Innophos Holdings, Inc. Reports Fourth Quarter and Full Year 2016 Results

CRANBURY, N.J., Feb. 21, 2017

Q4 2016 Highlights

• Net income of $9 million was up 303% year-over-year on a GAAP basis and 70% on an adjusted basis, on a 2% decrease in sales
• Adjusted EBITDA of $26 million, or 16% of sales, up 249 basis points year-over-year and in line with expectations
• GAAP diluted EPS of $0.47 was up significantly from the $0.24 loss in Q4 2015. Adjusted diluted EPS of $0.52 was up 62% versus prior year
• Working capital reductions drove strong operating cash delivery of $57 million, more than double Q4 2015, and $46 million in free cash flow, more than triple Q4 2015
• Credit facility refinanced providing favorable terms and additional capacity to support strategic growth plans

Full Year 2016 Highlights

• Net income of $48 million was up 82% year-over-year on a GAAP basis and up 9% on an adjusted basis, on an 8% decrease in sales
• Margin impact from revenue shortfall offset by $44 million from cost-reduction actions resulting in strong adjusted EBITDA of $122 million, or 17% of sales, up 180 basis points year-over-year
• GAAP diluted EPS of $2.44, up 89% from 2015. Adjusted diluted EPS of $2.55, was up 12%
• Working capital as a percent of sales reduced by 690 basis points through improvements in planning processes and disciplined inventory management
• Operational Excellence initiatives identified a procurement savings pipeline of $15 to $18 million, $3 million above the range previously provided; $12 million of savings were recorded in 2016 and the balance expected to be realized in 2017
• Operating cash flow delivered $139 million, up 41% year-over-year, and $103 million in free cash flow, up 53% year-over-year, reducing net debt by 33% and leverage to 1.1x

"2016 was a meaningful and transformative year for Innophos as we strengthened the foundation of our business, delivered bottom line improvement and laid the groundwork for strategic growth," said Kim Ann Mink, Ph.D., Chief Executive Officer. "By remaining laser focused on reducing costs across the organization, we lowered input costs by a total of $22 million annually, $12 million of which was through our Operational Excellence initiatives and the balance from market conditions. Our 2016 financial results are a true testament to the performance driven culture we are cultivating at Innophos. Throughout the organization our teams are embracing the transformation that is underway, delivering results and displaying a commitment to excellence, transparency and accountability."

"The fourth quarter was highlighted by bottom line growth and tremendous cash generation. We grew margins even as we faced ongoing market headwinds. Our focus on efficient working capital resulted in meaningful free cash flow performance in the quarter that was more than triple the prior year. We also refinanced our credit facility with lower interest rates and an expanded capacity to support our Strategic Growth pillar."  

"As we move forward into 2017, although we expect market headwinds to continue, we are well positioned to deliver enhanced shareholder value," Dr. Mink continued. "Our focus will be on executing additional bottom line savings as we move to the next phase of Operational Excellence initiatives, which will standardize processes and reduce costs while improving how we operate. In addition, our Commercial Excellence blueprint that better aligns our sales organization with market opportunities and key customers will be fully implemented. Further, we plan to drive sustainable growth through acquisitions in attractive, high-growth, functional food, health and nutrition market segments. We are actively seeking opportunities to expand our capabilities and build upon our experience in providing value-added and innovative technology-based solutions to these markets."

Dr. Mink concluded, "I am confident that in the year ahead, we will leverage the momentum of our progress in 2016 by taking the appropriate, decisive next steps to further strengthen our competitive position, improve profitability and solidify Innophos' future growth prospects."