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Innospec (IOSP) Q2 Earnings Miss Estimates, Sales Up Y/Y
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Innospec Inc. (IOSP - Free Report) delivered a profit of $21.8 million or 89 cents per share in second-quarter 2018, down from $26.1 million or $1.06 in the year-ago quarter.
Barring one-time items, earnings were $1.00, which missed the Zacks Consensus Estimate of $1.11.
The chemical maker’s revenues increased 10% year over year to $358.1 million in the quarter. The top line was driven by sales gains in core business segments.
Revenues in the Fuel Specialties segment went up 11% year over year to $134.2 million in the reported quarter on the back of increased volumes and positive currency impact, which offset an unfavorable price/mix impact. Operating income was $23.7 million, flat year over year.
The Performance Chemicals unit raked in sales of $118.9 million, up 13% year over year. Higher volumes driven by good demand, new product launches along with positive currency impact contributed to growth. Operating income rose 49% to $9.7 million in the quarter.
Revenues in the Oilfield Services division improved 25% to $95 million, boosted by increased customer activity and higher volumes. The segment recorded an operating income of $4.1 million in the quarter, up 11% year over year.
Revenues in the Octane Additives division fell to $10 million from $24 million in the year-ago quarter. The division logged an operating profit of $5.2 million compared with $12.8 million in the prior-year quarter.
Balance Sheet
As of Jun 30, 2018, Innospec had cash and cash equivalents of $66 million, up around 35.2% year over year. Total debt was $228 million, down from $254.9 million in the year-ago quarter.
In the second quarter, Innospec distributed $10.7 million to shareholders for semi-annual dividend.
Outlook
Innospec stated that the Octane Additives business completed a small order in the second quarter but further orders are expected later this year. Moreover, the company’s project to enter the Drag Reducer market for Fuel Specialties and Oilfield Services has progressed well.
It is on schedule to start customer trials on the Texas site in fourth quarter, despite recent unfavorable weather conditions. The company also expects cash generation to improve in the second half of 2018.
Price Performance
Shares of Innospec have gained 8.6% over the past three months compared with the industry’s 3.1% rise.
KMG Chemicals has an expected long-term earnings growth rate of 28.5%. Its shares have returned 42.5% in a year.
CF Industries has an expected long-term earnings growth rate of 6%. Its shares have rallied 52.8% in a year.
Celanese has an expected long-term earnings growth rate of 10%. Its shares have gained 19.6% in a year.
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Innospec (IOSP) Q2 Earnings Miss Estimates, Sales Up Y/Y
Innospec Inc. (IOSP - Free Report) delivered a profit of $21.8 million or 89 cents per share in second-quarter 2018, down from $26.1 million or $1.06 in the year-ago quarter.
Barring one-time items, earnings were $1.00, which missed the Zacks Consensus Estimate of $1.11.
The chemical maker’s revenues increased 10% year over year to $358.1 million in the quarter. The top line was driven by sales gains in core business segments.
Innospec Inc. Price, Consensus and EPS Surprise
Innospec Inc. Price, Consensus and EPS Surprise | Innospec Inc. Quote
Segment Highlights
Revenues in the Fuel Specialties segment went up 11% year over year to $134.2 million in the reported quarter on the back of increased volumes and positive currency impact, which offset an unfavorable price/mix impact. Operating income was $23.7 million, flat year over year.
The Performance Chemicals unit raked in sales of $118.9 million, up 13% year over year. Higher volumes driven by good demand, new product launches along with positive currency impact contributed to growth. Operating income rose 49% to $9.7 million in the quarter.
Revenues in the Oilfield Services division improved 25% to $95 million, boosted by increased customer activity and higher volumes. The segment recorded an operating income of $4.1 million in the quarter, up 11% year over year.
Revenues in the Octane Additives division fell to $10 million from $24 million in the year-ago quarter. The division logged an operating profit of $5.2 million compared with $12.8 million in the prior-year quarter.
Balance Sheet
As of Jun 30, 2018, Innospec had cash and cash equivalents of $66 million, up around 35.2% year over year. Total debt was $228 million, down from $254.9 million in the year-ago quarter.
In the second quarter, Innospec distributed $10.7 million to shareholders for semi-annual dividend.
Outlook
Innospec stated that the Octane Additives business completed a small order in the second quarter but further orders are expected later this year. Moreover, the company’s project to enter the Drag Reducer market for Fuel Specialties and Oilfield Services has progressed well.
It is on schedule to start customer trials on the Texas site in fourth quarter, despite recent unfavorable weather conditions. The company also expects cash generation to improve in the second half of 2018.
Price Performance
Shares of Innospec have gained 8.6% over the past three months compared with the industry’s 3.1% rise.
Zacks Rank & Key Picks
Innospec currently has a Zacks Rank #2 (Buy).
A few other top-ranked stocks in the basic materials space are KMG Chemicals, Inc , CF Industries Holdings, Inc. (CF - Free Report) and Celanese Corporation (CE - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
KMG Chemicals has an expected long-term earnings growth rate of 28.5%. Its shares have returned 42.5% in a year.
CF Industries has an expected long-term earnings growth rate of 6%. Its shares have rallied 52.8% in a year.
Celanese has an expected long-term earnings growth rate of 10%. Its shares have gained 19.6% in a year.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>