Operating income grew sequentially and versus prior year in Performance Chemicals and Fuel Specialties
Oilfield Services continued to deliver strong results completing an excellent year
QGP acquisition closed in the quarter; Excellent fit with Performance Chemicals
GAAP EPS
Total revenues for the fourth quarter were
Results for this quarter include some special items, which are summarized in the table below. Excluding these items, adjusted non-GAAP EPS in the fourth quarter was
EBITDA, income before income taxes and net income excluding special items, and related per-share amounts, are non-GAAP financial measures that are defined and reconciled with GAAP results herein and in the schedules below.
Quarter ended | Quarter ended | ||||||||||||||||
(in millions, except share and per share data) | Income before income taxes | Net income | Diluted EPS | Income before income taxes | Net income | Diluted EPS | |||||||||||
Reported GAAP amounts | $ | 45.3 | $ | 37.8 | $ | 1.51 | $ | 45.2 | $ | 25.5 | $ | 1.02 | |||||
Legacy costs of closed operations | 3.7 | 2.8 | 0.11 | 0.9 | 0.7 | 0.03 | |||||||||||
Amortization of acquired intangible assets | 2.6 | 2.0 | 0.08 | 2.6 | 2.0 | 0.08 | |||||||||||
Foreign currency exchange losses | 2.6 | 2.0 | 0.08 | 2.9 | 1.7 | 0.07 | |||||||||||
Acquisition related costs | 1.3 | 1.0 | 0.04 | - | - | - | |||||||||||
Adjustment of income tax provisions | - | 0.5 | 0.02 | - | - | - | |||||||||||
10.2 | 8.3 | 0.33 | 6.4 | 4.4 | 0.18 | ||||||||||||
Adjusted non-GAAP amounts | $ | 55.5 | $ | 46.1 | $ | 1.84 | $ | 51.6 | $ | 29.9 | $ | 1.20 |
For the full year, total revenues of
Results for the full year include some special items, which are summarized in the table below. Excluding these items, adjusted non-GAAP EPS for the full year was
Year ended | Year ended | ||||||||||||||
(in millions, except share and per share data) | Income before income taxes | Net income | Diluted EPS | Income before income taxes | Net income | Diluted EPS | |||||||||
Reported GAAP amounts | $ | 174.4 | $ | 139.1 | $ | 5.56 | $ | 184.6 | $ | 133.0 | $ | 5.32 | |||
Amortization of acquired intangible assets | 10.5 | 8.0 | 0.32 | 13.0 | 10.3 | 0.41 | |||||||||
Legacy costs of closed operations | 6.1 | 4.6 | 0.18 | 3.5 | 2.8 | 0.11 | |||||||||
Foreign currency exchange (gains)/losses | (3.8 | ) | (2.9 | ) | (0.12 | ) | 6.7 | 4.9 | 0.20 | ||||||
Acquisition related costs | 3.1 | 2.4 | 0.10 | - | - | - | |||||||||
Adjustment of income tax provisions | - | 1.2 | 0.05 | - | - | - | |||||||||
15.9 | 13.3 | 0.53 | 23.2 | 18.0 | 0.72 | ||||||||||
Adjusted non-GAAP amounts | $ | 190.3 | $ | 152.4 | $ | 6.09 | $ | 207.8 | $ | 151.0 | $ | 6.04 |
Commenting on the fourth quarter results,
“This was another very good quarter for
I was very pleased to announce our acquisition of QGP in December. QGP gives us a strong strategic position in
Performance Chemicals achieved double-digit operating income growth over the prior year as margin expansion more than offset the impact of lower sales. In addition, the business continued to deliver sequential operating income growth and margin improvement. While the economic environment remains a challenge, we expect further improvement in this business in 2024 as activity levels recover.
Fuel Specialties achieved double-digit operating income growth in the quarter and gross margins were within our target range of 32 to 35 percent. Adjusting for the
Oilfield Services had another excellent quarter and for the full year, operating income approximately doubled, and operating margins expanded above our 10 percent target. While we expect production chemicals activity to remain at moderate levels in the coming quarters, we plan to pursue further sales growth and margin improvement in our other segments.”
