Q2 2025 Overall Performance - The company reported GAAP EPS of 94 cents and adjusted non-GAAP EPS of $1.26[5] - Revenue increased by 1 percent[11] - The company has $266.6 million in net cash[5, 25] - $20.8 million semi-annual dividend was paid in the quarter and $8.2 million was spent on buybacks[5, 25] Segment Performance - Performance Chemicals revenue increased by 9 percent, but operating income decreased by 33 percent[12, 14, 15] - Fuel Specialties operating income increased by 16 percent, despite a 1 percent decrease in revenue[16, 18] - Oilfield Services revenue decreased by 7 percent and operating income decreased by 15 percent[19, 21] Financial Focus - Gross margin decreased by 1.2 percentage points[11] - Adjusted EBITDA decreased by 9 percent[11] - The company's effective tax rate was 26.3 percent[22, 24]

[Q2 2025 Financial Results Overview](index=1&type=section&id=Q2%202025%20Financial%20Results%20Overview) Innospec Inc. reported Q2 2025 financial results with a 1% increase in total revenues to $439.7 million, a decrease in net income, and a strong net cash position [Executive Summary](index=1&type=section&id=Executive%20Summary) Innospec Inc. reported Q2 2025 financial results with a 1% increase in total revenues to $439.7 million, a decrease in net income, and a strong net cash position Q2 2025 Key Financial Highlights (GAAP & Non-GAAP): | Metric | Q2 2025 | Q2 2024 | Change (YoY) | | :-------------------------------- | :------ | :------ | :----------- | | Total Revenues | $439.7M | $435.0M | +1% | | Net Income | $23.5M | $31.2M | -24.7% | | GAAP Diluted EPS | $0.94 | $1.24 | -24.2% | | Adjusted Non-GAAP EPS | $1.26 | $1.39 | -9.35% | | Adjusted EBITDA | $49.1M | $54.1M | -9.24% | | Cash from Operating Activities | $9.3M | $4.7M | +97.87% | | Net Cash (as of June 30, 2025) | $266.6M | N/A | N/A | | Share Repurchases | $8.2M | N/A | N/A | | Semi-annual Dividend | $0.84/share | N/A | N/A | - The company closed the quarter with a debt-free balance sheet and over **$266.6 million in net cash**[2](index=2&type=chunk)[6](index=6&type=chunk) [GAAP vs. Non-GAAP Reconciliation](index=1&type=section&id=GAAP%20vs.%20Non-GAAP%20Reconciliation) The company provides adjusted non-GAAP financial measures to offer a clearer view of underlying performance by excluding special items Q2 2025 GAAP to Adjusted Non-GAAP Reconciliation: | (in millions, except share and per share data) | Q2 2025 (GAAP) | Adjustments | Q2 2025 (Adjusted Non-GAAP) | | :--------------------------------------------- | :------------- | :---------- | :-------------------------- | | Income before income taxes | $31.9 | $10.6 | $42.5 | | Net income | $23.5 | $8.2 | $31.7 | | Diluted EPS | $0.94 | $0.32 | $1.26 | Q2 2024 GAAP to Adjusted Non-GAAP Reconciliation: | (in millions, except share and per share data) | Q2 2024 (GAAP) | Adjustments | Q2 2024 (Adjusted Non-GAAP) | | :--------------------------------------------- | :------------- | :---------- | :-------------------------- | | Income before income taxes | $43.7 | $4.7 | $48.4 | | Net income | $31.2 | $3.7 | $34.9 | | Diluted EPS | $1.24 | $0.15 | $1.39 | [Management Commentary and Business Segment Performance](index=2&type=section&id=Management%20Commentary%20and%20Business%20Segment%20Performance) Management discusses Q2 2025 performance, highlighting Fuel Specialties' growth offsetting declines in Performance Chemicals and Oilfield Services, and outlines strategic priorities [CEO's Overall Remarks](index=2&type=section&id=CEO's%20Overall%20Remarks) CEO characterized Q2 2025 as balanced, with Fuel Specialties' growth offsetting weaker results in other segments - The diversified portfolio benefited from **strong growth in Fuel Specialties operating income**, which offset lower results in Performance Chemicals and Oilfield Services[9](index=9&type=chunk) [Segmental Performance Review](index=2&type=section&id=Segmental%20Performance%20Review) Review of Performance Chemicals, Fuel Specialties, and Oilfield Services, detailing revenue, margin, and operating income changes [Performance Chemicals](index=2&type=section&id=Performance%20Chemicals) Performance Chemicals saw strong sales growth but declining gross margins and operating income Performance Chemicals Q2 2025 Performance: | Metric | Q2 2025 | Q2 2024 | Change (YoY) | | :---------------- | :------ | :------ | :----------- | | Revenues | $173.8M | $160.1M | +9% | | Volumes | N/A | N/A | +4% | | Price/Mix | N/A | N/A | +2% | | Currency Impact | N/A | N/A | +3% | | Gross Margins | 17.5% | 22.6% | -5.1 ppts | | Operating Income | $14.3M | $21.2M | -33% | - Gross margins fell short of expectations, with improvement being a key priority for the coming quarters, focusing on margin-accretive opportunities[10](index=10&type=chunk) [Fuel