IOSP - Earnings call transcript Q2 2022

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David Jones

[Call starts abruptly] This is David Jones. I'm Innospec's General Counsel and Chief Compliance Officer. Late yesterday, we reported our financial results for the quarter ended June 30, 2022. The earnings release and this presentation are posted on the company's website.

During this call we will make forward-looking statements, which are predictions, projections and other statements about future events. results on and and actual uncertainties differ from based subject that results are statements. materially risks forward-looking to that anticipated statements current assumptions expectations are to These by implied could cause The risks Innospec's and filings other detailed the XX-K, SEC. XX-Qs with uncertainties and are in these see Please for SEC documents. or site other the site Innospec's and our discussion measures. today In we've financial also included non-GAAP our directly to GAAP financial in the contained most comparable earnings reconciliation A is release. measure or considered The those superior non-GAAP for measures a financial GAAP. to be in as with not accordance prepared substitute should They're of results. included items addition impact investors additional and items to these the to aid understanding of financial in company's performance on events have the me Officer Financial With and Officer. are Cleminson, President and Williams, Chief and Chief from Executive today Executive Innospec Patrick Ian Vice President I'll you, to that, with Patrick. over it turn And

Patrick Williams

welcome Conference increases Thank quarter good improvements in businesses. and Innospec. Second to everyone was all This you, another drove Innospec's David sales mix Call. and very Quarter and income double-digit Volume, price for operating in XXXX

support program. margin operating demand billion organic weaker in surpassed of income Care most Our year up year our have and manufacturing remained sales all $XX XX%. and year we more ongoing Personal European Operating as we our Performance continue current on growth capacity than our offset under smaller partner To Care and the EBITDA imbalances customers. last was a end improvement Homecare. these through reputation to prior in build margin, Personal demand investment supply income Chemicals global and extremely XX% reliable to are drove resourceful over grew two chain like and over adding consistent and markets. the teams segments

Center, at further purchase land, foot R&D opened XX,XXX for U.S. square delivered the performance Specialties and target operating however, end which Carolina. our strong markets of To long-term margin technical recover. North adjacent Performance jet fully last over in last segments. a across quarter facility Chemicals of an quarter, lower normalizes Fuel our services positioned comparative we as income remained closed in significant our this we XX% on to manufacturing fuel inflation Global higher we addition, primary chemicals our all the margins supports growth, end increase week improvement Gross In business and new expect Technology like additional range year.

versus have sustainability income and and over Oilfield potential application recovering global We have of nonfuel aligned business end applications introducing these Chemical fuel, Despite segment completions continue internal Production technologies like operating growth are approximately expectations. marine new to several double-digit delivered Services low-sulfur success innovative the markets. year. our opportunities have These into objectives. Several continued with in fuels segments is performance growth in still renewable our years. past below our overall exciting doubled and areas the growth and prior our

sequential in coming expect large income quarters. We operating the and expansion to continue

turn will that, detail will including will I Ian the financial I call some then Cleminson, Ian Now, will with comments over take your in more review who after I return results and our questions. to

Ian Cleminson

Patrick. Thanks,

a million income the year margin in was $XX.X million ago. slightly to to last for X.X from by from $XXX.X for decreased compared the net Overall, year points last $XX.X revenues company's EBITDA XX.X%. for million presentation, X Slide second quarter the were a year to gross quarter the year XX% quarter ago. to and Turning $XX.X million, total percentage million million $XX.X compared was a the $XXX.X increase

which reported negative $X.XX items the share including share. net $X.XX Our included which share. of of special per GAAP year impact special our a quarter items, per share effect were second $X.XX, decreased A of per we earnings per by earnings GAAP $X.XX ago from earnings

$X.XX, EPS a for in items years, special compared adjusted to our year quarter ago. $X.XX Excluding both the was

up positive X Slide last grew in of year's impact in of benefiting X.X second from XX.X% the with Performance revenues business. million. adverse $XXX.X year percentage XX% compared X%. a currency offsetting by in of in Personal to million. up $XXX mix Volumes for XXXX Operating increased quarter XX.X% X% from Chemicals XX% points, to same were Turning margins price the margin $XX.X quarter higher million, XX% the were to from income last Gross Care an growth

than on the in year effect of Volumes X% negative for there a the gross and reported were a X%. our XX%, million, XX% Fuel relatively to revenues Specialties Fuel $XX.X of expected second the strong moderates. Slide and inflation from X.X ago. grew quarter will $XXX.X until million. price a X, offsetting Moving by quarter last $XXX.X increased currency mix million was year to positive last a XX.X% percentage at with of lower income end range margins Specialties year of impact Operating higher points XX% below remain

million, $XXX.X from of ago. million Moving from broadly and was a last Gross XX, the $XX.X a of million for year in quarter services million $X.X second the same up onto margins XX.X% Slide we're $X.X revenues income in operating the quarter year. last XX% year were as oilfield improvement

the higher XX, million the by increased and XX.X% rates Turning personnel compensation to performance The related rate effective XX.X% tax compared was to costs compared corporate quarter accruals. for which ago, XX.X% change were $XX.X the a for was tax. enacted last adjusted to rate year Kingdom Slide deferred due XX.X% impacting mainly for included effective share-based to compared expenses, a tax quarter United year ago, million in $XX.X related The year. to quarter driven tax the

