Strong end to the year – GAAP EPS of
$0.90 and adjusted non-GAAP EPS of $1.09
Innospec Inc. (NASDAQ:IOSP) today announced its financial results
for the fourth quarter and full year ended December 31, 2016.
Total net sales for the fourth quarter were
$237.8 million, a 3 percent decrease from $246.0 million in the
corresponding period last year.
Net income for the quarter was $22.1 million, or
$0.90 per diluted share, compared with $31.5 million, or $1.28 per
diluted share, a year ago. Adjusted EBITDA (earnings before
interest, taxes, depreciation, amortization and fair value
adjustments) for the quarter was $36.3 million compared to $39.8
million a year ago.
Results for this quarter include some special
items, which are summarized in the table below. Excluding
these items, adjusted non-GAAP EPS (earnings per share) in the
fourth quarter was $1.09 per diluted share, compared to $1.24 per
diluted share a year ago. Innospec closed the quarter with
net debt of $171.4 million. The Company paid a semi-annual
dividend of $0.34 per common share and completed the acquisition of
the Huntsman business for approximately $200 million in the
quarter.
Innospec continued to generate cash and, during
the quarter operating cash inflows were $17.7 million before
capital expenditures of $4.3 million.
Adjusted EBITDA 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 December 31, 2016 |
|
|
Quarter ended December 31, 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions,
except share and per share data) |
|
Income beforeincome
taxes |
|
|
NetIncome |
|
|
Diluted EPS |
|
|
Income beforeincome taxes |
|
|
Netincome |
|
|
Diluted EPS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported GAAP
amounts |
$ |
29.0 |
|
|
$ |
22.1 |
|
|
$ |
0.90 |
|
|
$ |
35.2 |
|
|
$ |
31.5 |
|
|
$ |
1.28 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
acquired intangible assets |
|
4.3 |
|
|
|
3.3 |
|
|
|
0.13 |
|
|
|
4.3 |
|
|
|
3.4 |
|
|
|
0.14 |
|
Adjustment to fair
value of contingent consideration |
|
(3.1 |
) |
|
|
(1.9 |
) |
|
|
(0.08 |
) |
|
|
(9.1 |
) |
|
|
(5.6 |
) |
|
|
(0.23 |
) |
Foreign currency
exchange losses/(gains) |
|
2.3 |
|
|
|
1.8 |
|
|
|
0.07 |
|
|
|
(2.0 |
) |
|
|
(1.5 |
) |
|
|
(0.06 |
) |
Acquisition-related
costs |
|
1.7 |
|
|
|
1.7 |
|
|
|
0.07 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Fair value acquisition
accounting |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
3.7 |
|
|
|
2.4 |
|
|
|
0.10 |
|
Adjustment of income
tax provisions |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
0.3 |
|
|
|
0.3 |
|
|
|
0.01 |
|
|
|
5.2 |
|
|
|
4.9 |
|
|
|
0.19 |
|
|
|
(2.8 |
) |
|
|
(1.0 |
) |
|
|
(0.04 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
non-GAAP amounts |
$ |
34.2 |
|
|
$ |
27.0 |
|
|
$ |
1.09 |
|
|
$ |
32.4 |
|
|
$ |
30.5 |
|
|
$ |
1.24 |
|
Commenting on the results, Patrick S. Williams,
President and Chief Executive Officer, said,
“Innospec has ended the year as we expected with
a strong quarter, with all of our strategic businesses delivering
at or above expectations. Excluding Octane Additives, sales were up
4 percent on the same quarter last year. Margins remain strong with
good cost control, helping us deliver an excellent underlying
adjusted EPS of $1.09 for the quarter.”
“Fuel Specialties delivered volume growth of 1
percent, although we saw some adverse impacts from price/mix and
foreign exchange. Market conditions continue to be tough in some
regions, but margins remain above expectations, with a strong
contribution from our aviation gasoline products in the
quarter. We have seen additional customer wins in all
regions, making us feel confident entering 2017.”