Specialties](index=2&type=section&id=Fuel%20Specialties) Fuel Specialties delivered a robust quarter with double-digit operating income growth despite a slight revenue decrease Fuel Specialties Q2 2025 Performance: | Metric | Q2 2025 | Q2 2024 | Change (YoY) | | :---------------- | :------ | :------ | :----------- | | Revenues | $165.1M | $166.6M | -1% | | Volumes | N/A | N/A | -7% | | Price/Mix | N/A | N/A | +4% | | Currency Impact | N/A | N/A | +2% | | Gross Margins | 38.1% | 34.6% | +3.5 ppts | | Operating Income | $35.4M | $30.4M | +16% | - The business continued to deliver consistent results through economic uncertainty, with a focus on achieving full-year operating income growth and margin improvement[11](index=11&type=chunk) [Oilfield Services](index=2&type=section&id=Oilfield%20Services) Oilfield Services improved sequentially but declined year-over-year, with no expected resumption of Latin America activity Oilfield Services Q2 2025 Performance: | Metric | Q2 2025 | Q2 2024 | Change (YoY) | | :---------------- | :------ | :------ | :----------- | | Revenues | $100.8M | $108.3M | -7% | | Gross Margins | 29.6% | 30.6% | -1.0 ppts | | Operating Income | $6.2M | $7.3M | -15% | - Operating income improved sequentially but declined against the prior year, with no expectation for resumption of Latin America activity for the remainder of the year[12](index=12&type=chunk) [Strategic Priorities and Outlook](index=2&type=section&id=Strategic%20Priorities%20and%20Outlook) Innospec prioritizes margin improvement in Performance Chemicals and Oilfield Services, expects continued strong Fuel Specialties results, and maintains balance sheet flexibility - Prioritizing gross margin and operating income improvement in Performance Chemicals and Oilfield Services in the second half of 2025 through sales, cost actions, and new technology commercialization[16](index=16&type=chunk) - Fuel Specialties is expected to continue delivering good results[16](index=16&type=chunk) - The company has significant balance sheet flexibility for M&A, dividend growth, organic investment, and buybacks, continuing its record of returning value to shareholders[17](index=17&type=chunk) [Non-GAAP Financial Measures Explanation](index=3&type=section&id=Non-GAAP%20Financial%20Measures%20Explanation) This section defines and explains the company's non-GAAP financial measures, their components, and their purpose in evaluating performance [Definition and Reconciliation](index=3&type=section&id=Definition%20and%20Reconciliation) Innospec defines and reconciles non-GAAP measures like adjusted EBITDA and adjusted net income to provide clearer performance insights - Non-GAAP measures include adjusted EBITDA, income before income taxes excluding special items, net income excluding special items and related per share amounts, and net cash[18](index=18&type=chunk) - Adjusted EBITDA is net income adjusted for interest income, income taxes, depreciation and amortization, foreign currency exchange losses/(gains), legacy costs of closed operations, and adjustment to fair value of contingent consideration[18](index=18&type=chunk) - The company believes these non-GAAP measures provide useful information to investors for evaluating underlying performance and identifying operating trends, despite not being a substitute for GAAP measures[18](index=18&type=chunk) [Company Information](index=3&type=section&id=Company%20Information) Provides an overview of Innospec Inc., its business segments, forward-looking statement disclaimers, and investor contact details [About Innospec Inc.](index=3&type=section&id=About%20Innospec%20Inc.) Innospec Inc. is an international specialty chemicals company operating in 22 countries with approximately 2,450 employees - Innospec Inc. is an international specialty chemicals company with approximately **2,450 employees** in **22 countries**[19](index=19&type=chunk) - The company's business segments include Performance Chemicals (Personal Care, Home Care, Agrochemical, Mining, Industrial), Fuel Specialties (fuel additives), and Oilfield Services (specialty chemicals for oil and gas exploration and production)[19](index=19&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) Standard disclaimer regarding forward-looking statements, noting potential material differences in actual results due to risks - The press release contains forward-looking statements subject to risks, uncertainties, and assumptions, which may cause actual performance or results to differ materially[20](index=20&type=chunk) - Innospec undertakes no obligation to publicly update or revise any forward-looking statements[20](index=20&type=chunk) [Contacts](index=4&type=section&id=Contacts) Provides investor relations contact information for Innospec Inc - Contact for Innospec Inc. is