Q2 2017 EARNINGS CALL & NOVEL INGREDIENTS ACQUISITION · Novel Ingredients Acquisition and Earnings...

REVITALIZED

FOR GROWTH

Q2 2017 EARNINGS CALL & NOVEL INGREDIENTS ACQUISITION August 1, 2017 – 9:00 am ET

Novel Ingredients Acquisition and Earnings Conference Call Second Quarter 2017 | August 1, 2017

Forward-Looking Statements

• This presentation contains or may contain forward-looking statements within the meaning of Section 27a of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The company intends these forward-looking statements to be covered by the safe harbor provisions for such statements.

• Statements made in this presentation that relate to our future performance or future financial results or other future events (which may be identified by such terms as “expect”, “estimate”, “anticipate”, “assume”, “believe”, “plan”, “intend’, “may”, “will”, “should”, “outlook”, “guidance”, “target”, “opportunity”, “potential” or similar terms and variations or the negative thereof) are forward-looking statements, including the Company’s expectations regarding the business environment and the Company’s overall guidance regarding future performance and growth. These statements are based on our current beliefs and expectations and are subject to significant risks and uncertainties. Actual results may materially differ from the expectations expressed in or implied by these forward-looking statements.

• Factors that could cause the Company’s actual results to differ materially include, but are not limited to: (1) global macroeconomic conditions and trends; (2) the behavior of financial markets, including fluctuations in foreign currencies, interest rates and turmoil in capital markets; (3) changes in regulatory controls regarding tariffs, duties, taxes and income tax rates; (4) the Company’s ability to implement and refine its Vision 2022; (5) the Company’s ability to successfully identify and complete acquisitions in line with its Vision 2022 and effectively operate and integrate acquired businesses to realize the anticipated benefits of those acquisitions; (5) the Company’s ability to realize expected cost savings and efficiencies from its performance improvement and other optimization initiatives; (6) the Company’s ability to effectively compete in its markets, and to successfully develop new and competitive products that appeal to its customers; (7) changes in consumer preferences and demand for the Company’s products or a decline in consumer confidence and spending; (8) the Company’s ability to benefit from its investments in assets and human capital and the ability to complete projects successfully and on budget; (9) economic, regulatory and political risks associated with the Company’s international operations, most notably Mexico and China; (10) volatility and increases in the price of raw materials, energy and transportation, and fluctuations in the quality and availability of raw materials and process aids; (11) the impact of a disruption in the Company’s supply chain or its relationship with its suppliers; (12) the Company’s ability to comply with, and the costs associated with compliance with, U.S. and foreign environmental protection laws; (13) the Company’s ability to meet quality and regulatory standards in different jurisdictions in which it has operations or conducts business and (14) the Company’s ability to consummate the acquisition of Novel Ingredients and to achieve the benefits anticipated from such acquisition.

• 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 most recent Annual Report on Form 10-K, as amended by subsequent reports on Forms 10-Q and 8-K.

• We do not undertake to update the forward-looking statements to reflect the impact of circumstances or events that may arise after the date of the forward-looking statements.

Regulation G: Adjusted Results

• The information presented herein regarding certain unaudited adjusted results does not conform to generally accepted accounting principles in the U.S. (U.S. GAAP). Innophos has included this non-GAAP information to assist in understanding the operating performance of the company and its reporting segments. Please see reconciliations to the most directly comparable financial measure prescribed by U.S. GAAP in the appendix.

Totals in this presentation may not foot due to rounding.

Kim Ann Mink, Ph.D. Chairman, President and Chief Executive Officer

Han Kieftenbeld SVP and Chief Financial Officer

Agenda

1. Executive Overview

2. Q2 Financial Review and 2017 Outlook

3. Novel Ingredients Acquisition

4. Q&A



Strong Q2 Performance – Advancing Vision 2022

Q2 2017 Revenue and earnings performance exceeded guidance

• All segments showed positive year-over-year volume comparisons

• Continued cost savings from Operational Excellence initiatives with more scheduled for H2

• Well positioned to deliver robust H2 2017 in line with full year guidance

• Continued progress on strategic pillars

Acquiring Novel Ingredients to create a nearly $0.5 billion Food, Health and Nutrition platform and advance Vision 2022 growth strategy


