Innophos Holdings, Inc. Reports Fourth Quarter and Full Year 2007 Results

CRANBURY, N.J., Feb. 19 /PRNewswire-FirstCall/ -- Innophos Holdings, Inc.
(Nasdaq: IPHS), a leading specialty phosphates producer in North America,
today announced its financial results for the fourth quarter and full year
2007.
Fourth Quarter Results
-- Net sales for the fourth quarter 2007 were $143.9 million, an increase
of $12.3 million, or 9.4%, as compared to $131.6 million for the same
period in 2006.

-- Operating income for the fourth quarter 2007 was $6.4 million, an
increase of $10.3 million, compared to an operating loss of $3.9
million for the comparable period in 2006. Operating income in both
fourth quarter 2007 and fourth quarter 2006 included certain
highlighted items. The fourth quarter 2007 was negatively affected by
approximately $10.5 million from planned and unplanned outages at the
Company's Coatzacoalcos, Mexico facility, with approximately $5.4
million coming from maintenance costs, $4.0 million from reduced
volumes and $1.1 million from raw material replacement costs, and $2.4
million in legal fees to comply with a STPP document request subpoena
from the U.S. Department of Justice ("DOJ"). The fourth quarter 2006
was negatively affected by $13.3 million of unusual expense items
primarily related to the Company's termination of a management advisory
agreement and its initial public equity offering.

-- Depreciation and amortization for the fourth quarter 2007, excluding
deferred financing amortization expense, was $13.0 million, an increase
of $1.7 million compared to $11.3 million for the fourth quarter of
2006.

-- Net interest expense for the fourth quarter 2007, including deferred
financing amortization expense, was $8.9 million, a decrease of $9.7
million, compared to $18.6 million for the comparable period in 2006.
Included in net interest expense for the fourth quarter 2006 are
unusual expense items totaling $6.4 million, primarily due to the debt
retirement related to the Company's November 2006 initial public equity
offering.

-- Tax expense for the fourth quarter 2007 was $1.3 million, a decrease of
$0.9 million compared to $2.2 million for the comparable period in
2006.

-- Net loss for the fourth quarter 2007 was $3.9 million, an improvement
of $20.8 million compared to a net loss of $24.7 million for the same
period in 2006.

-- Diluted loss per share for the fourth quarter 2007 was $0.19. Innophos
had 20.9 million shares issued and outstanding at December 31, 2007.

-- As of December 31, 2007, Innophos had $15.7 million of cash and cash
equivalents. Net debt at the end of the fourth quarter 2007 was $368.8
million, a reduction of $4.3 million from $373.1 million at September
30, 2007. Capital expenditures for the fourth quarter 2007 were $5.3
million versus $6.0 million in the same quarter of 2006.

Randy Gress, CEO of Innophos said, "Higher pricing in all geographic
segments, combined with increases in US volume and mix, improved our sales and
operating income in the fourth quarter. We continue to see strong demand for
our products."
Segment Results 4Q 2007 Versus 4Q 2006
-- U.S. - Year on year quarterly net sales increased 8.6% due to the
impacts of higher prices and favorable volume and mix on revenue.
Operating income increased by $13.4 million from a loss of $11.9
million in the fourth quarter of 2006 to income of $1.5 million in the
fourth quarter of 2007. Included in the 2007 operating income was $2.4
million in legal fees to comply with the DOJ STPP document request
subpoena. Included in the 2006 operating income were $14.2 million of
unusual expenses related to the Company's November 2006 initial public
equity offering and the termination of a management advisory agreement.
-- Mexico - Net sales increased 11.9% for the quarter versus the same
quarter 2006 due to higher prices, which exceeded lower volume and mix
effects on revenue. Volume was lower due to lost production and sales
resulting from production outages. These effects were partially offset
by a GTSP (fertilizer co-product) export shipment delayed into early
October to optimize material handling. Operating income decreased by
$5.3 million, from $8.7 million in the fourth quarter of 2006 to $3.4
million in the fourth quarter of 2007, again as a result of
approximately $10.5 million planned and unplanned outage costs and
associated lower margins from lost production and sales, partially
offset by higher selling prices. Included in 2006 operating income was
$0.9 million of unusual income related to gains from a legal entity
restructuring.
-- Canada - Net sales increased 2.3% for the quarter versus the same
quarter 2006 due primarily to higher selling prices. Operating income
increased $2.2 million, from a loss of $0.7 million in the fourth
quarter of 2006 to income of $1.5 million in the fourth quarter of
2007.

