Innospec Inc. (NASDAQ:IOSP) Q1 2022 Earnings Conference Call May 4, 2022 9:00 AM ET Company Participants Patrick Williams - President and Chief Executive Officer Ian Cleminson - Executive Vice President and Chief Financial Officer David Jones - Senior Vice President and Chief Compliance Officer Conference Call Participants Mike Harrison - Seaport Research Partners Jon Tanwanteng - CJS Securities David Silver - CL King & Associates Chris Shaw - Monness, Crespi, Hardt & Co. David Jones Thank you. Late yesterd ...

Q1 2022 Earnings 1 May 2022 innospec》 Forward Looking Statements This presentation contains certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts included or incorporated herein may constitute forward-looking statements. Such forward-looking statements include statements (covered by words like "expects," "estimates," "anticipates," "may," "could," "believes," "feels," "plans," "intends" or sim ...

[PART I FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) This section presents the company's unaudited interim financial statements, management's analysis, market risk disclosures, and internal controls [Condensed Consolidated Financial Statements](index=5&type=section&id=Item%201%20Condensed%20Consolidated%20Financial%20Statements) The company reported significant year-over-year growth in net sales and net income for Q1 2022, with total assets increasing to **$1.62 billion**, despite negative operating cash flow due to working capital increases Condensed Consolidated Statements of Income (Q1 2022 vs Q1 2021) | (in millions, except per share data) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | **Net sales** | $472.4 | $339.6 | | **Gross profit** | $139.3 | $100.8 | | **Operating income** | $44.3 | $28.2 | | **Net income** | $36.5 | $23.4 | | **Diluted EPS** | $1.46 | $0.94 | Condensed Consolidated Balance Sheet Highlights | (in millions) | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Total current assets** | $778.6 | $728.1 | | **Total assets** | $1,623.8 | $1,570.9 | | **Total current liabilities** | $352.3 | $336.6 | | **Total liabilities** | $554.9 | $537.9 | | **Total equity** | $1,068.9 | $1,033.0 | Condensed Consolidated Statements of Cash Flows (Q1 2022 vs Q1 2021) | (in millions) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | **Net cash (used in)/provided by operating activities** | $(29.0) | $22.7 | | **Net cash used in investing activities** | $(8.4) | $(10.3) | | **Net cash provided by/(used in) financing activities** | $0.9 | $(0.3) | | **Net change in cash and cash equivalents** | $(36.2) | $11.7 | [Notes To The Unaudited Interim Condensed Consolidated Financial Statements](index=11&type=page&id=Notes%20To%20The%20Unaudited%20Interim%20Condensed%20Consolidated%20Financial%20Statements) Detailed notes reveal strong segment revenue growth, an undrawn **$250 million** credit facility, **$16.3 million** in unrecognized tax benefits, and **$8.8 million** in share-based compensation costs Segment Net Sales and Operating Income (Q1 2022 vs Q1 2021) | (in millions) | Net Sales 2022 | Net Sales 2021 | Operating Income 2022 | Operating Income 2021 | | :--- | :--- | :--- | :--- | :--- | | **Performance Chemicals** | $167.1 | $125.9 | $25.3 | $18.3 | | **Fuel Specialties** | $191.8 | $139.3 | $35.5 | $23.8 | | **Oilfield Services** | $113.5 | $74.4 | $2.5 | $1.2 | | **Corporate costs** | - | - | $(19.0) | $(15.1) | - The company has an available **$250.0 million** revolving credit facility expiring in September 2024, which was undrawn as of March 31, 2022[46](index=46&type=chunk) - Total unrecognized tax benefits, including interest and penalties, amounted to **$16.3 million** as of March 31, 2022, covering potential liabilities from a UK PDCF review, an Italian tax audit, and a 2017 U.S. Tax Act adjustment[41](index=41&type=chunk)[42](index=42&type=chunk)[43](index=43&type=chunk) - Share-based compensation costs for Q1 2022 totaled **$8.8 million**, consisting of **$1.7 million** for stock options and **$7.1 million** for stock equivalent units[62](index=62&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%20for%20the%20Three%20Months%20Ended%20March%2031%2C%202022) Management attributes **39%** revenue growth to strong segment performance and favorable pricing, with increased working capital leading to negative operating cash flow, while maintaining strong liquidity Overall Performance Change (Q1 2022 vs Q1 2021) | (in millions) | 2022 | 2021 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | **Net sales** | $472.4 | $339.6 | $132.8 | 39% | | **Gross profit** | $139.3 | $100.8 | $38.5 | 38% | | **Operating income** | $44.3 | $28.2 | $16.1 | 57% | - Adjusted working capital increased by **$79.9 million** in Q1 2022, primarily due to a **$53.2 million** increase in trade receivables and a **$30.6 million** increase in inventories to support higher sales and mitigate supply chain risks[92](index=92&type=chunk)[94](index=94&type=chunk)[95](index=95&type=chunk) - Operating activities used **$29.0 million** in cash in Q1 2022, a significant decrease from the **$22.7 million** generated in Q1 2021, mainly due to the increase in working capital needed to support sales growth[98](index=98&type=chunk) [Results of Operations](index=23&type=page&id=Results%20of%20Operations) All segments achieved substantial year-over-year net sales growth driven by volume and price/mix, with gross margins stable and operating