Innophos Holdings Inc (NASDAQ:IPHS) Q1 2019 Earnings Conference Call Transcript

Apr 30, 2019 • 09:00 am ET

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Innophos Holdings Inc (NASDAQ:IPHS) Q1 2019 Earnings Conference Call Transcript

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Q & A
Operator
Operator

Thank you, Kim. (Operator Instructions) Our first question comes from Brett Hundley with Seaport Global. Please proceed with your question.

Analyst
Brett Hundley

Hey good morning, everyone.

Executive
Kim Ann Mink

Hi Brett. How are you?

Executive
Mark Feuerbach

Good morning, Brett.

Analyst
Brett Hundley

I'm good. Thanks for asking. I just have a quick question to make sure that I'm clear on something. So it sounds to me like Midwest flooding is leading to somewhat of an unexpected incremental softness in certain business areas. And also that recovery is expected to take multiple quarters as opposed to maybe just one quarter. Am I hearing that right and what's the connection between Midwest flooding and incremental softness over a longer than expected time period?

Executive
Kim Ann Mink

Yeah. Thanks for that question, Brett. With that Midwest flooding, that specifically impacted some of our products that go into the fertilizer area. Typically those orders, typically, would come in the mid-to-late March time frame. So, right now, as we monitor the situation, it could just be pushed out mostly in Q2, but we see some spill over to Q3 depending upon when the farmers will do their fertilizing.

Analyst
Brett Hundley

Got you. Okay. That's very clear. But within FHN itself, volumes there were a touch weaker than I would have expected. And it sounds like maybe you saw some incremental softness there. I know you said that your base phosphates business is stable. Were you surprised by anything on the FHN volume side? And can you also -- to the extent that you can, can you give us some understanding of how Novel continues to perform?

Executive
Kim Ann Mink

Okay. So, yeah, with regard to FHN, really that was more of an order timing. So, the Midwest flooding was really in the Industrial Specialties segment. So, we put that to the side, but for FHN, order timing was the bigger factor there. That was primarily in our nutrition business, some of which was due to order phasing in some of our larger branded ingredients and some was due to further destocking by our customers, where orders were just pushed out into the second quarter. So, we've already begun to see movement, Brett, in the order book, including some sales that are already shipped in April, which is what gives us visibility and confidence that we'll see that.

Analyst
Brett Hundley

Excellent. Thank you. And then, I just had a question on pricing. So, you guys have gone through multiple rounds with customers now. Where do you think you stand today insofar as being close to made whole on your raw material inflation? That's the first part of my question. And then, as a follow-up, when would be the next discussion point, typically, between you and a customer assuming that raw materials remain static? So, I guess what I'm asking is like what's the normal course of talks in a stable non-inflationary environment? Would it be three months, six months? That color would be helpful too.

Executive
Kim Ann Mink

Yes. So we've actually more than covered our input costs so that -- to date. So that is good news and we've