Innophos Holding Inc., Cranbury, N.J., reported a 20 percent drop in first-quarter net income, in part citing the impact of Midwest flooding on its low-grade phosphoric acid business into fertilizer markets. Net income was $8.7 million ($0.44 per diluted share) on sales of $191.4 million, down from the year-ago $10.9 million ($0.55 per share) and $205.4 million, respectively. Adjusted EPS of $0.57 beat analyst estimates of $0.43, according to Bloomberg. Adjusted EBITDA was $30.3 million, down from $32.4 million.
“Innophos’ first-quarter performance was marked by our ability to deliver an adjusted EBITDA margin in line with last year, despite a difficult year-over-year comparison on the top line,” said Kim Ann Mink, Ph.D., Chairman, President, and CEO. “First-quarter sales were down compared with the prior-year quarter as Innophos’ pricing power was offset by the planned discontinuation of low-margin nutrition trading business, order pattern, and impact from Midwest flooding.
“In addition, there was weaker than expected demand in certain industrial categories,” Mink continued. “Our ability to maintain an adjusted EBITDA margin equal to last year was due to our cost management efforts implemented in the second half of 2018, continued success in capturing price increases, and improved mix. Adjusted EBITDA was sequentially flat, marking the fourth straight quarter of relatively stable adjusted EBITDA.”
She said the company made progress with its new product development program to continue the shift of product mix to higher levels of the attractive Food, Health, and Nutrition (FHN) business.
The company also said price actions continued to offset input cost increases. It said the transition to lower cost value chain structure at Geismar, La., successfully optimized the processing of the new multi-sourced supply mix and scale up to targeted run rates.
The company noted that it is bringing in more merchant grade acid to Geismar from its Coatzacoalcas, Mexico, facility. It added that the Coatzacoalcas facility will undergo and complete a planned annual shutdown in the second quarter at one of its units, with maintenance and under-absorption costs of $3 million. These costs are already baked into guidance.
Innophos maintains its 2019 adjusted EBITDA guidance for growth of 1-3 percent from 2018’s $125 million. However, 2019 revenues, which were expected to be level with 2018, have been tweaked downward by 1-2 percent below 2018’s $802 million. It said the move reflects the impact from the softer first-quarter demand in certain industrial categories.