Corbin Barnes, reachable at **+44-151-355-3611** or **corbin.barnes@innospecinc.com**[21](index=21&type=chunk) [Condensed Consolidated Financial Statements](index=5&type=section&id=Condensed%20Consolidated%20Financial%20Statements) Presents the company's condensed consolidated statements of income, segmental analysis, balance sheets, and cash flows for the reported periods [Condensed Consolidated Statements of Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Details net sales, gross profit, operating income, and net income for the three and six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Income (in millions, except share and per share data): | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net sales | $439.7 | $435.0 | $880.5 | $935.2 | | Cost of goods sold | ($316.5) | ($308.1) | ($632.2) | ($652.6) | | Gross profit | $123.2 | $126.9 | $248.3 | $282.6 | | Operating income | $34.3 | $40.7 | $76.8 | $91.2 | | Income before income taxes | $31.9 | $43.7 | $76.3 | $99.0 | | Net income | $23.5 | $31.2 | $56.3 | $72.6 | | Diluted EPS | $0.94 | $1.24 | $2.24 | $2.89 | [Segmental Analysis of Results](index=6&type=section&id=Segmental%20Analysis%20of%20Results) Provides a detailed breakdown of net sales, gross profit, and operating income by business segment, including Adjusted EBITDA reconciliation Segmental Net Sales (in millions): | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Performance Chemicals | $173.8 | $160.1 | $342.2 | $320.9 | | Fuel Specialties | $165.1 | $166.6 | $335.4 | $343.5 | | Oilfield Services | $100.8 | $108.3 | $202.9 | $270.8 | | **Total Net Sales** | **$439.7** | **$435.0** | **$880.5** | **$935.2** | Segmental Gross Profit (in millions): | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Performance Chemicals | $30.5 | $36.2 | $65.8 | $73.9 | | Fuel Specialties | $62.9 | $57.6 | $123.7 | $118.2 | | Oilfield Services | $29.8 | $33.1 | $58.8 | $90.5 | | **Total Gross Profit** | **$123.2** | **$126.9** | **$248.3** | **$282.6** | Segmental Operating Income (in millions): | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Performance Chemicals | $14.3 | $21.2 | $34.1 | $42.3 | | Fuel Specialties | $35.4 | $30.4 | $72.3 | $63.8 | | Oilfield Services | $6.2 | $7.3 | $10.3 | $24.2 | | Corporate costs | ($20.9) | ($17.6) | ($38.6) | ($37.8) | | **Total Operating Income** | **$34.3** | **$40.7** | **$76.8** | **$91.2** | Adjusted EBITDA Reconciliation (in millions): | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $23.5 | $31.2 | $56.3 | $72.6 | | Interest income, net | ($2.7) | ($2.1) | ($5.1) | ($4.2) | | Income taxes | $8.4 | $12.5 | $20.0 | $26.4 | | Depreciation and amortization | $11.4 | $11.0 | $22.3 | $21.3 | | Foreign currency exchange losses/(gains) | $4.7 | $0.1 | $4.3 | ($1.0) | | Legacy costs of closed operations | $3.0 | $0.8 | $3.8 | $1.6 | | Adjustment to fair value of contingent consideration | $0.8 | $0.6 | $1.5 | $1.4 | | **Adjusted EBITDA** | **$49.1** | **$54.1** | **$103.1** | **$118.1** | [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Presents the company's financial position, including assets, liabilities, and equity, as of June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheets (in millions): | Asset/Liability | June 30, 2025 | December 31, 2024 | | :---------------------------------- | :------------ | :---------------- | | **Assets:** | | | | Cash and cash equivalents | $266.6 | $289.2 | | Total current assets | $969.7 | $956.6 | | Net property, plant and equipment | $295.8 | $269.7 | | Goodwill | $397.6 | $382.5 | | Total assets | $1,806.1 | $1,734.7 | | **Liabilities and Stockholders' Equity:** | | | | Total current liabilities | $337.4 | $371.4 | | Acquisition-related contingent consideration | $24.5 | $20.1 | | Equity | $1,301.5 | $1,216.1 | | Total liabilities and equity | $1,806.1 | $1,734.7 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Outlines cash flows from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Cash Flows (in millions): | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $37.6 | $85.3 | | Net cash used in investing activities | ($31.7) | ($29.7) | | Net cash used in financing activities | ($32.5) | ($18.4) | | Net change in cash and cash equivalents | ($22.6) | $36.5 | | Cash and cash equivalents at end of period | $266.6 | $240.2 | - Cash provided by operating activities decreased significantly from **$85.3 million in 2024 to $37.6 million in 2025** for the six-month period[31](index=31&type=chunk) - Repurchase of common stock increased substantially from **$0.7 million in 2024 to $13.3 million in 2025** for the six-month period[31](index=31&type=chunk)

