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Dec 31, 2020
Innospec Q4 2020 Earnings Report
Innospec reported a decrease in revenue but an increase in operating income in Performance Chemicals, and sequential improvements in sales and operating income for Fuel Specialties. Oilfield Services returned to positive operating income.
Key Takeaways
Innospec Inc. reported a decrease in total revenues for Q4 2020 to $310.8 million, a 20% decrease compared to $390.7 million in Q4 2019. Net income was $22.6 million, or $0.91 per diluted share, compared to $31.1 million, or $1.26 per diluted share in the same quarter last year. Adjusted non-GAAP EPS was $1.27 per diluted share, compared to $1.47 per diluted share a year ago.
Continued strong revenue growth and operating income in Performance Chemicals.
Further sequential improvement in sales and operating income for Fuel Specialties.
Oilfield Services returned to positive operating income.
Excellent cash generation enhanced strong liquidity position; Improvement in net cash to $104.7 million.
Innospec
Innospec
Innospec Revenue by Segment
Revenue by Segment
Fuel Specialties Revenue
CapyFin.comOilfield Services Revenue
CapyFin.com Forward Guidance
The pandemic continues to add uncertainty to the general economic outlook, but as regions reopen and commercial activity increases, Innospec expects that demand for its products will continue to improve in all of its businesses. The company has prioritized new, technology-based, organic investment opportunities for 2021 and continues to evaluate acquisition opportunities focused on expanding its presence in the diverse number of end-markets.
Positive Outlook
- Demand for additives improved as global fuel consumption increased for the second consecutive quarter.
- Strong growth across all of our end-markets drove a 34 percent sequential increase in sales for the quarter in Oilfield Services.
- Gross margins improved both sequentially and versus the prior year in Oilfield Services.
- Delivered positive operating income versus a $12.4 million loss just two quarters ago in Oilfield Services.
- Cash flows were excellent in the quarter and full year, and our liquidity position strengthened again in the quarter.
Challenges Ahead
- Demand is still below 2019 levels.
- COVID-19 related factors such as vaccination rates and the most recent wave of lockdowns in Europe could slow demand levels as we move through 2021.
- Revenues in Fuel Specialties were down 8 percent from last year.
- Gross margins of 31.4 percent were at the bottom end of our expected range and down 1.9 percentage points compared to a strong comparative a year ago.
- Revenues of Oilfield Services were down by 52 percent on the fourth quarter of 2019, driven by low levels of customer activity in US completions.
Revenue & Expenses
Visualization of income flow from segment revenue to net income