Financial Data and Key Metrics Changes - Total revenues for Q3 2025 were $441.9 million, slightly down from $443.4 million in Q3 2024 [6] - Overall gross margin decreased by 1.6 percentage points to 26.4% [6] - Adjusted EBITDA for the quarter was $44.2 million, down from $50.5 million a year ago [6] - Net income for the quarter was $12.9 million, compared to $33.4 million in the previous year [6] - GAAP earnings per share were $0.52, down from $1.33 last year [7] - Adjusted EPS for the quarter was $1.12, compared to $1.35 a year ago [8] Business Line Data and Key Metrics Changes - **Performance Chemicals**: Revenues increased by 4% to $170.8 million, but gross margin decreased to 15.1%, down 7 percentage points from 22.1% [8] - **Fuel Specialties**: Revenues rose by 4% to $172 million, with gross margins improving to 35.6%, up 2 percentage points [9] - **Oilfield Services**: Revenues decreased by 13% to $99.1 million, but gross margins increased to 30% [10] Market Data and Key Metrics Changes - Performance Chemicals experienced a volume decline of 2%, offset by a positive price mix of 3% and favorable currency impact of 3% [8] - Fuel Specialties saw a volume decrease of 7%, with a price mix increase of 7% and a positive currency impact of 4% [9] - Oilfield Services faced a decline in operating income due to lower-than-expected activity in the Middle East [5] Company Strategy and Development Direction - The company is focused on margin improvement across all segments and has a strong pipeline of margin-accretive opportunities [4] - There is an emphasis on executing top-line cost and margin-improvement opportunities identified in the business [4] - The company plans to continue its share buyback program and has increased its semi-annual dividend by 10% to $0.87 per share [11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about sequential operating income and margin improvement in Q4, particularly in Performance Chemicals and Oilfield Services [5] - The company expects to see a positive impact from actions taken in Q3, with gross margins in Performance Chemicals expected to improve to around 18% in Q4 [18] - Management noted strong customer demand remains intact despite internal challenges faced in Q3 [40] Other Important Information - Corporate costs for the quarter were $18.2 million, up from $11.8 million a year ago [10] - Cash flow from operating activities was $39.3 million before capital expenditures of $22.2 million [10] - The company had $270.8 million in cash and cash equivalents and no debt as of September 30 [10] Q&A Session Summary Question: Can you provide more details on the gross margin decline in Performance Chemicals? - Management noted ongoing headwinds from oleochemicals affecting pricing and pass-through ability, but improvements are expected in Q4 [16][17] Question: What commercial actions are being taken in Performance Chemicals? - New product technologies are being introduced across various sectors, with expectations for improved product mix and pricing [20][21] Question: What is the outlook for Fuel Specialties in Q4? - Management expects stable performance in Fuel Specialties, with operating income projected around $35 million [24][25] Question: What is the expected EPS range for Q4? - Management anticipates EPS to be in the $1.20-$1.25 range, acknowledging challenges in achieving last year's levels [26][27] Question: Can you elaborate on the timing in the Oilfield Services business? - Management indicated that activity is expected to pick up in Q4, but there won't be a catch-up effect due to timing issues with customers [32][33] Question: What is the capital allocation strategy moving forward? - The company plans to balance share buybacks and dividend increases while maintaining flexibility for potential M&A opportunities [41][42]

Financial Performance - Net sales for Q3 2025 were $441.9 million, a slight decrease of 0.3% compared to $443.4 million in Q3 2024[12] - Gross profit for Q3 2025 was $116.7 million, down 6.0% from $124.1 million in Q3 2024[12] - Operating income for Q3 2025 decreased significantly to $5.9 million, compared to $45.6 million in Q3 2024, reflecting a decline of 87.0%[12] - Net income for Q3 2025 was $12.9 million, a decrease of 61.4% from $33.4 million in Q3 2024[12] - Earnings per share (EPS) for Q3 2025 were $0.52, down from $1.34 in Q3 2024, representing a decline of 61.2%[12] - Comprehensive income for Q3 2025 was $11.3 million, down from $48.7 million in Q3 2024[14] - For the nine months ended September 30, 2025, net income decreased to $69.2 million from $106.0 million in the same period of 2024, representing a decline of approximately 34.7%[18] - Gross profit for the nine months ended September 30, 2025, was $365.0 million, down 10.2% from $406.7 million in 2024[12] - Operating income for the three months ended September 30, 2025, was $5.9 million, a significant decline of 87.0% compared to $45.6 million in 2024[12] - Basic earnings per share for the three months ended September 30, 2025, were $0.52, down 61.2% from $1.34 in 2024[12] Assets and Liabilities - Total assets increased to $1,799.4 million as of September 30, 2025, compared to $1,734.7 million at the end of 2024[17] - Total liabilities decreased to $496.5 million as of September 30, 2025, down from $518.6 million at the end of 2024[17] - Total equity increased to $1,302.9 million as of September 30, 2025, compared to $1,216.1 million at the end of 2024[17] - Cash and cash equivalents at the end of the period were $270.8 million, down from $303.8 million at the end of September 2024, a decrease of about 10.8%[18] - The company has a current portion of operating lease liabilities of $16.0 million as of September 30, 2025, compared to $13.9 million at