Company Performance - Innospec reported quarterly earnings of $1.26 per share, exceeding the Zacks Consensus Estimate of $1.17 per share, but down from $1.39 per share a year ago, representing an earnings surprise of +7.69% [1] - The company posted revenues of $439.7 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 1.78% and showing a slight increase from $435 million year-over-year [2] - Over the last four quarters, Innospec has surpassed consensus EPS estimates three times and topped consensus revenue estimates three times [2] Stock Performance and Outlook - Innospec shares have declined approximately 27.9% since the beginning of the year, contrasting with the S&P 500's gain of 7.6% [3] - The current consensus EPS estimate for the upcoming quarter is $1.28 on revenues of $452.1 million, and for the current fiscal year, it is $5.47 on revenues of $1.82 billion [7] Industry Context - The Chemical - Diversified industry, to which Innospec belongs, is currently ranked in the bottom 7% of over 250 Zacks industries, indicating potential challenges for stock performance [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Innospec's stock performance [5]

Core Insights - Innospec Inc. reported a total revenue of $439.7 million for Q2 2025, reflecting a 1% increase from $435.0 million in Q2 2024. However, net income decreased to $23.5 million or $0.94 per diluted share, down from $31.2 million or $1.24 per diluted share in the same period last year [3][4][19] - The company maintained a debt-free balance sheet with over $266 million in net cash and executed share repurchases totaling $8.2 million [5][14] - The performance of the Fuel Specialties segment was strong, with a 16% increase in operating income, while Performance Chemicals saw a 9% revenue increase but a decline in gross margins [9][10][11] Financial Performance - Total revenues for Q2 2025 were $439.7 million, a slight increase of 1% from the previous year. Net income was $23.5 million, down from $31.2 million in Q2 2024 [3][19] - Adjusted EBITDA for the quarter was $49.1 million, compared to $54.1 million in the same period last year [4][23] - The effective tax rate for the quarter was 26.3%, a decrease from 28.6% in the same period last year [13] Segment Analysis - **Performance Chemicals**: Revenues increased by 9% to $173.8 million, but operating income decreased by 33% to $14.3 million due to lower gross margins of 17.5%, down 5.1 percentage points from the previous year [10][22] - **Fuel Specialties**: Revenues were $165.1 million, a slight decrease of 1% from $166.6 million last year. Operating income increased by 16% to $35.4 million, with gross margins improving by 3.5 percentage points to 38.1% [11][22] - **Oilfield Services**: Revenues decreased by 7% to $100.8 million, with operating income declining by 15% to $6.2 million. Gross margins were 29.6%, down 1.0 percentage point from the previous year [12][22] Cash Flow and Shareholder Returns - Cash from operating activities was $9.3 million before capital expenditures of $16.2 million. The company paid a semi-annual dividend of $0.84 per share and repurchased 89,778 shares at a cost of $20.8 million [5][14] - The company ended the quarter with $266.6 million in cash and cash equivalents, maintaining a strong liquidity position for potential M&A, dividend growth, and organic investments [14][25]

Core Viewpoint - Innospec Inc. has published its 2024 Sustainability Report, showcasing significant progress in sustainability commitments, growth, innovation, and community engagement [1][2]. Company Overview - Innospec Inc. is an international specialty chemicals company with approximately 2,450 employees across 22 countries, providing a wide range of specialty chemicals for various markets [3]. Sustainability Achievements - A 23% reduction in scope 1 & 2 greenhouse gas (GHG) emissions since the baseline year of 2014 [5] - Avoided CO₂e emissions of 20.8 million metric tons through the use of fuel additives, which is over 200 times Innospec's own operational emissions [5] - Completion of product carbon footprint assessments for over 90 products, enhancing insights into GHG reduction efforts [5] - US$47.8 million spent on Research & Technology, resulting in a 22% increase in total patent filings [5] - A total social value of $791,000 delivered in 2024, benefiting 210 global charities and local good causes [5] - Over $1.6 million raised and 3,889 volunteer hours contributed through the Innospec Cares program since its launch in 2016 [5] - Launch of two new social partnerships: one with International Justice Mission (IJM) to combat modern slavery in the palm industry and another with UNESCO to support Indigenous STEM education in Brazil [5] - EcoVadis Gold rating for sustainability management practices maintained for the fourth consecutive time [5] - Over 90% of employees received careers and skills training, totaling more than 19,000 hours [5].