In Performance Chemicals, revenues of
In Fuel Specialties, revenues of
Revenues in Oilfield Services of
Corporate costs of
The full year effective tax rate was 20.2 percent compared to 28.0 percent in 2022. The adjusted effective tax rate was 23.0 percent compared to 27.0 percent last year. The decrease is primarily a consequence of having operations outside of the
For the quarter, cash from operations after capital expenditures was
“Our business teams delivered a strong overall result in the quarter and full year. Despite our expectation for continued economic headwinds in the coming quarters, we enter 2024 with optimism. Our growing pipeline of technology-based organic opportunities will continue to advance in parallel with our integration of the QGP acquisition.
Cash generation was again excellent in the quarter, and our debt-free, net cash position remained over
Use of Non-GAAP Financial Measures
The information presented in this press release includes financial measures that are not calculated or presented in accordance with Generally Accepted Accounting Principles in
About
Forward-Looking Statements
This press release contains certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts included or incorporated herein may constitute forward-looking statements. Such forward-looking statements include statements (covered by words like “expects,” “estimates,” “anticipates,” “may,” “could,” “believes,” “feels,” “plans,” “intends” or similar words or expressions, for example) which relate to earnings, growth potential, operating performance, events or developments that we expect or anticipate will or may occur in the future. Although forward-looking statements are believed by management to be reasonable when made, they are subject to certain risks, uncertainties and assumptions, and our actual performance or results may differ materially from these forward-looking statements. Additional information regarding risks, uncertainties and assumptions relating to
Contacts:
+44-151-355-3611
corbin.barnes@innospecinc.com
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Schedule 1
(in millions, except share and per share data) | Three Months Ended | Twelve Months Ended | ||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||
Net sales | $ | 494.7 | $ | 510.7 | $ | 1,948.8 | $ | 1,963.7 | ||||
Cost of goods sold | (339.0 | ) | (359.1 | ) | (1,357.7 | ) | (1,377.0 | ) | ||||
Gross profit | 155.7 | 151.6 | 591.1 | 586.7 | ||||||||
Operating expenses: | ||||||||||||
Selling, general and administrative | (102.3 | ) | (96.6 | ) | (387.8 | ) | (360.7 | ) | ||||
Research and development | (8.9 | ) | (8.4 | ) | (41.7 | ) | (38.7 | ) | ||||
Total operating expenses | (111.2 | ) | (105.0 | ) | (429.5 | ) | (399.4 | ) | ||||
Operating income | 44.5 | 46.6 | 161.6 | 187.3 | ||||||||
