Innophos now competing as formulation R&D partner
In its second quarter 2018 earnings call with analysts, CEO Kim Ann Mink, PhD detailed the company’s ongoing transition, part of a plan called Vision 2022 which she put into place after taking the helm in late 2015. The plan’s goal is to achieve $1.25 billion in annual revenue and a 20% adjusted EBITDA margin by the year 2022.
Nutrition sales lead the way
“Our Food, Health and Nutrition or FHN segment demonstrated strong growth as we continue to capitalize on the stability of our legacy business and strengths of our acquired businesses. We remain laser focused on executing against our Vision 2022 strategic roadmap to transform Innophos into a leading specialty ingredient solution provider serving attractive FHN markets as well as select industrial markets,” Mink said in the call which was posted in transcript form on the site seekingalpha.com.
The top line revenue number was up 15% year over year. By far the strongest growth came from sales in the FHN segment, which grew by 36%, most of which came from acquisitions. As previously reported by NutraIngredients-USA, Innophos has aggressively pursued ingredient suppliers. Since Mink came on board the company has acquired Novel Ingredients and NutraGenesis. With these acquisitions the company now supplies a broad array of food and dietary ingredients to go along with its industrial phosphates.
Competing hard in R&D
Those acquisitions are now bearing fruit, not only in terms of sales but also in terms of new capabilities. Innophos is now competing in the realm of R&D support for its customers. Mink said these capabilities are being fitted into a new innovation initiative, which she called SPARC, standing for Stage-Gate, Process, Assess, Research, and Capture.
“We have had excellent early momentum with the SPARC program, including the launch of several unique products in support of our customer’s new product introduction that respond to important consumer trends such as health and wellness, energized aging and clean labels, and further support benefit platforms such as immune health and sports and recovery. So for example, we developed a delicious lactose-free, gluten-free, soy-free shake using plant-based proteins for a major multilevel marketing firm,” she said.
“In addition, we introduced a new organic plant-based protein product for a major marketer in the sports, nutrition and dietary supplement space. These products respond to consumer demand for organic, clean label, plant-based protein sources in convenient readily dissolvable powder products,” Mink concluded.
Stock price slides
Stock traders seem not to be fully convinced by Mink’s vision. The second quarter earnings slightly underperformed estimates both in terms of top line revenue and in profits. As a result, the stock dropped about 10% in value after the earnings announcement yesterday, closing at about $45 a share.
Nevertheless, the company had more than doubled its book value under Mink’s leadership. Innophos’ stock price bottomed out at less than $24 a share early in her tenure.