Innophos Holdings (IPHS) Misses Q1 EPS by 10c

Innophos Holdings (NASDAQ: IPHS) reported Q1 EPS of $0.55, $0.10 worse than the analyst estimate of $0.65. Revenue for the quarter came in at $202 million versus the consensus estimate of $218.1 million.

Recent Trends and Outlook

Specialty Phosphates volumes were down 1% for the first quarter 2015 compared to the prior year period. Soft end market demand, competitive pricing pressures and the strong US dollar effects seen in the fourth quarter 2014 continued through the first quarter 2015. These effects overshadowed continued strong volume performance for INNOVALT® and Cal-Rise®, where year-over-year volumes were up 123% and 40%, respectively. Export sales to Europe, Middle East and Africa were up 15% year-over-year; however, export sales overall were down 11% due to shipment delays to Asia resulting from the extended dockworkers slowdown affecting US West Coast ports and unfavorable market pricing conditions in Latin America. Specialty Phosphates volumes are now projected to be flat for full year 2015 compared to 2014, with soft market demand expected to offset successes on new products and geographic expansion.

Specialty Phosphates operating income margins were 12% for the first quarter 2015 as expected. However, market pricing conditions are more unfavorable than expected, so management's full year margin expectations have now been adjusted to be in the 12-13% range, down 100 basis points from the previously targeted 2015 range.

Reported fertilizer market prices showed a flat to slightly declining trend during the first quarter of 2015. However, demand was extremely soft, with buyers delaying purchases, leading to bid prices below reported market prices. Market phosphate rock prices were fairly stable sequentially in the first quarter 2015 and are expected to remain stable for the second quarter. Sulfur market prices increased approximately 14% sequentially in the first quarter 2015 and are expected to decline approximately 10% for the second quarter.

GTSP & Other recorded a $2 million operating loss for the first quarter 2015, $1 million below the low end of the expected range, due to a $1 million lower of cost or market reserve posted in the quarter. The company expects an operating result close to break even for the second quarter.

Net debt increased sequentially by $48 million in the first quarter 2015 to $148 million primarily due to $34 million of share repurchases and $21 million of increased working capital needs.

For earnings history and earnings-related data on Innophos Holdings (IPHS) click here.

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