Innospec(IOSP) - 2021 Q3 - Quarterly Report

Cautionary Statement Relative to Forward-Looking Statements This section outlines the nature of forward-looking statements, emphasizing that actual results may differ due to various risks - This section outlines the nature of forward-looking statements, emphasizing that actual results may differ due to various risks, including the effects of the COVID-19 pandemic. It advises reviewing the 'Risk Factors' section in the Annual Report on Form 10-K for further details[11] PART I FINANCIAL INFORMATION This section presents the company's unaudited interim condensed consolidated financial statements and management's discussion and analysis Item 1 Condensed Consolidated Financial Statements This section presents Innospec Inc.'s unaudited interim condensed consolidated financial statements, highlighting significant improvements in net income and EPS Condensed Consolidated Statements of Income This statement details the company's revenues, costs, and net income for the three and nine months ended September 30, 2021 and 2020 Condensed Consolidated Statements of Income (Three Months Ended September 30) | (in millions, except share and per share data) | 2021 | 2020 | | :--- | :--- | :--- | | Net sales | $ 376.1 | $ 265.1 | | Cost of goods sold | (263.2) | (186.4) | | Gross profit | 112.9 | 78.7 | | Operating income | 31.4 | 16.8 | | Income before income tax expense | 30.8 | 20.2 | | Net income | $ 23.4 | $ 12.7 | | Basic EPS | $ 0.95 | $ 0.52 | | Diluted EPS | $ 0.94 | $ 0.51 | Condensed Consolidated Statements of Income (Nine Months Ended September 30) | (in millions, except share and per share data) | 2021 | 2020 | | :--- | :--- | :--- | | Net sales | $1,070.2 | $ 882.3 | | Cost of goods sold | (748.2) | (630.6) | | Gross profit | 322.0 | 251.7 | | Operating income | 96.6 | 4.3 | | Income before income tax expense | 101.7 | 10.6 | | Net income | $ 69.2 | $ 6.1 | | Basic EPS | $ 2.81 | $ 0.25 | | Diluted EPS | $ 2.78 | $ 0.25 | Condensed Consolidated Statements of Comprehensive Income This statement presents net income and other comprehensive income components, showing total comprehensive income for the periods Condensed Consolidated Statements of Comprehensive Income (Three Months Ended September 30) | (in millions) | 2021 | 2020 | | :--- | :--- | :--- | | Net income | $ 23.4 | $ 12.7 | | Total other comprehensive income/(loss) | (6.4) | 12.1 | | Total comprehensive income | $ 17.0 | $ 24.8 | Condensed Consolidated Statements of Comprehensive Income (Nine Months Ended September 30) | (in millions) | 2021 | 2020 | | :--- | :--- | :--- | | Net income | $ 69.2 | $ 6.1 | | Total other comprehensive income/(loss) | (12.6) | 10.1 | | Total comprehensive income | $ 56.6 | $ 16.2 | Condensed Consolidated Balance Sheets This statement provides a snapshot of the company's assets, liabilities, and equity as of September 30, 2021, and December 31, 2020 Condensed Consolidated Balance Sheets (as of September 30, 2021 and December 31, 2020) | (in millions) | Sep 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Assets: | | | | Cash and cash equivalents | $ 89.2 | $ 105.3 | | Trade and other accounts receivable | 302.8 | 221.4 | | Total inventories | 274.1 | 220.0 | | Total current assets | 683.0 | 566.2 | | Total assets | $ 1,492.4 | $ 1,397.4 | | Liabilities & Equity: | | | | Accounts payable | $ 137.1 | $ 98.7 | | Accrued liabilities | 147.6 | 129.8 | | Total current liabilities | 308.3 | 252.4 | | Total liabilities and equity | $ 1,492.4 | $ 1,397.4 | | Total Innospec stockholders' equity | 992.5 | 944.4 | Condensed Consolidated Statements of Cash Flows This statement details the cash inflows and outflows from operating, investing, and financing activities for the nine months ended September 30 Condensed Consolidated Statements of Cash Flows (Nine Months Ended September 30) | (in millions) | 2021 | 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $ 24.4 | $ 87.7 | | Net cash used in investing activities | (27.0) | (21.7) | | Net cash used in financing activities | (13.2) | (74.8) | | Net change in cash