Release Date: October 24, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Net income for the third quarter of 2024 increased to $132 million, up from $111 million in the same period last year.

• Petroleum additives operating profit rose to $157 million, an increase from $140 million in the third quarter of 2023.

• The company successfully completed the acquisition of American Pacific Corp (AMPAC), integrating it into their specialty materials segment.

• Strong cash flows were generated during the quarter, allowing for $24 million in dividends and $14 million in capital expenditures.

• The net debt to EBITDA ratio improved to 1.4, slightly below the target operating range, indicating strong financial health.

Negative Points

• Petroleum additive sales slightly decreased to $663 million from $664 million in the same period last year.

• The specialty materials segment reported no margin on the sale of AMPAC finished goods inventory acquired at closing.

• There is an expectation of substantial variation in quarterly results for AMPAC due to the nature of its business.

• Capital expenditures for 2024 are expected to be in the range of $50 million to $70 million, which may impact cash flow.

• Lower selling prices partially offset the increase in petroleum additives operating profit, indicating pricing pressure.

Q & A Highlights

• Warning! GuruFocus has detected 3 Warning Signs with ZYXI.

Q: Can you provide more details on the factors contributing to the increase in petroleum additives operating profit? A: The increase in petroleum additives operating profit for the third quarter of 2024 was primarily due to lower raw material and operating costs. This was partially offset by lower selling prices. We continue to focus on margin management, which has been favorable for our results. - William Skrobacz, CFO

Q: How has the acquisition of American Pacific Corp (AMPAC) impacted your financial results? A: Since acquiring AMPAC on January 16, 2024, we have reported its financial results in our specialty materials segment. For the third quarter, specialty materials sales were $59 million, and operating profit was $16 million. The results reflect the sale of AMPAC finished goods inventory acquired at closing, which generated no margin. We expect quarterly results for AMPAC to vary substantially but anticipate full-year results to align with pre-acquisition expectations. - William Skrobacz, CFO

Q: What are your expectations for capital expenditures in 2024? A: For 2024, we expect capital expenditures to be in the range of $50 million to $70 million. This aligns with our strategic priorities and operational needs. - William Skrobacz, CFO