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

Zacks

Innospec Inc. IOSP swung to a loss of $4.8 million or 20 cents per share in fourth-quarter 2017, from a profit of $22.1 million or 90 cents per share a year ago. The bottom line in the reported quarter was hit by a one-time charge of $40.6 million related to the U.S. tax reform.

Barring one-time items, earnings were $1.47 per share for the quarter, coming ahead of the Zacks Consensus Estimate of $1.13.

The chemical maker’s revenues went up 49% year over year to $353.8 million in the quarter. The top line was driven by sales gains across all businesses.

Innospec Inc. Price, Consensus and EPS Surprise

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


FY17 Results

For 2017, profit was $61.8 million or $2.52 per share, compared with $81.3 million or $3.33 per share logged a year ago. Adjusted earnings per share for the year were $4.66.

Revenues for the full year surged 48% year over year to $1.3 billion.

Segment Highlights

Revenues from the Fuel Specialties segment edged up 2% year over year to $146 million in the fourth quarter on favorable price and mix as well as positive currency impact. Operating income fell 17.7% to $31.6 million in the quarter.

The Performance Chemicals unit raked in sales of $109.8 million in the quarter, a more than three-fold year over year jump, driven by double-digit growth in heritage business. Operating income rose nearly four-fold to $10.4 million.

Revenues from the Oilfield Services division jumped 35% to $79.9 million, buoyed by increased customer activity and higher volumes. The segment recorded an operating income of $1 million in the quarter, down 58%.

Revenues from the Octane Additives surged more than four-fold year over year to $18.1 million. Operating income soared to $7.5 million from $0.2 million a year ago.

Balance Sheet

Innospec ended 2017 with cash and cash equivalents of $90.2 million, down around 11.5% year over year. Long-term debt was $202.6 million, down around 22% year over year. Net cash from operations was $47.5 million for the fourth quarter, up from $18.5 million a year ago.

Outlook

Moving ahead, Innospec said that it is optimistic about 2018. The company will remain focused on further improving margins to boost profitability. Innospec also noted that its strategy of focusing on core businesses and expanding into adjacent markets will deliver value to both customers and shareholders.

Price Performance

Shares of Innospec have lost 4.3% over a year, underperforming the industry’s 17.4% rally.



Zacks Rank & Key Picks

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

Better-ranked companies in the basic materials space include Olympic Steel, Inc. ZEUS, LyondellBasell Industries N.V. LYB and The Mosaic Company MOS, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Olympic Steel has an expected long-term earnings growth rate of 7.5%. Its shares rallied 38% over the past six months.

LyondellBasell has an expected long-term earnings growth rate of 15%. Its shares have rallied 25% over the past six months.

Mosaic has an expected long-term earnings growth rate of 9.5%. Its shares have rallied 25% over the past six months.

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