Pricing Power, Cost Actions and Mix Shift
Offset Topline Pressures to Drive Margin Growth and Benefit Bottom
Line Performance
On Track to Achieve Year-End EPS Improvement
Targets from New Lower Cost Value Chain Structure
Innophos Holdings, Inc. (NASDAQ: IPHS) today announced financial
results for its second-quarter ended June 30, 2019.
Strategic Highlights
- Continued progress executing against Vision 2022 strategic
roadmap and Strategic Pillars
- Leveraged value-selling model to continue to capture price
increases to offset the gross profit effects of lower sales
volumes
- On schedule to realize GAAP and adjusted diluted EPS
improvement of $0.25 to $0.27 per share run rate by the end of 2019
from the value chain optimization program that provided some
initial sequential benefits in the quarter
- Completed planned annual maintenance shut-down of
Coatzacoalcos, Mexico facility on time and on budget with $3
million of maintenance and under-absorption costs in Q2 2019
Q2 2019 Financial
Highlights
- Sales of $185 million were down 10% compared with prior-year
quarter as pricing power was predominantly offset by the planned
discontinuation of low-margin nutrition trading business, as well
as a general weakening of demand including customer destocking,
lost 2019 business due to Midwest flooding and continued “indirect”
tariff effects
- GAAP Net Income of $1 million, or $0.07 per diluted share, was
down $5 million from Q2 2018, primarily due to a $6.6 million
one-off tax charge
- Reported EBITDA of $26 million was up $4 million, or 17%
year-over-year due to reduced value chain transition costs
- Adjusted EBITDA of $30 million was flat sequentially but down
$1 million year-on-year, while adjusted EBITDA margin of 16% was up
30 basis points sequentially and 129 basis points compared with the
prior-year quarter, reflecting improved mix and continued price
increases and cost management, as well as early benefits from the
new value chain lower cost structure
- Q2 2019 adjusted diluted EPS of $0.43 was down 22% year-on-year
due primarily to a higher effective tax rate and interest expense,
lower adjusted EBITDA and higher non-cash stock compensation
- Free Cash Flow of $20 million, up $24 million year-on-year on
improved working capital and lower capital expenditures
Management Comments
“By leveraging our improved mix, pricing power momentum, cost
management and lower cost structure, we grew our adjusted EBITDA
margin by 129 basis points in the second quarter despite a 10%
decline in sales,” said Kim Ann Mink, Ph.D., Chairman, President
and Chief Executive Officer. “This solid margin performance is a
strong testament to the effectiveness of our Vision 2022 strategy
and Strategic Pillar framework that have begun to transform
Innophos’ growth profile.”
“Second-quarter sales were impacted by several factors that more
than offset our continued pricing power. This included difficult
year-over-year comparisons due to the planned discontinuation of
low-margin nutrition trading business announced in Q3 2018, lower
sales to the fertilizer markets in the US due to the ongoing
Midwest flooding, and indirect tariff pricing pressure on our IS
segment. In addition, we experienced softer than expected demand in
several markets including customer destocking.”
“In response to these factors that we expect to persist through
the balance of the year, we are resetting our 2019 revenue
guidance. At the same time, we are maintaining our EBITDA guidance
as we expect to continue to benefit from our pricing power and cost
containment actions. In addition, while investments in high return
projects remain a priority, we are committed to a more efficient
approach to spending going forward, as reflected in our revised
Capex range,” continued Mink.
“While we manage through the near-term by focusing on what we
can control, we remain committed to executing on the strategic
priorities that will advance Innophos on our transformational
Vision 2022 journey. First, we will continue to shift the mix of
business to higher levels of attractive FHN business through our
SPARC new product development program and the pursuit of targeted
M&A opportunities. Second, we will benefit from our lower-cost
value chain structure to help achieve our year-end EPS improvement
goal. And finally, we will leverage our market leadership in
Commercial Excellence to capture further pricing power,” concluded
Mink.
