Innospec's (IOSP) Earnings Beat Estimates in Q3, Revenues Lag
Innospec Inc. IOSP recorded a profit of $39.2 million or $1.57 per share in third-quarter 2023, up from a profit of $38.7 million or $1.55 in the year-ago quarter.
Barring one-time items, earnings came in at $1.59 per share, down from $1.74 per share a year ago. It surpassed the Zacks Consensus Estimate of $1.45.
The company’s revenues fell roughly 10% year over year to $464.1 million in the quarter. It missed the Zacks Consensus Estimate of $483 million. The company saw continued strong results in its Oilfield Services unit and a sequential improvement in the Performance Chemicals segment in the reported quarter.
Innospec Inc. Price, Consensus and EPS Surprise
Innospec Inc. price-consensus-eps-surprise-chart | Innospec Inc. Quote
Segment Highlights
The Performance Chemicals unit logged sales of $145.2 million, down around 9% year over year, hurt by unfavorable price/mix, partly offset by higher volumes and favorable currency swings. It was above the consensus estimate of $139 million. New contracts led to sequentially higher operating income and margin notwithstanding continued destocking and end-market headwinds.
Revenues in the Fuel Specialties segment fell 5% year over year to $169.3 million in the reported quarter as lower volumes and unfavorable price/mix more than offset the positive currency impact. The figure was higher than the consensus estimate of $158 million.
Revenues in the Oilfield Services division fell 14% to $149.6 million, impacted by the moderation in production chemicals activities. It was below the consensus estimate of $180 million. The segment, however, delivered strong operating income growth and higher margin compared with the year-ago quarter.
Balance Sheet
Innospec ended the quarter with cash and cash equivalents of $207.2 million, up around 25% sequentially.
Cash from operating activities was $58.1 million for the reported quarter.
Outlook
Innospec is cautiously optimistic that its new contracts and the ongoing improvement in the base business have the potential to deliver growth and margin improvement on a sequential comparison basis in the fourth quarter in Performance Chemicals. It also anticipates sequential margin improvement and operating income growth in Fuel Specialties. For Oilfield Services, IOSP sees similar results in the fourth quarter.
Price Performance
Shares of Innospec have declined 7.2% over a year, compared with the industry’s 18.3% decline.
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Zacks Rank & Key Picks
IOSP currently has a Zacks Rank #3 (Hold).
Better-ranked stocks worth a look in the basic materials space include Carpenter Technology Corporation CRS, Axalta Coating Systems Ltd. AXTA and The Andersons Inc. ANDE.
The consensus estimate for Carpenter Technology’s current fiscal year earnings is pegged at $3.57, indicating year-over-year growth of 213.2%. CRS beat the Zacks Consensus Estimate in all of the last four quarters, with the average earnings surprise being 14.3%. The company’s shares have surged 65% in the past year. It currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 60 days, the Zacks Consensus Estimate for Axalta Coating Systems’ current year has been revised upward by 8.2%. AXTA, carrying a Zacks Rank #1, beat the Zacks Consensus Estimate in three of the last four quarters while missing in one quarter, with the average earnings surprise being 6.7%. The company’s shares have gained 15% in the past year.
Andersons currently carries a Zacks Rank #1. The Zacks Consensus Estimate for ANDE's current-year earnings has been revised 8.6% upward over the past 60 days. Andersons beat the Zacks Consensus Estimate in three of the last four quarters. It delivered a trailing four-quarter earnings surprise of 32.8%, on average. ANDE shares have rallied around 32% in a year.
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