and cash equivalents | (16.1) | (9.1) | | Cash and cash equivalents at end of period | $ 89.2 | $ 66.6 | Condensed Consolidated Statements of Equity This statement outlines changes in Innospec stockholders' equity, including net income and dividends, for the nine months ended September 30 Condensed Consolidated Statements of Equity (Nine Months Ended September 30, 2021) | (in millions) | Common Stock | Additional Paid-In Capital | Treasury Stock | Retained Earnings | Accumulated Other Comprehensive Loss | Non Controlling Interest | Total Equity | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Balance at Dec 31, 2020 | $ 0.3 | $ 336.1 | $ (93.3) | $ 758.6 | $ (57.3) | $ 0.5 | $ 944.9 | | Net income | | | | 69.2 | | | 69.2 | | Dividend paid | | | | (14.0) | | | (14.0) | | Balance at Sep 30, 2021 | $ 0.3 | $ 341.3 | $ (93.0) | $ 813.8 | $ (69.9) | $ 0.6 | $ 993.1 | Condensed Consolidated Statements of Equity (Nine Months Ended September 30, 2020) | (in millions) | Common Stock | Additional Paid-In Capital | Treasury Stock | Retained Earnings | Accumulated Other Comprehensive Loss | Non Controlling Interest | Total Equity | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Balance at Dec 31, 2019 | $ 0.3 | $ 330.4 | $ (93.3) | $ 755.5 | $ (74.4) | $ 0.4 | $ 918.9 | | Net income | | | | 6.1 | | | 6.1 | | Dividend paid | | | | (12.8) | | | (12.8) | | Balance at Sep 30, 2020 | $ 0.3 | $ 334.4 | $ (93.7) | $ 748.8 | $ (64.3) | $ 0.5 | $ 926.0 | Notes To The Unaudited Interim Condensed Consolidated Financial Statements This section provides detailed explanatory notes supporting the unaudited interim condensed consolidated financial statements NOTE 1 – BASIS OF PRESENTATION This note clarifies that the interim financial statements are prepared under GAAP and should be read with the 2020 Annual Report - The unaudited interim condensed consolidated financial statements are prepared in accordance with GAAP for interim financial information and should be read in conjunction with the Company's 2020 Annual Report on Form 10-K[33][34] NOTE 2 – SEGMENT REPORTING This note details financial performance across Fuel Specialties, Performance Chemicals, and Oilfield Services segments, noting the Octane Additives cessation - The Company reports financial performance across three segments: Fuel Specialties, Performance Chemicals, and Oilfield Services. The Octane Additives segment ceased trading in Q2 2020[36] Segment Net Sales (Three Months Ended September 30) | (in millions) | 2021 | 2020 | | :--- | :--- | :--- | | Fuel Specialties | $ 156.4 | $ 120.0 | | Performance Chemicals | 132.8 | 102.0 | | Oilfield Services | 86.9 | 43.1 | | Total Net Sales | $ 376.1 | $ 265.1 | Segment Operating Income (Nine Months Ended September 30) | (in millions) | 2021 | 2020 | | :--- | :--- | :--- | | Fuel Specialties | $ 78.9 | $ 59.0 | | Performance Chemicals | 54.0 | 40.2 | | Oilfield Services | 6.1 | (9.7) | | Octane Additives | 0.0 | (2.8) | | Corporate costs | (42.4) | (41.5) | | Total Operating Income | $ 96.6 | $ 4.3 | NOTE 3 – EARNINGS PER SHARE This note provides the calculation of basic and diluted earnings per share for the nine months ended September 30 Earnings Per Share Calculation (Nine Months Ended September 30) | (in millions, except per share data) | 2021 | 2020 | | :--- | :--- | :--- | | Net income available to common stockholders | $ 69.2 | $ 6.1 | | Weighted average common shares outstanding (in thousands) | 24,624 | 24,555 | | Dilutive effect of stock options and awards (in thousands) | 248 | 203 | | Diluted EPS denominator (in thousands) | 24,872 | 24,758 | | Net income per share, basic | $ 2.81 | $ 0.25 | | Net income per share, diluted | $ 2.78 | $ 0.25 | NOTE 4 – GOODWILL This note details the movements in goodwill, including the opening balance, exchange effects, and closing balance Goodwill Movements (in millions) | | Gross Cost | | :--- | :--- | | Opening balance at January 1, 2021 | $ 371.2 | | Exchange effect | (5.2) | | Closing balance at September 30, 2021 | $ 366.0 | NOTE 5 – OTHER INTANGIBLE ASSETS This note presents the gross