the end of 2024[17] Cash Flow and Investments - Net cash provided by operating activities for the nine months ended September 30, 2025, was $76.9 million, down from $158.8 million in 2024, a decrease of about 51.5%[18] - Net cash used in investing activities rose to $55.9 million in 2025 compared to $41.4 million in 2024, an increase of about 35.1%[18] - Capital expenditures increased to $35.7 million in 2025 from $29.3 million in 2024, reflecting a rise of approximately 21.8%[18] - The company paid dividends of $20.8 million in 2025, up from $19.0 million in 2024, indicating an increase of approximately 9.5%[18] Impairments and Charges - The company reported an impairment of property, plant, and equipment amounting to $22.9 million for the nine months ended September 30, 2025[18] - The company impaired intangible assets totaling $19.1 million related to the acquisition of Química Geral S.A. due to insufficient expected cash flows[41] - The company impaired property, plant, and equipment assets totaling $22.9 million within its Oilfield Services segment[42] - The charge for plant closure provisions for the nine months ended September 30, 2025, was $5.0 million, compared to $2.6 million for the same period in 2024[56] Segment Information - The company operates through three reportable segments: Performance Chemicals, Fuel Specialties, and Oilfield Services[30] Foreign Currency and Contingent Considerations - The company reported a loss of $3.6 million from foreign currency forward exchange contracts for the nine months ended September 30, 2025, compared to a loss of $1.1 million for the same period in 2024[60] - The fair value of acquisition-related contingent consideration decreased by $18.5 million to $8.2 million as of September 30, 2025, primarily due to changes in expected financial targets[59] Research and Development - Research and development expenses for the nine months ended September 30, 2025, included $5.7 million that was reclassified from selling, general, and administrative expenses[27] Credit Facilities and Guarantees - As of September 30, 2025, the company has a $250.0 million multicurrency revolving credit facility available until May 30, 2028, with no borrowings drawn down during the first nine months of 2025[54] - Guarantees for certain obligations of affiliated companies amounted to $8.3 million as of September 30, 2025, up from $6.8 million at the end of 2024[64]

Q3 2025 Performance Summary - The company reported Earnings Per Share (EPS) of $1.12 for Q3 2025[6] - The company's balance sheet shows $270.8 million in net cash[7] - A 10 percent semi-annual dividend increase was authorized, bringing it to 87 cents per share[7] - The company executed $10.7 million in share buybacks[7] Segment Performance - Performance Chemicals saw a 4 percent increase in revenue, but volumes decreased by 2 percent, while price/mix increased by 3 percent[16] - Performance Chemicals gross margin decreased by 7 percentage points[7, 16] - Fuel Specialties experienced a 4 percent increase in revenue, with volumes down 7 percent and price/mix up 7 percent[19] - Fuel Specialties operating income increased by 14 percent[19] - Oilfield Services revenue decreased by 13 percent due to lower Middle East activity[23] Financial Results - Consolidated revenue was broadly flat[13] - Gross margin decreased by 1.6 percentage points[13] - Operating income decreased by 87 percent, including $24.4 million in charges[13] - Adjusted EBITDA decreased by 12 percent[13] Outlook - Sequential growth is expected in Q4 for Performance Chemicals and Oilfield Services[7, 8, 16, 23] - Fuel Specialties is expected to maintain steady performance in Q4[7, 19, 32]

Financial Performance - Total revenues for Q3 2025 were $441.9 million, slightly down from $443.4 million in Q3 2024[3] - Net income for the quarter was $12.9 million, or $0.52 per diluted share, compared to $33.4 million, or $1.33 per diluted share, in the same period last year[3] - Adjusted non-GAAP EPS for Q3 2025 was $1.12, down from $1.35 in Q3 2024[6] - Adjusted EBITDA for the quarter was $44.2 million, compared to $50.5 million in the same period a year ago[5] - Total operating income decreased to $5.9 million in Q3 2025 from $45.6 million in Q3 2024, a decline of 87.0%[24] - Net income for the nine months ended September 30, 2025, was $69.2 million, down from $106.0 million in the same period of 2024, a decrease of 34.7%[25] - Adjusted EBITDA for the nine months ended September 30, 2025, was $147.3 million, down from $168.6 million in the same period of 2024, a decrease of 12.5%[25] - The company reported a gross profit of $116.7 million in Q3 2025, down from $124.1 million in Q3 2024, a decrease of 5.9%[24] Revenue Breakdown - Performance Chemicals revenues were $170.8 million, up 4% year-over-year, but gross margins decreased by 7.0 percentage points to 15.1%[11] - Fuel Specialties revenues increased by 4% to $172.0 million, with gross margins improving by 2.0 percentage points to 35.6%[12] - Oilfield Services revenues decreased by 13% to $99.1 million, with operating income down 32% to $4.8 million[13] - Net sales for Performance Chemicals increased to $170.8 million in Q3 2025, up from $163.6 million in Q3 2024, representing a growth of 7.4%[24] Cash Flow and Assets - Cash generated from operating activities was $39.3 million, down from $73.5 million a year ago, with net cash position at $270.8 million[15] - Cash and cash equivalents decreased to $270.8 million as of September 30, 2025, from $289.2 million at the end of 2024, a decline of 6.0%[28] - Total assets increased to $1,799.4 million as of September 30, 2025, compared to $1,734.7 million at the end of 2024, an increase of 3.7%[28] - Total current liabilities decreased to $356.1 million as of September 30, 2025, from $371.4 million at the end of 2024, a reduction of 4.1%[28] Corporate Costs and Dividends - Corporate costs for the quarter were $18.2 million, up from $11.8 million a year ago, which included an $8.4 million recovery of historic pension costs[14] - The company announced a 10% increase in the semi-annual dividend to $0.87 per share, bringing the annual dividend to $1.71 per share[17] Capital Expenditures and Impairments - Capital expenditures for the nine months ended September 30, 2025, were $35.7 million, compared to $29.3 million in the same period of 2024, an increase of 21.8%[30] - The company incurred an impairment of property, plant, and equipment amounting to $22.9 million in the nine months ended September 30, 2025[30]

