IOSP - Earnings call transcript Q1 2024

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Operator

Good day, and thank you for standing by. Welcome to the Innospec's First Quarter 2024 Earnings Release and Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your first speaker today, David Jones, General Counsel and Chief Compliance Officer. Please go ahead.

David Jones

you. Thank First Innospec's Earnings Quarter to Call. Welcome release posted on earnings for the are presentation this and the quarter The company's website.

be During about statements make and expectations cause this forward-looking statements, that and are actual that today, superior also the earnings which will as to call, subject could accordance the financial the discussions are items and to assumptions other our documents. In understanding future a A based of comparable investor are statements They is those These events. on current results uncertainties measures. with to we measure risks non-GAAP predictions additional to Please or in to see release. of and reconciliation and filings risks and The as The such forward-looking had differ statements. related substitute other and to site materially most GAAP financial from SEC in and are the considered addition the GAAP. Innospec's detailed Innospec's directly anticipated impact we've items not with in included these prepared XX-Qs results. non-GAAP results SEC. in included are implied financial by on for XX-K, financial aid events these uncertainties site contained company's performance for the should measures

Innospec Financial Officer. With and Chief Williams, and Chief Executive from Patrick me Executive today Cleminson, President are President Officer; and Vice Ian

I'll it Patrick. turn over that, with you, And to

Patrick Williams

margin Conference operating delivered than First double-digit for strong XXXX drove across as over Innospec's income Thank growth our start performance to Chemicals Excellent on sequential Call. last am doubled income you, XXXX. all pleased operating Performance target David, welcome, and year. more report improvement and to Quarter I our to a everyone, improvement. businesses

can strong their XXXX. in we growth improved patterns, cautiously organic this Supported disciplined and our by in improvement our remain optimistic have pipeline, that technology key maintain are in end markets. we customers volumes While order

accretive. immediately as in is line with In was recent performing acquisition QGP our addition, expectations

Fuel remains operating levels and income run within year range. and rates focus set Specialties margins another with over margins operating continued of prior Gross Our the on steady progress XXXX. targeted returning our achieved consistent were and to of improved year full results.

strong opportunities Our both product team regional fuel income a and build in continued market Oilfield Services operating growth of nonfuel and pipeline prior growth the expansion margin to year. applications. has achieved over and

in quarter by offset more Softer segments. further the other activity our production than improvement chemicals was in

production operating In the substantially second lower in quarter, will consequently, income expect we chemicals And than be headwinds significant quarters. activity. previous

run quarter targeted income will $XX $XX the We million our of second the to are operating optimistic return to year. cautiously million rates per that range in half

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

Ian Cleminson

and good Thanks, morning, Patrick, everyone.

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

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

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

X% and from $XXX.X QGP last up to million. were acquisition price X%, XX% mix growth for due an first X% XX% sales the on offset X. million, currency were Turning percentage by from XX.X% the volume Revenues of of X.X of $XX.X impact of million Growth of to compared selling Chemicals to Slide last $XXX.X approximately XX.X% in adverse raw year's Performance quarter attributable Operating volumes. in Gross year. to doubled margins through and lower production of material increased benefiting flowing in points increased XXXX, prices. income costs the mainly to same positive quarter

was million offset our to positive in inventory a million The year margins ago, avgas Slide $XX.X a was income of down XX.X%. impact in to Moving an million XX.X% on sales X% of currency and for price/mix first were and of in points X%. Fuel the X.X Brazil X. the million from Specialties business. a year $XX.X X% $XXX.X same income the quarter in for volumes were year above timing adverse XX.X%, of $XXX.X gross ago. decrease X% of Operating million, by were Adjusting Revenues year. was margins partially operating write-off year-on-year a quarter adjusted in up were percentage X% in operating from Gross due reduction the $X.X mostly last income the prior reported

ago. Moving in production quarter percentage $XXX.X quarter XX.X% due first mix. on X% the we decreased our points expect be slowdown last weaker from to to sales last business. to year's in income $XX.X Oilfield million the million, a chemicals lower a from significantly from in X% XX. million $XX.X Gross of second income Services million year. Slide year operating the down X.X $XXX.X for increased XX.X% Revenues In Operating of on X were margins quarter,

operating million be to in $XX the We $X range. million will expect income

year. half optimistic the that to will of However, range income our return this rates cautiously $XX run million $XX we million to in are quarter operating second per

were ago, the higher Turning rate year and IT of quarter ago. a to mainly million timing to a due million performance-related for expenditure compared $XX.X the to year the compared Slide effective The XX.X% and growth quarter with tax Corporate was XX.X% $XX.X remuneration. XX. costs for