“Performance Chemicals continued its excellent
track record of technology-driven growth. Increased sales of
established products were augmented by further new product launches
in all regions. We also successfully completed the acquisition of
the Huntsman business on December 30, 2016. The integration is
proceeding to plan and importantly, customer reaction has been very
positive.”
“As we expected, Oilfield Services continued its
recovery as we delivered our fourth successive quarter of
sequential improvement with the business returning to profit. The
improvement and relative stability of crude oil and natural gas
prices is underpinning our customers’ investment programs, and
activity levels have shown a marked increase. There is still a long
way to go to get back to 2014-2015 levels, but customer confidence
is better than it has been for some time.”
“As anticipated, Octane Additives had a quiet
quarter, although we do expect new orders starting again late in
the first quarter or early in the second quarter of 2017.”
For the full year, total revenues of $883.4
million decreased 13 percent from $1.0 billion in 2015. Net
income for 2016 was $81.3 million, or $3.33 per diluted share,
compared to $119.5 million, or $4.86 per diluted share, a year
ago. Adjusted EBITDA for the year was $134.6 million, down 12
percent from $153.3 million in 2015. Special items decreased
net income for the full year by $11.8 million, or $0.47 per diluted
share; in 2015, similar items increased net income by $12.4
million, or $0.50 per diluted share.
|
|
Year ended December 31, 2016 |
|
|
Year ended December 31, 2015 |
(in millions,
except share and per share data) |
|
Income beforeincome
taxes |
|
|
NetIncome |
|
|
Diluted EPS |
|
|
Income beforeincome taxes |
|
|
Netincome |
|
|
Diluted EPS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported GAAP
amounts |
$ |
103.1 |
|
|
$ |
81.3 |
|
|
$ |
3.33 |
|
|
$ |
152.3 |
|
|
$ |
119.5 |
|
|
$ |
4.86 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
acquired intangible assets |
|
17.1 |
|
|
|
13.5 |
|
|
|
0.55 |
|
|
|
17.0 |
|
|
|
13.3 |
|
|
|
0.54 |
|
Adjustment to fair
value of contingent consideration |
|
(9.4 |
) |
|
|
(5.8 |
) |
|
|
(0.24 |
) |
|
|
(40.7 |
) |
|
|
(24.2 |
) |
|
|
(0.98 |
) |
Acquisition-related
costs |
|
4.4 |
|
|
|
4.4 |
|
|
|
0.18 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Adjustment of income
tax provisions |
|
(1.6 |
) |
|
|
(1.6 |
) |
|
|
(0.07 |
) |
|
|
(2.3 |
) |
|
|
(2.3 |
) |
|
|
(0.09 |
) |
Loss/(profit) on
disposal of subsidiary |
|
1.4 |
|
|
|
1.4 |
|
|
|
0.06 |
|
|
|
(1.6 |
) |
|
|
(1.6 |
) |
|
|
(0.07 |
) |
Settlement of
distributor claim |
|
1.0 |
|
|
|
0.6 |
|
|
|
0.02 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Foreign currency
exchange gains |
|
(0.9 |
) |
|
|
(0.7 |
) |
|
|
(0.03 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
Fair value acquisition
accounting |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
3.7 |
|
|
|
2.4 |
|
|
|
0.10 |
|
|
|
12.0 |
|
|
|
11.8 |
|
|
|
0.47 |
|
|
|
(23.9 |
) |
|
|
(12.4 |
) |
|
|
(0.50 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
non-GAAP amounts |
$ |
115.1 |
|
|
$ |
93.1 |
|
|
$ |
3.80 |
|
|
$ |
128.4 |
|
|
$ |
107.1 |
|
|
$ |
4.36 |
|
Net sales in Fuel Specialties for the quarter
were $142.5 million, a 3 percent decrease from $146.2 million in
last year’s fourth quarter. Volumes were up by 1 percent, with an
adverse price and product mix of 3 percent, and a 1 percent
negative currency impact. A continued strong performance in EMEA
was offset by a slightly softer sales quarter in both the Americas
and Asia Pacific. Sales into aviation were very strong in the
quarter, driven by order patterns. Overall, the segment’s
gross margin for the quarter was 39.9 percent, up 5.3 percentage
points from 34.6 percent in last year’s fourth quarter, and
operating income was $38.4 million. For the full year, the
segment’s sales were down 4 percent to $509.6 million and operating
income was up 8 percent at $110.6 million.