XX, cash capital, on expenditures cash million capital working in resulted Slide outflow was $X.X a million. for $X Moving before which outflow by cash an generation $XX.X impacted million operating was of quarter for the to

no Patrick it XX final in and to I'll debt Innospec over As of and June some and had million now, cash turn cash back for equivalents comments. $XX.X

Patrick Williams

customer will not Ian. distract our service This uncertainty exceptional quarters. supply continue chain Thanks, product Global operations, support. and safe coming expected in focus and to economic from innovation, with is the

contracts to operating with feel slower signs potential with begin continues in chemistries recent over the volumes some products. manage income as which we performance steady to seeing it been place capacity business, could see to addition our during has periods Specialties the Coming out into are have income Oilfield levels historically strong are come a multi-year collaboration business significant due customers' close Chemicals Performance critical actions our by pre-COVID XX% target to returning with of supported term. customers. all services we moderate drive online. over cost businesses. Care our We that quarter, that across our Personal medium of Fuel to in operating a parts our demand Although we sold price third growth they relatively economic continue

shareholders balance $XX.X us growth quarter further of million with we semiannual sheet M&A. our repurchases share $X.X organic Despite for near any believe and million return continue and dividend to and dividend positions our This we to strong economic repurchases. funding priorities while our value share volatility, investment

call Now, the will and Ian your turn I and take questions. I to operator the will over

Operator

comes [Operator you. Mike first Seaport we're from our Thank the it Now Partners. Instructions] Research Harrison going from take question of line to and

your question. line open, Your please is ask

Mike Harrison

quarter. good Hi, strong and a congratulations morning on

Patrick Williams

Thanks, Mike.

Mike Harrison

are business be you're more seeing Performance wondering that are seeing could where if seeing that Chemicals some might and you are trends in Europe Fuel you pockets the you was both resilient? pockets in and Specialties, through I that walk where your softening

Patrick Williams

seeing area. that's personal still The In seeing in it's Care the Europe, strong Mike, Patrick. Europe care in weaknesses we're are we're globally. strictly that Home

the in Now and a smaller part same I seeing we're think we're of in Fuel that still seeing therefore, region business our significant growth Specialties.

South We but and due have Europe, seeing overall, in growth little we're COVID still It's due States strong and Asian growth a to shut down nice still really and some countries seeing good really the growth slow America. markets. United of we're in of our ASPAC most to strong demand the still in

Mike Harrison

of to is Europe. might now And that's you energy this might in the then, rationing in about some terms have shortages maybe asked be I maybe lot broadly, natural companies talk a facilities or question more gas right for you Can how ask that which potential of impacted of have and as believe would relates is Fuel being is economy having on pretty happens products Specialties in to that of essential think think but I Germany Europe, facility in be impacted, by ethylene a the it do I you those to there guess you I pipeline. What function. reliant that being and

in to higher So position if expect be going be to rationing a the priority list would there on? you be on were some

Patrick Williams

we've run our Europe. plans Mike, plants so all our of in contingency on

area. ethylene that was plant shortage in softened We a one, in for We could if you it sits manufacturer steam, severe off industrial run quite a that just line sits some that mentioned two time but there gas have facility. has natural plants major

the B or would other is us where that Castiglione same The plants of A can inventory we to diversified our products. require either plant to react increase one in other move

as have planned when of So, and in the our about for we a thing basis just on gas. plan to XX% we on it both those to case a, good our plants cut XX% goes natural business ran contingency

spot. think good we we're a in So

think pretty to to what raw we're is a in can't we in good can't happens happens but our we materials what sitting and Now what control we consumer, the coming position. plants we control control can

Mike Harrison

of the you're Carolina, current the All million for to future that the on spending you currently. that it Chemicals right. projects North $XX And that beyond additional programs then, suggests facility about land vision in a ask wanted acquired in Performance you capital have

So you're or add scope be can to? and product you capabilities help what the looking or future Carolina maybe additional of that going to technologies North in frame-up us facility to lines

Patrick Williams

free, to add strategy, would would increases as than if well we on market. Mike, which we're sometime gives right if to the staying it within use But roads It expand be to right gives next that and million in next made two acreage. ability It ability stays us on to at reactors, the years. assume the years area expand at and -- over ability the add we're that really you'll more needed, where us us us It the of that in our our Yes. see $XX free focus are expansion, we gives and facility as gives the I as strategy XX addition to free, when that and us and sulfate we enough now. will expanding strategy of offices be the just grow it dioxin the business nitrous contiguous current strategy more five in It now.