分组1 - Innospec reported quarterly earnings of $1.12 per share, exceeding the Zacks Consensus Estimate of $1.03 per share, but down from $1.35 per share a year ago, representing an earnings surprise of +8.74% [1] - The company posted revenues of $441.9 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 0.73%, but down from $443.4 million year-over-year [2] - Innospec has surpassed consensus EPS estimates four times over the last four quarters and topped consensus revenue estimates three times during the same period [2] 分组2 - The stock has underperformed, losing about 33.1% since the beginning of the year compared to the S&P 500's gain of 16.5% [3] - The current consensus EPS estimate for the coming quarter is $1.37 on revenues of $479.2 million, and for the current fiscal year, it is $5.08 on revenues of $1.8 billion [7] - The Zacks Industry Rank for Chemical - Diversified is currently in the bottom 9% of over 250 Zacks industries, indicating potential challenges for stock performance [8]

Continued strength in Fuel Specialties offsetting lower than expected results in our other business segments Focused on delivering sequential gross margin and operating income growth in Performance Chemicals and Oilfield Services Strong cash flow of $39.3 million generated from operations; Net cash improves to $270.8 million GAAP EPS 52 cents per share and adjusted non-GAAP EPS $1.12 Semi Annual dividend increased by 10 percent: $10.7 million in share repurchases made in the quarter ENGLEWOOD, Colo., Nov. 0 ...

Company Overview - Innospec Inc. is an international specialty chemicals company with approximately 2,450 employees across 22 countries [4] - The company manufactures and supplies a wide range of specialty chemicals to various markets including Personal Care, Home Care, Agrochemical, Mining, and Industrial [4] - Innospec's Fuel Specialties business focuses on fuel additives that enhance fuel efficiency, improve engine performance, and reduce harmful emissions [4] - The Oilfield Services segment provides specialty chemicals for the oil and gas exploration and production industry [4] Upcoming Earnings Release - Innospec Inc. will release its third quarter 2025 earnings on November 4, 2025, after market close [1] - Following the earnings release, an interactive conference call will be hosted by the President and CEO, Patrick S. Williams, and the Executive Vice President and CFO, Ian Cleminson, on November 5, 2025, at 10:00 a.m. ET [1] Conference Call Details - The public can listen to the conference call by registering in advance through an online registration link [2] - Participants will receive an email confirmation with dial-in numbers and a unique Personal PIN for joining the conference [2] - An audio webcast of the conference call will be available simultaneously on the company's website, along with a slide presentation [3] - A replay of the webcast will be accessible on the company's website for 30 days following the call [3]

Core Insights - Innospec Inc. has entered the second year of its partnership with International Justice Mission (IJM) to enhance protections for palm oil workers in Indonesia and combat forced labor and human trafficking [1][2] - The partnership, initiated in 2024, has made significant progress in improving labor conditions and will expand to additional provinces, including Sumatra and the Riau Islands, with new initiatives planned for 2025 [2][3] Company Overview - Innospec Inc. is a global specialty chemicals company with approximately 2,450 employees across 22 countries, providing a wide range of specialty chemicals for various markets [4] - The Performance Chemicals division focuses on innovative technology-based solutions for sectors such as Personal Care, Home Care, Agrochemical, Mining, and Industrial markets [4] Partnership Initiatives - Key initiatives from the partnership include training over 50 law enforcement and government officials on human rights and business practices, promoting a digital complaint system for reporting labor violations, and launching a national awareness campaign on safe migration and human trafficking [6] - The partnership aims to implement aftercare systems for survivors of forced labor, further enhancing support for vulnerable workers [2][3]