In Performance Chemicals, revenues for the
quarter were $31.9 million, up 4 percent from $30.6 million last
year. Strong volume growth of 11 percent was partially offset by an
adverse currency impact of 7 percent. By region, sales in EMEA and
Asia Pacific grew by 15 percent while the Americas were broadly
flat. The segment’s gross margin for the quarter was 28.2
percent down due to the sales mix in the quarter. Operating income
for the quarter was $2.7 million. Excluding the divestment of
Aroma Chemicals in 2015, full year sales of $138.7 million were up
7 percent and operating income of $16.0 million increased by 28
percent from last year.
Sales in Oilfield Services for the quarter were
$59.3 million, up 22 percent on the fourth quarter of 2015, driven
by increased customer activity. Volume growth of 53 percent was
offset by a price and mix reduction of 31 percent. Gross
margins remained steady and strong at 41.0 percent. The Oilfield
Services business returned an operating income of $2.4 million for
the quarter, compared to a loss of $4.8 million in the same quarter
last year. For the full year, sales were $191.7 million down
from $265.0 million a year ago and there was an operating loss of
$4.7 million compared to an operating income of $9.0 million in
2015.
Octane Additives’ net sales for 2016’s fourth
quarter were $4.1 million, compared to $20.5 million a year ago.
Gross margin for the quarter was 29.3 percent, and the segment’s
operating income was $0.2 million, compared to last year’s $8.8
million. For the year, Octane Additives’ net sales were $43.4
million a 27 percent decrease, and its operating income was $22.7
million, an 8 percent decrease from a year ago.
Corporate costs for the quarter were $16.1
million, up from $13.5 million a year ago driven primarily by
acquisition costs and increased share-based and LTIP
compensation. The effective tax rate for the quarter was 23.8
percent and, as we expected, the full year effective tax rate of
21.1 percent was slightly lower than last year’s 21.5 percent.
For the full year, net cash generated from
operations was $104.5 million, compared to $117.7 million during
2015. At year-end, Innospec had $101.9 million in cash and
cash equivalents and total debt of $273.3 million, resulting in net
debt of $171.4 million.
Mr. Williams concluded,
“I’m delighted to report that Innospec has ended
the year with great momentum as we expected. These improvements are
across the board in all three of our strategic businesses. With
solid margins and continued cost control, we continue to
deliver good earnings per share.”
“We have closed the acquisition from Huntsman
which balances our portfolio, and we believe our business enters
2017 in good shape to build on the fourth quarter’s momentum. Our
excellent cash generation has also meant that our leverage is
slightly better than we predicted.”
“While there are challenges ahead next year, the
strong end to 2016 means that we feel cautiously optimistic about
2017. Our strategy continues to deliver to expectations, and we
remain open to additional acquisitions that can further enhance our
portfolio without over-stressing our balance sheet.”