expenses rising in line with business activity - Performance Chemicals sales grew **33%** YoY, driven by a **7%** volume increase (led by the Americas) and a **32%** improvement in price/mix, partially offset by a **6%** negative currency impact[79](index=79&type=chunk)[80](index=80&type=chunk) - Fuel Specialties sales increased **38%** YoY, fueled by a **23%** volume growth as global fuel demand recovered and a **21%** positive price/mix effect, partially offset by a **6%** negative currency impact[79](index=79&type=chunk)[82](index=82&type=chunk) - Oilfield Services sales surged **53%** YoY to **$113.5 million**, driven by increased customer demand in the Americas amid high crude oil prices[79](index=79&type=chunk)[85](index=85&type=chunk) - The adjusted effective tax rate for Q1 2022 was **24.3%**, up from **23.2%** in Q1 2021, primarily because a higher proportion of profits were generated in higher tax jurisdictions[90](index=90&type=chunk)[91](index=91&type=chunk) [Liquidity and Financial Condition](index=28&type=page&id=Liquidity%20and%20Financial%20Condition) Despite a decrease in cash to **$105.6 million** due to increased working capital for sales support, the company maintains a solid liquidity position with no outstanding debt on its revolving credit facility Working Capital Analysis | (in millions) | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Working capital** | $426.3 | $391.5 | | **Adjusted working capital** | $344.8 | $264.9 | - Cash and cash equivalents decreased by **$36.2 million** during the quarter to **$105.6 million**, primarily due to increased working capital levels[99](index=99&type=chunk) - As of March 31, 2022, the company had no debt outstanding under its revolving credit facility[100](index=100&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=30&type=section&id=Item%203%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company manages market risks from interest rates, foreign currency, and commodity prices using derivatives for hedging, with no significant changes in exposure since the 2021 Form 10-K - The company uses derivatives, including interest rate swaps, commodity swaps, and foreign currency forward contracts, to manage market risks in the normal course of business[102](index=102&type=chunk) - The objective of managing foreign currency exchange rate exposure is to reduce earnings and cash flow volatility[102](index=102&type=chunk) - There have been no significant changes in the company's market risk exposure since the 2021 Form 10-K[104](index=104&type=chunk) [Controls and Procedures](index=31&type=section&id=Item%204%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of March 31, 2022, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of March 31, 2022[105](index=105&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal controls[107](index=107&type=chunk) [PART II OTHER INFORMATION](index=32&type=section&id=PART%20II%20OTHER%20INFORMATION) This section covers legal proceedings, updated risk factors, equity security sales, and required exhibits [Legal Proceedings](index=32&type=section&id=Item%201%20Legal%20Proceedings) The company is involved in various incidental legal claims, but there are no material pending legal proceedings against the company or its subsidiaries - There are no material pending legal proceedings to which the Company or any of its subsidiaries is a party[108](index=108&type=chunk) [Risk Factors](index=32&type=page&id=Item%201A%20Risk%20Factors) New material risks from the Russian invasion of Ukraine, impacting raw materials, sales, distribution, and energy costs, have emerged, with no other significant changes since the 2021 Form 10-K - A new material risk factor has emerged from the Russian invasion of Ukraine, which could potentially affect raw material imports, product sales, and distribution costs[109](index=109&type=chunk) - Wider implications of the conflict include higher energy and utility costs, especially in Europe, and other negative impacts such as supply chain disruptions, currency volatility, and heightened cybersecurity threats[109](index=109&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=32&type=section&id=Item%202%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company had no unregistered equity sales but repurchased **10,237** shares under a new **$50 million** program, with **$49.1 million** remaining for future repurchases - On February 15, 2022, the Company announced a new share repurchase plan for up to **$50 million** of its common stock over a three-year period[113](index=113&type=chunk) Issuer Purchases of Equity Securities (Q1 2022) | Period | Total Shares Purchased | Average Price Paid | Approx. Dollar Value Remaining | | :--- | :--- | :--- | :--- | | **Total** | 10,237 | $93.27 | $49.1 million | [Exhibits](index=33&type=section&id=Item%206%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL data files - Exhibits filed include CEO and CFO certifications under Sarbanes-Oxley Sections 302 and 906[120](index=120&type=chunk)

innospec� chemistry matters Q4 2021 Earnings FEBRUARY 2022 Forward Looking Statements This presentation contains certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts included or incorporated herein may constitute forward-looking statements. Such forward-looking statements include statements (covered by words like "expects," "estimates," "anticipates," "may," "could," "believes," "feels," "pla ...