cost, accumulated amortization, and net book amount of other intangible assets by category Other Intangible Assets Movements (in millions) | | 2021 | | :--- | :--- | | Gross cost at January 1 | $ 298.9 | | Exchange effect | (2.8) | | Gross cost at September 30 | 296.1 | | Accumulated amortization at January 1 | (223.6) | | Amortization expense | (12.0) | | Exchange effect | 1.4 | | Accumulated amortization at September 30 | (234.2) | | Net book amount at September 30 | $ 61.9 | Net Book Amount by Category of Other Intangible Assets (in millions) | | September 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Product rights | $ 3.5 | $ 6.3 | | Brand names | 1.8 | 2.3 | | Technology | 18.0 | 19.8 | | Customer relationships | 36.9 | 44.2 | | Internally developed software | 1.7 | 2.7 | | Total | $ 61.9 | $ 75.3 | NOTE 6 – PENSION AND POST EMPLOYMENT BENEFITS This note describes the company's defined benefit pension plans and the net periodic benefit for the nine months - The Company maintains defined benefit pension plans in the UK and Germany, both closed to future accrual or new entrants[42][43] - The net periodic benefit for the nine months ended September 30, 2021, was $2.5 million, down from $3.2 million in 2020[44] Net Periodic Benefit (Nine Months Ended September 30) | (in millions) | 2021 | 2020 | | :--- | :--- | :--- | | Service cost | $ (1.4) | $ (1.0) | | Interest cost on projected benefit obligation | (5.7) | (8.5) | | Expected return on plan assets | 11.7 | 13.3 | | Amortization of prior service credit/(cost) | (0.2) | 0.6 | | Amortization of actuarial net losses | (1.9) | (1.2) | | Net periodic benefit | $ 2.5 | $ 3.2 | NOTE 7 – INCOME TAXES This note details unrecognized tax benefits, associated interest and penalties, and their potential impact on the effective tax rate Unrecognized Tax Benefits and Associated Accrued Interest and Penalties (in millions) | | Unrecognized Tax Benefits | Interest and Penalties | Total | | :--- | :--- | :--- | :--- | | Opening balance at January 1, 2021 | $ 13.6 | $ 2.4 | $ 16.0 | | Net change for tax positions of prior periods | (0.2) | 0.6 | 0.4 | | Closing balance at September 30, 2021 | $ 13.4 | $ 3.0 | $ 16.4 | - All $16.4 million of unrecognized tax benefits, interest, and penalties would impact the effective tax rate if recognized[46] - The Company is subject to ongoing tax audits and potential adjustments related to the Tax Cuts and Jobs Act[47][48] NOTE 8 – LONG-TERM DEBT This note confirms no drawdowns on the revolving credit facility and details deferred finance costs as of September 30, 2021 - As of September 30, 2021, the Company had not drawn down on its $250.0 million revolving credit facility, which is available until September 25, 2024[50] - Deferred finance costs were $1.1 million[51] NOTE 9 – PLANT CLOSURE PROVISIONS This note outlines provisions for plant closure and environmental remediation, primarily at the Ellesmere Port site - The Company has provisions for plant closure and environmental remediation, primarily at its Ellesmere Port site[52][53] - Total provisions at September 30, 2021, were $56.5 million, with $5.7 million due within one year[54] Movements in Plant Closure Provisions (in millions) | | 2021 | | :--- | :--- | | Total at January 1 | $58.5 | | Charge for the period | 2.8 | | Utilized in the period | (4.3) | | Exchange effect | (0.5) | | Total at September 30 | 56.5 | | Due within one year | (5.7) | | Due after one year | $50.8 | NOTE 10 – FAIR VALUE MEASUREMENTS This note presents the fair values of financial assets and liabilities, including cash, derivatives, and stock equivalent units Fair Values of Financial Assets and Liabilities (in millions) | | September 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $ 89.2 | $ 105.3 | | Foreign currency forward exchange contracts | 0.4 | 0.0 | | Liabilities | | | | Finance leases | 0.0 | 0.6 | | Foreign currency forward exchange contracts | 0.0 | 0.5 | | Stock equivalent units | 17.9 | 17.2 | NOTE 11 – DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT This note explains the use of foreign currency