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 the
United States (GAAP). These non-GAAP financial measures
comprise adjusted EBITDA, income before income taxes excluding
special items and net income excluding special items and related
per share amounts. Adjusted EBITDA is net income per our
consolidated financial statements adjusted for the exclusion of
charges for interest expense, net, income taxes, depreciation,
amortization and acquisition fair value adjustments. Income
before income taxes, net income and diluted EPS, excluding special
items, per our consolidated financial statements are adjusted for
the exclusion of amortization of acquired intangible assets,
adjustment to fair value of contingent consideration,
acquisition-related costs, adjustment of income tax provisions,
loss/(profit) on disposal of subsidiary, settlement of distributor
claim, foreign currency exchange losses/(gains) and fair value
acquisition accounting. Reconciliations of these non-GAAP
financial measures to their most directly comparable GAAP financial
measures are provided herein and in the schedules below. The
Company believes that such non-GAAP financial measures provide
useful information to investors and may assist them in evaluating
the Company’s underlying performance and identifying operating
trends. In addition, these non-GAAP measures address
questions the Company routinely receives from analysts and
investors and the Company has determined that it is appropriate to
make this data available to all investors. While the Company
believes that such measures are useful in evaluating the Company’s
performance, investors should not consider them to be a substitute
for financial measures prepared in accordance with GAAP. In
addition, these non-GAAP financial measures may differ from
similarly-titled non-GAAP financial measures used by other
companies and do not provide a comparable view of the Company’s
performance relative to other companies in similar
industries. Management uses adjusted EPS (the most directly
comparable GAAP financial measure for which is GAAP EPS) and
adjusted net income and adjusted EBITDA (the most directly
comparable GAAP financial measure for which is GAAP net income) to
allocate resources and evaluate the performance of the Company’s
operations. Management believes the most directly comparable
GAAP financial measure is GAAP net income and has provided a
reconciliation of adjusted EBITDA and net income excluding special
items, and related per share amounts, to GAAP net income herein and
in the schedules below.
About Innospec Inc.
Innospec Inc. is an international specialty
chemicals company with approximately 1800 employees in 23
countries. Innospec manufactures and supplies a wide range of
specialty chemicals to markets in the Americas, Europe, the Middle
East, Africa and Asia-Pacific. The Fuel Specialties business
specializes in manufacturing and supplying fuel additives that
improve fuel efficiency, boost engine performance and reduce
harmful emissions. Oilfield Services provides specialty chemicals
to all elements of the oil & gas exploration and production
industry. The Performance Chemicals business creates