Enhancing Our Growth And Earnings Profile

Strategic Pillars strengthen the foundation and drive performance

Operational Excellence

• Phase 1 complete; final $2m in Q2 2017

• On track with Phase 2; $5m of $13m to be realized in H2 2017

• Further performance improvement potential in 2018 and beyond

Commercial Excellence

• Fully implemented the newly aligned market-focused global sales organization and “3 in-the-box” go-to-market model

Strategic Growth

• Announced acquisition of Novel Ingredients

Advancing Vision 2022

Innophos announces definitive agreement to acquire Novel Ingredients

+

• Creates nearly $0.5 billion Food, Health and Nutrition (FHN) platform

• Advances Vision 2022 growth strategy and enhances innovation

• Expands Innophos’ offering in high-growth Nutrition end-markets

• Expected to deliver attractive cost and tax synergies of ~$15 million

• Prudently financed using existing cost effective credit facility



Agenda




4. Q&A

> Totals in this presentation may not foot due to rounding


Q2 2017 Performance Highlights

30

22

30 30

1

9 13

1 4

0

2016A Vol/Mix Price Inp Cost Mfg SG&A FX 2017A

• Adjusted EBITDA of $30m and margin of 17% showing a 18 bps YOY improvement

• Sales shortfall resulting in -$8m margin impact primarily from price erosion

• Offset by +$13m from lower input costs and maintaining tight cost controls

• Manufacturing included $2.5m of fees to complete Operational Excellence phase II cost savings implementation which was offset by $2.4m of maintenance stoppage costs in the prior year

• SG&A increase primarily due to strategic project initiatives and incentive compensation programs

• Good OCF/FCF for the current quarter but comps down YOY due to significant working capital reductions in the prior year

($8m) +$8m

Adjusted EBITDA ($ Millions)

Q2

$m Variance

Sales 179 (3) -2%

Gross Profit Gross Margin

39 3 8%

22% +194 bps

Net Income 11 (1) -7%

Adj. Net Income 11 (1) -8%

Adj. EBITDA Adj. EBITDA%

30 --- ---

17% +18 bps

Diluted EPS 0.57 (0.05) -8%

Adj. Diluted EPS 0.57 (0.05) -8%

OCF 30 (15) -33%

FCF 23 (12) -35%


Q2 2017 Sales Revenue And Gross Margin

Quarterly Comments

• Sales Revenue down 2% YOY primarily due to lower selling prices. Favorable volume comps seen in all segments

• Food, Health and Nutrition: -3% YOY primarily due to lower average selling prices as volumes improved 2%. Export sales to Venezuela will resume in Q3 2017

• Industrial Specialties: -6% due to strong price competition in technical grade products

• Mix unfavorable due to Other sales up 28%

2016

Sales ($m) Gross Margin (% of Sales)

182 186 168 166

179

20% 22%

20% 22% 22%

0%

5%

10%

15%

20%

25%

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

$200

Q2 Q3 Q4 Q1 Q2

2017

Sales Revenue Bridge

Q2 YTD

$m % $m %

2016 182 371

Volume/Mix 6 3% (7) -2%

Price (9) -5% (19) -5%

2017 179 345

YOY Variance (3) -2% (26) -7%


Q2 2017 Earnings

Quarterly Comments

*Excl. $1.6m in Q2 2016, $2.4m in Q3 2016, $1.8m in Q4 2016, $1.7m in Q1 2017 and $1.8m in Q2 2017

• Net income down $1m or -7% versus prior year due to a higher tax rate as EBT was flat. Margins of 6% down 39 bps YOY.

• Adjusted EBITDA flat YOY with a margin of 17%, up 18 bps compared with prior year

• YOY average selling price erosion offset by lower input costs

• SG&A increase primarily due to strategic project initiatives and incentive compensation programs

• Sequential FX down $1m to zero due to stronger Mexican Peso

12 14 9 11 11

$0

$5

$10

$15

Q2 Q3 Q4 Q1 Q2

2016 2017

Net Income

Adjusted EBITDA*

30 34 26 28 30

16% 18%

16% 17% 17%

0%

5%

10%

15%

20%

$0

$10

$20

$30

$40

Q2 Q3 Q4 Q1 Q2

Adjustment ($m) Reported ($m) Adjusted EBITDA margin (% of Sales)