Other (expense)/income, net | (0.7 | ) | (1.4 | ) | 10.5 | (1.6 | ) | |||||
Interest income/(expense), net | 1.5 | - | 2.3 | (1.1 | ) | |||||||
Income before income taxes | 45.3 | 45.2 | 174.4 | 184.6 | ||||||||
Income taxes | (7.5 | ) | (19.7 | ) | (35.3 | ) | (51.6 | ) | ||||
Net income | $ | 37.8 | $ | 25.5 | $ | 139.1 | $ | 133.0 | ||||
Earnings per share: | ||||||||||||
Basic | $ | 1.52 | $ | 1.03 | $ | 5.60 | $ | 5.37 | ||||
Diluted | $ | 1.51 | $ | 1.02 | $ | 5.56 | $ | 5.32 | ||||
Weighted average shares outstanding (in thousands): | ||||||||||||
Basic | 24,867 | 24,766 | 24,851 | 24,787 | ||||||||
Diluted | 25,030 | 24,958 | 25,022 | 24,982 | ||||||||
Schedule 2A
SEGMENTAL ANALYSIS OF RESULTS | Three Months Ended | Twelve Months Ended | ||||||||||
(in millions) | 2023 | 2022 | 2023 | 2022 | ||||||||
Net sales: | ||||||||||||
Performance Chemicals | $ | 137.2 | $ | 143.9 | $ | 561.6 | $ | 639.7 | ||||
Fuel Specialties | 182.1 | 183.3 | 695.9 | 730.2 | ||||||||
Oilfield Services | 175.4 | 183.5 | 691.3 | 593.8 | ||||||||
494.7 | 510.7 | 1,948.8 | 1,963.7 | |||||||||
Gross profit: | ||||||||||||
Performance Chemicals | 29.2 | 26.5 | 105.6 | 150.0 | ||||||||
Fuel Specialties | 59.9 | 50.9 | 215.1 | 221.9 | ||||||||
Oilfield Services | 66.6 | 74.2 | 270.4 | 214.8 | ||||||||
155.7 | 151.6 | 591.1 | 586.7 | |||||||||
Operating income: | ||||||||||||
Performance Chemicals | 18.0 | 15.8 | 54.5 | 95.3 | ||||||||
Fuel Specialties | 32.6 | 26.8 | 109.7 | 121.7 | ||||||||
Oilfield Services | 18.3 | 20.5 | 78.6 | 41.7 | ||||||||
Corporate costs | (24.4 | ) | (16.5 | ) | (81.2 | ) | (71.4 | ) | ||||
Total operating income | $ | 44.5 | $ | 46.6 | $ | 161.6 | $ | 187.3 |
Schedule 2B
NON-GAAP MEASURES | Three Months Ended | Twelve Months Ended | ||||||||||
(in millions) | 2023 | 2022 | 2023 | 2022 | ||||||||
Net income | $ | 37.8 | $ | 25.5 | $ | 139.1 | $ | 133.0 | ||||
Interest (income)/expense, net | (1.5 | ) | - | (2.3 | ) | 1.1 | ||||||
Income taxes | 7.5 | 19.7 | 35.3 | 51.6 | ||||||||
Depreciation and amortization: | ||||||||||||
Performance Chemicals | 4.7 | 4.0 | 17.4 | 19.6 | ||||||||
Fuel Specialties | 1.7 | 1.5 | 6.2 | 6.1 | ||||||||
Oilfield Services | 3.2 | 3.0 | 12.4 | 11.9 | ||||||||
Corporate costs | 0.6 | 0.6 | 2.5 | 2.1 | ||||||||
EBITDA | 54.0 | 54.3 | 210.6 | 225.4 | ||||||||
EBITDA: | ||||||||||||
Performance Chemicals | 22.7 | 19.8 | 71.9 | 114.9 | ||||||||
Fuel Specialties | 34.3 | 28.3 | 115.9 | 127.8 | ||||||||
Oilfield Services | 21.5 | 23.5 | 91.0 | 53.6 | ||||||||
Corporate costs | (23.8 | ) | (15.9 | ) | (78.7 | ) | (69.3 | ) | ||||
54.7 | 55.7 | 200.1 | 227.0 | |||||||||
Other (expense)/income, net | (0.7 | ) | (1.4 | ) | 10.5 | (1.6 | ) | |||||
EBITDA | $ | 54.0 | $ | 54.3 | $ | 210.6 | $ | 225.4 | ||||
EBITDA by segment includes operating income relating to the segments, excluding depreciation and amortization.