Core Viewpoint - Innospec Inc. will release its second quarter 2025 earnings results on August 5, 2025, followed by an interactive conference call on August 6, 2025, at 10:00 a.m. ET [1] Company Overview - Innospec Inc. is an international specialty chemicals company with approximately 2,400 employees across 22 countries [4] - The company manufactures and supplies a wide range of specialty chemicals for 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] 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 on the company's website, along with a slide presentation [3] - A replay of the webcast will be accessible for 30 days following the call [3]

Core Viewpoint - Innospec Inc. reported a decline in profits and revenues for the first quarter of 2025, with mixed performance across its business segments, particularly impacted by unfavorable market conditions and currency fluctuations [1][2][4]. Financial Performance - Innospec recorded a profit of $32.8 million or $1.31 per share, down from $41.4 million or $1.65 per share in the same quarter last year [1]. - Earnings, excluding one-time items, were $1.42 per share, a decrease from $1.75 per share a year ago, but exceeded the Zacks Consensus Estimate of $1.40 [1]. - Revenues fell approximately 12% year over year to $440.8 million, missing the Zacks Consensus Estimate of $459.3 million [1]. Segment Performance - The Fuel Specialties unit experienced a decline in revenues of about 4% year over year to $170.3 million, below the consensus estimate of $180 million, due to unfavorable price/mix and currency impacts [3]. - The Performance Chemicals unit reported sales of $168.4 million, up around 5% year over year, but still below the consensus estimate of $174 million [2]. - Revenues in the Oilfield Services division plummeted around 37% year over year to $102.1 million, significantly lower than the consensus estimate of $113 million, affected by weak recovery in Latin America and lower activity in U.S. completions and production [4]. Cash Flow and Dividends - Innospec ended the quarter with cash and cash equivalents of $299.8 million, reflecting a sequential increase of about 4% [5]. - Net cash provided by operating activities was $28.3 million, down from $80.6 million in the previous year [5]. - The company increased its semi-annual dividend by 10% and initiated a $50 million share buyback program [5]. Outlook - Innospec anticipates challenges in the Performance Chemicals and Oilfield Services segments due to the current economic environment, while expecting stability in the Fuel Specialties segment [6]. - The company is focused on positioning its businesses for growth and margin improvement as market conditions recover [6]. Stock Performance - Innospec's shares have declined by 31.3% over the past year, compared to a 24.9% decline in the Zacks Chemicals Diversified industry [7].

Financial Data and Key Metrics Changes - Total revenues for Q1 2025 were $440.8 million, a 12% decrease from $500.2 million a year ago [10] - Overall gross margin decreased by 2.7 percentage points to 28.4% [10] - Adjusted EBITDA for the quarter was $54 million, down from $64 million last year [10] - Net income for the quarter was $32.8 million, compared to $41.4 million a year ago [10] - GAAP earnings per share were $1.31, down from $1.65 a year ago [10] Business Line Data and Key Metrics Changes - **Performance Chemicals**: Revenues were $168.4 million, up 5% from $160.8 million last year, with operating income of $19.8 million, down 6% [11] - **Fuel Specialties**: Revenues were £170.3 million, down 4% from £176.9 million, but operating income increased by 10% to $36.9 million [12] - **Oilfield Services**: Revenues were $102.1 million, a 37% decrease from $162.5 million, with operating income down 76% to $4.1 million [13] Market Data and Key Metrics Changes - Performance Chemicals experienced a volume growth of 5% but faced a negative currency impact of 3% [11] - Fuel Specialties faced a 2% adverse price mix and a negative currency impact of 2% [12] - Oilfield Services saw no sales in Latin America, with potential recoveries delayed due to ongoing trade policy negotiations [9] Company Strategy and Development Direction - The company remains focused on delivering full-year operating income growth and margin improvement despite near-term challenges [7] - There is a commitment to security of supply, innovation, and world-class customer service [15] - The company is positioned to pursue M&A, dividend growth, organic investment, and buybacks due to a strong debt-free balance sheet [15] Management's Comments on Operating Environment and Future Outlook - Management noted that market conditions are extremely volatile, which may hinder the 2025 target for sequential improvement in operating income [7] - There is cautious