innovative technology-based solutions for our customers in the
Personal Care, Home Care, Agrochemical, Mining and Industrial
markets. Octane Additives produces octane improvers to
enhance gasoline.
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,” “believes,”
“feels” 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 Innospec and affecting
our business operations and prospects are described in Innospec’s
Annual Report on Form 10-K for the year ended December 31, 2015,
Innospec’s Quarterly Report on Form 10-Q for the quarter ended June
30, 2016 and other reports filed with the U.S. Securities and
Exchange Commission. You are urged to review our discussion
of risks and uncertainties that could cause actual results to
differ from forward-looking statements under the heading "Risk
Factors” in such reports. Innospec undertakes no obligation
to publicly update or revise any forward-looking statements,
whether as a result of new information, future events or
otherwise.
Schedule 1 |
|
INNOSPEC INC. AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF
INCOME |
|
(in millions, except share and per share
data) |
|
Three Months EndedDecember
31 |
|
Twelve Months Ended December
31 |
2016 |
|
|
2015 |
|
|
2016 |
|
|
2015 |
|
|
|
|
|
|
|
|
|
|
Net sales |
$ |
237.8 |
|
$ |
246.0 |
|
$ |
883.4 |
|
$ |
1,012.3 |
|
Cost of goods sold |
|
(146.4 |
) |
|
(159.7 |
) |
|
(551.1 |
) |
|
(666.3 |
) |
Gross profit |
|
91.4 |
|
|
86.3 |
|
|
332.3 |
|
|
346.0 |
|
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
Selling,
general and administrative |
|
(56.4 |
) |
|
(55.1 |
) |
|
(209.5 |
) |
|
(206.7 |
) |
Research
and development |
|
(5.8 |
) |
|
(6.0 |
) |
|
(25.4 |
) |
|
(25.3 |
) |
Adjustment to fair value of contingent consideration |
|
3.1 |
|
|
9.1 |
|
|
9.4 |
|
|
40.7 |
|
(Loss)/profit on disposal of subsidiary |
|
- |
|
|
- |
|
|
(1.4 |
) |
|
1.6 |
|
Total operating
expenses |
|
(59.1 |
) |
|
(52.0 |
) |
|
(226.9 |
) |
|
(189.7 |
) |
Operating income |
|
32.3 |
|
|
34.3 |
|
|
105.4 |
|
|
156.3 |
|
Other net
(expense)/income |
|
(2.3 |
) |
|
2.0 |
|
|
0.9 |
|
|
- |
|
Interest expense,
net |
|
(1.0 |
) |
|
(1.1 |
) |
|
(3.2 |
) |
|
(4.0 |
) |
Income before income
taxes |
|
29.0 |
|
|
35.2 |
|
|
103.1 |
|
|
152.3 |
|
Income taxes |
|
(6.9 |
) |
|
(3.7 |
) |
|
(21.8 |
) |
|
(32.8 |
) |
Net income |
$ |
22.1 |
|
$ |
31.5 |
|
$ |
81.3 |
|
$ |
119.5 |
|
|
|
|
|
|
|
|
|
|
Earnings per
share: |
|
|
|
|
|
|
|
|
Basic |
$ |
0.92 |
|
$ |
1.31 |
|
$ |
3.39 |
|
$ |
4.96 |
|
Diluted |
$ |
0.90 |
|
$ |
1.28 |
|
$ |
3.33 |
|
$ |
4.86 |
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding (in thousands): |
|
|
|
|
|
|
|
|
Basic |
|
24,026 |
|
|
24,093 |
|
|
23,998 |
|
|
24,107 |
|
Diluted |
|
24,480 |
|
|
24,598 |
|
|
24,442 |
|
|
24,612 |
|
|
|
|
|
|
|
|
|
|
INNOSPEC INC. AND
SUBSIDIARIES |
|
Schedule 2A |
|
SEGMENTAL
ANALYSIS OF RESULTS |
|
Three Months EndedDecember
31 |
|
Twelve Months Ended December
31 |
(in
millions) |
|
2016 |
|
|
2015 |
|
|
2016 |
|
|
2015 |
|
|
|
|
|
|
|
|
|
|
Net sales: |
|
|
|
|
|
|
|
|
Fuel
Specialties |
$ |
142.5 |
|
$ |
146.2 |
|
$ |
509.6 |
|
$ |
532.8 |
|
Performance Chemicals |
|
31.9 |
|
|
30.6 |
|
|
138.7 |
|
|
155.0 |
|
Oilfield
Services |