Adj. EBITDA Bridge

Q2 YOY YTD

$m % $m %

2016 30 61

Volume/Mix 1 3% (5) -8%

Price (9) -30% (19) -31%

Input costs 13 43% 23 38%

Manufacturing (1) -3% 1 2%

SG&A (4) -13% (4) -7%

FX - - 1 2%

2017 30 58

YOY Variance - - (4) -6%


Q2 2017 Performance By Segment

Food, Health and Nutrition Industrial Specialties Other

51% 38%

11%

Q2 2017 Sales

$179m

Food, Health and Nutrition Industrial Specialties

Sales Bridge FHN IS Other Total

2016 95 100% 72 100% 15 100% 182 100%

Volume/Mix 2 2% - - 5 31% 7 3%

Price (4) -5% (5) -6% - -3% (9) -5%

2017 92 97% 67 94% 20 72% 179 98%

YOY Variance (2) -3% (5) -6% 4 28% (3) -2%

95 94 90 91 92

22% 22% 21% 18%

20%

0%

5%

10%

15%

20%

25%

$0

$20

$40

$60

$80

$10 0

$12 0

Q2 Q3 Q4 Q1 Q2

72 70 62 64 67

15% 15%

11%

16%

14%

0%

5%

10%

15%

20%

25%

$0

$20

$40

$60

$80

$10 0

$12 0

Q2 Q3 Q4 Q1 Q2

Sales Revenue ($m) Adj. EBITDA % of Sales


Q2 2017 Other Items

Item Q2 2017 Q2 2016 Comment

Net interest expense $1m $2m Favorable due to lower debt levels, leverage and applicable margins

Effective tax rate 34% 29% Unfavorable due to Mexico exchange and inflation vs. prior year benefit for deconsolidation of Mexico subs

Capital expenditure $7m $10m 30% of current quarter spend is on Geismar deep well investment

Dividends $9m $9m $1.92/sh. annual dividend is 45% of LTM free cash flow

Share repurchase - - No activity

Net Debt $147m $190m 23% or $43m lower YOY

Net Debt / LTM Adjusted EBITDA

1.2x 1.7x 29% improvement YOY


Q2 2017 Earnings Per Share

0.61 0.69 0.47 0.55 0.57

Q2 Q3 Q4 Q1 Q2

0.63 0.75

0.52 0.59 0.57

Q2 Q3 Q4 Q1 Q2

2017 2016

Diluted EPS

Adjusted Diluted EPS* Volume/mix (0.07) (0.27)

Price (0.46) (0.97)

Costs 0.52 0.99

FX (0.01) 0.04

Operational items (0.02) (0.21)

Financing 0.03 0.05

Tax (0.03) 0.09

Shares outstanding --- (0.01)

Other (0.03) (0.04)

Other items (0.03) 0.09

Earnings per share Q2 YTD

2016 Diluted 0.61 1.27

Adjustments 0.02 0.01

2016 Adj. Diluted 0.63 1.28

YOY Variance (0.05) (0.12)

2017 Adj. Diluted 0.57 1.16

Adjustments --- 0.04

2017 Diluted 0.57 1.12

Diluted EPS ($ per share) Adjusted Diluted EPS ($ per share)

*Excl. pre-tax costs of $0.4m in Q2 2016, $1.6m in Q3 2016, $1.3m in Q4 2016, $0.9m in Q1 2017 and $0.2m in Q2 2017


Q2 2017 Cash Delivery

Quarterly Comments

• Good cash from operations at $30m, but lower YOY due to large working capital improvement in prior year

• Free cash flow of $23m used primarily for dividends and debt reduction

• Capital expenditure of $7m in the quarter, 30% of which was related to the Geismar deep well investment

Cash Flow Bridge

Q2 YTD

$m Variance $m Variance

Adj. EBITDA 30 -- -- 58 (4) -6%

Working Cap 8 (17) -69% (23) (36) -268%

Tax (6) -- 8% (11) 15 57%

Interest (1) -- 23% (3) 1 23%

Other -- 1 80% (2) 1 42%

OCF 30 (15) -34% 19 (23) -54%

Capex (7) 3 29% (16) 2 13%

FCF 23 (12) -35% 3 (20) -86%

45 40 57

-11 30

Q2 Q3 Q4 Q1 Q2

35 33 46

-19 23

Q2 Q3 Q4 Q1 Q2

2016 2017

Cash from Operations

Free Cash Flow

Opening 15 39 33 53 30

FCF 35 33 46 (19) 23

Financing (11) (39) (26) (4) (19)

