Q2 2019 Earnings Call August 6, 2019 9:00am ET Innophos Holdings, Inc. | March 2019
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 (w hich may be identified by such terms as “expect”, “estimate”, “anticipate”, “assume”, “believe”, “plan”, “intend’, “may”, “will”, “should”, “outlook”, “guidance”, “target”, “ opp ortunity”, “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 macroe conomic 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 strategic roadmap; (5) the Company’s ability to successfully id entify and complete acquisitions in line with its Vision 2022 strategic roadmap and effectively operate and integrate acquired businesses to realize the anticipated benefits of those acquisi tions; (6) the Company’s ability to realize expected cost savings and efficiencies from its performance improvement and other optimization initiatives; (7) the Company’s ability to ef fectively compete in its markets, and to successfully develop new and competitive products that appeal to its customers; (8) changes in consumer preferences and demand for the Company’s p roducts or a decline in consumer confidence and spending; (9) the Company’s ability to benefit from its investments in assets and human capital and the ability to complete p rojects successfully and on budget; (10) economic, regulatory and political risks associated with the Company’s international operations, most notably Mexico and China; (11) volatility an d increases in the price of raw materials, energy and transportation, and fluctuations in the quality and availability of raw materials and process aids; (12) the impact of a disrupt ion in the Company’s supply chain or its relationship with its suppliers; (13) the Company’s ability to comply with, and the costs associated with compliance with, U.S. and foreign environ men tal protection laws and (14) the Company’s ability to meet quality and regulatory standards in different jurisdictions in which it has operations or conducts business. • 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. Innophos Holdings, Inc. | March 2019 2 Innophos Holdings, Inc. | Earnings Conference Call Second-Quarter 2019 | August 6, 2019
Agenda 1. Executive Overview 2. Financial Review 3. Outlook Kim Ann Mink, Ph.D. Mark Feuerbach 4. Q&A Chairman, President and Interim Chief Financial Officer Chief Executive Officer Innophos Holdings, Inc. | March 2019 3 Innophos Holdings, Inc. | Earnings Conference Call Second-Quarter 2019 | August 6, 2019
Q2 2019: Margin Growth & Strong Cash Performance Pricing Power, Cost Actions and Mix Shift Offset Topline Pressures • Q2 Adjusted EBITDA Margin up 129 bps YOY Q2 2019 RESULTS Pricing power, improved mix, cost management and lower cost • $1m structure offset effects from discontinued low-margin nutrition sales, $185m general weakening of demand, lost 2019 business due to Midwest flooding and continued “indirect” tariff effects GAAP NET SALES INCOME • $26m cash from operations and $20m Free Cash Flow $30m • 16% Continued success Advancing Vison 2022 roadmap and Strategic Pillars initiatives ADJUSTED EBITDA ADJUSTED EBITDA • MARGIN Resetting 2019 Revenue guidance, maintaining 2019 Adjusted EBITDA guidance • On track to achieve Vision 2022 goals Innophos Holdings, Inc. | March 2019 4 Innophos Holdings, Inc. | Earnings Conference Call Second-Quarter 2019 | August 6, 2019
Executing Against Strategic Pillars to Realize Vision 2022 Goals Operational Excellence Commercial Excellence Strategic Growth • • • Achieved initial sequential savings from Pricing actions nearly offset effects SPARC program shifting portfolio mix to new value chain structure of volume declines support future organic growth • Continued to advance our supply plan with • • Leveraging value-selling model to Selectively evaluating M&A to strengthen the successful setup of 3rd party sourced capture pricing power FHN platform consistent with strategic MGA for Geismar PWA plant and financial criteria • Recently announced 6 th consecutive • On track to deliver GAAP and adjusted quarterly price increase which will diluted EPS improvement of $0.25 to $0.27 take effect August 15th per share annual run rate by end of 2019 Innophos Holdings, Inc. | March 2019 5 Innophos Holdings, Inc. | Earnings Conference Call Second-Quarter 2019 | August 6, 2019
Q2 2019 Performance Highlights Q2 $m Variance vs PY ($ Millions) Sales 185 (22) -10% 36 — — % Gross Profit Gross Margin 20% 207 bps Net Income 1 (5) -78% Adj. Net Income 9 (2) -22% 30 (1) -3% Adj. EBITDA Adj. EBITDA% 16% 129 bps Diluted EPS 0.07 (0.24) -78% $(1)m $0m Adj. Diluted EPS 0.43 (0.12) -22% OCF 26 18 BIG 2018A Vol/Mix Price INP Cost Mfg SG&A FX 2019A FCF 20 24 711% • Sales below prior year as selling price increases were predominantly offset by the planned discontinuation of low-margin nutrition trading business, as well as a general weakening of demand including customer destocking, lost 2019 business due to Midwest flooding and continued “indirect” tariff effects • Net Income down due primarily to a $6.6 million one-off tax charge • Adjusted EBITDA flat sequentially and down slightly YOY due to lower volumes that were mostly offset by price increases; Adjusted EBITDA margin was up YOY reflecting improved mix and continued benefits of price and cost actions • FCF was up significantly due to improved working capital and lower capital expenditures Innophos Holdings, Inc. | March 2019 6 Innophos Holdings, Inc. | Earnings Conference Call Second-Quarter 2019 | August 6, 2019
Q2 2019 Sales Revenue And Gross Margin Q2 YTD Sales Revenue Bridge $m % $m % 2018 207 412 Volume/Mix (28) -13% (49) -12% Price 6 3% 14 3% 2019 185 376 Variance (22) -10% (36) -9% Quarterly Comments • Sales were 10% below prior year as 3% selling price increases were offset by a 13% volume decline from discontinued low-margin nutrition trading business, as well as a general weakening of demand including customer destocking, lost 2019 business from Midwest flooding and continued “indirect” tariff impacts • FHN: down 15% year over year (price +3%, volume -18%) as strong price increases were offset by lower volumes due to the Company’s decision to discontinue a portion of low -margin nutrition trading business and softer demand including customer destocking • IS: up slightly year over year (price +3%, volume -2%) with volumes affected by Midwest flooding and indirect tariff effects • Other down 25% (price -1%, volume -23%) due to reduced co-product and low grade acid sales • Gross margin at highest level since Q1 2018 Innophos Holdings, Inc. | March 2019 7 Innophos Holdings, Inc. | Earnings Conference Call Second-Quarter 2019 | August 6, 2019
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