Business performance on track – one off
items impact results; Margins remain strong
Innospec Inc. (NASDAQ:IOSP) today announced its financial results
for the third quarter ended September 30, 2016. At the same
time, the Company announced that it has declared a semi-annual
dividend of $0.34 per common share for the second half of 2016,
which will be paid on November 24, 2016 to shareholders of record
as of November 15, 2016. This brings the annual dividend to
$0.67 per share, a 10 percent increase over 2015.
Total net sales for the third quarter were
$205.5 million, down 19 percent from the $254.2 million reported in
the corresponding quarter last year. Net income was $11.4
million, or $0.47 per diluted share, compared to $35.6 million, or
$1.45 per diluted share, recorded a year ago. Adjusted EBITDA
(earnings before interest, taxes, depreciation, amortization and
fair value adjustments) for the quarter was $21.2 million, a 50
percent decrease from $42.1 million in 2015’s third quarter. The
comparative quarter last year was bolstered by strong sales in
Octane Additives and a very strong quarter in Oilfield
Services.
Results for this quarter include several special
items, which are summarized in the table below. Excluding
these special items, adjusted non-GAAP EPS was $0.78 per diluted
share, compared to $1.18 per diluted share a year ago. Innospec
closed the quarter with a net cash position of $19.6 million,
compared to a net debt position of $4.7 million at the end of the
second quarter. Cash generation in the quarter was strong, with
operating cash inflows of $29.8 million before capital expenditures
of $4.7 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 September 30, 2016 |
|
Quarter ended September 30, 2015 |
(in millions,
except share and per share data) |
|
Income beforeincome
taxes |
|
NetIncome |
|
Diluted EPS |
|
Income beforeincome
taxes |
|
Netincome |
|
Diluted EPS |
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported GAAP
amounts |
$ |
|
13.2 |
|
$ |
|
11.4 |
|
$ |
|
0.47 |
|
$ |
|
41.4 |
|
$ |
|
35.6 |
|
$ |
|
1.45 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
exchange losses/(gains) |
|
|
5.0 |
|
|
|
4.3 |
|
|
|
0.18 |
|
|
|
(1.2 |
) |
|
|
(0.9 |
) |
|
|
(0.04 |
) |
Amortization of
acquired intangible assets |
|
|
4.3 |
|
|
|
3.7 |
|
|
|
0.15 |
|
|
|
4.3 |
|
|
|
3.4 |
|
|
|
0.14 |
|
Adjustment to fair
value of contingent consideration |
|
|
(2.3 |
) |
|
|
(1.4 |
) |
|
|
(0.06 |
) |
|
|
(8.5 |
) |
|
|
(4.8 |
) |
|
|
(0.20 |
) |
Acquisition-related
costs |
|
|
1.7 |
|
|
|
1.7 |
|
|
|
0.07 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Adjustment of income
tax provisions |
|
|
(1.2 |
) |
|
|
(1.2 |
) |
|
|
(0.05 |
) |
|
|
(2.7 |
) |
|
|
(2.7 |
) |
|
|
(0.11 |
) |
Settlement of
distributor claim |
|
|
1.0 |
|
|
|
0.6 |
|
|
|
0.02 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Profit on disposal of
subsidiary |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1.6 |
) |
|
|
(1.6 |
) |
|
|
(0.06 |
) |
|
|
|
8.5 |
|
|
|
7.7 |
|
|
|
0.31 |
|
|
|
(9.7 |
) |
|
|
(6.6 |
) |
|
|
(0.27 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
non-GAAP amounts |
$ |
|
21.7 |
|
$ |
|
19.1 |
|
$ |
|
0.78 |
|
$ |
|
31.7 |
|
$ |
|
29.0 |
|
$ |
|
1.18 |
|
Commenting on the third quarter results, Patrick
S. Williams, President and Chief Executive Officer, said,
“I am pleased to report that, from an operations
perspective, the third quarter met our expectations despite a
number of one-off items that negatively impacted our earnings.
Outside of this we have also seen the phasing of orders into the
fourth quarter and an increase in stock-based compensation costs
driven by a 32 percent increase in our share price. With this
in mind we expect a strong end to the year and to carry this
positive momentum into 2017.”
