenses (0.7) (0.8) (0.1) SAR % (5.7%) (4.5%) 1.2%pt O
Slide 22: GAAP Reconciliation EBITDA - Quarter 1
22 GAAP Reconciliation EBITDA - Quarter 1 Q1 2015 Q1 2016 $m $m Net income 17.9 18.9 Interest expense, net 1.0 0.8 Income taxes 6.0 5.6 Depreciation and amortization 8.3 9.1 Adjustment to fair value of contingent consideration 3.5 (1.6) EBITDA 36.7 32.8
Slide 23: GAAP Reconciliation: Net Income Excluding Special Items - Quarter 1
23 GAAP Reconciliation: Net Income Excluding Special Items - Quarter 1 Q1 2015 Q1 2016 Income before Income before income taxes Net income Diluted EPS income taxes Net income Diluted EPS $m $m $ $m $m $ Reported GAAP amounts 23.9 17.9 0.72 24.5 18.9 0.77 Amortization of acquired intangible assets 4.