Schedule 3
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions) | 2023 | 2022 | ||
Assets | ||||
Current assets: | ||||
Cash and cash equivalents | $ | 203.7 | $ | 147.1 |
Trade and other accounts receivable | 359.8 | 334.6 | ||
Inventories | 300.1 | 373.1 | ||
Prepaid expenses | 18.7 | 14.1 | ||
Prepaid income taxes | 2.8 | 3.3 | ||
Other current assets | 0.6 | 0.4 | ||
Total current assets | 885.7 | 872.6 | ||
Net property, plant and equipment | 268.3 | 220.9 | ||
Operating lease right-of-use assets | 45.1 | 45.3 | ||
399.3 | 358.8 | |||
Other intangible assets | 57.3 | 45.0 | ||
Deferred tax assets | 10.4 | 5.9 | ||
Pension asset | 35.1 | 48.1 | ||
Other non-current assets | 6.2 | 7.1 | ||
Total assets | $ | 1,707.4 | $ | 1,603.7 |
Liabilities and Stockholders’ Equity | ||||
Current liabilities: | ||||
Accounts payable | $ | 163.6 | $ | 165.3 |
Accrued liabilities | 185.9 | 202.9 | ||
Current portion of operating lease liabilities | 13.6 | 13.9 | ||
Current portion of plant closure provisions | 4.6 | 5.3 | ||
Current portion of accrued income taxes | 2.6 | 18.4 | ||
Current portion of unrecognized tax benefits | 1.2 | - | ||
Total current liabilities | 371.5 | 405.8 | ||
Operating lease liabilities, net of current portion | 31.6 | 31.4 | ||
Plant closure provisions, net of current portion | 57.0 | 51.9 | ||
Accrued income taxes, net of current portion | 11.6 | 21.0 | ||
Unrecognized tax benefits, net of current portion | 13.6 | 13.4 | ||
Deferred tax liabilities | 33.5 | 26.2 | ||
Pension liabilities and post-employment benefits | 13.3 | 12.2 | ||
Acquisition-related contingent deferred consideration | 23.4 | - | ||
Other non-current liabilities | 2.3 | 1.4 | ||
Equity | 1,149.6 | 1,040.4 | ||
Total liabilities and equity | $ | 1,707.4 | $ | 1,603.7 |
Schedule 4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Twelve Months Ended | ||||||
(in millions) | 2023 | 2022 | ||||
Cash Flows from Operating Activities | ||||||
Net income | $ | 139.1 | $ | 133.0 | ||
Adjustments to reconcile net income to cash provided by operating activities: | ||||||
Depreciation and amortization | 39.3 | 40.1 | ||||
Deferred taxes | 3.6 | (5.5 | ) | |||
Non-cash movements on defined benefit pension plans | (3.3 | ) | (2.5 | ) | ||
Stock option compensation | 8.0 | 6.7 | ||||
Changes in working capital | 39.3 | (95.2 | ) | |||
Movements in plant closure provisions | 4.0 | 1.1 | ||||
Movements in accrued income taxes | (25.9 | ) | 9.4 | |||
Movements in unrecognized tax benefits | 1.4 | (2.9 | ) | |||
Movements in other assets and liabilities | 1.8 | (2.5 | ) | |||
Net cash provided by operating activities | 207.3 | 81.7 | ||||
Cash Flows from Investing Activities | ||||||
Capital expenditures | (62.1 | ) | (39.6 | ) | ||
Proceeds on disposal of property, plant and equipment | 0.1 | 0.2 | ||||
Business combinations, net of cash acquired | (34.7 | ) | - | |||
Internally developed software | (15.1 | ) | (2.7 | ) | ||
Net cash used in investing activities | (111.8 | ) | (42.1 | ) | ||
Cash Flows from Financing Activities | ||||||
Non-controlling interest | - | 1.8 | ||||
Repayment of acquired term loan | (2.3 | ) | - | |||
Repayment of finance leases | - | (0.1 | ) | |||
Refinancing costs | (1.4 | ) | - | |||
Dividend paid | (35.1 | ) | (31.7 | ) | ||
Issue of treasury stock | 0.9 | 2.2 | ||||
Repurchase of common stock | (1.1 | ) | (5.9 | ) | ||
Net cash used in financing activities | (39.0 | ) | (33.7 | ) | ||
Effect of foreign currency exchange rate changes on cash | 0.1 | (0.6 | ) | |||
Net change in cash and cash equivalents | 56.6 | 5.3 | ||||
Cash and cash equivalents at beginning of year | 147.1 | 141.8 | ||||
Cash and cash equivalents at end of year | $ | 203.7 | $ | 147.1 | ||
Amortization of deferred finance costs of
Source:
2024 GlobeNewswire, Inc., source