Full Year Results
-- Full year 2007 net sales were $579.0 million, an increase of $37.2
million, or 6.9%, as compared to $541.8 million in 2006.
-- Operating income for the year ended December 31, 2007 was $47.7
million, an increase of $16.8 million, or 54.4%, as compared to $30.9
million in 2006. Included in 2007 results are $10.2 million of unusual
expense items versus $17.6 million unusual expense items in 2006
results.

-- Depreciation and amortization, excluding deferred financing
amortization expense, for 2007 was $47.5 million, an increase of $1.1
million compared to $46.4 million in 2006.
-- Net interest expense, including deferred financing amortization
expense, for 2007 was $41.6 million, a decrease of $16.6 million
compared to $58.2 million in 2006.
-- Included in 2007 income (loss) before income taxes are unusual expense
items totaling $13.9 million, resulting from the Company's termination
of the pharma sales agency agreement, Mexican workforce reorganization
and port tax settlements, and debt retirement, all of which occurred in
the first and second quarters of 2007. Included in 2006 income (loss)
before income taxes are unusual expense items totaling $24.6 million,
primarily due to the Company's termination of a management advisory
agreement and its November 2006 initial public equity offering and
related debt retirement.

$ Millions
Unusual Items of Expense (Income) in Operating
Income: 2006 2007

Management Advisory Fees $15.2 $---
Termination of Pharma Sales Agency Agreement --- 6.3

Mexican Port Facility Tax Settlement for 1996 -
- 2006 --- 2.0 Mexican Workforce Reorganization
--- 1.4
Gains on Mexican Legal Entity Restructuring (0.9) ---
Separation Consulting Fees, Professional Fees and Other 3.2 0.3
CNA Litigation & All Other 0.1 0.2
Sub-Total of Unusual Items in Operating Income 17.6 10.2

Unusual Items of Expense in Net Interest Expense:
Call Premiums and Penalties 3.6 1.8
Deferred Financing Acceleration due to Debt Retirement 3.4 1.9
Sub-Total of Unusual Items in Net Interest Expense 7.0 3.7
Total Unusual Items of Expense in Income (loss) $24.6 $13.9
before income taxes

-- Tax expense for 2007 was $11.9 million, an increase of $6.0 million,
compared to $5.9 million in 2006.

-- Net loss for 2007 was $5.5 million, an improvement of $27.3 million
compared to a net loss of $32.8 million in 2006.

-- Diluted loss per share for 2007 was $0.27.

-- Capital expenditures for 2007 were $28.4 million versus $15.6 million
in 2006. This increased spending level was primarily due to the
Company's Coatzacoalcos, Mexico cogeneration project, where $15.1
million was incurred in 2007 versus $1.1 million in 2006. This project
is mechanically complete, fully permitted, and we expect all shakedown
testing to be completed by March 1st.

Segment Results Full Year 2007 Versus Full Year 2006
-- U.S. - Net sales increased 2.8% for the full year 2007 versus the full
year 2006 due to favorable volume and mix effects on revenue, along
with higher prices. Operating income increased by $1.8 million from
$1.5 million in 2006 to $3.3 million in 2007. Included in the 2007
operating income were $6.8 million of unusual expenses related
primarily to the Company's termination of the pharma sales agency
agreement. Included in the 2006 operating income were $18.4 million of
unusual expenses related to the Company's initial public offering of
equity and termination of an advisory agreement.

-- Mexico - Net sales increased 14.4% for 2007 versus 2006 due to higher
prices and minimal volume and mix effects on revenue. Operating income
increased by $11.4 million, from $28.4 million in 2006 to $39.8 million
in 2007, as a result of the higher selling prices which exceeded higher
raw material and maintenance outage costs. Included in the 2007
operating income were $3.4 million of unusual expenses related to the
workforce reorganization and port tax settlements. Included in the
2006 operating income was $0.8 million of unusual income related
primarily to gains on legal entity restructuring.

-- Canada - Net sales increased 1.2% for 2007 versus 2006 due primarily to
volume and mix effects upon revenue, as selling prices were essentially
flat. Operating income increased $3.6 million, from $1.0 million in
2006 to $4.6 million in 2007, driven by lower manufacturing fixed costs
and amortization expenses.