Q2 2019 Results
Variance $ and Variance % in the following tables and comments
may not foot due to rounding
$ Millions except EPS
Quarter 2
2019
2018
Variance $
Variance %
Sales
185
207
(22)
(10)%
Net Income
1
6
(5)
(78)%
Adj. Net Income
9
11
(2)
(22)%
EBITDA
26
23
4
17%
Adj. EBITDA
30
31
(1)
(3)%
Diluted EPS
0.07
0.31
(0.24)
(78)%
Adj. Diluted EPS
0.43
0.55
(0.12)
(22)%
Cash from Ops
26
8
18
BIG
Free Cash Flow
20
(3)
24
712%
- Sales were 10% below prior year as 3% selling price increases
were offset by a 13% volume decline
- The Q2 2019 volume decline was impacted by several factors,
including discontinued low-margin nutrition trading business, a
general weakening of demand including customer destocking, lost
2019 business from Midwest flooding and continued “indirect” tariff
impacts
- GAAP Net Income of $1 million and diluted EPS of $0.07 were
down versus the prior year primarily due to a $6.6 million one-off
tax charge related to Dutch tax regulations enacted in the current
quarter retroactive to January 1, 2018
- In line with the Company’s expectations, Mexico’s natural gas
network improved sequentially following their pipeline completion.
As a result, there were no imbalance charges and there was a 12%
sequential reduction in the basic rate invoiced that resulted in
similar year-over-year natural gas costs
- Adjusted EBITDA margin of 16% was up 129 basis points year over
year due to improved sales pricing and mix combined with
improvements in cost structure
- Free Cash Flow was $20 million, up $24 million from the prior
year period on improved working capital and lower capital
expenditures
Q2 2019 Segment
Financials
Q2 Sales
2019 $ Millions
2018 $ Millions
Variance $
Variance %
FHN
107
126
(19)
(15)%
IS
68
67
1
1%
Other
11
14
(4)
(25)%
Total IPHS
185
207
(22)
(10)%
Q2 Adj. EBITDA
2019 $ Millions
2018 $ Millions
2019 % Margin
2018 % Margin
FHN
22
18
21%
14%
IS
8
11
12%
16%
Other
(1)
2
-7%
11%
Total IPHS
30
31
16%
15%
Note: See Adjusted EBITDA reconciliation to EBITDA in the
financial tables that follow
- FHN sales declined 15% year over year (price +3%, volume -18%)
as price increases were offset by lower volumes due to the
discontinuation of low-margin nutrition trading business and softer
demand including customer destocking; adjusted EBITDA margins were
up 611 basis points sequentially and 639 basis points compared with
Q2 2018 due to increased selling prices, improved sales mix,
capitalized variances for the nutrition business, lower costs from
the value chain optimization program and a reclassification to FHN
of some profit that was recorded in the Other segment in Q1
2019
- IS sales were up 1% year over year (price +3%, volume -2%) due
to higher prices that exceeded lower volume effects from “indirect”
unfavorable tariff impacts on international sales as Chinese
competition redirected mostly technical grade product and Midwest
flooding; adjusted EBITDA margins were down 320 basis points
sequentially due to the planned maintenance outage and 409 basis
points year over year due to higher freight costs and the noted
tariff impacts
- Other sales were down 25% (price -1%, volume -23%) due
primarily to reduced co-product and low grade acid sales volumes;
adjusted EBITDA margins were negative 7% due to the
reclassification of some Q1 2019 profit on certain intermediate
product transactions from Other to the downstream consuming
segments. Year-to-date margins are properly reflected at 12%
Year-to-Date Results
Variance $ and Variance % in the following tables and comments
may not foot due to rounding
$ Millions except EPS
YTD Q2
2019
2018
Variance $
Variance %
Sales
376
412
(36)
(9)%
Net Income
10
17
(7)
(41)%
Adj. Net Income
20
23
(3)
(13)%
EBITDA
52
52
0
(1)%
Adj. EBITDA
60
63
(3)
(5)%
Diluted EPS
0.51
0.87
(0.36)
(41)%
Adj. Diluted EPS
1.00
1.15
(0.15)
(13)%
Cash from Ops
17
10
7
76%
