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Dec 31, 2019
Innospec Q4 2019 Earnings Report
Innospec's financial performance was influenced by strong performances in Oilfield Services and Performance Chemicals, offset by supply issues in Fuel Specialties.
Key Takeaways
Innospec reported Q4 2019 revenues of $390.7 million and net income of $31.1 million, or $1.26 per diluted share. Adjusted non-GAAP EPS was $1.47. The company's performance was impacted by supply disruptions in Fuel Specialties and higher share-based compensation costs, but Oilfield Services and Performance Chemicals performed strongly.
Oilfield Services revenues increased by 12 percent and operating income increased by 48 percent.
Gross margin improvements in Performance Chemicals drove record operating income.
Fuel Specialties was impacted by a supply disruption, with operations expected to normalize by the end of Q1 2020.
GAAP EPS was $1.26 and adjusted EPS was $1.47, impacted by 19 cents from higher share-based compensation.
Innospec
Innospec
Innospec Revenue by Segment
Revenue by Segment
Fuel Specialties Revenue
CapyFin.comOilfield Services Revenue
CapyFin.com Forward Guidance
Innospec expects that strategies in its core businesses remain robust and has excellent organic growth opportunities based on innovative technology, which it expects will drive its performance beyond 2020.
Positive Outlook
- Solutions to the supply disruption are being implemented, expected to benefit the business long-term.
- Oilfield Services business has outperformed the market and delivered an excellent performance.
- Strategic intent to increase margins in Performance Chemicals has contributed to a great year.
- Excellent cash flow generation has moved the company to a net cash position at year end.
- Underlying fundamentals of the business are very sound and the company is well placed to continue to successfully execute its strategy.
Challenges Ahead
- Market dynamics are still influenced by the uncertainty of slower growth and trade disputes.
- Dealing with supply disruption in Fuel Specialties business.
- Higher costs related to increased share-based compensation.
- Fuel Specialties impacted by supply disruption and expect operations to normalize by the end of Q1.
- Octane Additives revenue for 2019 down 38 percent on prior year, and with a reduction in year-over-year operating income of over $10 million.
Revenue & Expenses
Visualization of income flow from segment revenue to net income