“In Fuel Specialties, the changes to refinery
crude slates continue to impact demand for one of our product
lines, but the resulting richer sales mix means that gross margins
are strong. The third quarter was also weaker for sales into
aviation, but this is a result of order phasing, and we do not feel
this reflects a change in underlying demand. With good cost
control, we are pleased to have delivered improved operating income
in the quarter.”
“Performance Chemicals delivered a really good
quarter, with a 9 percent sales increase. With margins also
improving, and despite the settlement of a legal claim, this
translated into a 17 percent operating income improvement compared
to the same quarter in 2015. This success continues to be driven by
a strong pipeline of new products being delivered from our R&D
team, which is very well aligned to our customers needs. This
performance has been delivered despite a significant adverse
exchange rate impact on our business in EMEA. The acquisition of
the Huntsman European Surfactants business is progressing well, and
we believe this transaction is on track to close towards the end of
Q4.”
"As we have previously indicated, our Oilfield
Services business continues to move in the right direction.
Sequential sales have improved again, and the business has moved
back to break-even after two very tough quarters, with our cost
containment measures delivering reduced operating expenses. Our
frac/stim business leads the recovery, with our production
chemicals business continuing its robust performance, despite some
order phasing into Q4. However, this remains a fragile recovery,
and, although WTI is now hovering around the $50 per barrel mark,
we need to see this sustained for several months, before this may
be translated into more significant opportunities. The market
remains very competitive indeed. While we remain cautious, we are
viewing 2017 with a little more confidence.”
“Octane Additives sales were lower than
anticipated as a customer administrative issue prevented us
completing the order in the quarter. This was rectified in October.
We are working with our one remaining customer for this business to
identify their future demand.”
Net sales in Fuel Specialties for the quarter
were $114.4 million, a 6 percent decrease from $121.3 million last
year due to an adverse price/mix. Revenues in the Americas
were down by 13 percent year over year driven by softer demand for
a specific product line, but were broadly flat in EMEA. In Asia
Pacific, sales grew 14 percent from last year, driven by new
business wins. The aviation business experienced a softer
quarter, due to the phasing of orders. Gross margins in the
segment rose from last year to 38.3 percent, benefitting from a
richer sales mix of higher margin business. Operating income
for the quarter was $24.1 million, up 12 percent from last year’s
$21.6 million.
In Performance Chemicals, net sales of $36.8
million were up 9 percent year over year, as volume growth of 14
percent offset an adverse currency impact of 4 percent and 1
percent lower pricing. By region, sales grew by 6 percent in
the Americas and 17 percent in EMEA and Asia Pacific from a year
ago. The segment’s gross margin was 33.4 percent benefitting
from a richer sales mix with increased sales of higher margin
Personal Care business. Operating income of $4.2 million for
the quarter included a $1.0 million commercial legal settlement
with a distributor; excluding this settlement underlying operating
income was up 44 percent from the $3.6 million reported in 2015’s
third quarter.
Sales in Oilfield Services were $49.7 million,
down 37 percent on a very strong third quarter of 2015, driven by a
reduction in customer activity with overall volumes down by 30
percent and an adverse price/mix impact of 7 percent.
However, as we anticipated, sales were up 7 percent on Q2
2016, indicating a modest recovery in this segment. Current
quarter sales are up 37 percent on the low point of Q1 2016.
Gross margins remained strong at 41.4 percent, and operating
costs were down 17 percent on the same quarter last year,
reflecting our effective cost control measures in these difficult
market conditions. This business was break-even at the operating
income level, compared to a profit of $7.2 million in the same
quarter last year. However, this performance represents continuous
improvement over the first and second quarters of this year.
In Octane Additives, net sales for the quarter
were $4.6 million. This was lower than expected as the last portion
of the current order was delayed because of customer administrative
issues, and this was finally fulfilled early in October. If this
order had been completed during the third quarter, it would have
increased EPS by $0.06 per share.
Corporate costs were $15.2 million, up from $9.3
million a year ago. In this quarter there were
acquisition-related costs of $1.7 million, and an increase of $2.1
million related to share-based compensation and LTIP accruals as a
result of the 32 percent rise in the share price during the
quarter.
The effective tax rate for the quarter was 13.6
percent, and the expected tax rate for the full year remains at 20
percent.
Net cash generated from operations was strong in
the quarter at $29.8 million, compared to $35.5 million a year
ago. As of September 30, 2016, Innospec had $167.1 million in
cash and cash equivalents, and total debt of $147.5
million.
