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Innospec (IOSP) Q2 Earnings Top Estimates, Sales Up Y/Y


Innospec Inc. IOSP posted a profit of $26.1 million or $1.06 per share in second-quarter 2017, down around 10% from $28.9 million or $1.18 per share a year ago.

Barring one-time items, earnings were $1.16 per share for the quarter, coming ahead of the Zacks Consensus Estimate of $1.08.

The chemical maker’s revenues soared 43% year over year to $326.3 million in the quarter. The top line was driven by strong sales gains across Performance Chemicals and Oilfield Services units.

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 down 6% year over year to $121.3 million in the quarter as favorable price and mix was more than offset by lower volumes and negative currency impact. Operating income fell 2% to $23.8 million in the quarter.

The Performance Chemicals unit raked in sales of $104.9 million in the quarter, a nearly three-fold year over year jump, driven by business acquired from Huntsman. Operating income climbed 38% to $6.5 million.

Revenues from the Oilfield Services division surged 64% to $76.1 million, buoyed by increased customer activity, higher volumes and favorable price and mix impact. The segment recorded an operating income of $3.7 million in the quarter compared with a loss of $1.6 million a year ago. The division is benefiting from improved market conditions.

Revenues from the Octane Additives unit climbed roughly 42% year over year to $24 million. Operating income went up around 33% to $12.8 million.

Balance Sheet

Innospec ended the quarter with cash and cash equivalents of $48.8 million, down around 68% year over year. Total debt was $254.9 million, up around 61% year over year. Net cash from operations was $9 million in the quarter versus $50.4 million a year ago.


Innospec said that it is optimistic about meeting its expectations for 2017. The company also noted that new products will help it deliver sustainable growth in the longer term while its balanced capital management program should enable it create shareholder value moving ahead. Innospec also remains open to more acquisition opportunities. The company also sees healthy prospects for Oilfield Services for the balance of 2017.

Price Performance

Shares of Innospec have gained a paltry 0.4% over a year, underperforming the industry’s 18.4% rally.

Zacks Rank & Key Picks

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

Better-placed companies in the chemicals space include The Chemours Company CC, Kronos Worldwide, Inc. KRO and BASF SE BASFY, all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Chemours has an expected long-term earnings growth of 15.5%.

Kronos has an expected long-term earnings growth of 5%.

BASF has an expected long-term earnings growth of 8.6%.

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