Free Cash Flow
1
(17)
18
106%
- Sales decreased 9% on 3% higher prices but 12% lower volumes
due to the planned discontinuation of low-margin nutrition trading
business, as well as a general weakening of demand including
customer destocking, lost 2019 business due to Midwest flooding and
continued “indirect” tariff effects
- GAAP Net Income of $10 million was down $7 million due
primarily to a one-off tax charge related to Dutch tax regulations
enacted in Q2 2019 retroactive to January 1, 2018
- Adjusted EBITDA declined 5% due to the effects of lower sales
volumes and higher input costs that were not entirely covered by
selling price increases
YTD Quarter 2 Segment
Financials
YTD Q2 Segment Sales
2019 $ Millions
2018 $ Millions
Variance $
Variance %
FHN
222
252
(30)
(12)%
IS
131
130
1
1%
Other
24
30
(6)
(20)%
Total IPHS
376
412
(36)
(9)%
YTD Q2 Segment Adj. EBITDA
2019 $ Millions
2018 $ Millions
2019 % Margin
2018 % Margin
FHN
39
39
18%
15%
IS
18
22
14%
17%
Other
3
2
12%
8%
Total IPHS
60
63
16%
15%
Note: See Adjusted EBITDA reconciliation to EBITDA in the
financial tables that follow
- FHN represented 59% of total Company sales and was down 12%
year over year (price +4%, volume -16%) as price increases were
offset by lower volumes due to the discontinuation of low-margin
nutrition trading business, as well as general weakening in demand
including customer destocking; adjusted EBITDA margins were 221 bps
above H1 2018 due to increased selling prices and improved sales
mix
- IS sales were up 1% with selling price increases exceeding
volume decreases (price +4%, volume -3%); adjusted EBITDA margins
were down 292 bps due to higher freight costs and “indirect”
unfavorable tariff impacts
- Other sales were down 20% (price -1%, volume -19%) due
primarily to reduced co-product and low grade acid sales volumes.
Other adjusted EBITDA margins were 12%
Full Year 2019 Outlook
The Company is revising its previously announced 2019 revenue
guidance to reflect current market conditions.
Revenues are now forecasted to be 6-7% below 2018 revenue
of $802 million, compared with the prior expectation of 1-2%
down.
The revised revenue range reflects the expectation that the US
fertilizer sales impacted by Midwest flooding will not rebound in
2019 as previously expected. In addition, the Company expects
market softness to continue to impact both FHN and IS volumes, as
well as IS pricing and volumes to continue to be affected
indirectly by tariffs. The year-over-year volume decline from the
discontinuation of the low margin nutrition business is expected to
impact comps through the end of the year, but less materially for
the fourth quarter. The combined impact of these factors will be
partially offset by positive year-over-year revenue contribution
from price increases and new product wins.
Innophos continues to expect Adjusted EBITDA to grow 1-3%
in 2019 from $125 million in 2018, reflecting the benefits of
pricing and cost actions more than offsetting impacts from volume
declines.
From a GAAP and cash flow perspective, costs are expected
to be lower in H2 than H1 as the Company winds down spending on the
non-recurring expenses that are adjusted for non-GAAP reporting
purposes, including value chain transition expense and Mexico
natural gas supply adjustment charges.
Capital investments are now expected to be in the $45 to
$50 million range, approximately 15-20% below 2018 spending. This
compares with the prior expectation of capital investments in line
with prior year, and reflects the Company’s expectation to be more
efficient with spending to finalize the optimization of the value
chain and manufacturing program while continuing to make
investments in high return projects.
The Company expects its effective tax rate to operate in
the 28-32% range, excluding the second quarter $6.6 million
one-time Dutch tax charge.