Financial Data and Key Metrics Changes - Total revenues for Q2 2025 were $439.7 million, a 1% increase from $435 million a year ago [10] - Overall gross margin decreased by 1.2 percentage points to 28% [11] - Adjusted EBITDA for the quarter was $49.1 million compared to $54.1 million last year [11] - Net income for the quarter was $23.5 million, down from $31.2 million a year ago [11] - GAAP earnings per share were $0.94, including special items that decreased earnings by $0.32 per share [11] - Adjusted EPS for the quarter was $1.26 compared to $1.39 a year ago [11] Business Line Data and Key Metrics Changes - **Performance Chemicals**: Revenues were $173.8 million, up 9% from $160.1 million last year; however, gross margins decreased by 5.1 percentage points to 17.5% [12] - **Fuel Specialties**: Revenues were $165.1 million, down 1% from $166.6 million; gross margins improved by 3.5 percentage points to 38.1% [13] - **Oilfield Services**: Revenues were $101 million, down 7% from $108.3 million; operating income improved sequentially but decreased 15% from $7.3 million a year ago [14] Market Data and Key Metrics Changes - The company does not anticipate any resumption of Latin America activity for the remainder of the year [8] - The oilfield services segment has seen better diversification in other countries, particularly in the Middle East [35] Company Strategy and Development Direction - The immediate priority is margin improvement in Performance Chemicals and Oilfield Services, focusing on sales, cost actions, and new technology [15] - The company has significant balance sheet flexibility for further organic investment, complementary M&A, and shareholder returns through dividend growth and buybacks [16] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about achieving sequential gross margin improvement and operating growth in the second half of the year [6] - There is a noted hesitancy in the market due to geopolitical factors, leading to a consumer shift towards lower-margin products [21] - The company expects to see a lag in pricing recovery, particularly in oleochemicals, affecting margins in Q3 [24] Other Important Information - Corporate costs for the quarter were $20.9 million, including a $2.3 million legacy environmental provision [14] - Cash from operating activities was $9.3 million before capital expenditures of $16.2 million; the company repurchased almost 90,000 shares at a cost of $8.2 million [14] Q&A Session Summary Question: Insights on Performance Chemicals business and margin trends - Management noted a shift to lower-margin products due to market hesitancy and emphasized the need for better pricing control internally [21][23] Question: Drivers of strong gross margin performance in Fuel Specialties - The strong performance was attributed to price discipline, product mix, and non-fuel applications, though some normalization is expected in Q3 [25][26] Question: Update on oilfield customer base diversification and Latin America - Management does not foresee orders from the Latin American customer in Q3, citing internal issues within the customer’s operations [33][35] Question: Capital allocation and M&A updates - The company is opportunistically buying back shares and remains focused on long-term shareholder value, with potential M&A opportunities being considered after resolving margin issues [39][43]

PART I FINANCIAL INFORMATION [Item 1 Condensed Consolidated Financial Statements](index=5&type=section&id=Item%201%20Condensed%20Consolidated%20Financial%20Statements) This section presents the unaudited interim condensed consolidated financial statements and accompanying detailed notes Condensed Consolidated Statements of Income (Three Months Ended June 30) | Metric | 2025 (Millions $) | 2024 (Millions $) | Change ($M) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net sales | 439.7 | 435.0 | 4.7 | 1.1% | | Gross profit | 123.2 | 126.9 | (3.7) | -2.9% | | Operating income | 34.3 | 40.7 | (6.4) | -15.7% | | Income before income tax expense | 31.9 | 43.7 | (11.8) | -27.0% | | Net income | 23.5 | 31.2 | (7.7) | -24.7% | | Basic EPS | 0.94 | 1.25 | (0.31) | -24.8% | | Diluted EPS | 0.94 | 1.24 | (0.30) | -24.2% | Condensed Consolidated Statements of Income (Six Months Ended June 30) | Metric | 2025 (Millions $) | 2024 (Millions $) | Change ($M) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net sales | 880.5 | 935.2 | (54.7) | -5.8% | | Gross profit | 248.3 | 282.6 | (34.3) | -12.1% | | Operating income | 76.8 | 91.2 | (14.4) | -15.8% | | Income before income tax expense | 76.3 | 99.0 | (22.7) | -22.9% | | Net income | 56.3 | 72.6 | (16.3) | -22.4% | | Basic EPS | 2.26 | 2.91 | (0.65) | -22.3% | | Diluted EPS | 2.24 | 2.89 | (0.65) | -22.5% | Condensed Consolidated Balance Sheets (June 30, 2025 vs. December 31, 2024) | Metric | June 30, 2025 (Millions $) | Dec 31, 2024 (Millions $) | Change ($M) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total current assets | 969.7 | 956.6 | 13.1 | 1.4% | | Total assets | 1,806.1 | 1,734.7 | 71.4 | 4.1% | | Total current liabilities | 337.4 | 371.4 | (34.0) | -9.2% | | Total liabilities | 504.6 | 518.6 | (14.0) | -2.7% | | Total equity | 1,301.5 | 1,216.1 | 85.4 | 7.0% | Condensed Consolidated Statements of Cash Flows (Six Months Ended June 30) | Metric | 2025 (Millions $) | 2024 (Millions $) | Change ($M) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | 37.6 | 85.3 | (47.7) | -55.9% | | Net cash used in investing activities | (31.7) | (29.7) | (2.0) | 6.7% | | Net cash used in financing activities | (32.5) | (18.4) | (14.1) | 76.6% | | Net change in cash and cash equivalents | (22.6) | 36.5 | (59.1) | -161.9% | | Cash and cash equivalents at end of period | 266.6 | 240.2 | 26.4 | 11.0% | [Condensed Consolidated Statements of Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) [Condensed Consolidated Statements of Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) [Condensed Consolidated Statements of Equity](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity) [Notes To The Unaudited Interim Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20To%20The%20Unaudited%20Interim%20Condensed%20Consolidated%20Financial%20Statements) [NOTE 1 – BASIS OF PRESENTATION](index=11&type=section&id=NOTE%201%20%E2%80%93%20BASIS%20OF%20PRESENTATION) The financial statements are prepared per GAAP, with reclassifications made to conform to the 2025 presentation - Reclassification of **$3.8 million (2025 YTD)** and **$4.0 million (2024 YTD)** from selling, general and administrative expenses to research and development expenses, with no impact on previously reported total net revenue, operating income, or net income[24](index=24&type=chunk) [NOTE 2 – SEGMENT REPORTING](index=11&type=section&id=NOTE%202%20%E2%80%93%20SEGMENT%20REPORTING) The company reports financial performance across its Performance Chemicals, Fuel Specialties, and Oilfield Services segments Net Sales by Segment (Three Months Ended June 30) | Segment | 2025 (Millions $) | 2024 (Millions $) | Change ($M) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Performance Chemicals | 173.8 | 160.1 | 13.7 | 8.6% | | Fuel Specialties | 165.1 | 166.6 | (1.5) | -0.9% | | Oilfield Services | 100.8 | 108.3 | (7.5) | -6.9% | | **Total Net Sales** | **439.7** | **435.0** | **4.7** | **1.1%** | Net Sales by Segment (Six Months Ended June 30) | Segment | 2025 (Millions $) | 2024 (Millions $) | Change ($M) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Performance Chemicals | 342.2 | 320.9 | 21.3 | 6.6% | | Fuel Specialties | 335.4 | 343.5 | (8.1) | -2.4% | | Oilfield Services | 202.9 | 270.8 | (67.9) | -25.1% | | **Total Net Sales** | **880.5** | **935.2** | **(54.7)** | **-5.8%** | Operating Income by Segment (Six Months Ended June 30) | Segment | 2025 (Millions $) | 2024 (Millions $) | Change ($M) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Performance Chemicals | 34.1 | 42.3 | (8.2) | -19.4% | | Fuel Specialties | 72.3 | 63.8 | 8.5 | 13.3% | | Oilfield Services | 10.3 | 24.2 | (13.9) | -57.4% | | Corporate costs | (38.6) | (37.8) | (0.8) | 2.1% | | **Total Operating Income** | **76.8** | **91.2** | **(14.4)** | **-15.8%** | [NOTE 3 – EARNINGS PER SHARE](index=13&type=section&id=NOTE%203%20%E2%80%93%20EARNINGS%20PER%20SHARE) This note details the calculation of basic and diluted earnings per share for the six months ended June 30 EPS Calculation (Six Months Ended June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net income available to common stockholders (millions $) | 56.3 | 72.6 | | Weighted average common shares outstanding (thousands) | 24,954 | 24,918 | | Dilutive effect of stock options and awards (thousands) | 143 | 173 | | Denominator for diluted EPS (thousands) | 25,097 | 25,091 | | Net income per share, basic ($) | 2.26 | 2.91 | | Net income per share, diluted ($) | 2.24 | 2.89 | [NOTE 4 – GOODWILL](index=13&type=section&id=NOTE%204%20%E2%80%93%20GOODWILL) Goodwill increased by $15.1 million in H1 2025, primarily due to foreign exchange rate effects - Goodwill increased from **$382.5 million** at January 1, 2025, to **$397.6 million** at June 30, 2025[33](index=33&type=chunk) - The increase was driven by a **$15.1 million exchange effect**, with **$14.9 million** related to Performance Chemicals and **$0.2 million** to Fuel Specialties[33](index=33&type=chunk) [NOTE 5 – OTHER INTANGIBLE ASSETS](index=13&type=section&id=NOTE%205%20%E2%80%93%20OTHER%20INTANGIBLE%20ASSETS) Other intangible assets increased, primarily from capitalized software development for a new ERP system - Net book amount of other intangible assets was **$78.3 million** at June 30, 2025, up from **$65.4 million** at December 31, 2024[17](index=17&type=chunk)[34](index=34&type=chunk) - Additions of **$10.8 million** in 2025 were capitalized for internally developed software for a new Enterprise Resource Planning ("ERP") system, expected to complete in 2026[34](index=34&type=chunk)[35](index=35&type=chunk) - Amortization expense for the six months ended June 30, 2025, was **$5.9 million**[34](index=34&type=chunk) [NOTE 6 – PENSION AND POST EMPLOYMENT BENEFITS](index=15&type=section&id=NOTE%206%20%E2%80%93%20PENSION%20AND%20POST%20EMPLOYMENT%20BENEFITS) The UK defined benefit pension plan was wound up, leaving only a German unfunded defined benefit plan - The UK defined benefit pension plan was bought out in Q4 2024 and fully wound up on July 29, 2025, **eliminating future obligations**[37](index=37&type=chunk) - The German unfunded defined benefit pension plan liability was **$10.1 million** at June 30, 2025, an increase from **$9.0 million** at December 31, 2024[38](index=38&type=chunk) - Net periodic benefit cost for the six months ended June 30, 2025, was **$(2.5) million**, compared to **$1.6 million** in the prior year[38](index=38&type=chunk) [NOTE 7 – INCOME TAXES](index=16&type=section&id=NOTE%207%20%E2%80%93%20INCOME%20TAXES) The company had no unrecognized tax benefits and expects no significant changes in the next twelve months - **No unrecognized tax benefits** as of January 1, 2025, and no change during the six months ended June 30, 2025[40](index=40&type=chunk) - U.S. subsidiaries are open to examination by the IRS for years **2021 onwards**; foreign jurisdictions like Brazil (2020 onwards), Germany (2020 onwards), and the U.K. (2023 onwards) are also open[41](index=41&type=chunk) [NOTE 8 – LONG-TERM DEBT](index=16&type=section&id=NOTE%208%20%E2%80%93%20LONG-TERM%20DEBT) The company had no outstanding debt under its $250.0 million multicurrency revolving credit facility - A **$250.0 million** multicurrency revolving credit facility is available until May 30, 2028[42](index=42&type=chunk) - **No debt was drawn down** or repaid on the revolving credit facility during the first six months of 2025 or 2024[42](index=42&type=chunk) [NOTE 9 – PLANT CLOSURE PROVISIONS](index=16&type=section&id=NOTE%209%20%E2%80%93%20PLANT%20CLOSURE%20PROVISIONS) Plant closure provisions increased by $8.5 million, primarily for legacy operations in the United States - Total plant closure provisions increased to **$68.8 million** at June 30, 2025, from **$60.3 million** at January 1, 2025[45](index=45&type=chunk) - The charge for the six