Mr. Williams concluded, "We had some one-off
charges this quarter, including those related to the significant
rise in our share price. When combined with the order phasing in
Octane Additives, these have adversely impacted our EPS by $0.22
per share. However, our underlying business performance
remains close to expectations, and we still feel confident that we
will meet our targets for the year. There is evidence of the
Oilfield Services business continuing to make progress and some of
the order phasing issues are expected to unwind in Q4. With the
Huntsman acquisition well on track to enhance Performance
Chemicals, we believe that we are very well placed for 2017.”
“Based on our strong financial position, the
Board has authorized a further increase in our semi-annual
dividend, with a dividend payment of $0.34 per share, which
continues to return value to our shareholders.”
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 foreign currency exchange losses/(gains),
amortization of acquired intangible assets, adjustment to fair
value of contingent consideration, acquisition-related costs,
adjustment of income tax provisions, settlement of distributor
claim and profit on disposal of subsidiary. 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 1300 employees in 20
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 market, focusing on skincare, haircare and
suncare. 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 EndedSeptember
30 |
|
Nine Months EndedSeptember 30 |
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
|
|
|
|
|
Net sales |
$ |
|
205.5 |
|
$ |
|
254.2 |
|
$ |
|
645.6 |
|
$ |
|
766.3 |
|
Cost of goods sold |
|
|
(126.3 |
) |
|
|
(163.8 |
) |
|
|
(404.7 |
) |
|
|
(506.6 |
) |
Gross profit |
|
|
79.2 |
|
|
|
90.4 |
|
|
|
240.9 |
|
|
|
259.7 |
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
Selling, general and
administrative |
|
|
(56.1 |
) |
|
|
(52.7 |
) |
|
|
(153.1 |
) |
|
|
(151.6 |
) |
Research and development |
|
|
(6.5 |
) |
|
|
(6.6 |
) |
|
|
(19.6 |
) |
|
|
(19.3 |
) |
Adjustment to fair value of
contingent consideration |
|
|
2.3 |
|
|
|
8.5 |
|
|
|
6.3 |
|
|
|
31.6 |
|
Profit/(loss) on disposal of
subsidiary |
|
|
- |
|
|
|
1.6 |
|
|
|
(1.4 |
) |
|
|
1.6 |
|
Total operating
expenses |
|
|
(60.3 |
) |
|
|
(49.2 |
) |
|
|
(167.8 |
) |
|
|
(137.7 |
) |
Operating income |
|
|
18.9 |
|
|
|
41.2 |
|
|
|
73.1 |
|
|
|
122.0 |
|
Other net
(expense)/income |
|
|
(5.0 |
) |
|
|
1.2 |
|
|
|
3.2 |
|
|
|
(2.0 |
) |
Interest expense, net |
|
|
(0.7 |
) |
|
|
(1.0 |
) |
|
|
(2.2 |
) |
|
|
(2.9 |
) |
Income before income
taxes |
|
|
13.2 |
|
|
|
41.4 |
|
|
|
74.1 |
|
|
|
117.1 |
|
Income taxes |
|
|
(1.8 |
) |
|
|
(5.8 |
) |
|
|
(14.9 |
) |
|
|
(29.1 |
) |
Net income |
$ |
|
11.4 |
|
$ |
|
35.6 |
|
$ |
|
59.2 |
|
$ |
|
88.0 |
|
|
|
|
|
|
|
|
|
|
Earnings per share: |
|
|
|
|
|
|
|
|
Basic |
$ |
|
0.48 |
|
$ |
|
1.48 |
|
$ |
|
2.47 |
|
$ |
|