Conference Call
Innophos will host its second-quarter 2019 conference call today
August 6, 2019 at 9:00 am ET to discuss its earnings results. Those
who wish to listen to the conference call webcast should visit the
“Investors” section of the Company’s website at www.innophos.com. The live call also can be
accessed by dialing (877) 604-1612 (U.S.) or (201) 389-0883
(international). No passcode is required. Please dial in
approximately 15 minutes ahead of the start time to ensure timely
entry to the call. The Q2 2019 earnings call presentation will be
made available on the Company’s website prior to the call. If you
are unable to listen to the live call, the webcast will be archived
on the Company’s website. In addition,
a replay of the call will be available between August 6 and August
20, 2019. The replay is accessible by dialing (877) 660-6853 (U.S.)
or (201) 612-7415 (international) and entering the Conference ID
number 13692166.
Additional information on Innophos’ second-quarter 2019 results
can also be found on the Company’s website.
About the Company
Innophos is a leading international producer of essential
ingredients. We partner with world-leading health & nutrition,
food & beverage and industrial brands to create science-based
solutions that improve quality of life. Our knowledgeable teams
apply science to unlock the potential that lies within the blends
and formulations that we deliver. Forward thinking and people
centric at heart, we execute with purpose and efficiency to create
value in everything we do. Headquartered in Cranbury, New Jersey,
Innophos has manufacturing operations across the United States, in
Canada, Mexico and China. For more information, please visit
www.innophos.com 'IPHS-G'
Financial Tables Follow
Safe Harbor for Forward-Looking and
Cautionary Statements
This press release contains or may contain forward-looking
statements within the meaning of Section 27a of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended. The Company intends these forward-looking
statements to be covered by the safe harbor provisions for such
statements. Statements made in this press release that relate to
our future performance or future financial results or other future
events (which may be identified by such terms as “expect”,
“estimate”, “anticipate”, “assume”, “believe”, “plan”, “intend’,
“may”, “will”, “should”, “outlook”, “guidance”, “target”,
“opportunity”, “potential” or similar terms and variations or the
negative thereof) are forward-looking statements, including the
Company’s expectations regarding the business environment and the
Company’s overall guidance regarding future performance and growth.
These statements are based on our current beliefs and expectations
and are subject to significant risks and uncertainties. Actual
results may materially differ from the expectations expressed in or
implied by these forward-looking statements. Factors that could
cause the Company’s actual results to differ materially include,
but are not limited to: (1) global macroeconomic conditions and
trends; (2) the behavior of financial markets, including
fluctuations in foreign currencies, interest rates and turmoil in
capital markets; (3) changes in regulatory controls regarding
tariffs, duties, taxes and income tax rates; (4) the Company’s
ability to implement and refine its Vision 2022 strategic roadmap;
(5) the Company’s ability to successfully identify and complete
acquisitions in line with its Vision 2022 strategic roadmap and
effectively operate and integrate acquired businesses to realize
the anticipated benefits of those acquisitions; (6) the Company’s
ability to realize expected cost savings and efficiencies from its
performance improvement and other optimization initiatives; (7) the
Company’s ability to effectively compete in its markets, and to
successfully develop new and competitive products that appeal to
its customers; (8) changes in consumer preferences and demand for
the Company’s products or a decline in consumer confidence and
spending; (9) the Company’s ability to benefit from its investments
in assets and human capital and the ability to complete projects
successfully and on budget; (10) economic, regulatory and political
risks associated with the Company’s international operations, most
notably Mexico and China; (11) volatility and increases in the
price of raw materials, energy and transportation, and fluctuations
in the quality and availability of raw materials and process aids;
(12) the impact of a disruption in the Company’s supply chain or
its relationship with its suppliers; (13) the Company’s ability to
comply with, and the costs associated with compliance with, U.S.
and foreign environmental protection laws and (14) the Company’s
ability to meet quality and regulatory standards in the various
jurisdictions in which it has operations or conducts business. We
caution you to consider the important risks and other factors as
set forth in the forward-looking statements section and in Item 1A
Risk Factors in our most recent Annual Report on Form 10-K, as
amended by subsequent reports on Forms 10-Q and 8-K. We do not
undertake to update the forward-looking statements to reflect the
impact of circumstances or events that may arise after the date of
the forward-looking statements.
