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Innospec (IOSP) Q4 Earnings Top Estimates, Revenues Up Y/Y

Anindya Barman

Innospec Inc. IOSP swung to a profit of $20.4 million or 83 cents per share in fourth-quarter 2018 from a loss of $4.8 million or 20 cents in the year-ago quarter.

Barring one-time items, earnings were $1.62 per share (up from $1.47 per share a year ago), which surpassed the Zacks Consensus Estimate of $1.35. The results were aided by the company’s actions to manage costs.

The chemical maker’s revenues went up roughly 12% year over year to $395 million in the quarter. The company saw strong growth in its Fuel Specialties and Oilfield Services units.

Innospec Inc. Price, Consensus and EPS Surprise


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

FY18 Results

For 2018, profits were $85 million or $3.45 per share, up roughly 38% from $61.8 million or $2.52 per share recorded in 2017.

Net sales for the year went up 13% year over year to $1,476.9 million.

Segment Highlights

Revenues in the Fuel Specialties segment rose 11% year over year to $162 million in the reported quarter on the back of higher volumes that rose 13%. Operating income was $35.6 million, up 12% year over year.

The Performance Chemicals unit raked in sales of $110.4  million, up 0.5% year over year. Higher volumes were offset by unfavorable currency and price/mix impacts. Operating income was flat year over year at $10.5 million in the quarter.

Revenues in the Oilfield Services division climbed around 36% to $108.5 million, boosted by increased customer activity and higher volumes that climbed 29%. The segment recorded an operating income of $8 million in the quarter, a roughly eight-fold year over year improvement.

Revenues in the Octane Additives division fell roughly 22% year over year to $14.1 million. The division logged an operating profit of $3.4 million, down 55% year over year.

Balance Sheet

Innospec ended 2018 with cash and cash equivalents of $123.1 million, up around 36% year over year. Long-term debt was $186.2 million, down around 8% year over year.

Net cash provided by operating activities was $69.8 million for the reported quarter, up around 47% year over year.

Moving ahead, Innospec said that it has several significant organic growth options that along with potential acquisition opportunities will deliver further value for its shareholders.  The company believes that it can continue to deliver positive growth in 2019 amid tough challenges driven by the instability in the geopolitical environment.

Price Performance

Shares of Innospec have gained 11.8% over a year, outperforming the industry’s 18.6% decline.


Zacks Rank & Stocks to Consider

Innospec currently has a Zacks Rank #3 (Hold).

A few better-ranked stocks worth considering in the basic materials space include Kirkland Lake Gold Ltd. KL, Israel Chemicals Ltd. ICL and The Mosaic Company MOS.

Kirkland Lake Gold has an expected earnings growth rate of 20.9% for the current year and carries a Zacks Rank #1 (Strong Buy). Its shares have surged 141% in the past year.  You can see the complete list of today’s Zacks #1 Rank stocks here.

Israel Chemicals has an expected earnings growth rate of 10.8% for the current year and carries a Zacks Rank #2 (Buy). The company’s shares have rallied 32% over the past year.  

Mosaic has an expected earnings growth rate of 23.4% for the current year and carries a Zacks Rank #2. Its shares have gained 21% in the past year.

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