3.64 |
|
Diluted |
$ |
|
0.47 |
|
$ |
|
1.45 |
|
$ |
|
2.42 |
|
$ |
|
3.57 |
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding (in thousands): |
|
|
|
|
|
|
|
|
Basic |
|
|
23,977 |
|
|
|
24,121 |
|
|
|
23,989 |
|
|
|
24,162 |
|
Diluted |
|
|
24,476 |
|
|
|
24,611 |
|
|
|
24,462 |
|
|
|
24,660 |
|
|
|
|
|
|
|
|
|
|
Schedule 2A |
INNOSPEC INC. AND SUBSIDIARIES |
|
SEGMENTAL ANALYSIS
OF RESULTS |
|
Three Months EndedSeptember
30 |
|
Nine Months Ended September
30 |
(in
millions) |
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
|
|
|
|
|
Net sales: |
|
|
|
|
|
|
|
|
Fuel Specialties |
$ |
|
114.4 |
|
$ |
|
121.3 |
|
$ |
|
367.1 |
|
$ |
|
386.6 |
|
Performance Chemicals |
|
|
36.8 |
|
|
|
33.7 |
|
|
|
106.8 |
|
|
|
124.4 |
|
Oilfield Services |
|
|
49.7 |
|
|
|
78.9 |
|
|
|
132.4 |
|
|
|
216.3 |
|
Octane Additives |
|
|
4.6 |
|
|
|
20.3 |
|
|
|
39.3 |
|
|
|
39.0 |
|
|
|
|
205.5 |
|
|
|
254.2 |
|
|
|
645.6 |
|
|
|
766.3 |
|
|
|
|
|
|
|
|
|
|
Gross profit: |
|
|
|
|
|
|
|
|
Fuel Specialties |
|
|
43.8 |
|
|
|
39.5 |
|
|
|
129.5 |
|
|
|
125.4 |
|
Performance Chemicals |
|
|
12.3 |
|
|
|
9.9 |
|
|
|
34.4 |
|
|
|
33.3 |
|
Oilfield Services |
|
|
20.6 |
|
|
|
32.0 |
|
|
|
52.1 |
|
|
|
82.4 |
|
Octane Additives |
|
|
2.5 |
|
|
|
9.0 |
|
|
|
24.9 |
|
|
|
18.6 |
|
|
|
|
79.2 |
|
|
|
90.4 |
|
|
|
240.9 |
|
|
|
259.7 |
|
|
|
|
|
|
|
|
|
|
Operating
income/(loss): |
|
|
|
|
|
|
|
|
Fuel Specialties |
|
|
24.1 |
|
|
|
21.6 |
|
|
|
72.2 |
|
|
|
70.7 |
|
Performance Chemicals |
|
|
4.2 |
|
|
|
3.6 |
|
|
|
13.3 |
|
|
|
13.1 |
|
Oilfield Services |
|
|
- |
|
|
|
7.2 |
|
|
|
(7.1 |
) |
|
|
13.8 |
|
Octane Additives |
|
|
1.9 |
|
|
|
8.0 |
|
|
|
22.5 |
|
|
|
15.9 |
|
Pension credit |
|
|
1.6 |
|
|
|
- |
|
|
|
5.1 |
|
|
|
0.1 |
|
Corporate costs |
|
|
(15.2 |
) |
|
|
(9.3 |
) |
|
|
(37.8 |
) |
|
|
(24.8 |
) |
|
|
|
16.6 |
|
|
|
31.1 |
|
|
|
68.2 |
|
|
|
88.8 |
|
Adjustment to fair value
of contingent consideration |
|
|
2.3 |
|
|
|
8.5 |
|
|
|
6.3 |
|
|
|
31.6 |
|
Profit/(loss) on disposal
of subsidiary |
|
|
- |
|
|
|
1.6 |
|
|
|
(1.4 |
) |
|
|
1.6 |
|
Total operating
income |
$ |
|
18.9 |
|
$ |
|
41.2 |
|
$ |
|
73.1 |
|
$ |
|
122.0 |
|
Schedule 2B |
|
NON-GAAP
MEASURES |
|
Three Months Ended September
30 |
|
Nine Months EndedSeptember
30 |
(in
millions) |
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
|
11.4 |
|
$ |
|
35.6 |
|
$ |
|
59.2 |
|
$ |
|
88.0 |
|
Interest expense, net |
|
|
0.7 |
|
|
|
1.0 |
|
|
|
2.2 |
|
|
|
2.9 |
|
Income taxes |
|
|
1.8 |
|
|
|
5.8 |
|
|
|
14.9 |
|
|
|
29.1 |
|
Depreciation and
amortization |
|
|
9.6 |
|
|
|
8.2 |
|
|
|
28.3 |
|
|
|
25.1 |
|
Adjustment to fair value
of contingent consideration |
|
|
(2.3 |
) |
|
|
(8.5 |
) |
|
|
(6.3 |
) |
|
|
(31.6 |
) |
Adjusted EBITDA |
|
|
21.2 |
|
|
|
42.1 |
|
|
|
98.3 |
|
|
|
113.5 |
|
|
|
|
|
|
|
|
|
|
Fuel Specialties |
|
|
25.2 |
|
|
|
22.5 |
|
|
|
75.7 |
|
|
|
73.7 |
|
Performance Chemicals |
|
|
5.8 |