optimism regarding customer behavior and inventory management in the Performance Chemicals segment [6][34] - The company expects to see some stabilization in oilfield services as fears around crude prices subside [61] Other Important Information - Cash from operating activities was $28.3 million before capital expenditures of $15.5 million [14] - The Board approved a 10% increase in the semiannual dividend to $0.84 per share [16] Q&A Session Summary Question: Impact of tariffs on input costs - Management indicated that they are monitoring the situation and have flexible supply chains to manage potential impacts [22][27] Question: Trends in Performance Chemicals - Management noted that customer caution and inventory management are influencing trends, with some signs of improvement [30][34] Question: Cost actions in oilfield business - The company is consolidating assets and focusing on efficiencies and cost reductions [39] Question: Earnings cadence for the rest of the year - Management expects Q2 to be similar to Q1, with slight improvements in Q3 and Q4 for oilfield services [41][45] Question: Fuel Specialties stability - Management expressed confidence in the stability of the Fuel Specialties business despite potential market fluctuations [52] Question: R&D efforts and customer collaborations - There has been no change in customer mindset regarding R&D collaborations, with some projects potentially accelerating [71][74] Question: Capital deployment and buyback strategy - The company plans to be opportunistic with buybacks and has the flexibility to pursue various capital allocation strategies [82][86]

Financial Data and Key Metrics Changes - Total revenues for Q1 2025 were $440.8 million, a 12% decrease from $500.2 million a year ago [12] - Overall gross margin decreased by 2.7 percentage points to 28.4% [12] - Adjusted EBITDA for the quarter was $54 million, down from $64 million last year [12] - Net income for the quarter was $32.8 million, compared to $41.4 million a year ago [12] - GAAP earnings per share were $1.31, down from $1.65 a year ago [12] Business Line Data and Key Metrics Changes - **Performance Chemicals**: Revenues were $168.4 million, up 5% from $160.8 million last year, with operating income of $19.8 million, down 6% [13] - **Fuel Specialties**: Revenues were £170.3 million, down 4% from £176.9 million, but operating income increased by 10% to $36.9 million [14] - **Oilfield Services**: Revenues were $102.1 million, a 37% decrease from $162.5 million, with operating income down 76% to $4.1 million [15] Market Data and Key Metrics Changes - Performance Chemicals experienced a volume growth of 5% but faced a negative currency impact of 3% [13] - Fuel Specialties faced a 2% adverse price mix and a negative currency impact of 2% [14] - Oilfield Services saw no sales in Latin America, impacting overall performance [15] Company Strategy and Development Direction - The company remains focused on delivering full-year operating income growth and margin improvement despite near-term challenges [7] - There is a commitment to security of supply, innovation, and world-class customer service [17] - The company is positioned for growth and margin expansion as market conditions recover, with a strong debt-free balance sheet allowing for flexibility in capital deployment [18] Management's Comments on Operating Environment and Future Outlook - Management noted that market conditions are extremely volatile, which may hinder the 2025 target for sequential improvement in operating income [7] - There is cautious optimism regarding customer behavior and inventory management in the Performance Chemicals segment [6][36] - The company expects to see some stabilization in oilfield services as crude prices remain steady [63] Other Important Information - Cash from operating activities was $28.3 million before capital expenditures of $15.5 million [16] - The company bought back 34,100 shares at a cost of $3.3 million and had $299.8 million in cash and cash equivalents with no debt [16][19] - The Board approved a 10% increase in the semiannual dividend to $0.84 per share [19] Q&A Session Summary Question: Impact of tariffs on input costs and exports - Management indicated that they are monitoring the situation and have flexible supply chains to manage potential impacts [25][30] Question: Trends in Performance Chemicals and margin trajectory - Management noted that trends are influenced by customer inventory management and a mix of volume and pricing pressures [34][39] Question: Cost actions in the oilfield business - Cost initiatives include asset consolidation, personnel adjustments, and efficiency improvements [42] Question: Earnings cadence for the rest of the year - Management expects Q2 to be lower sequentially but anticipates improvement in the latter half of the year [44][48] Question: Stability of Fuel Specialties business - Management expressed confidence in the stability of the Fuel Specialties business despite external pressures [54] Question: R&D efforts and customer collaborations - There has been no change in customer collaboration or R&D efforts, with some projects potentially accelerating [72][73] Question: Capital deployment and share buyback strategy - The company plans to be opportunistic with share buybacks while maintaining flexibility for growth and M&A [84]