Randy Gress continued, "2007 was a strong year for Innophos, our first
full year as a publicly traded company. During the year, we invested in
projects that will make the Company stronger. Cost savings projects
addressing energy consumption, yields and efficiencies in Coatzacoalcos and
the reorganization of our Mexican workforce are contributing to more efficient
Mexican operations, and will continue to do so in the future. We refinanced
one issue of notes and lowered our interest expense. And we accomplished
important governance milestones by achieving a majority independent Board,
reorganizing our Board committees to consist exclusively of independent
directors, and electing a lead independent director. We also brought inside
the company the pharma sales and marketing functions, allowing us to be closer
to our pharmaceutical customers. We expect these and other important
decisions to yield continued results improvements in what we expect to be
dynamic 2008 market conditions."
2008: Innophos Goals and Market Outlook
Market prices of phosphate rock and sulfur, two primary raw materials used
in the production of specialty phosphates, have increased substantially over
the last several quarters.
Historically, we have successfully recovered raw material, energy, and
other cost increases through price increases. During the fourth quarter 2007,
we implemented price increases in all our product lines, most of which became
effective January 1, 2008. We have also implemented additional price
increases through February. Our January and February price increases,
together, are expected to fully recover the currently estimated increases in
raw material costs. While there may be timing differences between raw
material cost increases and responsive actions, management expects price
increases will be achieved at or ahead of realized cost increases. While we
cannot guarantee that these measures will succeed, marketplace acceptance
rates for these increases has to date been high.
If current raw material market price levels for phosphate rock and sulfur
are sustained throughout 2008 into early 2009, we currently estimate that our
annual raw material costs will increase by approximately 30% of 2007 annual
sales by early 2009, as compared to our cost structure at year-end 2007.
Randy Gress commented, "Innophos benefits from a flexible production
infrastructure that will allow us to adjust to customer demand shifts in the
current environment. It does not change our overall mission to deliver
quality products and lead in specialty phosphate production and customer
service. Our infrastructure and staff are equipped to respond to these
conditions. In summary, through price actions and operating improvements, we
expect to again expand operating margins in 2008, in addition to what we
accomplished in 2007."
Legal Items
-- During the fourth quarter of 2007 Innophos has completed delivery of
the greater part of the documents and information called for by the
U.S. DOJ STPP antitrust subpoena, and anticipates a significantly
reduced level of related legal expense beginning in the first quarter
of 2008.

-- Innophos Holdings recently received a favorable ruling from the NY
Court of Appeals unanimously affirming full indemnity from Rhodia on
the C.N.A. water tax issue. This decision is not subject to further
appeal by Rhodia.

About Innophos Holdings, Inc.
Innophos Holdings, Inc. (www.innophos.com), the holding company for a
leading North American manufacturer of specialty phosphates, serves 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. Headquartered in Cranbury, New Jersey,
Innophos has manufacturing operations in Nashville, TN; Chicago Heights, IL;
Chicago (Waterway), IL; Geismar, LA; Port Maitland, ON (Canada); and
Coatzacoalcos, Veracruz and Mission Hills, Guanajuato (Mexico). 'IPHS-G'
Financial Tables Follow

Conference Call Details
The conference call is scheduled for February 20 at 10:00 a.m. EST and can
be accessed by dialing 888.713.4217(U.S.) or 617.213.4869(international) and
entering passcode 66516760. A replay will be available between 12:00 pm EST
on February 20 and 11:59 pm EST on February 27. The replay is accessible by
dialing 888-286-8010 (U.S.) or 617-801-6888 (international) and entering
passcode 16131704. Please dial in approximately 15 minutes ahead of the start
time to ensure timely entry to the call.
Forward Looking Statements
Safe Harbor for Forward-Looking and Cautionary Statements
This release contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended and Section 21E of the
Securities Exchange Act of 1934, as amended. As such, final results could
differ from estimates or expectations due to risks and uncertainties,
including but not limited to: incomplete or preliminary information; changes
in government regulations and policies; continued acceptance of Innophos'
products and services in the marketplace; competitive factors; technological
changes; Innophos' dependence upon fourth-party suppliers; and other risks.
For any of these factors, Innophos claims the protection of the safe harbor
for forward-looking statements contained in the Private Securities Litigation
Reform Act of 1995, as amended.