forward exchange contracts to manage currency risk, not for hedging - The Company uses foreign currency forward exchange contracts to minimize currency exchange rate exposure, with maturities up to twelve months[60] - These contracts are not designated as hedging instruments and resulted in a gain of $0.9 million for the first nine months of 2021[60] NOTE 12 – CONTINGENCIES This note states the company is involved in routine legal claims but has no material pending legal proceedings - The Company is involved in incidental legal proceedings but has no material pending legal proceedings[61] - Guarantees of affiliated companies' obligations amounted to $8.6 million as of September 30, 2021[62] NOTE 13 – STOCK-BASED COMPENSATION PLANS This note details transactions and compensation costs related to stock option and stock equivalent unit plans Stock Option Plan Transactions (Nine Months Ended September 30, 2021) | | Number of Options | Weighted Average Exercise Price | Weighted Average Grant-Date Fair Value | | :--- | :--- | :--- | :--- | | Outstanding at December 31, 2020 | 442,893 | $ 32.49 | $ 45.31 | | Granted | 92,284 | $ 10.85 | $ 85.90 | | Exercised | (56,508) | $ 34.57 | $ 37.45 | | Forfeited | (19,023) | $ 20.46 | $ 63.56 | | Outstanding at September 30, 2021 | 459,646 | $ 28.44 | $ 53.64 | - Stock option compensation cost for the first nine months of 2021 was $4.6 million[68] - Total intrinsic value of options exercised was $1.8 million[68] - Unrecognized compensation cost is $8.8 million, to be recognized over 2.02 years[68] Stock Equivalent Units (SEUs) Transactions (Nine Months Ended September 30, 2021) | | Number of SEUs | Weighted Average Exercise Price | Weighted Average Grant-Date Fair Value | | :--- | :--- | :--- | :--- | | Outstanding at December 31, 2020 | 390,164 | $ 4.35 | $ 63.96 | | Granted | 97,954 | $ 0.00 | $ 90.00 | | Exercised | (35,384) | $ 13.93 | $ 45.20 | | Forfeited | (25,290) | $ 2.40 | $ 66.53 | | Outstanding at September 30, 2021 | 427,444 | $ 3.57 | $ 71.22 | - SEU compensation for the first nine months of 2021 was a $3.4 million charge (compared to a $4.9 million credit in 2020)[71] - The total intrinsic value of SEUs exercised was $1.6 million[72] - The weighted-average remaining vesting period is 1.89 years[72] NOTE 14 – RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE LOSS This note details reclassifications from accumulated other comprehensive loss, primarily related to pension plan items Reclassifications from AOCL (Nine Months Ended September 30, 2021) | Details about AOCL Components | Amount Reclassified from AOCL (in millions) | | :--- | :--- | | Amortization of prior service cost | $ 0.2 | | Amortization of actuarial net losses | 1.9 | | Total reclassifications (Net of tax) | $ 1.9 | Changes in Accumulated Other Comprehensive Loss (Nine Months Ended September 30, 2021) | (in millions) | Defined Benefit Pension Plan Items | Cumulative Translation Adjustments | Total | | :--- | :--- | :--- | :--- | | Balance at December 31, 2020 | $ (19.9) | $ (37.4) | $ (57.3) | | Total other comprehensive income | 1.9 | (14.5) | (12.6) | | Balance at September 30, 2021 | $ (18.0) | $ (51.9) | $ (69.9) | NOTE 15 – RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS This note confirms that recently issued accounting pronouncements have no relevant impact on the company's financial statements - The Company reviewed recently issued accounting pronouncements and concluded there were no matters relevant to its financial statements[76] NOTE 16 – RELATED PARTY TRANSACTIONS This note discloses transactions with related parties, including purchases, fees, and sales involving company directors - The Company engaged in transactions with AdvanSix ($0.3 million purchases), Smith, Gambrell & Russell, LLP ($0.1 million fees), and European Metal Recycling Limited ($0.5 million scrap metal sales), all involving directors[77][78][79] Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations for the Three and Nine Months Ended September 30, 2021 This section provides a detailed analysis of Innospec's financial