Financial Data and Key Metrics Changes - Total revenues for Q4 2021 were $413.2 million, a 33% increase from $310.8 million in Q4 2020, driven by recovering demand across all businesses [8] - Full-year total revenues reached $1.5 billion, up 24% from $1.2 billion in 2020 [9] - EBITDA for Q4 was $44.8 million, compared to $40.2 million in the previous year [8] - Net income for Q4 was $23.9 million, up from $22.6 million a year ago [8] - Full-year net income was $93.1 million, significantly higher than $28.7 million in 2020 [9] - GAAP earnings per share for the full year were $3.75, including special items that decreased earnings by $1.05 per share [9] Business Line Data and Key Metrics Changes - Performance Chemicals revenues for Q4 were $138.4 million, up 21% from $114.6 million in Q4 2020 [9] - Fuel Specialties revenues for Q4 were $179.5 million, a 30% increase from $138.3 million a year ago [10] - Oilfield Services revenues for Q4 were $95.3 million, up 65% from $57.9 million in the same quarter last year [11] - Full-year revenues for Performance Chemicals were $525.3 million, a 23% increase from $425.4 million [10] - Full-year revenues for Fuel Specialties were $618.3 million, up 21% from the previous year [11] - Full-year revenues for Oilfield Services were $339.8 million, a 33% increase from $255 million in 2020 [12] Market Data and Key Metrics Changes - Gross margins for Q4 decreased to 27.3%, down 2 percentage points from the previous year [8] - Performance Chemicals gross margins were 21.4%, down 2.4 percentage points compared to 23.8% in Q4 2020 [10] - Fuel Specialties gross margins were 27.4%, compared to 31.4% in the same quarter last year [11] - Oilfield Services gross margins improved to 35.9%, up 0.8 percentage points from 35.1% a year ago [11] Company Strategy and Development Direction - The company is focused on innovation and growth across all business lines, with a $70 million organic growth investment plan in place [5][15] - A new $50 million share repurchase program has been approved to enhance shareholder value [4][15] - The company aims to address sustainability and high-performance demands in its technology offerings [6][14] - Continued emphasis on cash management and working capital efficiency is noted, with a net cash position of $141.7 million [12][15] Management's Comments on Operating Environment and Future Outlook - Management expects tight supply chain conditions and elevated cost inflation to persist into 2022 [14] - There is cautious optimism that these conditions will moderate in the coming quarters [14] - The company is well-positioned for continued growth and margin expansion across all businesses [14] - Further price increases have been announced across all business lines for Q1 2022 [14] Other Important Information - The adjusted effective tax rate for the full year was 22.7%, with an expectation of 24% for 2022 [13] - Cash generated from operations for Q4 was $68.8 million, with a total dividend for the full year of $1.16 per share, a 12% increase over 2020 [12][13] Q&A Session Summary Question: Expectations for pricing versus volume in revenue growth - Management expects high single-digit growth in Performance Chemicals primarily from volume, while Fuel Specialties may see low single-digit growth with some price inflation [18][19] Question: Operating expenses and wage inflation - The company is experiencing wage inflation and is taking actions to attract and retain talent, which will add pressure on operating margins [21] Question: Buyback authorization strategy - The buyback program is both opportunistic and a measure to prevent dilution, with a balanced capital allocation strategy in place [22][23] Question: Breakdown of the $70 million investment - The investment will focus on personal care markets, with additional capacity expansions in home care, agriculture, and industrial sectors [24][25]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUALREPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 or ☐ TRANSITIONREPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-13879 INNOSPEC INC. (Exact name of registrant as specified in its charter) | DELAWARE 98-0181725 | | | --- | --- | | State or othe ...

Innospec Inc. (NASDAQ:IOSP) Q3 2021 Earnings Conference Call November 3, 2021 10:00 AM ET Company Participants David Jones - VP, General Counsel, Chief Compliance Officer and Corporate Secretary Patrick Williams - President and CEO Ian Cleminson - EVP and CFO Conference Call Participants Stefanos Crist - CJS Securities David Silver - CL King & Associates David Jones Hello, this is David Jones and I'm Innospec's General Counsel and Chief Compliance Officer. Yesterday, we reported our financial results for th ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-13879 INNOSPEC INC. (Exact name of registrant as specified in its charter) DELAWARE 98-0181725 (State or other jurisdic ...

Innospec Inc. (NASDAQ:IOSP) Q2 2021 Earnings Conference Call August 4, 2021 10:10 AM ET Company Participants David Jones - Vice President, General Counsel, Chief Compliance Officer and Corporate Secretary Patrick Williams - President, Chief Executive Officer and Director Ian Cleminson - Executive Vice President and Chief Financial Officer Conference Call Participants Peter Lucas - CJS Securities David Silver - CL King & Associates, Inc Christopher Shaw - Monness, Crespi, Hardt & Co., Inc Operator Good day. ...

innospec� chemistry matters Q2 2021 Earnings AUGUST 2021 Forward Looking Statements This presentation contains certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts included or incorporated herein may constitute forward-looking statements. Such forward-looking statements include statements (covered by words like "expects," "estimates," "anticipates," "may," "could," "believes," "feels," "plans ...