|
59.3 |
|
|
48.7 |
|
|
191.7 |
|
|
265.0 |
|
Octane
Additives |
|
4.1 |
|
|
20.5 |
|
|
43.4 |
|
|
59.5 |
|
|
|
237.8 |
|
|
246.0 |
|
|
883.4 |
|
|
1,012.3 |
|
|
|
|
|
|
|
|
|
|
Gross profit: |
|
|
|
|
|
|
|
|
Fuel
Specialties |
|
56.9 |
|
|
50.6 |
|
|
186.4 |
|
|
176.0 |
|
Performance Chemicals |
|
9.0 |
|
|
9.1 |
|
|
43.4 |
|
|
42.4 |
|
Oilfield
Services |
|
24.3 |
|
|
16.7 |
|
|
76.4 |
|
|
99.1 |
|
Octane
Additives |
|
1.2 |
|
|
9.9 |
|
|
26.1 |
|
|
28.5 |
|
|
|
91.4 |
|
|
86.3 |
|
|
332.3 |
|
|
346.0 |
|
|
|
|
|
|
|
|
|
|
Operating
income/(loss): |
|
|
|
|
|
|
|
|
Fuel
Specialties |
|
38.4 |
|
|
31.4 |
|
|
110.6 |
|
|
102.1 |
|
Performance Chemicals |
|
2.7 |
|
|
3.2 |
|
|
16.0 |
|
|
16.3 |
|
Oilfield
Services |
|
2.4 |
|
|
(4.8 |
) |
|
(4.7 |
) |
|
9.0 |
|
Octane
Additives |
|
0.2 |
|
|
8.8 |
|
|
22.7 |
|
|
24.7 |
|
Pension credit |
|
1.6 |
|
|
0.1 |
|
|
6.7 |
|
|
0.2 |
|
Corporate costs |
|
(16.1 |
) |
|
(13.5 |
) |
|
(53.9 |
) |
|
(38.3 |
) |
|
|
29.2 |
|
|
25.2 |
|
|
97.4 |
|
|
114.0 |
|
Adjustment to fair
value of contingent consideration |
|
3.1 |
|
|
9.1 |
|
|
9.4 |
|
|
40.7 |
|
(Loss)/profit on
disposal of subsidiary |
|
- |
|
|
- |
|
|
(1.4 |
) |
|
1.6 |
|
Total operating
income |
$ |
32.3 |
|
$ |
34.3 |
|
$ |
105.4 |
|
$ |
156.3 |
|
Schedule 2B |
|
NON-GAAP
MEASURES |
|
Three Months Ended December
31 |
|
Twelve Months EndedDecember
31 |
(in
millions) |
|
2016 |
|
|
2015 |
|
|
2016 |
|
|
2015 |
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
22.1 |
|
$ |
31.5 |
|
$ |
81.3 |
|
$ |
119.5 |
|
Interest expense,
net |
|
1.0 |
|
|
1.1 |
|
|
3.2 |
|
|
4.0 |
|
Income taxes |
|
6.9 |
|
|
3.7 |
|
|
21.8 |
|
|
32.8 |
|
Depreciation and
amortization: |
|
|
|
|
|
|
|
|
Fuel
Specialties |
|
1.2 |
|
|
1.2 |
|
|
4.7 |
|
|
4.2 |
|
Performance Chemicals |
|
1.6 |
|
|
1.4 |
|
|
6.3 |
|
|
6.1 |
|
Oilfield
Services |
|
4.6 |
|
|
4.7 |
|
|
18.1 |
|
|
17.9 |
|
Octane
Additives |
|
0.1 |
|
|
0.1 |
|
|
0.5 |
|
|
0.4 |
|
Corporate
costs |
|
1.9 |
|
|
1.5 |
|
|
8.1 |
|
|
5.4 |
|
Adjustment to fair
value of contingent consideration |
|
(3.1 |
) |
|
(9.1 |
) |
|
(9.4 |
) |
|
(40.7 |
) |
Fair value acquisition
accounting |
|
- |
|
|
3.7 |
|
|
- |
|
|
3.7 |
|
Adjusted EBITDA |
|
36.3 |
|
|
39.8 |
|
|
134.6 |
|
|
153.3 |
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA: |
|
|
|
|
|
|
|
|
Fuel
Specialties |
|
39.6 |
|
|
32.6 |
|
|
115.3 |
|
|
106.3 |
|
Performance Chemicals |
|
4.3 |
|
|
4.6 |
|
|
22.3 |
|
|
22.4 |
|
Oilfield
Services |
|
7.0 |
|
|
3.6 |
|
|
13.4 |
|
|
30.6 |
|
Octane
Additives |
|
0.3 |
|
|
8.9 |
|
|
23.2 |
|
|
25.1 |
|
Pension credit |
|
1.6 |
|
|
0.1 |
|
|
6.7 |
|
|
0.2 |
|
Corporate costs |
|
(14.2 |
) |
|
(12.0 |
) |
|
(45.8 |
) |
|
(32.9 |
) |
|
|
38.6 |
|
|
37.8 |
|
|
135.1 |
|
|
151.7 |
|
(Loss)/profit on
disposal of subsidiary |
|
- |
|
|
- |
|
|
(1.4 |
) |
|
1.6 |
|
Other net
(expense)/income |
|
(2.3 |
) |
|
2.0 |
|
|
0.9 |
|
|
- |
|
Adjusted EBITDA |
$ |
36.3 |
|
$ |
39.8 |
|
$ |
134.6 |
|
$ |
153.3 |
|
Adjusted EBITDA by segment includes operating income relating to
the segments, excluding depreciation and amortization. In
addition, it also excludes the fair value acquisition accounting
relating to Oilfield Services.