Summary Profit & Loss
Statement
INNOPHOS HOLDINGS, INC. AND
SUBSIDIARIES
Condensed Consolidated
Statement of Operations (Unaudited)
(Dollars in thousands, except
per share amounts or share amounts)
Three Months Ended June
30,
Six Months Ended June
30,
2019
2018
2019
2018
Net Sales
$
185,038
$
206,725
$
376,452
$
412,165
Cost of goods sold
148,646
170,340
303,648
333,553
Gross profit
36,392
36,385
72,804
78,612
Operating expenses:
Selling, general and administrative
20,261
22,503
39,703
45,023
Research & development expenses
1,232
1,338
2,572
2,749
Total operating expenses
21,493
23,841
42,275
47,772
Operating income
14,899
12,544
30,529
30,840
Interest expense, net
3,887
3,198
7,589
6,102
Foreign exchange (gain) loss
(470
)
1,136
(851
)
940
Other income
(8
)
(13
)
(11
)
(28
)
Income before income taxes
11,490
8,223
23,802
23,826
Provision for income taxes
10,089
1,977
13,707
6,665
Net income
$
1,401
$
6,246
$
10,095
$
17,161
Diluted Earnings Per Participating
Share
$
0.07
$
0.31
$
0.51
$
0.87
Diluted weighted average participating
shares outstanding
19,776,845
19,818,883
19,715,907
19,765,971
Dividends paid per share of common
stock
$
0.48
$
0.48
$
0.96
$
0.96
Dividends declared per share of common
stock
$
0.48
$
0.48
$
0.96
$
0.96
Adjusted Net Income Reconciliation to
Net Income
(Dollars in thousands, except EPS)
Three Months Ended June
30,
Six Months Ended June
30,
2019
2018
2019
2018
Net Income
$
1,401
$
6,246
$
10,095
$
17,161
Pre-tax
Adjustments
Foreign exchange loss (gain)
(470
)
1,136
(851
)
940
Severance/Restructuring expense
1,306
304
3,249
1,284
M&A related costs
285
186
451
938
Mexico natural gas supply imbalance
charges
0
0
1,179
0
Value chain transition
743
4,493
2,338
4,493
Supplier Q418 payment amortization
(1,254
)
0
(2,365
)
0
Other
151
0
463
0
Total Pre-Tax Adjustments
761
6,119
4,464
7,655
Income tax effects on Adjustments
244
1,471
1,332
1,933
One-time Dutch tax charge
6,603
0
6,603
0
Adjusted Net Income
$
8,521
$
10,894
$
19,830
$
22,883
Adjusted Diluted Earnings Per
Participating Share
$
0.43
$
0.55
$
1.00
$
1.15
Adjusted EBITDA Reconciliation to Net
Income
(Dollars in thousands)
Three Months Ended June
30,
Six Months Ended June
30,
2019
2018
2019
2018
Net Income
$
1,401
$
6,246
$
10,095
$
17,161
Interest expense, net
3,887
3,198
7,589
6,102
Provision for income taxes
10,089
1,977
13,707
6,665
Depreciation & amortization
10,886
11,089
20,646
22,453
EBITDA
26,263
22,510
52,037
52,381
Adjustments
Non-cash stock compensation
2,780
1,993
3,567
2,992
Foreign exchange loss (gain)
(470
)
1,136
(851
)
940
Severance/Restructuring expense
1,306
304
3,249
1,284
M&A related costs
285
186
451
938
Mexico natural gas supply imbalance
charges
0
0
1,179
0
Value chain transition
743
4,493
2,338
4,493
Supplier Q418 payment amortization
(1,254
)
0
(2,365
)
0
Other
151
0
463
0
Adjusted EBITDA
$
29,804
$
30,622
$
60,068
$
63,028
Percent of Sales
16.1
%
14.8
%
16.0
%
15.3
%
Segment Adjusted EBITDA Reconciliation
to EBITDA
(Dollars in thousands)
Three Months Ended
Three Months Ended
June 30, 2019
June 30, 2018
FHN
IS
Other
Total
FHN
IS
Other
Total
EBITDA
$
19,561
$
6,972
$
(270
)
$
26,263
$
14,939
$
7,794
$
(223
)
$
22,510
Non-cash stock compensation
1,573
1,101
106
2,780
1,128
789
76
1,993
Foreign exchange loss (gain)
66
—
(536
)
(470
)
96
—
1,040
1,136
Severance/Restructuring exp
848
391
67
1,306
169
114
21
304
M&A related costs
285
—
—
285
172
—
14
186
Value chain transition
448
266
30
744
1,666
2,219
608
4,493
