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Innospec(IOSP) - 2025 Q2 - Quarterly Results
InnospecInnospec(US:IOSP)2025-08-06 10:07

Q2 2025 Financial Results Overview 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 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 cash26 GAAP vs. Non-GAAP Reconciliation 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 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 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 Services9 Segmental Performance Review Review of Performance Chemicals, Fuel Specialties, and Oilfield Services, detailing revenue, margin, and operating income changes Performance Chemicals 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 opportunities10 Fuel Specialties 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 improvement11 Oilfield Services 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 year12 Strategic Priorities and Outlook 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 commercialization16 - Fuel Specialties is expected to continue delivering good results16 - The company has significant balance sheet flexibility for M&A, dividend growth, organic investment, and buybacks, continuing its record of returning value to shareholders17 Non-GAAP Financial Measures Explanation This section defines and explains the company's non-GAAP financial measures, their components, and their purpose in evaluating performance Definition and Reconciliation 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 cash18 - 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 consideration18 - 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 measures18 Company Information Provides an overview of Innospec Inc., its business segments, forward-looking statement disclaimers, and investor contact details About Innospec Inc. 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 countries19 - 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 Forward-Looking Statements 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 materially20 - Innospec undertakes no obligation to publicly update or revise any forward-looking statements20 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.com21 Condensed Consolidated Financial Statements 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 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 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 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 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 period31 - Repurchase of common stock increased substantially from $0.7 million in 2024 to $13.3 million in 2025 for the six-month period31