INNOPHOS HOLDINGS, INC. (IPHS, Financial) filed Quarterly Report for the period ended 2009-09-30.
Innophos Inc. is one of the leading North American manufacturers of specialty phosphates serving a diverse range of customers across multiple applications geographies and channels. Innophos offers a broad suite of products used in a wide variety of food and beverage consumer products pharmaceutical and industrial applications. Innophos' market-leading positions derive from its experience and dedication to customer service and innovation. Innophos Holdings, Inc. has a market cap of $468.6 million; its shares were traded at around $22.01 with a P/E ratio of 2.7 and P/S ratio of 0.5. The dividend yield of Innophos Holdings, Inc. stocks is 3.1%.
Operating expenses consist primarily of selling, general and administrative, and R&D expenses. For the three months ended September 30, 2009, these costs were $19.2 million, an increase of $5.5 million, or 40.1%, as compared to $13.7 million for the same period in 2008. The increase is primarily due to $3.3 million for our enterprise resource planning (ERP) system and business redesign project, $1.3 million increase in legal expenses related to our OCP arbitration, and $0.9 million increase in all other costs.
Net sales represent the selling price of the products, net of any customer-related rebates, plus freight and any other items invoiced to customers. Net sales for the nine months ended September 30, 2009 were $519.5 million, a decrease of $198.8 million, or 27.7%, as compared to $718.3 million for the same period in 2008. Selling price increases had a positive impact on revenue of 8.0% or $57.8 million that occurred primarily in Specialty Salts & Specialty Acids and to a lesser extent in Purified Phosphoric Acid. STPP & Other Products, which showed a net selling price decrease, was negatively affected by declines in granular triple super-phosphate (GTSP) fertilizer co-product prices. Volume and mix effects upon revenue had a negative effect of 35.7% or $256.6 million which occurred across all product lines and reporting segments. On a unit basis, the average selling price for all Innophos products increased by 2.1% compared to 2008, while total volume shipped decreased by 29.2%.
Gross profit represents net sales less cost of goods sold. Gross profit for the nine months ended September 30, 2009 was $166.9 million, a decrease of $108.3 million, or 39.4%, as compared to $275.2 million for the same period in 2008. Gross margin decreased to 32.1% for the nine months ended September 30, 2009 versus 38.3% for the same period in 2008. The change in gross profit was due to unfavorable sales volume and mix impact upon revenue and higher raw material costs, which had a combined unfavorable impact of $173.7 million. Gross profit was negatively impacted by a $1.8 million inventory write-down for GTSP; the Company has $0.8 million GTSP inventory remaining as of September 30, 2009. As a result of reduced operating rates in Mexico, the company took a charge of $1.8 million for Mexican workforce reduction costs and a charge of $1.1 million for anticipated unfulfilled contractual natural gas purchase commitments, including the unfavorable variance to current market prices, expiring in December 2009. These unfavorable effects were partially offset by higher selling prices which had a favorable impact of $57.8 million, $8.8 million favorable exchange rate impact mostly from our Mexican peso based costs, and $0.9 million lower depreciation expense. Included in 2008 results were $1.3 million expense for a scheduled Geismar, LA plant maintenance outage, and $1.3 million asset impairment charge for two obsolete production units.
$2.8 million increased legal expenses related to our OCP arbitration and $0.7 million increases in all other costs partially offset by $2.1 million lower legal and other fees which were incurred in 2008 to comply with the DOJ STPP document request subpoena, $2.3 million lower professional fees used to support growth and other corporate initiatives, and $2.0 million favorable exchange rate impact from our Mexican peso based costs.
Net interest expense, including deferred financing amortization expense, for the nine months ended September 30, 2009 was $17.3 million, a decrease of $8.7 million, compared to $26.0 million for the same period in 2008. This decrease is primarily due to a gain of $3.5 million on the retirement of $10.0 million of the 9.5% Senior Unsecured Notes due April 2012, lower average interest rates and the lower average balance of our Term Loan resulting from the $54.0 million principal payments made in March 2009 mostly to satisfy the excess cash flow requirement of our credit agreement and the $72.5 million payment in May 2009 to pay off the balance of the Term Loan, and fees incurred in 2008 associated with the fourth amendment to the credit facility. These decreases were partially offset by accelerated deferred financing related to the excess cash flow payment and the pay off of the Term Loan.