months ended June 30, 2025, was **$4.1 million**, including a **$2.3 million** increase for legacy operations in the United States[45](index=45&type=chunk) [NOTE 10 – FAIR VALUE MEASUREMENTS](index=17&type=section&id=NOTE%2010%20%E2%80%93%20FAIR%20VALUE%20MEASUREMENTS) This note details the fair value measurements for various financial assets and liabilities Fair Value of Financial Instruments (June 30, 2025) | Instrument | Carrying Amount (Millions $) | Fair Value (Millions $) | | :--- | :--- | :--- | | Emissions Trading Scheme credits | 2.2 | 2.2 | | Foreign currency forward exchange contracts | 1.7 | 1.7 | | Acquisition-related contingent consideration | 24.5 | 24.5 | [NOTE 11 – DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT](index=17&type=section&id=NOTE%2011%20%E2%80%93%20DERIVATIVE%20INSTRUMENTS%20AND%20RISK%20MANAGEMENT) The company uses foreign currency forward exchange contracts to manage currency exposure, resulting in a loss in H1 2025 - Foreign currency forward exchange contracts resulted in a **loss of $6.4 million** for the first six months of 2025, compared to a **gain of $1.6 million** in the first six months of 2024[49](index=49&type=chunk) [NOTE 12 – CONTINGENCIES](index=18&type=section&id=NOTE%2012%20%E2%80%93%20CONTINGENCIES) The company is involved in various legal proceedings and has issued guarantees for affiliated companies - An ongoing civil and criminal legal claim related to inventory misappropriation in Brazil has seen **no significant developments**[52](index=52&type=chunk) - Guarantees for certain obligations of affiliated companies amounted to **$8.3 million** as of June 30, 2025, up from **$6.8 million** at December 31, 2024[54](index=54&type=chunk) [NOTE 13 – STOCK-BASED COMPENSATION PLANS](index=19&type=section&id=NOTE%2013%20%E2%80%93%20STOCK-BASED%20COMPENSATION%20PLANS) Stock-based compensation expense decreased in H1 2025, with $25.3 million in unrecognized costs remaining - Total stock-based compensation expense for the six months ended June 30, 2025, was **$4.6 million**, compared to **$8.2 million** in the prior year[57](index=57&type=chunk) - As of June 30, 2025, there was **$25.3 million** of total unrecognized compensation cost related to nonvested share-based compensation arrangements, expected to be recognized over a weighted-average period of **2.1 years**[60](index=60&type=chunk) [NOTE 14 – RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE LOSS](index=19&type=section&id=NOTE%2014%20%E2%80%93%20RECLASSIFICATIONS%20OUT%20OF%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20LOSS) This note details reclassifications out of accumulated other comprehensive loss, primarily from translation adjustments - Changes in Accumulated Other Comprehensive Loss (AOCL) for the first six months of 2025, net of tax, were **$57.6 million**, primarily due to cumulative translation adjustments[62](index=62&type=chunk) [NOTE 15 – RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS](index=21&type=section&id=NOTE%2015%20%E2%80%93%20RECENTLY%20ISSUED%20ACCOUNTING%20PRONOUNCEMENTS) The company reviewed and found no recently issued accounting pronouncements relevant to its financial statements - **No recently issued accounting pronouncements** were deemed relevant to the Company's financial statements[64](index=64&type=chunk) [NOTE 16 – RELATED PARTY TRANSACTIONS](index=22&type=section&id=NOTE%2016%20%E2%80%93%20RELATED%20PARTY%20TRANSACTIONS) This note discloses transactions with entities affiliated with company directors, which were minimal in H1 2025 - **No product purchases** from AdvanSix Inc (where Mr Patrick S Williams is a director) in the six months ended June 30, 2025 or 2024[65](index=65&type=chunk) - Incurred **$0.2 million** in fees from Smith, Gambrell & Russell, LLP (where former director Mr Robert I Paller held a position) in the six months ended June 30, 2024[66](index=66&type=chunk) - Sold **less than $0.1 million** of scrap metal to European Metal Recycling Limited (where Mr David F Landless is a director) in the six months ended June 30, 2025 and 2024[67](index=67&type=chunk) [Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations for the Three and Six months ended June 30, 2025](index=23&type=section&id=Item%202%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%20for%20the%20Three%20and%20Six%20months%20ended%20June%2030,%202025) Management discusses the company's financial performance, condition, and critical accounting estimates for the reporting periods [Critical Accounting Estimates](index=23&type=section&id=Critical%20Accounting%20Estimates) The company's most critical accounting estimates relate to plant closure provisions, income taxes, and goodwill - The most critical accounting estimates are related to **plant closure provisions, income taxes, and goodwill**[70](index=70&type=chunk) [Results of Operations](index=23&type=section&id=Results%20of%20Operations) Net sales increased for Q2 2025 but decreased for H1 2025, with declines in gross profit and operating income for both periods [Three Months Ended June 30, 2025](index=24&type=section&id=Three%20Months%20Ended%20June%2030,%202025) Net sales increased 1% to $439.7 million, while gross profit and operating income decreased by 3% and 16% respectively [Performance Chemicals](index=24&type=section&id=Performance%20Chemicals_Q2) Net sales increased 9% to $173.8 million, driven by higher volumes, though gross margin decreased due to pricing erosion - Net sales increased by **$13.7 million (+9%)** to $173.8 million[72](index=72&type=chunk) - Higher sales volumes in the **Americas (+11%)** and **ASPAC (+13%)** were key drivers[73](index=73&type=chunk) - Gross margin **decreased by 5.1 percentage points**, primarily due to pricing erosion and higher