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Innophos Holdings, Inc. (IPHS)
Q2 2013 Earnings Call
July 30, 2013 10:00 AM ET
Mark Feuerbach – VP and CFO
Randy Gress – Chairman, CEO and President
Larry Solow – CJS Securities
Peter Cozzone – KeyBanc Capital Markets
Edward Yang – Oppenheimer
Christopher Butler – Sidoti & Company
Chris Shaw – Monness Crespi
Richard O’Reilly – Revere Associates
Previous Statements by IPHS
» Innophos Holdings' CEO Discusses Q1 2013 Results - Earnings Call Transcript
» 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
I would now like to turn the presentation over to your host for today’s call, Mr. Mark Feuerbach, Vice President, Investor Relation; and currently serving as CFO. Sir, you may begin.
Good morning, and thank you for joining us today for Innophos’ second quarter 2013 results. Joining me on the call today is Randy Gress, Chief Executive Officer. Randy will open with comments on our second quarter performance and progress in executing our strategic initiatives. I will then summarize our financial results in more detail and provide a look ahead to the third 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 July 29 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 risks and other factors as set forth in the forward-looking statements 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 number 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 July 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 obligation 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. We continue to make significant progress against our strategic objectives in the quarter and exited the period in a markedly better position than we entered. We delivered improved volume growth in the U.S. and Canada with great performance coming from our low sodium product line and our recently acquired nutrition businesses along with continued strong export sales. We also successfully resume shipments to Venezuela towards the end of the quarter. Importantly, we made great progress on the short-term production improvement program in Mexico and exited the quarter back on track toward our longer term performance objectives, with June yields and production rates well above first quarter averages.
Although we executed well during the quarter, our reported results were not in line with our long-term performance expectations. In the first half of the quarter, we experienced higher costs related to getting our Mexico production performance back up to speed along with the impact of a revision of estimates for our phosphate rock inventories. However, underlying business performance improved during the quarter, and we saw some solid demand improvement in consumer-oriented end markets, while some industrial markets remain below year ago levels.
We also experienced extremely soft market conditions in our GTSP & Other business. As a result, we delivered total net sales of $213 million in the second quarter, a 1% decline from last year. Adjusted diluted earnings per share were $0.79 compared to the $0.81 recorded in the prior year period after giving effect to the disclosed adjustments for each period.
Let me provide some details on our results for the second quarter and the progress we are making in our growth strategy. Overall sales for U.S. and Canada Specialty Phosphates were up 9% on 3% higher volumes in our core business which reached its highest level in more than three years. Our recent acquisitions in the nutrition space contributed 7% to our Specialty Phosphates growth. We continue to gain momentum and are positioned well within the highly attractive bioactive mineral ingredient space where our business has grown above the 6% to 8% market growth rate for the first half of 2013.
Continuing the trend, we have been experiencing over the past few quarters, our innovative CAL-RISE products for low sodium baking applications generated good results this quarter, recording sales more than double of the prior year period. We have also seen market acceptance of our low sodium products and other applications and I am pleased to have achieved several new business wins for low sodium blends for meat and poultry applications. Lastly, export sales out of our U.S. and Canada business remained strong to the Europe, Middle East and Africa and Asia-Pacific regions with year-over-year sales up 9%. This means a critical source of future growth and an opportunity that we continue to pursue in attractive markets.