Supplier payment amortization
(652
)
(477
)
(125
)
(1,254
)
—
—
—
—
Other
89
15
52
10
151
—
—
—
—
Adjusted EBITDA
$
22,218
$
8,305
$
(718
)
$
29,804
$
18,170
$
10,916
$
1,536
$
30,622
Six Months Ended
Six Months Ended
June 30, 2019
June 30, 2018
FHN
IS
Other
Total
FHN
IS
Other
Total
EBITDA
$
33,967
$
15,029
$
3,041
$
52,037
$
33,931
$
17,886
$
564
$
52,381
Non-cash stock compensation
2,019
1,412
136
3,567
1,693
1,185
114
2,992
Foreign exchange loss (gain)
(60
)
—
(791
)
(851
)
9
—
931
940
Severance/Restructuring exp
2,100
981
168
3,249
763
482
40
1,285
M&A related costs
451
—
—
451
923
—
14
937
Mexico natural gas supply adj.
263
553
363
1,179
—
—
—
—
Value chain transition
1,409
836
93
2,338
1,666
2,219
608
4,493
Supplier payment amortization
(1,230
)
(899
)
(236
)
(2,365
)
—
—
—
—
Other
261
169
33
463
—
—
—
—
Adjusted EBITDA
$
39,180
$
18,081
$
2,807
$
60,068
$
38,985
$
21,772
$
2,271
$
63,028
Segment Reporting
Three Months Ended June
30,
Six Months Ended June
30,
Segment Net Sales
2019
2018
2019
2018
Food, Health and Nutrition
$
106,543
$
125,664
$
221,609
$
252,027
Industrial Specialties
67,725
66,751
130,923
130,101
Other
10,770
14,310
23,920
30,037
Total
$
185,038
$
206,725
$
376,452
$
412,165
Net Sales % change
Food, Health and Nutrition
(15.2
)%
(12.1
)%
Industrial Specialties
1.5
%
0.6
%
Other
(24.7
)%
(20.4
)%
Total
(10.5
)%
(8.7
)%
Segment EBITDA
Food, Health and Nutrition
$
19,561
$
14,939
$
33,967
$
33,931
Industrial Specialties
6,972
7,794
15,029
17,886
Other
(270
)
(223
)
3,041
564
Total
$
26,263
$
22,510
$
52,037
$
52,381
Segment EBITDA % of net sales
Food, Health and Nutrition
18.4
%
11.9
%
15.3
%
13.5
%
Industrial Specialties
10.3
%
11.7
%
11.5
%
13.7
%
Other
(2.5
)%
(1.6
)%
12.7
%
1.9
%
Total
14.2
%
10.9
%
13.8
%
12.7
%
Depreciation and amortization
expense
Food, Health and Nutrition
$
6,781
$
7,213
$
13,169
$
14,535
Industrial Specialties
3,766
3,368
6,946
7,104
Other
339
508
531
814
Total
$
10,886
$
11,089
$
20,646
$
22,453
Price / Volume
The Company calculates pure selling price dollar variances as
the selling price for the current year to date period minus the
selling price for the prior year to date period, and then
multiplies the resulting selling price difference by the prior year
to date period volume. The current quarter selling price dollar
variance is derived from the current quarter year to date selling
price dollar variance less the previous quarter year to date
selling price dollar variance. The selling price dollar variance is
then divided by the prior period sales dollars to calculate the
percentage change. Volume/mix variance is calculated as the total
sales variance minus the selling price variance. The following
table illustrates the percentage changes in net sales by reportable
segments compared with the same period of the prior year, including
the effect of selling price and volume/mix changes upon
revenue:
Three Months Ended
Six Months Ended
June 30, 2019
June 30, 2019
Reportable Segments
Price
Vol/Mix
Total
Price
Vol/Mix
Total
Food, Health and Nutrition
3.1
%
(18.3
)%
(15.2
)%
3.7
%
(15.8
)%
(12.1
)%
Industrial Specialties
3.4
%
(1.9
)%
1.5
%
3.5
%
(2.9
)%
0.6
%
Other
(1.3
)%
(23.4
)%
(24.7
)%
(1.1
)%
(19.3
)%
(20.4
)%
Total
2.9
%
(13.4
)%
(10.5
)%
3.3
%
(12.0
)%
(8.7
)%
Summary Cash Flow
Statement
INNOPHOS HOLDINGS, INC. AND
SUBSIDIARIES
Condensed Consolidated
Statement of Cash Flows (Unaudited)
(Dollars in thousands)
Six Months Ended June
30,
2019
2018
Cash flows provided from (used for)