demand for lower-priced products[74](index=74&type=chunk) [Fuel Specialties](index=26&type=section&id=Fuel%20Specialties_Q2) Net sales decreased 1% to $165.1 million due to lower volumes, but gross margin improved significantly - Net sales decreased by **$1.5 million (-1%)** to $165.1 million[72](index=72&type=chunk) - Sales volumes decreased in the **Americas (-5%)**, **ASPAC (-21%)**, and **AvGas (-19%)**[76](index=76&type=chunk) - Gross margin **increased by 3.5 percentage points**, driven by an improved sales mix, disciplined pricing, and reduced raw material costs[77](index=77&type=chunk) [Oilfield Services](index=26&type=section&id=Oilfield%20Services_Q2) Net sales decreased 7% to $100.8 million, and gross margin also declined due to reduced demand and a weaker sales mix - Net sales decreased by **$7.5 million (-7%)** to $100.8 million[72](index=72&type=chunk)[78](index=78&type=chunk) - Sales in EMEA were lower due to **reduced demand**, outweighing higher sales in the Americas[78](index=78&type=chunk) - Gross margin **decreased by 1.0 percentage point** due to a weaker sales mix[78](index=78&type=chunk) [Other Income Statement Captions](index=26&type=section&id=Other%20Income%20Statement%20Captions_Q2) Corporate costs rose, other net expense increased due to currency losses, and the adjusted effective tax rate decreased - Corporate costs increased by **$3.3 million (+19%)** due to increased provisions for environmental remediation and additional investment in IT infrastructure[72](index=72&type=chunk)[80](index=80&type=chunk) - Other net income/(expense) shifted from a **$0.9 million income** in Q2 2024 to a **$(5.1) million expense** in Q2 2025, primarily due to foreign currency forward contract losses of **$(4.1) million**[81](index=81&type=chunk) - Adjusted effective tax rate **decreased to 23.5%** in Q2 2025 from 28.4% in Q2 2024, primarily due to a higher proportion of profits being generated in lower tax jurisdictions[82](index=82&type=chunk) [Six Months Ended June 30, 2025](index=28&type=section&id=Six%20Months%20Ended%20June%2030,%202025) Net sales decreased 6% to $880.5 million, with gross profit and operating income declining 12% and 16% respectively [Performance Chemicals](index=28&type=section&id=Performance%20Chemicals_H1) Net sales increased 7% to $342.2 million driven by higher volumes, while gross margin decreased due to pricing erosion - Net sales increased by **$21.3 million (+7%)** to $342.2 million[84](index=84&type=chunk) - Higher sales volumes in the **Americas (+11%)** and **ASPAC (+21%)** were key drivers[85](index=85&type=chunk) - Gross margin **decreased by 3.8 percentage points**, primarily due to pricing erosion and higher demand for lower-priced products[86](index=86&type=chunk) [Fuel Specialties](index=29&type=section&id=Fuel%20Specialties_H1) Net sales decreased 2% to $335.4 million on lower volumes, but gross margin improved due to better sales mix and pricing - Net sales decreased by **$8.1 million (-2%)** to $335.4 million[84](index=84&type=chunk) - Sales volumes decreased in the **Americas (-2%)**, **ASPAC (-19%)**, and **AvGas (-8%)**[88](index=88&type=chunk) - Gross margin **increased by 2.5 percentage points**, driven by an improved sales mix, disciplined pricing, and reduced raw material costs[89](index=89&type=chunk) [Oilfield Services](index=29&type=section&id=Oilfield%20Services_H1) Net sales significantly decreased 25% to $202.9 million, primarily due to the absence of activity in Latin America - Net sales decreased by **$67.9 million (-25%)** to $202.9 million[84](index=84&type=chunk)[90](index=90&type=chunk) - Sales volumes were adversely impacted by the **absence of production chemical activity in Latin America**[90](index=90&type=chunk) - Gross margin **decreased by 4.4 percentage points** due to an unfavorable sales mix[91](index=91&type=chunk) [Other Income Statement Captions](index=29&type=section&id=Other%20Income%20Statement%20Captions_H1) Corporate costs rose slightly, other net expense increased due to currency losses, and the adjusted tax rate decreased - Corporate costs increased by **$0.8 million (+2%)** due to increased provisions for environmental remediation and additional investment in IT infrastructure[84](index=84&type=chunk)[92](index=92&type=chunk) - Other net income/(expense) shifted from a **$3.6 million income** in H1 2024 to a **$(5.6) million expense** in H1 2025, primarily due to foreign currency forward contract losses of **$(6.4) million**[93](index=93&type=chunk) - Adjusted effective tax rate **decreased to 24.0%** in H1 2025 from 26.2% in H1 2024, primarily due to a higher proportion of profits being generated in lower tax jurisdictions[94](index=94&type=chunk) [Liquidity and Financial Condition](index=31&type=section&id=Liquidity%20and%20Financial%20Condition) Working capital increased, while operating cash flows and total cash decreased in the first six months of 2025 [Working Capital](index=31&type=section&id=Working%20Capital) Working capital increased, driven by higher inventories and lower accounts payable, partially offset by lower receivables - Working capital increased by **$47.1 million**, and adjusted working capital by **$42.9 million**, in the six months ended June 30, 2025[96](index=96&type=chunk) - Inventories increased by **$35.8 million**, including a $3.1 million increase in allowances, driven by higher finished goods and raw materials in the Fuel Specialties segment[99](index=99&type=chunk) - Accounts payable and accrued liabilities decreased by **$20.0 million**, related to lower activity in the Oilfield Services segment[101](index=101&type=chunk) [Operating Cash Flows](index=32&type=section&id=Operating%20Cash%20Flows) Net cash from operating activities decreased by $47.7 