|
|
|
5.1 |
|
|
|
18.0 |
|
|
|
17.8 |
|
Oilfield Services |
|
|
4.6 |
|
|
|
11.7 |
|
|
|
6.4 |
|
|
|
27.0 |
|
Octane Additives |
|
|
2.0 |
|
|
|
8.1 |
|
|
|
22.9 |
|
|
|
16.2 |
|
Pension credit |
|
|
1.6 |
|
|
|
- |
|
|
|
5.1 |
|
|
|
0.1 |
|
Corporate costs |
|
|
(13.0 |
) |
|
|
(8.1 |
) |
|
|
(31.6 |
) |
|
|
(20.9 |
) |
|
|
|
26.2 |
|
|
|
39.3 |
|
|
|
96.5 |
|
|
|
113.9 |
|
Profit/(loss) on disposal
of subsidiary |
|
|
- |
|
|
|
1.6 |
|
|
|
(1.4 |
) |
|
|
1.6 |
|
Other net
(expense)/income |
|
|
(5.0 |
) |
|
|
1.2 |
|
|
|
3.2 |
|
|
|
(2.0 |
) |
Adjusted EBITDA |
$ |
|
21.2 |
|
$ |
|
42.1 |
|
$ |
|
98.3 |
|
$ |
|
113.5 |
|
Schedule 3 |
INNOSPEC INC. AND SUBSIDIARIES |
CONSOLIDATED BALANCE SHEETS |
|
(in
millions) |
|
September 30,2016 |
|
|
December 31,2015 |
Assets |
|
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and cash equivalents |
$ |
167.1 |
|
$ |
136.9 |
Short-term investments |
|
- |
|
|
4.8 |
Trade and other accounts
receivable |
|
125.5 |
|
|
137.4 |
Inventories |
|
161.8 |
|
|
159.9 |
Current portion of deferred tax
assets |
|
8.6 |
|
|
8.8 |
Prepaid expenses |
|
9.2 |
|
|
6.1 |
Prepaid income taxes |
|
7.0 |
|
|
3.0 |
Other current assets |
|
- |
|
|
1.8 |
Total current assets |
|
479.2 |
|
|
458.7 |
|
|
|
|
|
|
Net property, plant and
equipment |
|
80.2 |
|
|
76.0 |
Goodwill |
|
267.4 |
|
|
267.4 |
Other intangible
assets |
|
150.5 |
|
|
168.7 |
Deferred finance
costs |
|
1.2 |
|
|
1.4 |
Deferred tax assets, net
of current portion |
|
1.4 |
|
|
1.4 |
Pension asset |
|
62.6 |
|
|
55.5 |
Other non-current
assets |
|
0.8 |
|
|
0.9 |
Total assets |
$ |
1,043.3 |
|
$ |
1,030.0 |
|
|
|
|
|
|
Liabilities and
Stockholders’ Equity |
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
Accounts payable |
|
56.4 |
|
|
52.2 |
Accrued liabilities |
|
79.7 |
|
|
84.1 |
Current portion of finance
leases |
|
1.6 |
|
|
0.7 |
Current portion of plant closure
provisions |
|
5.0 |
|
|
6.4 |
Current portion of accrued income
taxes |
|
11.8 |
|
|
7.9 |
Current portion of
acquisition-related contingent consideration |
|
4.3 |
|
|
54.6 |
Current portion of deferred
income |
|
0.2 |
|
|
0.2 |
Total current
liabilities |
|
159.0 |
|
|
206.1 |
|
|
|
|
|
|
Long-term debt, net of
current portion |
|
143.0 |
|
|
133.0 |
Finance leases, net of
current portion |
|
2.9 |
|
|
2.4 |
Plant closure provisions,
net of current portion |
|
34.2 |
|
|
31.3 |
Unrecognized tax benefits,
net of current portion |
|
2.3 |
|
|
3.9 |
Deferred tax liabilities,
net of current portion |
|
38.2 |
|
|
37.7 |
Pension liability |
|
10.0 |
|
|
9.2 |
Deferred income, net of
current portion |
|
0.6 |
|
|
0.6 |
Other non-current
liabilities |
|
0.9 |
|
|
0.5 |
Equity |
|
652.2 |
|
|
605.3 |
Total liabilities and
equity |
$ |
1,043.3 |
|
$ |
1,030.0 |
Schedule 4 |
INNOSPEC INC. AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF CASH FLOWS |
|
|
|
Nine Months Ended
September 30 |
(in
millions) |