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Innophos Inc. is one of the leading North American manufacturers of specialty phosphates serving a diverse range of customers across multiple applications geographies and channels. Innophos offers a broad suite of products used in a wide variety of food and beverage consumer products pharmaceutical and industrial applications. Innophos' market-leading positions derive from its experience and dedication to customer service and innovation. Innophos Holdings, Inc. has a market cap of $468.6 million; its shares were traded at around $22.01 with a P/E ratio of 2.7 and P/S ratio of 0.5. The dividend yield of Innophos Holdings, Inc. stocks is 3.1%.
Highlight of Business Operations:
Gross profit represents net sales less cost of goods sold. Gross profit for the three months ended September 30, 2009 was $47.7 million, a decrease of $78.9 million, or 62.3%, as compared to $126.6 million for the same period in 2008. Gross margin decreased to 29.5% for the three months ended September 30, 2009 versus 43.4% for the same period in 2008. The change in gross profit was primarily due to lower selling prices which had an unfavorable impact of $72.0 million. Unfavorable sales volume and mix impact upon revenue was mostly offset by favorable raw material costs, restructured manufacturing costs and favorable exchange rates which resulted in a net unfavorable impact of $6.9 million.Operating expenses consist primarily of selling, general and administrative, and R&D expenses. For the three months ended September 30, 2009, these costs were $19.2 million, an increase of $5.5 million, or 40.1%, as compared to $13.7 million for the same period in 2008. The increase is primarily due to $3.3 million for our enterprise resource planning (ERP) system and business redesign project, $1.3 million increase in legal expenses related to our OCP arbitration, and $0.9 million increase in all other costs.
Net sales represent the selling price of the products, net of any customer-related rebates, plus freight and any other items invoiced to customers. Net sales for the nine months ended September 30, 2009 were $519.5 million, a decrease of $198.8 million, or 27.7%, as compared to $718.3 million for the same period in 2008. Selling price increases had a positive impact on revenue of 8.0% or $57.8 million that occurred primarily in Specialty Salts & Specialty Acids and to a lesser extent in Purified Phosphoric Acid. STPP & Other Products, which showed a net selling price decrease, was negatively affected by declines in granular triple super-phosphate (GTSP) fertilizer co-product prices. Volume and mix effects upon revenue had a negative effect of 35.7% or $256.6 million which occurred across all product lines and reporting segments. On a unit basis, the average selling price for all Innophos products increased by 2.1% compared to 2008, while total volume shipped decreased by 29.2%.
Gross profit represents net sales less cost of goods sold. Gross profit for the nine months ended September 30, 2009 was $166.9 million, a decrease of $108.3 million, or 39.4%, as compared to $275.2 million for the same period in 2008. Gross margin decreased to 32.1% for the nine months ended September 30, 2009 versus 38.3% for the same period in 2008. The change in gross profit was due to unfavorable sales volume and mix impact upon revenue and higher raw material costs, which had a combined unfavorable impact of $173.7 million. Gross profit was negatively impacted by a $1.8 million inventory write-down for GTSP; the Company has $0.8 million GTSP inventory remaining as of September 30, 2009. As a result of reduced operating rates in Mexico, the company took a charge of $1.8 million for Mexican workforce reduction costs and a charge of $1.1 million for anticipated unfulfilled contractual natural gas purchase commitments, including the unfavorable variance to current market prices, expiring in December 2009. These unfavorable effects were partially offset by higher selling prices which had a favorable impact of $57.8 million, $8.8 million favorable exchange rate impact mostly from our Mexican peso based costs, and $0.9 million lower depreciation expense. Included in 2008 results were $1.3 million expense for a scheduled Geismar, LA plant maintenance outage, and $1.3 million asset impairment charge for two obsolete production units.
$2.8 million increased legal expenses related to our OCP arbitration and $0.7 million increases in all other costs partially offset by $2.1 million lower legal and other fees which were incurred in 2008 to comply with the DOJ STPP document request subpoena, $2.3 million lower professional fees used to support growth and other corporate initiatives, and $2.0 million favorable exchange rate impact from our Mexican peso based costs.
Net interest expense, including deferred financing amortization expense, for the nine months ended September 30, 2009 was $17.3 million, a decrease of $8.7 million, compared to $26.0 million for the same period in 2008. This decrease is primarily due to a gain of $3.5 million on the retirement of $10.0 million of the 9.5% Senior Unsecured Notes due April 2012, lower average interest rates and the lower average balance of our Term Loan resulting from the $54.0 million principal payments made in March 2009 mostly to satisfy the excess cash flow requirement of our credit agreement and the $72.5 million payment in May 2009 to pay off the balance of the Term Loan, and fees incurred in 2008 associated with the fourth amendment to the credit facility. These decreases were partially offset by accelerated deferred financing related to the excess cash flow payment and the pay off of the Term Loan.
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