$XX.X on million. operating of the expenditures was quarter cash cash for inflow with before XX. Slide Free million $XX.X to Moving capital excellent of generation an

and $XXX.X March debt. XX, Innospec cash cash of and As million in no have equivalents

for turn it Patrick to I'll some And final comments. over back now

Patrick Williams

remain partnership I growth Ian. very our with term. with to performance quarter, delivered through medium of pleased long acquisition. excellent technical the all the customers, businesses the strong our and customer innovation placed am for well In over new service in we the including Thanks,

quarter, dividend our to share. our on This maintaining for to to $X.XX increase Board in of XX% deliver continue approved and M&A, semiannual buybacks. of net per value $XXX returning our organic flexibility we dividend a cash investment With shareholders while further over million, growth, record

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

Operator

your Seaport first question And Harrison, line Mike Partners. of Instructions] Research [Operator from comes the

Michael Harrison

could on what you're the was of in bit detail provide a strong on I that year. additional little start Congrats to a Chemicals seeing business. that Performance hoping you

mentioned destocking time curious, patterns that orders? some disciplined You going there's as mean some trends of some kind Maybe into lingering in February, in frame? you remaining into lines. Just terms of product help customers in seeing understand order on look that still effects that at what and us been are their April you've does March,

Patrick Williams

still positive We're very Mike. trends. Yes, seeing

the looks year, behind to we're into continue. date. some the We're strong application But put we been very overall the Performance by see destocking finally and instance, second back QX We're if globally, agriculture. feeling home strong to come we're see by order moving personal market et we'll throughout uptick, was I us starting business, Chemicals cetera, patterns And an seeing has believe you destocking care, care, we're uptick seeing coming for think normalcy. i.e., to quarter. the like just forward. look that at

Michael Harrison

that's that, mostly And the maybe just mix, affecting like you see in pricing. that's past, materials in had price/mix I you stabilization just Chemicals. might mix where sounded terms expect I mix. there to are believe number said ag price saying some you in weighing a that's soft, that if in when that also of is Maybe it Performance more understand in but Chemicals, and little that and color would were number raw And Performance lower on

Ian Cleminson

Yes, comment. a year-over-year Mike, was that

we lower there. bit the of still to in seeing raw So material lines. it through like not There's where a revenue now mix is to Ag costs little starting to be. are flow we'd much

personal home in we're to to main alluded And business continuing seeing expand. care, we're Patrick great care, sequentially, see the growth volume As our year-over-year. business

to materials raw stabilize. expect we So

year. the the the of good sort QX for rest expect out into So we in and of shape that going flatten year. throughout of price/mix the to we're But rest

Michael Harrison

first I the said Oilfield the guess, in last on more question, The But is can't annualize maybe full But was All some business. the for right. my you about understand QX $X annualized what And I I hoping get QX provided you that you the consensus in quarter, on just year number. broad outlook. EPS type just to that given give I know us commentary thoughts could you $X.XX, a would I number Oilfield.

year. rest the modeling of mind us maybe should just help keeping the that level So the be for in on some set assumptions we of

Ian Cleminson

Mike, me that take let Yes, one.

to obviously, income Oilfield, the million we've in So $XX $X guided million earlier a operating quarter. comments to

Our expectation in QX, why today we income QX can't that get that. operating $XX no to million is reason sit million $XX here There's into as that we range. back we that and do

sort in Oilfield. that the full in operating So $XX that of year $XX broadly us to million income puts for million range

Patrick Williams

seeing the QX. But QX put additional as for an Ian well. QX, I color, numbers we potential, again, let's you've stick is to part just that some in Mike, to the start there said, give of latter think, forth orders as

Operator

King CL comes Associates. question from Instructions] & the line [Operator of next Silver from And David your

David Silver

I'd line between to of out disparity guess, the start I'm in curious, a just the like Oilfield, gross just how performed versus I clarification, there's a income. operating with kind but margin

there of a lower but but on curious, margins profit talked gross about income. something you increase was on Just line, year-over-year the operating

Or a the the don't in what quarter that X segment kind I lines that something kind you directions. those year? X is So phenomenon? And financials Or going persist characterize the of of on would between how is kind will just of opposite through that profit? know, that gross

