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Innophos Holdings, Inc. (IPHS)
Q1 2013 Earnings Call
April 30, 2013, 10:00 am ET
Mark Feuerbach - VP, Treasury, Financial Planning & Analysis
Randy Gress - Chairman, President & CEO
Neil Salmon - VP & CFO
Larry Solow - CJS Securities
Peter Cozzone - KeyBanc Capital Markets
Edward Yang - Oppenheimer
Chris Butler - Sidoti & Co.
Chris Shaw - Monness, Crespi, Hardt & Co.
Jonathan Bloom - Fiduciary Management
Rick D'Auteuil - Columbia Management
Previous Statements by IPHS
» Innophos Holdings' CEO Discusses Q4 2012 Results - Earnings Call Transcript
» Innophos Holdings' CEO Discusses Q3 2012 Results - Earnings Call Transcript
» Innophos Holdings' CEO Discusses Q2 2012 Results - Earnings Call Transcript
» Innophos CEO Discusses Q3 2010 Results – Earnings Call Transcript
I’ll now turn the call over to Mark Feuerbach. Mark Feuerbach, you may begin.
Good morning and thank you for joining us today for Innophos’ first quarter 2013 results. Joining me on the call today are Randy Gress, Chief Executive Officer, and Neil Salmon, Chief Financial Officer. Randy will open with comments on our first quarter performance and progress in executing our strategic initiatives. Neil will then summarize our financial results in more detail and provide a look ahead to the 2013 second quarter after which Randy will conclude with some final remarks before opening the call up to your questions.
During the course of this call, management may make or reiterate forward-looking statements made in our April 29th press release regarding financial performance and future events. We will attempt to identify these statements by use of words such as expects, believes, anticipates, intends, and other words that denote future events. These forward-looking statements are subject to material risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements.
We caution you to consider the important risk and other factors as set-forth in the forward-looking statement section and in Item 1A Risk Factors in our annual reports on Form 10-K as filed with the SEC that could cause actual results to differ from those in the forward-looking statements made in this conference call.
We will make a replay of this conference call available for a limited time over the telephone at the numbers set-forth in our press release and via webcast available on the company website. In addition, please note that the date of this conference call is April, 30, 2013. Any forward-looking statements we may make today are based on assumptions that we believe to be reasonable as of this date and we undertake no obligations to update these statements.
Now I would like to turn the call over to Randy Gress, CEO of Innophos. Randy?
Thanks, Mark, and good morning everyone. Our results this quarter were not inline with our long-term objectives and reflected lower demand for some of our higher margin products and operational disruptions at our primary Mexico facilities. Despite these challenges, I remain confident that we are making good progress with our strategic growth initiatives. We benefited from strong performance within our nutrition businesses and continued success of our innovative low-sodium product line as well as record export sales from our US and Canada facilities including strong results in Asia Pacific which is particularly satisfying given the investments we've made in this region.
While we are encouraged by these developments, we were not able to fully offset pockets of softness in certain higher margin market segments during the quarter and our Mexican specialty phosphates, also fell significantly short of our earlier expectations on continued variation in production rates and operating efficiency.
As a result, we delivered net sales of $214 million in the first quarter, a 6% decline from last year. Adjusted diluted earnings per share were $0.60 compared to the $0.90 reported in the prior year period after giving effect to the disclosed adjustments for each quarter.
Let me give a bit more detail on the progress we are making in our growth strategy. In North America, overall sales for US and Canada specialty phosphates were up 7% primarily due to the benefit of our recent acquisitions in the nutrition space. These acquisitions position us well within the highly attractive bioactive mineral ingredient space and we are encouraged by their performance in our integration efforts which are proceeding according to plan.
We are beginning to realize the full potential of these businesses on an individual basis and are now shifting our focus on capturing the synergies inherent in their combination with each other and our specialty phosphate business.
Kelatron, AMT Labs, and Triarco Industries are highly complementary to each other and I continue to believe we have a strong platform for future growth in this attractive market segment. Combined these businesses are expected to generate annual revenues in excess of $50 million with EBITDA margins inline with our more differentiated specialty ingredients business. Going forward, we believe they are well positioned to achieve high single-digit growth rates in spite of the challenging economic environment.
Another important growth initiative for us is developing innovative product lines that fit well with broader consumer trends and address specific customer needs. A great example of that are our Cal-Rise products, which reduce the sodium content in baked goods while maintaining the same case profile and functionality. Market acceptance of this product has been gaining traction and we are delivering good growth with sales more than doubling in the quarter. We remain focused on developing other products that reduce sodium in processed foods as well as increase nutritional content and other mineral fortification in a variety of foods and beverages.