Summary Profit & Loss Statement - Fourth Quarter

INNOPHOS HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations (Unaudited)
(Dollars in thousands, except per share amounts)

Three months ended December 31,
2007 2006

Net sales $ 143,939 $ 131,562
Cost of goods sold 122,404 107,270

Gross profit 21,535 24,292

Operating expenses:
Selling, general and administrative 14,660 27,670
Research & Development Expenses 482 490
Total operating expenses 15,142 28,160

Operating income (loss) 6,393 (3,868)

Interest expense, net 8,945 18,635
Foreign exchange (gains)/losses 24 495
Other expense (income), net (43) (504)

Income (loss) before income taxes (2,533) (22,494)
Provision for income taxes 1,349 2,236

Net loss $ (3,882) $ (24,730)

Dividends paid per share of common
stock $ 0.17 $ ---
Dividends declared per share of common
stock $ 0.17 $ 0.11

Segment Reporting - Fourth Quarter

The company reports its operations in three segments-United States, Mexico
and Canada, each of which sells the entire portfolio of products. The primary
performance indicators for the chief operating decision maker are sales and
operating income, with sales on a ship-from basis. The following table sets
forth the historical results of these indicators by segment:

Three months Three months
ended ended
December 31, December 31, Net Sales
2007 2006 % Growth

Segment Net Sales
United States $ 83,936 $ 77,320 8.6%
Mexico 52,627 47,035 11.9%
Canada 7,376 7,207 2.3%

Total $ 143,939 $ 131,562 9.4%

Segment Operating Income
United States $ 1,533 (11,893)
Mexico 3,354 8,687
Canada 1,506 (662)

Total $ 6,393 $ (3,868)

Segment Operating Income % of net sales
United States 1.8% (15.4)%
Mexico 6.4% 18.5%
Canada 20.4% (9.2)%

Price / Volume - Fourth Quarter

The following table illustrates for the three months ended December 31,
2007 the percentage changes in net sales by reportable segment compared with
the same period of the prior year, including the effect of price and
volume/mix changes upon revenue:
Price Volume/Mix Total

United States 4.1% 4.5% 8.6%
Canada 2.7% (0.4)% 2.3%
Mexico 21.2% (9.3)% 11.9%

The following table illustrates for the three months ended December 31,
2007 the percentage changes in net sales by major product lines compared with
the same period of the prior year, including the effect of price and
volume/mix changes upon revenue:

Price Volume/Mix Total

Purified Phosphoric Acid 5.7% (7.9)% (2.2)%
Specialty Salts and Specialty Acids 6.0% 5.9% 11.9%
STPP & Other Products 23.2% (7.6)% 15.6%

Summary Profit & Loss Statement - Full Year

INNOPHOS HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations (Unaudited)
(Dollars in thousands, except per share amounts)

Year Ended December 31,
2007 2006

Net sales $ 578,982 $ 541,797
Cost of goods sold 474,785 449,516

Gross profit 104,197 92,281

Operating expenses:
Selling, general and administrative 54,441 59,598
Research & Development Expenses 2,047 1,734
Total operating expenses 56,488 61,332

Operating income 47,709 30,949

Interest expense, net 41,559 58,24
Foreign exchange (gains)/losses 40 (162)
Other expense (income), net (299) (228)

Income (loss) before income taxes 6,409 (26,903)
Provision for income taxes 11,896 5,914

Net loss $ (5,487) $ (32,817)

Dividends paid per share of common stock $ 0.62 $ ---
Dividends declared per share of common stock $ 0.68 $ 0.11

Segment Reporting - Full Year

The company reports its operations in three segments -- United States,
Mexico and Canada, each of which sells the entire portfolio of products. The
primary performance indicators for the chief operating decision maker are
sales and operating income, with sales on a ship-from basis. The following
table sets forth the historical results of these indicators by segment:

Net Sales
2007 2006 % Growth
Segment Net Sales

United States $ 326,882 $ 318,105 2.8%
Mexico 222,699 194,639 14.4%
Canada 29,401 29,053 1.2%

Total $ 578,982 $ 541,797 6.9%

Segment Operating Income
United States $ 3,299 $ 1,544
Mexico 39,819 28,422
Canada 4,591 983

Total $ 47,709 $ 30,949

Segment Operating Income % of net sales
United States 1.0% 0.5%
Mexico 17.9% 14.6%
Canada 15.6% 3.4%

Price / Volume - Full Year

The following table illustrates for the year ended December 31, 2007 the
percentage changes in net sales by reportable segment compared with the same
period of the prior year, including the effect of price and volume/mix changes
upon revenue:

Price Volume/Mix Total

United States 0.7% 2.1% 2.8%
Canada (0.5)% 1.7% 1.2%
Mexico 14.7% (0.3)% 14.4%

The following table illustrates for the year ended December 31, 2007 the
percentage changes in net sales by major product lines compared with the same
period of the prior year, including the effect of price and volume/mix changes
upon revenue:

Price Volume/Mix Total

Purified Phosphoric Acid 0.9% (1.5)% (0.6)%
Specialty Salts and Specialty Acids 1.9% 4.2 % 6.1%
STPP & Other Products 18.0% (2.5)% 15.5%

Summary Cash Flow Statement

INNOPHOS HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Unaudited)
(Dollars in thousands)

Year Ended December 31,
2007 2006
Cash flows from operating activities
Net loss $ (5,487) $ (32,817)
Adjustments to reconcile net (loss) to
net cash provided by operating activities:
Depreciation and amortization 47,486 46,443
Amortization of deferred financing charges 4,643 6,669
Deferred income tax benefit (1,807) (3,673)
Deferred profit sharing 800 217
Non-cash interest for floating rate
senior notes - 13,176
Share based compensation 1,077 231
Changes in assets and liabilities:
(Increase)/decrease in accounts receivable (3,763) (474)
(Increase)/decrease in inventories (8,159) 5,712
(Increase)/decrease in other current assets (4,732) 8,957
(Decrease)/increase in accounts payable 5,565 2,461
(Decrease)/increase in other current liabilities 5,180 (9,557)
Changes in other long-term assets and liabilities 2,638 3,592

Net cash provided from operating activities 43,441 40,937

Cash flows from investing activities:
Capital expenditures (28,356) (15,577)
Purchase of assets (2,120) -

Net cash used for investing activities (30,476) (15,577)

Cash flows from financing activities:
Proceeds from share capital issue,
(net of expenses $8,831) - 87,169
Proceeds from exercise of stock options 950 -
Proceeds from issuance of senior unsecured notes 66,000 -
Proceeds from term-loan - -
Borrowings under revolving lines of credit - -
Proceeds from issuance of floating rate senior notes - -
Principal payments of floating rate senior note (60,800) (83,272)
Principal payments of term-loan (20,500) (58,900)
Repayment of revolver - -
Deferred financing costs (1,815) -
Capital contribution - -
Distribution to stockholders - -
Dividends paid (12,899) -

Net cash used for financing activities (29,064) (55,003)

Net change in cash (16,099) (29,643)
Cash and cash equivalents at beginning of period 31,760 61,403

Cash and cash equivalents at end of period $ 15,661 $ 31,760

Summary Balance Sheets

INNOPHOS HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)
(Dollars in thousands)

December 31,
2007 2006

ASSETS
Current Assets:
Cash and cash equivalents $ 15,661 $ 31,760
Accounts receivable - trade 60,079 56,316
Inventories 78,728 70,569
Other current assets 18,384 13,652
Total current assets 172,852 172,297

Property, plant and equipment, net 260,563 277,222
Goodwill 47,268 47,268
Intangibles and other assets, net 62,016 68,533

Total assets $ 542,699 $ 565,320

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 1,328 $ 1,524
Accounts payable, trade and other 36,444 30,879
Other current liabilities 45,380 40,200
Total current liabilities 83,152 72,603
Long-term debt 383,172 398,276
Other long-term liabilities 31,671 33,729
Total liabilities 497,995 504,608
Total stockholders' equity 44,704 60,712
Total liabilities and stockholders' equity $ 542,699 $ 565,320

Additional Information
It should be noted the unusual expense items discussed are not considered
extraordinary under United States generally accepted accounting principles, or
USGAAP. They have been presented here to exclude the impact of certain
unusual expense items on Innophos' results. The Company believes these
measures are reflective of how management views Innophos' operations, provide
transparency to investors, and enable period-to-period comparability of
financial performance.
Net debt is a supplemental financial measure that is not required by, or
presented in accordance with, USGAAP. The Company believes net debt is
helpful in analyzing leverage and as a performance measure for purposes of
presentation in this release. The Company defines net debt as total debt less
cash and cash equivalents.
SOURCE Innophos Holdings, Inc.

Innophos Holdings, Inc. Investor Relations, +1-609-366-1299,
investor.relations@innophos.com; Maura Gedid, +1-646-452-2335, Barbara Cano,
+1-646-452-2334, both of Breakstone Group