In a recent earnings call with analysts, CEO Kim Ann Mink said that the company, which is based in Cranbury, NJ, is moving aggressively into the human nutrition space as part of her so-called Vision 2022. Mink put this plan into place in 2016 shortly after being named CEO. Mink characterized the plan as, “Our strategic roadmap targeting $1.25 billion in revenue and a 20% adjusted EBITDA margin by 2022. Vision 2022 is focused on establishing Innophos as a leading specialty ingredient solution provider to attractive food, health and nutrition or FHN market.”
This past year saw significant progress on the plan, including two rapidly executed acquisitions in the ingredient supply space. Moving into this value-added segment will help the company forestall the commoditization of the phosphate sector, which the company has in the past identified as a drag on sales and on future growth potential.
“In the second half of the year, we successfully closed and integrated two strategic acquisitions—Novel Ingredients and NutraGenesis. These deals are important steps towards strengthening our growth profile and creating a nearly $1.5 million FHN platform within enhanced branded ingredients portfolio,” Mink said
“The integrations of both companies are well underway and we remain confident in our ability to deliver the $4 million of identified cost synergies from Novel,” she added during the call, which was posted in transcript form on the site seekingalpha.com.
CFO Han Kieftenbeld said the acquisitions were an immediate boost for the company, and helped boost fourth quarter earnings by $24 million, or 15% over the same period a year previously. Sales in the FHN sector were $116 million in the quarter, and accounted for 60% of overall sales. For the full year, the company recorded $722 million in sales, which was down slightly from the $725 million it recorded in 2016.
Kieftenbeld said the company is projecting strong upcoming growth, which is driven almost exclusively by the FHN side of the business:
“We expect full year 2018 revenues to grow 12% to 14% due to the annualized contribution from Novel Ingredients and NutraGenesis, favorable growth in nutrition end markets and the stabilization of the base business,” he said.
Novel Ingredients supplies a wide range of ingredients, including some branded ingredients, in the areas of botanicals, amino acids, antioxidants and fish oils. Nutragenesis also supplies a wide range of branded ingredients for many condition specific categories such as anti-aging, immune support, cognition and sports nutrition.