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Innospec (IOSP) Q1 Earnings Top Estimates, Sales Up Y/Y

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Innospec Inc. IOSP logged a profit of $22.2 million or 90 cents per share in first-quarter 2018, up 29% from a profit of $17.2 million or 70 cents per share a year ago.

Barring one-time items, earnings were $1.02 per share for the quarter, coming ahead of the Zacks Consensus Estimate of 98 cents.

The chemical maker’s revenues went up 23% year over year to $360.7 million in the quarter. The top line was driven by sales gains across most segments.

Innospec Inc. Price, Consensus and EPS Surprise

 

Innospec Inc. Price, Consensus and EPS Surprise | Innospec Inc. Quote

Segment Highlights

Revenues from the Fuel Specialties segment went up 13% year over year to $143.4 million in the reported quarter on higher volumes, favorable price and mix as well as positive currency impact. Operating income rose 4% to $28.2 million in the quarter.

The Performance Chemicals unit raked in sales of $124 million in the quarter, up 31% year over year, driven by double-digit growth in volumes, positive price and mix as well as favorable currency impact. Operating income rose two-fold to $12.1 million.

Revenues from the Oilfield Services division shot up 40% to $92.9 million, boosted by increased customer activity and higher volumes. The segment recorded an operating income of $3 million in the quarter, flat year over year.

Revenues from the Octane Additives unit tumbled 94% year over year to $0.4 million. The division logged an operating loss of $1.4 million compared with a profit of $2 million a year ago.

Balance Sheet

Innospec ended the quarter with cash and cash equivalents of $78.1 million, up around 72% year over year. Total debt was $218.8 million, down around 10% year over year. Net cash outflow from operations was $2 million for the first quarter, versus an outflow of $19.9 million a year ago.

Innospec also declared its semi-annual dividend of 44 cents per share for first-half 2018, representing an increase of 15%.  
 
Outlook

Innospec is seeing healthy customer activity across all of its core businesses. The company said that it will remain focused on further improving margins in Performance Chemicals and other strategic businesses to boost profitability. Innospec expects its margin improvement programs to deliver enhanced profitability later this year.

Price Performance

Shares of Innospec have gained 12.5% over a year, outperforming the industry’s 10.1% gain.

 



 

Zacks Rank & Stocks to Consider

Innospec is a Zacks Rank #3 (Hold) stock.

Better-ranked stocks in the basic materials space are Kronos Worldwide Inc. KRO, Celanese Corporation CE and Methanex Corporation MEOH.

Kronos has an expected long-term earnings growth rate of 5% and flaunts a Zacks Rank #1 (Strong Buy). The company’s shares have moved up around 32% in a year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Celanese has an expected long-term earnings growth rate of 8.9% and flaunts a Zacks Rank #1. Its shares have gained roughly 26% over a year.

Methanex has an expected long-term earnings growth rate of 15% and carries a Zacks Rank #2 (Buy). Its shares have roughly 52% over a year.
 
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