Performance Chemicals operating income up 14 percent; Fuel Specialties operating income up 7 percent
As expected, Oilfield Services saw the continued impact of lower production chemical activity in Latin America
$25.7 million cash generated from operations; Net cash of $289.2 million
Non-cash settlement charge of $155.6 million ($4.65 per share) on UK pension scheme buy out
GAAP loss per share $2.80 and adjusted non-GAAP earnings per share $1.41
ENGLEWOOD, Colo., Feb. 18, 2025 (GLOBE NEWSWIRE) -- Innospec Inc. (NASDAQ: IOSP) today announced its financial results for the fourth quarter and full year ended December 31, 2024.
Total revenues for the fourth quarter were $466.8 million, a decrease of 6 percent from $494.7 million in the corresponding period last year. There was a net loss of $70.4 million, or $2.80 per diluted share, driven by the buy out of the UK pension scheme, compared to net income of $37.8 million or $1.51 per diluted share recorded last year. Adjusted EBITDA for the quarter was $56.6 million compared to $61.6 million reported in the same period 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 in the fourth quarter was $1.41 per diluted share, compared to $1.84 per diluted share a year ago.
Innospec generated cash from operating activities of $25.7 million before capital expenditures of $20.6 million in the quarter and closed the year with net cash of $289.2 million.
Adjusted EBITDA, income before income taxes excluding special items, net income excluding special items, and related per-share amounts, together with net cash, are non-GAAP financial measures that are defined and reconciled with GAAP results herein and in the schedules below.
| Quarter ended December 31, 2024 | Quarter ended December 31, 2023 | |||||||||||||||||||||
| (in millions, except share and per share data) | (Loss)/ income before income taxes | Net (loss)/ income | Per diluted share | Income before income taxes
| Net income | Per diluted share
| ||||||||||||||||
| Reported GAAP amounts | $ | (102.6 | ) | $ | (70.4 | ) | $ | (2.80 | ) | $ | 45.3 | $ | 37.8 | $ | 1.51 | |||||||
| Settlement charge on UK pension scheme buy-out | 155.6 | 116.7 | 4.65 | - | - | - | ||||||||||||||||
| Adjustment of income tax provisions | - | (11.0 | ) | (0.44 | ) | - | 0.5 | 0.02 | ||||||||||||||
| Foreign currency exchange (gains)/losses | (8.0 | ) | (5.7 | ) | (0.23 | ) | 2.6 | 2.0 | 0.08 | |||||||||||||
| Adjustment to fair value of contingent consideration | 1.3 | 2.0 | 0.08 | - | - | - | ||||||||||||||||
| Amortization of acquired intangible assets | 2.3 | 1.7 | 0.07 | 2.6 | 2.0 | 0.08 | ||||||||||||||||
| Legacy costs of closed operations | 1.4 | 1.1 | 0.04 | 3.7 | 2.8 | 0.11 | ||||||||||||||||
| Impact of internal reorganizations | 0.6 | 1.1 | 0.04 | - | - | - | ||||||||||||||||
| Acquisition related costs | - | - | - | 1.3 | 1.0 | 0.04 | ||||||||||||||||
| 153.2 | 105.9 | 4.21 | 10.2 | 8.3 | 0.33 | |||||||||||||||||
| Adjusted non-GAAP amounts | $ | 50.6 | $ | 35.5 | $ | 1.41 | $ | 55.5 | $ | 46.1 | $ | 1.84 | ||||||||||
For the full year, total revenues of $1.85 billion decreased by 5 percent from $1.95 billion in the prior year. Net income for 2024 was $35.6 million or $1.42 per diluted share, driven by the buy out of the UK pension scheme, compared to the prior year net income of $139.1 million, or $5.56 per diluted share. Adjusted EBITDA for the year was $225.2 million up 4 percent from $216.0 million in 2023.
Results for the full year include some special items, which are summarized in the table below. Excluding these items, adjusted non-GAAP EPS for the full year was $5.92 per diluted share, compared to $6.09 per diluted share a year ago.
