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Innospec (IOSP) Q3 Earnings Top Estimates, Sales Rise Y/Y

Zacks

Innospec Inc. IOSP posted a profit of $23.3 million or 95 cents per share in third-quarter 2017, more than doubling from $11.4 million or 47 cents per share a year ago.

Barring one-time items, earnings were $1.00 per share for the quarter, coming ahead of the Zacks Consensus Estimate of 85 cents.

The chemical maker’s revenues soared 62% year over year to $332.4 million in the quarter. The top line was driven by strong sales gains across all core businesses.

Innospec Inc. Price, Consensus and EPS Surprise

Innospec Inc. Price, Consensus and EPS Surprise

Innospec Inc. price-consensus-eps-surprise-chart | Innospec Inc. Quote


Segment Highlights

Revenues from the Fuel Specialties segment went up 14% year over year to $130.1 million in the quarter on favorable price and mix, higher volumes and positive currency impact. Operating income rose 3% to $24.9 million in the quarter.

The Performance Chemicals unit raked in sales of $110.3 million in the quarter, a nearly three-fold year over year jump, driven by growth across heritage and acquired businesses. Operating income more than doubled to $9.7 million.

Revenues from the Oilfield Services division surged 65% to $81.9 million, buoyed by increased customer activity and higher volumes, offsetting the impacts of Hurricane Harvey. The segment recorded an operating income of $1.8 million in the quarter.

Revenues from the Octane Additives unit more than doubled year over year to $10.1 million. Operating income rose more than two-fold year over year to $4.4 million.

Balance Sheet

Innospec ended the quarter with cash and cash equivalents of $65.5 million, down around 61% year over year. Long-term debt was $219 million, up around 53% year over year. Net cash from operations was $35.2 million for the first nine months of 2017 versus $87 million a year ago.

Outlook

Moving ahead, Innospec said that it is positive about the balance of 2017 and is optimistic about 2018. The company will remain focused on further improving operating margins. Innospec will also focus on developing new technologies that are closely aligned to its customers' requirements. The company also noted that strength of its balance sheet allows it to participate in acquisition projects that will create shareholder value.

Price Performance

Shares of Innospec have gained 13.2% over a year, underperforming the industry’s 31.5% rally.



Zacks Rank & Key Picks

Innospec is a Zacks Rank #2 (Buy) stock.

Other top-ranked companies in the chemicals space include Westlake Chemical Corporation WLK, Kraton Corporation KRA and Ingevity Corporation NGVT, all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Westlake has an expected long-term earnings growth of 8.4%.

Kraton has an expected earnings growth of 25.4% for the current year.

Ingevity has an expected long-term earnings growth of 12%.

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