Schedule 3 |
|
INNOSPEC INC. AND
SUBSIDIARIESCONSOLIDATED BALANCE
SHEETS |
|
(in
millions) |
|
December 31,2016 |
|
|
|
December 31,2015 |
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and
cash equivalents |
$ |
101.9 |
|
|
$ |
136.9 |
Short-term investments |
|
- |
|
|
|
4.8 |
Trade and
other accounts receivable |
|
154.4 |
|
|
|
137.4 |
Inventories |
|
173.8 |
|
|
|
159.9 |
Current
portion of deferred tax assets |
|
- |
|
|
|
8.8 |
Prepaid
expenses |
|
6.2 |
|
|
|
6.1 |
Prepaid
income taxes |
|
4.8 |
|
|
|
3.0 |
Other
current assets |
|
- |
|
|
|
1.8 |
Total current
assets |
|
441.1 |
|
|
|
458.7 |
|
|
|
|
|
|
|
Net property, plant and
equipment |
|
157.4 |
|
|
|
76.0 |
Goodwill |
|
374.8 |
|
|
|
267.4 |
Other intangible
assets |
|
144.4 |
|
|
|
168.7 |
Deferred tax assets,
net of current portion |
|
14.9 |
|
|
|
1.4 |
Pension asset |
|
48.0 |
|
|
|
55.5 |
Other non-current
assets |
|
0.8 |
|
|
|
0.9 |
Total assets |
$ |
1,181.4 |
|
|
$ |
1,028.6 |
|
|
|
|
|
|
|
Liabilities and
Stockholders’ Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
Accounts
payable |
$ |
59.6 |
|
|
$ |
52.2 |
Accrued
liabilities |
|
94.3 |
|
|
|
84.1 |
Current
portion of long-term debt |
|
10.3 |
|
|
|
- |
Current
portion of finance leases |
|
1.6 |
|
|
|
0.7 |
Current
portion of plant closure provisions |
|
6.7 |
|
|
|
6.4 |
Current
portion of accrued income taxes |
|
9.4 |
|
|
|
7.9 |
Current
portion of acquisition-related contingent consideration |
|
1.1 |
|
|
|
54.6 |
Current
portion of deferred income |
|
0.1 |
|
|
|
0.2 |
Total current
liabilities |
|
183.1 |
|
|
|
206.1 |
|
|
|
|
|
|
|
Long-term debt, net of
current portion |
|
258.5 |
|
|
|
131.6 |
Finance leases, net of
current portion |
|
2.9 |
|
|
|
2.4 |
Plant closure
provisions, net of current portion |
|
32.8 |
|
|
|
31.3 |
Unrecognized tax
benefits |
|
2.3 |
|
|
|
3.9 |
Deferred tax
liabilities |
|
32.3 |
|
|
|
37.7 |
Pension liability |
|
14.2 |
|
|
|
9.2 |
Deferred income, net of
current portion |
|
0.5 |
|
|
|
0.6 |
Other non-current
liabilities |
|
1.0 |
|
|
|
0.5 |
Equity |
|
653.8 |
|
|
|
605.3 |
Total liabilities and
equity |
$ |
1,181.4 |
|
|
$ |
1,028.6 |
Schedule 4 |
|
INNOSPEC INC. AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF
CASH FLOWS |
|
|
|
Twelve Months
EndedDecember 31 |
(in
millions) |
|
2016 |
|
|
|
2015 |
|
|
|
|
|
|
|
Cash Flows from
Operating Activities |
|
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
81.3 |
|
|
$ |
119.5 |
|
Adjustments to
reconcile net income to cash provided by operating activities: |
|
|
|
|
|
Depreciation and amortization |
|
38.1 |
|
|
|
35.2 |
|
Adjustment to fair value of contingent consideration |
|
(9.4 |
) |
|
|