Closing 39 33 53 30 34

($ Millions)

($ Millions)


Outlook

SALES COSTS EARNINGS & CASH • Soft customer demand in

packaged foods and price competition from imports

• Pruning of lower margin, less differentiated products

• Cost savings actions to largely offset pricing pressures

• Implementation of new improvement initiatives

• Selective investments in market-facing functions

• Earnings as % of sales forecast to show further enhancement

• Expect further improvements in working capital

• Capital investment at Geismar

Q3 2017 • Q3 Sales expected to be similar to Q2 2017, down ~4%

YOY, but with an anticipated mix improvement towards FHN

• Q3 Earnings forecast to be positively affected sequentially by reduced implementation fees and first-time cost savings from Phase 2 operational excellence. Input costs are expected to be in line with second quarter 2017

• Q3 Tax rate to be at the more normalized level of ~33%

Full Year • Reiterating revenue and earnings guidance for full year

2017, excluding acquisition impact

• Overall market conditions and the competitive landscape for 2017 are expected to be similar to 2016

• Phase 2 Operational Excellence fees incurred in H1 to be more than offset by Phase 2 savings, of which $5m is estimated to take effect in H2 2017

• Expect full-year revenues to be down by approximately 4% compared with 2016. Full-year earnings to be broadly in line with 2016


Agenda




4. Q&A

Novel Brings Growth And Complementary Capabilities Innophos announces definitive agreement to acquire Novel Ingredients

+

• Creates nearly $0.5 billion Food, Health and Nutrition (FHN) platform; 60% of total Company sales

• Advances Vision 2022 growth strategy and enhances innovation

• Expands Innophos’ offering in high-growth Nutrition end-markets

• Expected to deliver attractive cost and tax synergies of ~$15 million

• Prudently financed using existing cost effective credit facility



VITAL INGREDIENTS

Novel Is A Strong Fit With Our Purpose

To provide vital ingredients for the nutrition and health of those around us, leveraging science and technology in partnership with our customers and informed by consumer trends, with a view to create value for our stakeholders.

“

”

Food Health Nutrition


• A leading specialty ingredients solutions provider to Food, Health and Nutrition end-markets

• Selective added value player in industrial specialties applications

• Best-in-class practices, agile supply chain and cost effective operations

• Aligned with consumer trends and partner of choice through vital solutions and systems

Novel Advances Our Vision 2022 On All Strategic Aspects


Creates A Nearly $0.5 Billion Food, Health and Nutrition Platform; 60% of Total Company Sales

60%

33%

7%

+

Note: Revenue split based on estimated pro forma revenues for 2017

54% 38%

8%


60% 26%

8% 6%

Ingredients Blends/Formulations Branded Other


Combined

2017E Sales: $696m 2017E Sales: $97m 2017E Pro Forma Sales: $793m



Novel, A Technology Driven Specialty Ingredients Solution Provider

High growth end-markets

Complementary combination

Strong financial transaction rationale

Prudently financed

• Annual revenue of nearly $100 million; 2008-2016 CAGR of 19%. Headquartered in NJ, USA

• Serving attractive end-markets driven by health and wellness consumer trends with demonstrated growth in the 4-8% range, such as Immune Health, Sports Nutrition, and Cognitive Health

• Technology-based specialty ingredient supplier of botanicals, proteins, amino acids and other healthy ingredients, as well as branded ingredient and custom formulated solutions

• Recognized for its best-in-class quality assurance, strategic sourcing and world class cGMP manufacturing facility supporting more than 185 unique ingredient solutions

• 100 customer-focused employees delivering solutions to more than 200 customers

• Acquiring Novel at an important inflection point

Novel, an attractive business


Novel Brings A Strong Set of Capabilities




Prudently financed


Manufacturing

Development

Sourcing

Processing

Quality Assurance & Certification

Processes including blending, granulation, agglomeration, and wet or dry milling to support custom formulation

Formulation and pilot plant capabilities to support product concept collaboration, troubleshooting and scale up assistance

Industry leading position in sourcing premium quality ingredients. Best in class quality and traceability

Suite of patent-pending processing technologies to deliver differentiated functionality