PART I [Condensed Consolidated Financial Statements](index=5&type=section&id=Item%201%20Condensed%20Consolidated%20Financial%20Statements) In Q1 2025, Innospec reported decreased net sales and net income, with a significant decline in operating cash flow, while total assets increased Condensed Consolidated Statements of Income (Q1 2025 vs Q1 2024) | Financial Metric | Q1 2025 (in millions) | Q1 2024 (in millions) | Change | | :--- | :--- | :--- | :--- | | **Net Sales** | $440.8 | $500.2 | -11.9% | | **Gross Profit** | $125.1 | $155.7 | -19.7% | | **Operating Income** | $42.5 | $50.5 | -15.8% | | **Net Income** | $32.8 | $41.4 | -20.8% | | **Diluted EPS** | $1.31 | $1.65 | -20.6% | Condensed Consolidated Balance Sheet Highlights | Balance Sheet Item | March 31, 2025 (in millions) | December 31, 2024 (in millions) | | :--- | :--- | :--- | | Cash and cash equivalents | $299.8 | $289.2 | | Total current assets | $977.1 | $956.6 | | Total assets | $1,774.6 | $1,734.7 | | Total current liabilities | $357.6 | $371.4 | | Total liabilities | $508.9 | $518.6 | | Total equity | $1,265.7 | $1,216.1 | Condensed Consolidated Statements of Cash Flows (Q1 2025 vs Q1 2024) | Cash Flow Activity | Q1 2025 (in millions) | Q1 2024 (in millions) | | :--- | :--- | :--- | | Net cash provided by operating activities | $28.3 | $80.6 | | Net cash used in investing activities | $(15.5) | $(14.3) | | Net cash provided by/(used in) financing activities | $(3.8) | $0.5 | | Net change in cash and cash equivalents | $10.6 | $66.4 | [Segment Reporting](index=10&type=section&id=NOTE%202%20%E2%80%93%20SEGMENT%20REPORTING) - The company operates through three reportable segments: Performance Chemicals, Fuel Specialties, and Oilfield Services, with performance evaluated by the CODM based on gross profit and operating income[28](index=28&type=chunk)[29](index=29&type=chunk) Segment Performance (Q1 2025 vs Q1 2024) | Segment | Net Sales (Q1 2025) | Net Sales (Q1 2024) | Operating Income (Q1 2025) | Operating Income (Q1 2024) | | :--- | :--- | :--- | :--- | :--- | | Performance Chemicals | $168.4M | $160.8M | $19.8M | $21.1M | | Fuel Specialties | $170.3M | $176.9M | $36.9M | $33.4M | | Oilfield Services | $102.1M | $162.5M | $4.1M | $16.9M | [Goodwill & Intangible Assets](index=12&type=section&id=NOTE%204%20%E2%80%93%20GOODWILL%20%26%20NOTE%205%20%E2%80%93%20OTHER%20INTANGIBLE%20ASSETS) - Goodwill increased to **$388.4 million** as of March 31, 2025, from **$382.5 million** at year-end 2024, with the change attributed to foreign exchange effects[34](index=34&type=chunk) - The company capitalized **$7.2 million** in Q1 2025 for internally developed software related to a new Enterprise Resource Planning (ERP) system, which is expected to be completed in 2026[36](index=36&type=chunk) [Long-Term Debt](index=14&type=section&id=NOTE%208%20%E2%80%93%20LONG-TERM%20DEBT) - As of March 31, 2025, the company had no outstanding borrowings on its **$250.0 million** multicurrency revolving credit facility, which is available until May 30, 2028[44](index=44&type=chunk) [Contingencies](index=16&type=section&id=NOTE%2012%20%E2%80%93%20CONTINGENCIES) - The company is pursuing a civil and criminal legal claim related to a misappropriation of inventory in Brazil, with no significant developments having occurred and no asset for potential recovery recorded[55](index=55&type=chunk) [Management's Discussion and Analysis (MD&A)](index=21&type=section&id=Item%202%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%20for%20the%20Three%20Months%20Ended%20March%2031%2C%202025) The company experienced an overall decline in net sales and gross profit in Q1 2025, primarily driven by the Oilfield Services segment, while maintaining a strong liquidity position Overall Performance Summary (Q1 2025 vs Q1 2024) | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $440.8M | $500.2M | -12% | | Gross Profit | $125.1M | $155.7M | -20% | | Gross Margin | 28.4% | 31.1% | -2.7 p.p. | | Operating Income | $42.5M | $50.5M | -16% | [Results of Operations by Segment](index=21&type=section&id=Results%20of%20Operations) - **Performance Chemicals:** Net sales grew **5%** to **$168.4 million**, driven by an **11%** volume increase in the Americas and **31%** in ASPAC for personal care products, though