million due to lower operating income and unfavorable working capital changes - Net cash provided by operating activities decreased to **$37.6 million** in the six months ended June 30, 2025, from **$85.3 million** in the prior year period[102](index=102&type=chunk) - The decrease was primarily related to **decreased operating income**, less favorable working capital cash flows, and increased income tax payments[102](index=102&type=chunk) [Cash](index=32&type=section&id=Cash) Cash and cash equivalents decreased by $22.6 million due to capital investments, dividends, and stock repurchases - Cash and cash equivalents at June 30, 2025, were **$266.6 million**, down from **$289.2 million** at December 31, 2024[103](index=103&type=chunk) - The decrease was primarily driven by continued investments in capital projects, the payment of semi-annual dividends, and repurchases of common stock[104](index=104&type=chunk) [Debt](index=32&type=section&id=Debt) The company maintains a $250.0 million credit facility but had no outstanding debt as of June 30, 2025 - The company has a **$250.0 million** multicurrency revolving credit facility available[105](index=105&type=chunk) - **No debt was outstanding** under the revolving credit facility at June 30, 2025, or December 31, 2024[105](index=105&type=chunk) [Item 3 Quantitative and Qualitative Disclosures about Market Risk](index=33&type=section&id=Item%203%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company manages market risks from interest rates, currency exchange, and commodity prices using derivatives - The company uses derivatives, including interest rate swaps, commodity swaps, and foreign currency forward exchange contracts, as risk management tools, **not for trading purposes**[108](index=108&type=chunk)[109](index=109&type=chunk) - There have been **no significant changes** in the company's exposure to market risk since the 2024 Form 10-K[110](index=110&type=chunk) [Item 4 Controls and Procedures](index=34&type=section&id=Item%204%20Controls%20and%20Procedures) Disclosure controls were deemed effective, and the ongoing ERP system implementation has led to updated internal controls - The company's disclosure controls and procedures were **effective** as of June 30, 2025[111](index=111&type=chunk) - The ongoing development and implementation of a new, company-wide, information system platform (ERP system) has led to **updated internal controls** over financial reporting[113](index=113&type=chunk) - **No material changes** to internal control over financial reporting were identified in connection with the evaluation[114](index=114&type=chunk) PART II OTHER INFORMATION [Item 1 Legal Proceedings](index=35&type=section&id=Item%201%20Legal%20Proceedings) The company is involved in various legal claims, with no significant new developments in the Brazil inventory case - An ongoing civil and criminal legal claim related to a misappropriation of inventory in Brazil has had **no significant developments** to report[117](index=117&type=chunk) [Item 1A Risk Factors](index=35&type=section&id=Item%201A%20Risk%20Factors) There have been no material changes in the company's risk factors since the 2024 Form 10-K filing - **No material changes** in the risk factors facing the Company have occurred since those disclosed in the 2024 Form 10-K[119](index=119&type=chunk) [Item 2 Unregistered Sales of Equity Securities and Use of Proceeds](index=35&type=section&id=Item%202%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased 93,353 shares in Q2 2025 under a new $50 million stock repurchase program - **No unregistered sales** of equity securities occurred[120](index=120&type=chunk) - A new **$50 million stock repurchase program** was announced on March 10, 2025, allowing for repurchases over a three-year period[121](index=121&type=chunk) Stock Repurchases (Three Months Ended June 30, 2025) | Period | Total Shares Purchased | Average Price Paid Per Share ($) | Approximate Dollar Value Remaining Under Program (Millions $) | | :--- | :--- | :--- | :--- | | April 1, 2025 through April 30, 2025 | 22,178 | 92.7 | 44.6 | | May 1, 2025 through May 31, 2025 | 48,575 | 91.8 | 40.5 | | June 1, 2025 through June 30, 2025 | 22,600 | 87.1 | 38.5 | | **Total** | **93,353** | **90.9** | **38.5** | [Item 3 Defaults Upon Senior Securities](index=36&type=section&id=Item%203%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported during the period - **No defaults** upon senior securities were reported[123](index=123&type=chunk) [Item 4 Mine Safety Disclosures](index=36&type=section&id=Item%204%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations - This item is **not applicable** to the company[124](index=124&type=chunk) [Item 5 Other Information](index=36&type=section&id=Item%205%20Other%20Information) No other information was reported under this item for the period - **No other information** was reported under this item[125](index=125&type=chunk) [Item 6 Exhibits](index=37&type=section&id=Item%206%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications and XBRL documents - Exhibits include certifications of the Chief Executive Officer and Chief Financial Officer pursuant to **Sections 302 and 906 of the Sarbanes-Oxley Act of 2002**[127](index=127&type=chunk) - XBRL Instance Document and Cover Page Interactive Data File are **embedded within the inline XBRL document**[127](index=127&type=chunk) [SIGNATURES](index=38&type=section&id=SIGNATURES) The report is duly signed by the President and CEO, and the Executive Vice President and CFO - The report was signed by Patrick S Williams, President and Chief Executive Officer, and Ian P Cleminson, Executive Vice President and Chief Financial Officer, on **August 6, 2025**[129](index=129&type=chunk)