operating activities
Net income
$
10,095
$
17,161
Adjustments to reconcile net income to net
cash provided from (used for) operating activities:
Depreciation and amortization
20,646
22,453
Amortization of deferred financing
charges
215
215
Deferred income tax provision
208
97
Dutch income tax liability
6,603
—
Share-based compensation
3,567
2,992
Changes in assets and liabilities:
Accounts receivable
3,607
(8,110
)
Inventories
7,748
(13,136
)
Other current assets
(12,918
)
(4,481
)
Accounts payable
(24,129
)
(2,692
)
Other current liabilities
4,226
(718
)
Other long-term assets and liabilities
(3,087
)
(4,224
)
Net cash (used for) provided by
operating activities
16,781
9,557
Cash flows used for investing
activities:
Capital expenditures
(15,837
)
(26,475
)
Net cash used for investing
activities
(15,837
)
(26,475
)
Cash flows provided by (used for)
financing activities:
Long-term debt borrowings
37,000
61,000
Long-term debt repayments
(7,000
)
(41,000
)
Restricted stock forfeitures
(235
)
(251
)
Dividends paid
(18,866
)
(18,782
)
Net cash provided by (used for)
financing activities
10,899
967
Effect of foreign exchange rate changes on
cash and cash equivalents
—
(559
)
Net change in cash
11,843
(16,510
)
Cash and cash equivalents at beginning of
period
20,197
28,782
Cash and cash equivalents at end of
period
$
32,040
$
12,272
Cash From Operations Reconciliation to
EBITDA
(Dollars in thousands)
Three Months Ended June
30,
Six Months Ended June
30,
2019
2018
2019
2018
EBITDA
$
26,263
$
22,510
$
52,037
$
52,381
Operating Working Capital
11,168
5,160
(23,050
)
(24,986
)
Taxes paid
(6,400
)
(9,400
)
(9,000
)
(12,800
)
Interest paid
(3,900
)
(3,700
)
(7,500
)
(6,800
)
All other including non-cash stock
compensation and changes in other long-term assets and
liabilities
(876
)
(6,485
)
4,294
1,762
Net cash provided from
operation
$
26,255
$
8,085
$
16,781
$
9,557
Cash From Operations Reconciliation to
Adjusted EBITDA
(Dollars in thousands)
Three Months Ended June
30,
Six Months Ended June
30,
2019
2018
2019
2018
Adjusted EBITDA
$
29,804
$
30,622
$
60,068
$
63,028
Operating Working Capital
10,407
(959
)
(27,514
)
(32,641
)
Taxes paid
(6,400
)
(9,400
)
(9,000
)
(12,800
)
Interest paid
(3,900
)
(3,700
)
(7,500
)
(6,800
)
All other including non-cash stock
compensation and changes in other long-term assets and
liabilities
(3,656
)
(8,478
)
727
(1,230
)
Net cash provided from
operation
$
26,255
$
8,085
$
16,781
$
9,557
Free Cash Flow Reconciliation to Cash
From Operations
(Dollars in thousands)
Three Months Ended June
30,
Six Months Ended June
30,
2019
2018
2019
2018
Cash from Operations
$
26,255
$
8,085
$
16,781
$
9,557
Capital Expenditures
(5,913
)
(11,410
)
(15,837
)
(26,475
)
Free Cash Flow
$
20,342
$
(3,325
)
$
944
$
(16,918
)
Summary Balance Sheets
INNOPHOS HOLDINGS, INC. AND
SUBSIDIARIES
Condensed Consolidated Balance
Sheets (Unaudited)
(Dollars in thousands)
June 30, 2019
December 31, 2018
ASSETS
Current assets:
Cash and cash equivalents
$
32,040
$
20,197
Accounts receivable, net
98,957
102,564
Inventories
172,455
180,203
Other current assets
37,012
24,094
Total current assets
340,464
327,058
Property, plant and equipment, net
235,349
240,235
Lease right-of-use assets
51,604
—
Goodwill
152,767
152,767
Intangibles and other assets, net
89,971
95,094
Total assets
$
870,155
$
815,154
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable, trade and other
51,297
80,007
Other current liabilities
67,993
49,993
Total current liabilities