gross margin decreased by **2.4 percentage points** to **21.0%** due to pricing pressure and an adverse product mix[75](index=75&type=chunk)[76](index=76&type=chunk) - **Fuel Specialties:** Net sales decreased **4%** to **$170.3 million**, with increased volumes in the Americas and EMEA offset by lower volumes in ASPAC and adverse price/mix effects, while gross margin improved by **1.4 percentage points** to **35.7%** due to a better sales mix and lower raw material costs[78](index=78&type=chunk)[79](index=79&type=chunk) - **Oilfield Services:** Net sales fell sharply by **37%** to **$102.1 million**, primarily due to significantly lower production chemical activity in Latin America, and gross margin contracted by **6.9 percentage points** to **28.4%** because of an unfavorable sales mix from weakened customer demand[80](index=80&type=chunk) - The adjusted effective tax rate was **24.4%** in Q1 2025, slightly down from **24.5%** in Q1 2024, mainly because a higher proportion of profits were generated in lower-tax jurisdictions[84](index=84&type=chunk)[85](index=85&type=chunk) [Liquidity and Financial Condition](index=26&type=section&id=Liquidity%20and%20Financial%20Condition) - Adjusted working capital increased by **$27.1 million** during the quarter, primarily driven by a **$14.4 million** increase in inventories to manage supply chain risks and prepare for planned maintenance[86](index=86&type=chunk)[87](index=87&type=chunk)[89](index=89&type=chunk) - Cash from operating activities decreased to **$28.3 million** in Q1 2025 from **$80.6 million** in Q1 2024, due to lower operating income and less favorable working capital cash flows, particularly from increased inventory levels[92](index=92&type=chunk) - The company ended the quarter with **$299.8 million** in cash and cash equivalents and no outstanding debt under its **$250.0 million** revolving credit facility[93](index=93&type=chunk)[95](index=95&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=28&type=section&id=Item%203%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's market risk exposure, including interest rates, foreign currency, and commodity prices, remains consistent with its 2024 Form 10-K, utilizing derivatives for hedging purposes - There have been no significant changes in the Company's exposure to market risk since the 2024 Form 10-K[100](index=100&type=chunk) - The company uses derivatives, including foreign currency forward exchange contracts and commodity swaps, to manage market risks related to currency fluctuations and raw material costs[98](index=98&type=chunk)[99](index=99&type=chunk) [Controls and Procedures](index=29&type=section&id=Item%204%20Controls%20and%20Procedures) Management concluded that disclosure controls were effective as of March 31, 2025, with ongoing ERP system implementation and no material changes to internal controls over financial reporting - The CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of March 31, 2025[101](index=101&type=chunk) - The company is continuing the implementation of a new ERP system and has updated its internal controls over financial reporting to accommodate the changes, with no material changes to internal controls reported in the quarter[103](index=103&type=chunk)[104](index=104&type=chunk) PART II [Legal Proceedings](index=30&type=section&id=Item%201%20Legal%20Proceedings) The company is involved in routine legal proceedings, including an ongoing civil and criminal claim in Brazil regarding inventory misappropriation, with no significant new developments - The company continues to pursue legal claims regarding a misappropriation of inventory in Brazil, with no significant new developments reported[107](index=107&type=chunk) [Risk Factors](index=30&type=section&id=Item%201A%20Risk%20Factors) No material changes in the company's risk factors have occurred since its 2024 Annual Report on Form 10-K filing - No material changes in risk factors have occurred since the company's 2024 Form 10-K filing[109](index=109&type=chunk) [Share Repurchases](index=30&type=section&id=Item%202%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company initiated a new **$50 million** stock repurchase program on March 10, 2025, repurchasing **48,050** shares during the quarter, with **$46.7 million** remaining available - A new stock repurchase program was announced on March 10, 2025, allowing for up to **$50 million** in common stock repurchases over a three-year period[111](index=111&type=chunk) Share Repurchases (Q1 2025) | Period | Total Shares Purchased | Average Price Paid | Value Remaining in Program | | :--- | :--- | :--- | :--- | | Feb 1 - Feb 28, 2025 | 1,227 | $105.1 | $50.0M (New program not yet started) | | Mar 1 - Mar 31, 2025 | 46,823 | $99.0 | $46.7M | | **Total** | **48,050** | **$99.1** | **$46.7M** |