performance, condition, and critical accounting estimates Critical Accounting Estimates This section identifies key critical accounting estimates, including environmental liabilities, pensions, income taxes, and goodwill - Key critical accounting estimates include environmental liabilities, pensions, income taxes, goodwill, property, plant and equipment, other intangible assets, and the impact of the COVID-19 pandemic[82] Results of Operations This section analyzes the company's net sales and gross profit performance across segments for the three and nine months ended September 30 - The Company's financial performance is reported across three segments: Fuel Specialties, Performance Chemicals, and Oilfield Services[83] - The Octane Additives segment ceased trading in Q2 2020[83] Three Months Ended September 30, 2021 This section details the financial performance of each segment for the three months ended September 30, 2021 Net Sales and Gross Profit by Segment (Three Months Ended September 30) | (in millions, except ratios) | 2021 | 2020 | Change | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net sales: | | | | | | Fuel Specialties | $ 156.4 | $ 120.0 | $ 36.4 | +30% | | Performance Chemicals | 132.8 | 102.0 | 30.8 | +30% | | Oilfield Services | 86.9 | 43.1 | 43.8 | +102% | | Total | $ 376.1 | $ 265.1 | $111.0 | +42% | | Gross profit: | | | | | | Fuel Specialties | $ 49.1 | $ 40.3 | $ 8.8 | +22% | | Performance Chemicals | 32.6 | 24.0 | 8.6 | +36% | | Oilfield Services | 31.2 | 14.4 | 16.8 | +117% | | Total | $ 112.9 | $ 78.7 | $ 34.2 | +43% | Fuel Specialties Net sales increased by 30% YoY, driven by volume growth, though gross margin decreased due to mix and raw material costs - Net sales increased by 30% YoY, driven by a 17% increase in volume as global demand for refined fuel products returned to near pre-pandemic levels[85][86] - Gross margin decreased by 2.2 percentage points due to an adverse sales mix and a time lag in passing on higher raw material costs[87] Performance Chemicals Net sales increased by 30% YoY, with volumes up 10%, and gross margin improved due to higher volumes and favorable mix - Net sales increased by 30% YoY, with volumes up 10% driven by increased demand for Personal Care products in the Americas and recovery in EMEA[85][89] - Gross margin increased by 1.0 percentage point due to higher volumes and a favorable sales mix[91] Oilfield Services Net sales surged by 102% YoY due to increased customer demand, with gross margin improving from favorable mix and maintained prices - Net sales surged by 102% YoY, driven by continued customer demand growth in the Americas as pandemic impacts lessened[85][92] - Gross margin increased by 2.5 percentage points due to a favorable sales mix and maintained prices[93] Other Income Statement Captions This section details changes in corporate costs, other net income, and the effective tax rate for the three-month period - Corporate costs increased by $2.4 million due to higher personnel-related expenses[95] - Other net income decreased by $4.0 million, primarily due to foreign exchange losses on translation[96] Other Income/(Expense), Net (Three Months Ended September 30) | (in millions) | 2021 | 2020 | Change | | :--- | :--- | :--- | :--- | | Net pension credit | $ 1.3 | $ 1.4 | (0.1) | | Foreign exchange gains/(losses) on translation | (2.2) | 3.5 | (5.7) | | Foreign currency forward contracts gains/(losses) | 0.7 | (1.1) | 1.8 | | Total | $ (0.2) | $ 3.8 | $ (4.0) | - The GAAP effective tax rate was 24.0% in Q3 2021, down from 37.1% in Q3 2020[98] - The adjusted effective tax rate decreased to 22.3% from 23.0%, mainly due to a lower proportion of profits from higher tax jurisdictions[98] Nine Months Ended September 30, 2021 This section details the financial performance of each segment for the nine months ended September 30, 2021 Net Sales and Gross Profit by Segment (Nine Months Ended September 30) | (in millions, except ratios) | 2021 | 2020 | Change | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net sales: | | | | | | Fuel Specialties | $ 438.8 | $ 374.4 | $ 64.4 | +17% | | Performance Chemicals | 386.9 | 310.8 | 76.1 | +24% | | Oilfield Services | 244.5 | 197.1 | 47.4 | +24% | | Total | $1,070.2 | $ 882.3 | $187.9 | +21% | | Gross profit: | | | | | | Fuel Specialties | $ 144.1 | $ 116.9 | $ 27.2 | +23% | | Performance Chemicals | 95.6 | 76.5 | 19.1 | +25% | | Oilfield Services | 82.3 | 60.5 | 21.8 | +36% | | Octane Additives | 0.0 | (2.2) | 2.2 | +100% | | Total | $ 322.0 | $ 251.7 | $ 70.3 | +28% | Fuel Specialties Net sales increased by 17% YoY, driven by volume growth, and gross margin improved due to a favorable sales mix - Net sales increased by 17% YoY, driven by an 8% increase in volume[100][101] - Gross margin increased by 1.6 percentage points due to a favorable sales mix compared to the prior year's pandemic impact[102] Performance Chemicals Net sales increased by 24% YoY, with volumes up 12%, and gross margin slightly improved due to sales mix - Net sales increased by 24% YoY, with volumes up 12% due to increased demand for Personal Care products[100][103] - Gross margin increased by 0.1 percentage points, primarily due to sales mix[104] Oilfield Services Net sales increased by 24% YoY due to continued customer demand, with gross margin improving from favorable sales mix - Net sales increased by 24% YoY, driven by continued customer demand growth[100][106] - Gross margin increased by 3.0 percentage points due to a favorable sales mix and maintained prices[107] Octane Additives This business ceased trading from July 1, 2020, with legacy costs now recorded as corporate operating expenses - The Octane Additives business ceased trading from July 1, 2020, with legacy costs now recorded as corporate operating expenses[109] - In the first six months of 2020, it incurred a gross loss of $2.2 million and operating expenses of $0.6 million[109] Other Income Statement Captions This section details changes in corporate costs, interest expense, other net income, and the effective tax rate for the nine-month period - Corporate costs increased by $0.9 million due to higher personnel-related expenses and adverse foreign currency translation[110] - Interest expense decreased to $1.1 million from $1.5 million due to revolving credit facility repayment[112] Other Income/(Expense), Net (Nine Months Ended September 30) | (in millions) | 2021 | 2020 | Change | | :--- | :--- | :--- | :--- | | Net pension credit | $3.9 | $4.2 | (0.3) | | Profit on disposal of assets | 0.2 | 0.0 | 0.2 | | Foreign exchange gains on translation | 1.2 | 2.9 | (1.7) | | Foreign currency forward contracts gains | 0.9 | 0.7 | 0.2 | | Total | $6.2 | $7.8 | $ (1.6) | - The GAAP effective tax rate was 32.0% in the first nine months of 2021, down from 42.5% in 2020[113] - The adjusted effective tax rate decreased to 23.3% from 24.7%, primarily due to a lower proportion of profits from higher tax jurisdictions[113] Liquidity and Financial Condition This section discusses changes in working capital, operating cash flows, cash, and debt, highlighting impacts on liquidity Working Capital Working capital and adjusted working capital increased significantly due to higher accounts receivable and inventories - Working capital increased by $60.9 million, and adjusted working capital increased by $76.7 million in the first nine months of 2021[115][117] - This was driven by an $81.4 million increase in trade and other accounts receivable and a $54.1 million increase in inventories[117][118] Adjusted Working Capital (in millions) | | September 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Total current assets | $ 683.0 | $ 566.2 | | Total current liabilities | (308.3) | (252.4) | | Working capital | 374.7 | 313.8 | | Less cash and cash equivalents | (89.2) | (105.3) | | Less prepaid income taxes | (3.8) | (4.2) | | Less other current assets | (0.8) | (0.4) | | Add back current portion of accrued income taxes | 4.6 | 5.5 | | Add back current portion of finance leases | 0.0 | 0.5 | | Add back current portion of plant closure provisions | 5.7 | 6.6 | | Add back current portion of operating lease liabilities | 13.3 | 11.3 | | Adjusted working capital | $ 304.5 | $ 227.8 | Operating Cash Flows Net cash provided by operating activities decreased, primarily due to increases in working capital - Net cash provided by operating activities decreased to $24.4 million in the first nine months of 2021 from $87.7 million in 2020, primarily due to increases in working capital (higher accounts receivable and inventories)[122] Cash Cash and cash equivalents decreased due to increased working capital, capital investments, and dividend payments - Cash and cash equivalents decreased by $16.1 million to $89.2 million at September 30, 2021, mainly due to increased working capital, capital investments, and dividend payments[123] Debt The company had no outstanding debt under its revolving credit facility or finance leases as of September 30, 2021 - The Company had no debt outstanding under its revolving credit facility or finance leases as of September 30, 2021[124] Item 3 Quantitative and Qualitative Disclosures about Market Risk This section discusses the company's exposure to market risks and its strategies for managing them through derivatives - The Company is exposed to market risks including interest rate, foreign currency exchange rate, and commodity price fluctuations[126] - It uses derivatives like interest rate swaps, commodity swaps, and foreign currency forward exchange contracts to manage these risks, not for trading[127][128] - No significant changes in market risk exposure since the 2020 Form 10-K[129] Item 4 Controls and Procedures This section confirms the effectiveness of disclosure controls and reports no material changes in internal control over financial reporting Evaluation of Disclosure Controls and Procedures The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of September 30, 2021 - The CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of September 30, 2021, ensuring timely and accurate reporting[130] Changes in Internal Control over Financial Reporting No material changes to internal control over financial reporting occurred during the period - There were no changes to internal control over financial reporting that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting during the period[132] PART II OTHER INFORMATION This section provides additional information, including legal proceedings, risk factors, equity sales, and exhibits Item 1 Legal Proceedings The company is involved in routine legal claims but has no material pending legal proceedings - The Company is involved in routine legal claims but has no material pending legal proceedings that would, in aggregate, have a material adverse effect on results of operations[133] Item 1A Risk Factors This section refers to the 2020 Form 10-K for risk factors and confirms no material changes since that filing - There have been no material changes in the risk factors facing the Company since its 2020 Annual Report on Form 10-K[134] Item 2 Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities or open market repurchases of common stock occurred during the quarter - There were no unregistered sales of equity securities or open market repurchases of common stock during the quarter ended September 30, 2021[135][136] Item 3 Defaults Upon Senior Securities The company reported no defaults upon senior securities - The Company reported no defaults upon senior securities[137] Item 4 Mine Safety Disclosures Mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable to the Company[138] Item 5 Other Information The company reported no other information required to be disclosed - The Company reported no other information[139] Item 6 Exhibits This section lists the exhibits filed as part of the Form 10-Q, including certifications and XBRL documents - The exhibits include certifications from the CEO and CFO (Sections 302 and 906 of Sarbanes-Oxley Act) and XBRL instance and cover page interactive data files[142] SIGNATURES The report was signed by the President and CEO and the Executive Vice President and CFO on November 3, 2021 - 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 November 3, 2021[144]