(40.7 |
) |
Deferred
taxes |
|
0.9 |
|
|
|
12.0 |
|
Changes
in working capital |
|
(1.2 |
) |
|
|
(3.6 |
) |
Excess
tax benefit from stock-based payment arrangements |
|
(1.0 |
) |
|
|
(0.5 |
) |
Accrued
income taxes |
|
(2.0 |
) |
|
|
2.0 |
|
Movement
on plant closure provisions |
|
1.9 |
|
|
|
4.1 |
|
Loss/(profit) on disposal of subsidiary |
|
1.4 |
|
|
|
(1.6 |
) |
Cash
contributions to defined benefit pension plans |
|
(1.1 |
) |
|
|
(9.0 |
) |
Non-cash
movements on defined benefit pension plans |
|
(6.2 |
) |
|
|
0.5 |
|
Stock
option compensation |
|
3.3 |
|
|
|
3.7 |
|
Movements
on unrecognized tax benefits |
|
(1.6 |
) |
|
|
(2.3 |
) |
Movements
on other non-current assets and liabilities |
|
0.1 |
|
|
|
(1.6 |
) |
Net cash provided by
operating activities |
|
104.5 |
|
|
|
117.7 |
|
|
|
|
|
|
|
Cash Flows from
Investing Activities |
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditures |
|
(16.5 |
) |
|
|
(17.6 |
) |
Proceeds from disposal
of subsidiary |
|
- |
|
|
|
41.5 |
|
Business combinations,
net of cash acquired |
|
(197.4 |
) |
|
|
- |
|
Internally developed
software |
|
- |
|
|
|
(8.6 |
) |
Purchase of short-term
investments |
|
- |
|
|
|
(6.7 |
) |
Sale of short-term
investments |
|
4.8 |
|
|
|
6.4 |
|
Net cash (used
in)/provided by investing activities |
|
(209.1 |
) |
|
|
15.0 |
|
|
|
|
|
|
|
Cash Flows from
Financing Activities |
|
|
|
|
|
|
|
|
|
|
|
Non-controlling
interest |
|
- |
|
|
|
0.3 |
|
Net receipt/(repayment)
of revolving credit facility |
|
28.0 |
|
|
|
(6.0 |
) |
Net receipt/(repayment)
of finance leases and term loans |
|
108.9 |
|
|
|
(0.4 |
) |
Refinancing costs |
|
(1.2 |
) |
|
|
(1.5 |
) |
Payment for
acquisition-related contingent consideration |
|
(44.0 |
) |
|
|
- |
|
Excess tax benefit from
stock-based payment arrangements |
|
1.0 |
|
|
|
0.5 |
|
Dividend paid |
|
(15.9 |
) |
|
|
(14.9 |
) |
Issue of treasury
stock |
|
2.1 |
|
|
|
1.0 |
|
Repurchase of common
stock |
|
(8.4 |
) |
|
|
(15.3 |
) |
Net cash used in
financing activities |
|
70.5 |
|
|
|
(36.3 |
) |
Effect of foreign
currency exchange rate changes on cash |
|
(0.9 |
) |
|
|
(1.1 |
) |
Net change in cash and
cash equivalents |
|
(35.0 |
) |
|
|
95.3 |
|
Cash and cash
equivalents at beginning of year |
|
136.9 |
|
|
|
41.6 |
|
Cash and cash
equivalents at end of year |
$ |
101.9 |
|
|
$ |
136.9 |
|
Amortization of deferred finance costs of $0.4
million (2015 - $1.2 million) are included in depreciation and
amortization in the cash flow statement but in interest expense in
the income statement.
Contacts:
Brian Watt
Innospec Inc.
+44-151-355-3611
Brian.Watt@innospecinc.com
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