State-of-the-art laboratory facilities to support quality assurance program and certifications


More Closely Aligned With Consumer Megatrends




Prudently financed


• Health and Wellness

• Energized Ageing

• Convenience and Time Effectiveness

• Protection and Preservation

• Clean Label/Greener Food

• Sustainability


End-Markets With Demonstrated Growth In 4-8% Range




Prudently financed


• Rising demand for products with specific health benefits and natural characteristics

• Changing consumer patterns and behaviors prompt need for new delivery systems


Strengthened Foothold In $7.2bn NA Nutraceutical Market




Prudently financed


SOURCE: Markets & Markets, 2016

Application

2015 NAM Market

Size*

2015-2020 NAM CAGR

Dietary Supplements 2,580 6-7%

Functional Beverages 1,390 7-8%

Functional Food 1,575 6-7%

Animal Nutrition 875 7-8%

Personal Care 745 6-7%

Ingredient

2015 NAM Market Size*

2015-2020 NAM CAGR

Fibers & Specialty Carbs 1,719 7-8%

Omega 3's 938 6-7%

Vitamins 935 6-7%

Botanicals 745 7-8%

Minerals 669 6-7%

Carotenoids 663 6-7%

Probiotics 444 7-8%

Proteins & Amino Acids 306 6-7%

Prebiotics 265 7-8%

Other** 481 6-7%

* USD Millions ** Glucosamine, Chondroitin, and Polyols

Market Sub-Segment

2016-2020 Growth Rate

Cognitive Health 20%

Digestive Health 7%

Sports Nutrition 8%

Weight Management 7%

Women/Men's Health 7%

By Ingredient By Segment

By Sub-Segment


Complementary Market And Product Coverage




Prudently financed


Global Supplement Companies

Mid-tier Supplement Companies

Global Food Companies

Market Coverage

Botanicals

Minerals

Excipients

Enzymes

Botanicals

Proteins

Amino Acids

Other Actives

Product Coverage

Broadened and attractive product portfolio

Processing capabilities to develop further added value solutions

Expanded end-market coverage

Both companies have a strong North America presence


Attractive And Highly Complementary Product Portfolios




Prudently financed


Immune Health Heart Health

Sports Nutrition & Energy Antioxidants & Specialty Botanicals

Protein & Amino Acids Flavors & Sweeteners

Cognitive Health Weight Management

Unique botanicals,

antioxidants, and carotenoids

Nutraceutical ingredients that

support cardiovascular

health

Powerful aminos, next-gen

botanical energizers

A range of powerful antioxidants and unique specialty

botanicals

Ingredients to support cognitive

function and mental sharpness

The next generation

of advanced proteins

Premium quality sweeteners and cocoa products

Natural extracts and other weight management ingredients


Novel Brings Strong Portfolio Of Branded Products




Prudently financed


Kinetiq™

Cera-Q™

Acumin™

QU995™

PhysiCor™

A next-gen, natural citrus aurantium extract clinically demonstrated to deliver resistance training

performance benefits safely and without stimulants

First of its kind, patented turmeric complex providing a range of naturally occurring turmeric root nutrients

Dual-path plant extract clinically demonstrated to reduce body fat while increasing lean mass and strength

Protein hydrolysate ingredient derived from a silk fibroin delivering a range of cognitive health benefits

The most advanced quercetin offering on the market with unsurpassed purity and superior absorption


Sharing A Strong And Diverse Customer Base




Prudently financed


• Opportunity to leverage combined portfolio and grow customer base

• Innophos has longstanding relationships with market leading food and health customers where Novel has limited presence; opportunity to cross-sell and develop new offerings

• Develop innovative, technology-based ingredient solutions using combined product portfolios and processing capabilities

• Existing products and joint development provides potential access to new adjacencies


Supports Our Commitment To Grow And Diversify Earnings



Prudently financed



• Adds ~$100 million of annual revenue

• Accretive to earnings per share within the first year of combined operations

• Annual cost synergies ~$4 million; revenue synergies are anticipated from combined product technology and customer relationships

• Present value from tax synergies ~$11 million

• Multiple of ~12.1x on Novel’s estimated 2017 adjusted EBITDA, and ~7.7x adjusting for expected cost and tax synergies