Ian Cleminson

what here is base. same in our rest the production off in we've that Yes. the extremely our to execute looking but slowdown continue business chemicals quarter, of well businesses David, a cost had the we're at

to higher. income the and revenues, So year-over-year we've grow been helped maintain the what's costs, able operating that's become

attract business work. chemicals lot production of does service-intensive Our a

high So that cost. a is

So of as chemicals bit SAR line. a well. dropped And rise we've SAR as little a the back, production little just bit line comes see you'll our that business

we're results. unusual, well is So outside with of pleased and nothing the the production business just chemicals, doing

David Silver

I it, over read when No. of to I think couple had it. I about look and a times admit, at

you clarifying So thank that. for

XX% margin is getting Specialties to targeted of On the is side, there pickup know, kind that I Fuel the range. don't to XX% back

of Just questions couple a about that.

markets end So say margin to that maybe is is you return product markets some improvement, -- more the kind improvement quarter or that say fuel Or related returning normal? aviation more of maybe the would of the this margin to the would different is to tied recent you lines? margin jet that improvement

Patrick Williams

the end different lower steady it's have quarter. job. prices We bit No, marketplace, the didn't and materials, set jet years get be increased tends lot a ago fuel everything. little It's really group a of the of consistent a has good And lumpy. volumes. in It a these done in plan It's a tackling, markets, David. margins and up to to we've blocking raw

So well. see as there as even maybe we we uptick potentially should avgas, a see increase an in low margin

David Silver

kind mean, Okay. I'm Specialties definitely promising out also portfolio. the in and opportunities. you in did fumbling growth out you've Fuel or the kind cetera, X for call a stationary like what more oceangoing and the release. along would sorry, I'm the led with with call different power, of the I I'm with number that a of you but call Specialties you end additives seemed of in ones multiple markets during -- opportunities sorry, Fuel of And years, pages. other several my comment And press et across release, But new press Which right that as last -- more, it of the now then those over vessel some out sticking number initiatives, launched in to

Patrick Williams

Dave. Yes,

I think a it's combination GDI. and IMO really products the of

uptake. of the was starting We've that's been And that see and would the a to hope for direct the start preaching we're nations, And at that. that a injection European some legs, time. they're product. nice quite use it been you getting finally starting gasoline some If lot Eastern look to

off, in applications taken fuels of a taken off GDI's outside had quarter good well. So as IMO's

of. fuels we've advantage see business in to So to tailwinds got this some take we in general, continue that nice

David Silver

Very mind, don't on on in Performance contribution. the and Chemicals good. One more, you QGP if particular,

I above talk growth. you sales of the out about call did you So X% wondering could if was that trend right as increase on kind kind or trend. maybe of

expectations? contingent from for it say, And of maybe case, kind acquisition. I that a the the If think you relate performing if it's adjustments guess, expectations, that, for revenue framing mind let's kind asset? original related Just from earnout the that's to? you mean, QGP about that XX we to I'm was to And a Just incremental generation charge above with how at mean, months charge, what take of the wouldn't your related means and that does think maximum to you contribution did the And overall first maybe contingent consideration I contingent about? associated correctly, adjustment implications that qualitatively I secondly, is that I that for small the if talking took of then interpreting should consideration or there consideration.

Ian Cleminson

David. Sure,

business supply What's the work really quarter performed track with opportunity in confident is but a how terms that's well. the lots see going an for exactly going on across to a together and see our little integration behind we've in us we And made finance, chain that, and on growth, that that The is it. perspective. operating acquisition. and very bit expected exactly real us revenue lot performance is The are there's a bring So going we of that really the that going people are awful our of to income pleasing all integration fantastic. But take some manufacturing, sales, time of we great of from business in our QGP's first to forward.

next through that can think year, move we accelerate into As we growth. the year we

everything track, which on is great. here, back is So sit as we

absolutely and expectations from In terms right over transitions earnout change That's our is we'll contingent is There's going business consideration, changes that right the to of quarter-to-quarter. earnout accretion the through. the expected. like, is good. X now, But everything years, on now. here to the next to that look no And going that charge on right as looking track the of will keep what updated X you obviously,

Operator

There are will Williams. the no hand now further Patrick to back questions. call I

Patrick Williams

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

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

Operator

This concludes participating. conference for call. you. Thank today's Thank you

You may now disconnect.

Innospec (IOSP) 10 May 242024 Q1 Earnings call transcript