119,290
130,000
Long-term debt
330,000
300,000
Long-term lease liabilities
45,478
—
Other long-term liabilities
36,200
49,639
Total stockholders' equity
339,187
335,515
Total liabilities and stockholders'
equity
$
870,155
$
815,154
Additional Information
Net debt is a supplemental financial measure that is not
required by, or presented in accordance with, US GAAP. The Company
believes net debt is helpful in analyzing leverage and as a
performance measure for purposes of presentation in this release.
The Company defines net debt as total long-term debt (including any
current portion) less cash and cash equivalents.
Free cash flow is a supplemental financial measure that is not
required by, or presented in accordance with, US GAAP. The Company
believes free cash flow is helpful in analyzing the cash flow
generating capability of the business and as a performance measure
for purposes of presentation in this release. The Company defines
free cash flow as net cash provided from operating activities plus
cash used for capital expenditures plus cash received from sale
leaseback transactions.
EBITDA, adjusted EBITDA, adjusted net income and adjusted
diluted EPS are supplemental financial measures that are not
required by, or presented in accordance with, US GAAP. The Company
believes EBITDA and adjusted EBITDA are helpful in analyzing the
cash flow generating capability of the business and as performance
measures for purposes of presentation in this release.
Net Working Capital is a supplemental financial measure that is
not required by, or presented in accordance with, US GAAP. The
Company believes net working capital is helpful in analyzing the
effects on the cash flow generating capability of the business and
as a performance measure for purposes of presentation in this
release. The Company defines net working capital as total current
assets less cash and cash equivalents less total current
liabilities plus current portion of capital leases.
Operating Working Capital is a supplemental financial measure
that is not required by, or presented in accordance with, US GAAP.
The Company believes operating working capital is helpful in
analyzing the effects on the cash flow generating capability of the
business and as a performance measure for purposes of presentation
in this release. The Company defines operating working capital as
net working capital less taxes less interest.
Innophos is not able to provide a reconciliation of its
expectation for adjusted earnings to 2019 GAAP net income given the
dynamic nature of the strategic value chain repositioning program
expenses and potential Mexico energy charges that may be incurred.
In addition, Innophos is not able to provide a reconciliation of
its 2022 expectation for adjusted EBITDA margin to GAAP net income
due to the number of variables in the projected EBITDA margin for
2022. As a result we are currently unable to quantify accurately
certain amounts that would be required to be included in GAAP net
income for 2019 or 2022 or the individual adjustments for such
reconciliation. In addition, we believe such reconciliation would
imply a degree of precision that would be confusing or misleading
to investors.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190806005189/en/
Investors Mark Feuerbach Innophos 609-366-1204
investor.relations@innophos.com Media Ryan Flaim Sharon
Merrill Associates 617-542-5300 iphs@investorrelations.com
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