• Multiple of ~1.3x on Novel’s estimated 2017 sales revenue


Leveraging Our Cost Effective Existing Credit Facility




• All-cash consideration of $125 million

• Acquisition will be funded with borrowings under current cost effective credit facility

• Net leverage to increase from 1.2x to 2.1x at close well within the covenants of the credit facility

• Continued strong cash conversion cycle supports current dividend and net leverage to pre-transaction level in two years

• Closing of the transaction is subject to customary closing conditions, and is expected to be completed in the third quarter of 2017


Prudently financed


Novel is Strategically and Financially A Strong Fit

STRATEGIC FIT FINANCIAL FIT

Expanded solution capability to better serve our customers

• Diversifies participation in higher growth Food, Health and Nutrition segments

• Recognized as a leader in markets served

• Provides revenue synergies from customer portfolio overlap

• Technology and science based

• Deepens capabilities and ability to serve customers

• B-to-B customer model

Credible earnings and cash generation supported by enhanced growth potential

• Topline growth: 4-8% range

• EBITDA margin with capacity to grow to 20% range

• Reliable cash conversion cycle

• Asset light: maintenance capital <3% of sales. Working capital in 20% range

• EPS accretive in year 2


A Winning Combination

STRATEGIC FIT • Overlapping customers

and sales channels • Linked to consumer

trends • Technology enabled

MORE GROWTH • Leadership in markets

served • Expands aperture for

profitable and faster growth

FAVORABLE ECONOMICS

• Value > investment • Enhanced earnings

profile • Sustainable cash flow

POTENT INTEGRATION

• Foundation to build critical mass

• Enhances human capital and capability

Novel is strategically and financially a strong fit

Q2 2017 EARNINGS CALL and NOVEL INGREDIENTS ACQUISITION August 1, 2017 – 9:00 am ET

Q&A


Non-GAAP Reconciliations

Long Term Targets

Innophos is not able to provide a reconciliation of its 2022 expectation for Adjusted EBITDA margin to GAAP net income due to the number of variables in the projected EBITDA margin for 2022 and because we are currently unable to quantify accurately certain amounts that would be required to be included in GAAP net income or the individual adjustments for such reconciliation. In addition, we believe such reconciliation would imply a degree of precision that would be confusing or misleading to investors.

Additional Information Free cash flow is a supplemental financial measure that is not required by, or presented in accordance with, US GAAP. The Company believes free cash flow is helpful in analyzing the cash flow generating capability of the business and as a performance measure for purposes of presentation in this investor presentation. The Company defines free cash flow as net cash provided from operating activities plus net cash used for investing purposes.

EBITDA, adjusted EBITDA, adjusted net income and adjusted diluted EPS are supplemental financial measures that are not required by, or presented in accordance with, US GAAP. The Company believes EBITDA and adjusted EBITDA are helpful in analyzing the cash flow generating capability of the business and as performance measures for purposes of presentation in this investor presentation.

Net Working Capital and Operating Working Capital are supplemental financial measures that are not required by, or presented in accordance with, US GAAP. The Company believes net working capital and operating working capital are helpful in analyzing the effects on the cash flow generating capability of the business and as a performance measure for purposes of presentation in this release. The Company defines net working capital as total current assets less cash less total current liabilities, and defines operating working capital as net working capital less taxes less interest.



Adjusted EBITDA Reconciliation to Net Income

(Dollars in thousands) Three Months Ended June 30, Six Months Ended June 30,

2017 2016 2017 2016

Net Income $11,223 $12,104 $22,146 $24,946

Interest expense, net 1,452 1,913 2,805 3,712

Provision for income taxes 5,794 5,025 9,980 11,908

Depreciation & amortization 9,550 9,282 19,131 18,564

EBITDA 28,019 28,324 54,062 59,130

Adjustments

Non-cash stock compensation * 1,568 1,292 2,285 1,826

Foreign exchange loss (gain) (78) 355 (135) 316

Severance/Restructuring expense (income) 326 - 1,326 (43)

Adjusted EBITDA $29,835 $29,971 $57,538 $61,229

Percent of Sales 16.7% 16.5% 16.7% 16.5%

* Not adjusted when calculating Adjusted EPS

Adjusted Net Income Reconciliation to Net Income

(Dollars in thousands, except EPS) Three Months Ended June 30, Six Months Ended June 30,