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
|
Cash Flows from Operating
Activities |
|
|
|
|
|
|
|
|
|
Net income |
$ |
|
59.2 |
|
$ |
|
88.0 |
|
Adjustments to reconcile
net income to cash provided by operating activities: |
|
|
|
|
Depreciation and amortization |
|
|
28.5 |
|
|
|
25.7 |
|
Adjustment to fair value of
contingent consideration |
|
|
(6.3 |
) |
|
|
(31.6 |
) |
Deferred taxes |
|
|
0.5 |
|
|
|
13.9 |
|
Changes in working capital |
|
|
7.3 |
|
|
|
4.4 |
|
Excess tax benefit from stock-based
payment arrangements |
|
|
(0.2 |
) |
|
|
(0.7 |
) |
Accrued income taxes |
|
|
(0.9 |
) |
|
|
0.8 |
|
Movement on plant closure
provisions |
|
|
1.5 |
|
|
|
1.4 |
|
Loss/(profit) on disposal of
subsidiary |
|
|
1.4 |
|
|
|
(1.6 |
) |
Cash contributions to defined
benefit pension plans |
|
|
(0.8 |
) |
|
|
(7.9 |
) |
Non-cash movements on defined
benefit pension plans |
|
|
(4.7 |
) |
|
|
0.4 |
|
Stock option compensation |
|
|
2.8 |
|
|
|
2.7 |
|
Movements on unrecognized tax
benefits |
|
|
(1.6 |
) |
|
|
(2.6 |
) |
Movements on other non-current
assets and liabilities |
|
|
0.1 |
|
|
|
(2.3 |
) |
Net cash provided by
operating activities |
|
|
86.8 |
|
|
|
90.6 |
|
|
|
|
|
|
Cash Flows from Investing
Activities |
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
(12.2 |
) |
|
|
(12.0 |
) |
Proceeds from disposal of
subsidiary |
|
|
- |
|
|
|
41.5 |
|
Business combinations, net
of cash acquired |
|
|
1.8 |
|
|
|
- |
|
Internally developed
software |
|
|
- |
|
|
|
(7.0 |
) |
Purchase of short-term
investments |
|
|
- |
|
|
|
(5.3 |
) |
Sale of short-term
investments |
|
|
4.7 |
|
|
|
4.8 |
|
Net cash (used
in)/provided by investing activities |
|
|
(5.7 |
) |
|
|
22.0 |
|
|
|
|
|
|
Cash Flows from Financing
Activities |
|
|
|
|
|
|
|
|
|
Non-controlling
interest |
|
|
- |
|
|
|
0.4 |
|
Net receipt/(repayment) of
revolving credit facility |
|
|
10.0 |
|
|
|
(12.0 |
) |
Repayments of finance
leases and term loans |
|
|
(0.8 |
) |
|
|
(0.4 |
) |
Receipt of short-term
borrowing |
|
|
- |
|
|
|
7.6 |
|
Payment for
acquisition-related contingent consideration |
|
|
(44.0 |
) |
|
|
- |
|
Excess tax benefit from
stock-based payment arrangements |
|
|
0.2 |
|
|
|
0.7 |
|
Dividend paid |
|
|
(8.1 |
) |
|
|
(7.3 |
) |
Issue of treasury
stock |
|
|
0.3 |
|
|
|
1.0 |
|
Repurchase of common
stock |
|
|
(8.2 |
) |
|
|
(15.4 |
) |
Net cash used in financing
activities |
|
|
(50.6 |
) |
|
|
(25.4 |
) |
Effect of foreign
currency exchange rate changes on cash |
|
|
(0.3 |
) |
|
|
(1.1 |
) |
Net change in cash and
cash equivalents |
|
|
30.2 |
|
|
|
86.1 |
|
Cash and cash equivalents
at beginning of period |
|
|
136.9 |
|
|
|
41.6 |
|
Cash and cash equivalents
at end of period |
$ |
|
167.1 |
|
$ |
|
127.7 |
|
Amortization of deferred finance costs of $0.2
million (2015 - $0.6 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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