Mike Harrison

half. of flowing are as pretty is in maybe Performance capacity this you Chemicals play sounds the are margin and second right, Performance the think for good. And question Can cost improvement then, on additional looks impact companies about gross the now. seeing fixed we on All the comment gross costs second margin margin how performance some how and you're last me in right many half might there good, not and out performance price Chemicals related to your in showing

Ian Cleminson

is acquisition Mike. question, good now very our right that's That's in particularly for point that the very get major range on really improvement. we added what's we really them to percentage Chemicals that margins and margin X performance back as X, that could just our our year and mix XX lot that a you first we sales and were of What to for is number that worth good probably to and earlier when be add with back pushing higher, we're to the XX% between the were of driving now, We it's Right in said on. sort gross gross probably knew remainder strong since gross business, gross XXXX us, of demand going X, worked margins XX% chemicals, we volume sort script alluding if this somewhere only seeing think to and is looking hard we've did Performance which that in go percentage XX% we'd expect earlier the the range. points and additional that's margins in we've of years a help I

Now on pricing is as customer pretty is from volume, much set demand in here we certainly sticking, here it's additional incremental good. but be going to

XX% year this in pretty gross we're XX% the to solid looking that for of margin So range. rest

Mike Harrison

some that I And the input is last of on Are cost. your of rate piece some the or of least in moderation any inflation seeing at stabilization costs? signs guess in you of

Ian Cleminson

in some think So, Performance the end Chemicals, specifically two. the I see about three, are back back towards in thought of to starting I just quarter quarter moderation the we

any the see quarter what in and it's see some to three in oilfield. Let's released Fuel didn't but quarter quarter in or three and we're that beyond. in same happens two hopeful we we'll quarter far so start in four Specialties two, quarter see

us for as price way see there, created through inventories difficult and know going that but is additional you job increases that through lots into out still supply continued it's with our great we're we're working through our So pretty to to doing being a and customers, QX. have of

Mike Harrison

Thanks very right. All much.

Ian Cleminson

Thanks, Mike.

Operator

you. Thank

to CJS Securities. Now question. next Please standby we're question from Jon and our comes going Tanwanteng the line from our take next of

line open, Your your is please question. ask

Stefanos Crist

This Stefanos Crist Jon, in our for questions. Good is morning. taking for thanks calling

Patrick Williams

Good morning, Stefanos.

Stefanos Crist

you just in the that home and that to detail on us forward. business consumer you're little just trend Could how more seeing demand sentiment going Good. relates you and and where just see give a what care

Patrick Williams

it concern. in business, driven. Yes. little not is the to We it consumer off We and Europe don't Again, is positioned a business think long-term, a as demand it's a big going well that mostly little that of a portion is we said, it's and it's it market smaller be being comes bit.

products, it's a We off have It's and it's right Stefano. way markets now strictly bit. issue the up just just not the demand there, a little

Stefanos Crist

just Got you the in what possible you. seeing on time any potential maybe M&A and Thank a M&A? you. in And here, one quick targets and further any pipeline are

Patrick Williams

to start seeing strictly multiples retract little just due Yes. a rates. to interest I mean, you're bit

X a market are now think careful. to in We've once be that of it's potentially find organic and will and market need table. We're being gives take but leveraged from looking than you, our walked now at XX recession we that We've in do a we're we company who deal have stop concerning and for that a we're lot more a way, I looking to people and tell highly just opportunity lot. the something over which next got that in deals. for. to very an interest it I at we're I I really enough could a forward we us this cautious months are us, right more things volatile that pop-up some as off so found will are think let to deal growth haven't right But something strategically, think controlled we just the There move looking potentially that hope. and of just but away now, a

Stefanos Crist

so much my Thanks taking questions. great. Sounds for

Patrick Williams

Thank you.

Operator

closing Thank you. no There back our and remarks. to to are I Williams would hand questions like further Patrick for speaker

Patrick Williams

support. and your thanks for all our for shareholders, us to joining and you Thank all employees today customers Innospec interest and

you further please about in If results being give XXXX or questions our today Innospec us discuss third have matters to a look call. discussed We November. up a any great to forward with day. you Have quarter again

Innospec (IOSP) 6 Aug 222022 Q2 Earnings call transcript