2017 2016 2017 2016

Net Income (loss) $11,223 $12,104 $22,146 $24,946

Pre-tax Adjustments

Foreign exchange loss (gain) (78) 355 (135) 316

Severance/Restructuring expense (income) 326 - 1,326 (43)

Total Pre-tax Adjustments 248 355 1,191 273

Income tax effects on Adjustments 84 104 346 76

Adjusted Net Income $11,387 $12,355 $22,991 $25,143

Adjusted Diluted Earnings

Per Participating Share$0.57 $0.63 $1.16 $1.28



Segment Adjusted EBITDA Reconciliation to EBITDA

(Dollars in thousands)

FHN IS Other Total FHN IS Other Total

EBITDA $17,032 $8,654 $2,333 $28,019 $19,744 $10,136 ($1,556) $28,324

Non-cash stock compensation 887 621 60 1,568 732 534 26 1,292

Foreign exchange loss (gain) (26) 0 (52) (78) 0 0 355 355

Severance/Restructuring exp.(inc.) 130 196 0 326 0 0 0 0

Adjusted EBITDA $18,023 $9,471 $2,341 $29,835 $20,476 $10,670 ($1,175) $29,971

FHN IS Other Total FHN IS Other Total

EBITDA $32,656 $18,175 $3,231 $54,062 $39,677 $19,697 ($244) $59,130

Non-cash stock compensation 1,293 905 87 2,285 1,039 715 72 1,826

Foreign exchange loss (gain) (30) 0 (105) (135) 0 0 316 316

Severance/Restructuring exp.(inc.) 665 635 26 1,326 145 0 (188) (43)

Adjusted EBITDA $34,584 $19,715 $3,239 $57,538 $40,861 $20,412 ($44) $61,229

Three Months Ended June 30, 2017 Three Months Ended June 30, 2016

Six Months Ended June 30, 2017 Six Months Ended June 30, 2016


Non-GAAP Reconciliations Cash From Operations Reconciliation to EBITDA


2017 2016 2017 2016

EBITDA $28,019 $28,324 $54,062 $59,130

Operating Working Capital 7,840 24,987 (21,382) 13,701

Taxes paid (5,940) (6,425) (11,365) (26,443)

Interest paid (1,380) (1,788) (2,685) (3,498)

All other including non-cash stock

compensation and changes in other

long-term assets and liabilities

1,496 15 726 (851)

Net cash provided from operations $30,035 $45,113 $19,356 $42,039

Cash From Operations Reconciliation to Adjusted EBITDA


2017 2016 2017 2016

Adjusted EBITDA $29,835 $29,971 $57,538 $61,229

Operating Working Capital 7,592 24,632 (22,573) 13,428

Taxes paid (5,940) (6,425) (11,365) (26,443)

Interest paid (1,380) (1,788) (2,685) (3,498)

All other including changes in other

long-term assets and liabilities(72) (1,277) (1,559) (2,677)

Net cash provided from operations $30,035 $45,113 $19,356 $42,039

Free Cash Flow Reconciliation to Cash From Operations

Three Months Ended June 30, Six Months Ended June 30,

(Dollars in thousands) 2017 2016 2017 2016

Cash From Operations $30,035 $45,113 $19,356 $42,039

Capital Expenditures (7,524) (10,514) (16,077) (18,538)

Free Cash Flow $22,511 $34,599 $3,279 $23,501


ABOUT THE COMPANY Innophos (NASDAQ: IPHS) is a leading international producer of specialty ingredient solutions that deliver far-reaching, versatile benefits for the food, health, nutrition and industrial markets. We leverage our expertise in the science and technology of blending and formulating phosphate, mineral and botanical based ingredients to help our customers offer products that are tasty, healthy, nutritious and economical. Headquartered in Cranbury, New Jersey, Innophos has manufacturing operations across the United States, in Canada, Mexico and China. For more information please visit www.innophos.com

CONTACT Investors: Mark Feuerbach, 609-366-1204 or [email protected] Media: Ryan Flaim, Sharon Merrill Associates, 617-542-5300 or [email protected]

Q2 2017 EARNINGS CALL & NOVEL INGREDIENTS ACQUISITION · Novel Ingredients Acquisition and Earnings...

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Transcript of Q2 2017 EARNINGS CALL & NOVEL INGREDIENTS ACQUISITION · Novel Ingredients Acquisition and Earnings...