Innophos Holdings (IPHS) Trims Q3 Guidance

Innophos Holdings, Inc. (NASDAQ: IPHS) today issued preliminary results for its third quarter ending September 30, 2018 and updated full year 2018 guidance.

This update is preliminary in nature, based upon information available to the Company as of the date of this release and is subject to further changes upon completion of the Company's standard closing procedures. This update has not been reviewed or verified by the Company's independent auditors.

The Company is revising its full year 2018 revenue and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) guidance with revenue expected to grow 10% to 12% (previously was 12% to 14%) compared with full year 2017 revenue of $722 million. Adjusted EBITDA is expected to grow 3% to 7% (previously was 15% to 17%) compared with adjusted EBITDA of $120 million for full year 2017.

The Company anticipates softer sequential sales in the second half of 2018 compared with the first half of the current year with Q3 sales estimated at $197 million. The revised revenue guidance reflects lower-than-expected nutrition sales in the second half of 2018, principally driven by the Company’s decision to discontinue a portion of lower-margin trading business ahead of plan. To better position for future revenue and earnings growth, the Company continues to actively transition the lower-margin ingredients portion of its acquired portfolio to more value-adding solutions.

(**Street sees Q3 revenue of $212.6 million)

The Company has revised its full year adjusted EBITDA guidance, with Q3 estimated to be in the range of $30 million to $32 million, which is sequentially in line with Q1 and Q2 of 2018. This revision reflects a shift in the timing of the anticipated initial value chain benefits from 2018 to 2019 due to various factors, including a delay in receiving long lead-time environmental and operational government permits, which are now finalized and have been received. Additionally, the Company experienced isolated operations-related issues and expenses, which the Company is actively addressing. The Company has continued to advance the completion of the targeted supply chain redesign. As a result, Innophos continues to expect full benefits of the strategic value chain repositioning and manufacturing optimization program to materialize in H2 2019 and reiterates its expectation to deliver adjusted diluted EPS improvement of 10% by the end of 2019.

During the first half of 2018, selling price increases were effective in offsetting input cost increases. In response to the operating environment continuing to show cost inflation, the Company has continued to take further price increase actions.

Additionally, the Company immediately took initial SG&A cost actions, which are anticipated to deliver benefits in both Q3 and Q4 of 2018 and will carry forward into 2019. The Company continues to evaluate additional cost savings opportunities.

Further, the Company has taken steps to protect its 2018 free cash flow delivery and is announcing its intention to finalize a sale lease-back transaction during Q4 on a non-core asset for an estimated $20 million in cash. This transaction, along with the previously communicated $20 million Nutrien payment, is expected to generate an estimated $40 million in positive cash flow in the fourth quarter of 2018.

“We are acting swiftly to manage the dynamics of the business by implementing cost and pricing actions while simultaneously executing against key initiatives under our Strategic Pillars,” said Kim Ann Mink, Ph.D., Chairman, President and Chief Executive Officer. “We remain confident that our strategic programs are positioning Innophos to deliver long-term value for our customers and shareholders, and that we are on track to achieve our Vision 2022 goals.”

Q3 2018 Conference Call

Innophos announced that it will host its third quarter 2018 conference call on Thursday, November 1, 2018 at 9:00 am ET to discuss its earnings results. The press release detailing third-quarter 2018 results will be issued on the morning of November 1st prior to the call.

Those who wish to listen to the conference call webcast should visit the “Investors” section of the Company’s website at www.innophos.com. The live call also can be accessed by dialing (877) 604-1612 (U.S.) or (201) 389-0883 (international). If you are unable to listen to the live call, the webcast will be archived on the Company’s website. In addition, a telephone replay will be available between November 1, 2018 and November 15, 2018. The replay is accessible by dialing (877) 660-6853 (U.S.) or (201) 612-7415 (international) and entering the Conference ID number 13684095.

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