Innophos Holdings Inc (NASDAQ:IPHS) Q1 2019 Earnings Conference Call Transcript
Apr 30, 2019 • 09:00 am ET
Kim Ann Mink
line with last year despite a difficult year-over-year comparison on the top line. In addition, we continue to make solid progress executing against our Vision 2022 strategic roadmap and strategic pillars to build the critical capabilities that will transform Innophos' growth profile. Notably, during the quarter, we advanced our efforts to transition to our lower-cost, multi-faceted value chain structure, continued to develop innovative solutions that enhance our position in attractive Food, Health & Nutrition end-markets and capitalized on our value-selling commercial model.
First quarter sales of $191 million were down 7% compared to the prior year quarter as our pricing power and growth in several key categories were offset by several factors. This included the planned discontinuation of low-margin nutrition trading business, orders shifting out of the quarter due to customer timing and Midwest flooding, and softer than expected demand in certain industrial specialties categories related import to indirect tariff impacts.
Now GAAP net income for the quarter was $9 million, or $0.44 per share, down from $11 million, or $0.55 cents per share the prior year quarter due primarily to severance costs and Mexico natural gas supply adjustment charges. On this note, we continue to closely monitor the supply imbalance in Mexico's natural gas network and are proactively managing the situation where possible to mitigate the impact. This includes, engaging with an energy consultant, assembling an energy reduction team, and implementing several energy reduction programs. The infrastructure projects in Mexico are currently on schedule for completion in Q3 providing better access to natural gas in the second half of this year.
Now in Q1, we delivered adjusted EBITDA of $30 million, which was down $2 million, or 7% year-on-year, but sequentially flat. Of note, this marks the fourth straight quarter of relatively stable adjusted EBITDA. Adjusted EBITDA margin of 16% was up 4 basis points compared with the prior year quarter due to our cost management efforts implemented in the second half of 2018. Continued success in capturing price increases and improved mix all of which helped to offset the lower volume effects. Now as Mark will expand upon later, today, we are reiterating our 2019 adjusted EBITDA guidance and resetting our revenue guidance. Although we continue to see growth in several served markets, as a result of the pockets of softer market demand that we began to see in Q1, we believe it is prudent to adjust our revenue guidance for 2019 to a range of 1% to 2% below 2018 revenues.
Even so, we are confident that by proactively managing near-term market dynamics and advancing our key initiatives under our strategic pillars, we will be able to deliver 2019 adjusted EBITDA growth of 1% to 3%. Now, with that, please turn to slide 5, to take a closer look at some of our key strategic pillar achievements in Q1. In Operational Excellence, our transition to the new multi-faceted supply chain has advanced on schedule with several milestones completed in the quarter. The Geismar facility is now successfully