| Year ended December 31, 2024 | Year ended December 31, 2023 | |||||||||||||||||
| (in millions, except share and per share data) | Income before income taxes | Net income | Diluted EPS | Income before income taxes | Net income | Diluted EPS | ||||||||||||
| Reported GAAP amounts | $ | 41.2 | $ | 35.6 | $ | 1.42 | $ | 174.4 | $ | 139.1 | $ | 5.56 | ||||||
| Settlement charge on UK pension scheme buy out | 155.6 | 116.7 | 4.65 | - | - | - | ||||||||||||
| Adjustment of income tax provisions | - | (11.4 | ) | (0.45 | ) | - | 1.2 | 0.05 | ||||||||||
| Amortization of acquired intangible assets | 11.3 | 8.6 | 0.34 | 10.5 | 8.0 | 0.32 | ||||||||||||
| Recovery of historical pension costs | (8.4 | ) | (6.3 | ) | (0.25 | ) | - | - | - | |||||||||
| Foreign currency exchange gains | (4.9 | ) | (3.6 | ) | (0.14 | ) | (3.8 | ) | (2.9 | ) | (0.12 | ) | ||||||
| Adjustment to fair value of contingent consideration | 3.4 | 3.4 | 0.14 | - | - | - | ||||||||||||
| Legacy costs of closed operations | 4.0 | 3.0 | 0.12 | 6.1 | 4.6 | 0.18 | ||||||||||||
| Settlement of historical tax audits | - | 1.3 | 0.05 | - | - | - | ||||||||||||
| Impact of internal reorganizations | 0.6 | 1.1 | 0.04 | - | - | - | ||||||||||||
| Acquisition related costs | - | - | - | 3.1 | 2.4 | 0.10 | ||||||||||||
| 161.6 | 112.8 | 4.50 | 15.9 | 13.3 | 0.53 | |||||||||||||
| Adjusted non-GAAP amounts | $ | 202.8 | $ | 148.4 | $ | 5.92 | $ | 190.3 | $ | 152.4 | $ | 6.09 | ||||||
Commenting on the fourth quarter results, Patrick S. Williams, President and Chief Executive Officer, said,
"This was another good quarter for Innospec. Fuel Specialties and Performance Chemicals delivered strong operating income growth over the prior year, and Oilfield Services remained in line with expectations, despite continuing weak production chemicals activity in Latin America.
Performance Chemicals delivered double-digit operating income growth over last year. Moving through 2025, our outlook continues to target operating income and margin improvement to levels consistent with the full year 2022. The team has an exciting mix of growth opportunities across our global personal care, home care, agriculture, construction and other industrial markets.
In Fuel Specialties, gross margins were at the upper end of our targeted 32 to 35 percent range and operating income increased by 7 percent on the prior year. Full year operating margins improved to just below our target of 19 to 21 percent, and we remain focused on further growth and margin improvement. Entering 2025, the team is pursuing a broad set of regional and end-market opportunities in traditional fuel, renewable fuel and non-fuel applications.
In Oilfield Services, as expected, results remained similar to the third quarter with no recovery in Latin America production chemical activity. We currently do not expect this activity to resume in the coming quarters. In 2025, we remain focused on opportunities in our other oilfield segments, which we believe will drive sequential quarterly improvements. These include opportunities in US completions and production, DRA and continued momentum in the Middle East.”
Revenues in Performance Chemicals of $169.2 million were up 23 percent over the fourth quarter of last year, with acquisition growth of 7 percent, volume growth of 17 percent, an adverse price/mix of 2 percent and a positive currency impact of 1 percent. Gross margins of 22.7 percent increased by 1.4 percentage points from the same quarter last year. Operating income of $20.6 million increased 14 percent from $18.0 million in the prior year period. For the full year, revenues were up 16 percent to $653.7 million and operating income increased 52 percent to $82.9 million.
Revenues in Fuel Specialties of $191.8 million were up 5 percent from $182.1 million in the fourth quarter of last year. Volumes were up 9 percent with an adverse price/mix of 5 percent and a positive currency impact of 1 percent. Gross margins of 34.4 percent increased by 1.5 percentage points over last year. Operating income of $34.9 million was up 7 percent from $32.6 million a year ago. For the full year, revenues were up 1 percent to $701.1 million and operating income increased 18 percent to $129.6 million. Adjusting for the impact of non-recurring Brazil inventory charges in the first half of 2023, full year operating income grew by 4 percent.
Revenues in Oilfield Services of $105.8 million for the quarter were down 40 percent from $175.4 million in the fourth quarter of last year. Gross margins of 30.1 percent decreased by 7.9 percentage points from the same quarter last year on a weaker sales mix. Operating income of $7.5 million decreased 59 percent from $18.3 million in the prior year period. For the full year, revenues were down 29 percent to $490.6 million and operating income decreased 51 percent to $38.8 million.
Corporate costs of $20.6 million decreased by $3.8 million from last year which included $1.3 million relating to acquisition costs. The full year adjusted effective tax rate for 2024 was 26.4 percent compared to 23.0 percent last year, due to the geographical mix of taxable profits. In the fourth quarter the Company concluded the buy out of the UK pension scheme and incurred a non-cash settlement charge of $155.6m. All UK liabilities are now removed from the Company's balance sheet.
For the quarter, cash provided by operating activities after capital expenditures was $5.1 million compared to $51.3 million a year ago. For the full year, cash from operations after capital expenditures was $122.7 million compared to $130.2 million in 2023. As of December 31, 2024, Innospec had net cash of $289.2 million compared to net cash of $203.7 million a year ago.
Mr. Williams concluded,
"Our business teams delivered a strong quarter and full year. Entering 2025, we are well positioned for continued full year growth in Performance Chemicals and Fuel Specialties and s