Innospec Inc.

These releases and this presentation are posted on the company's site at InnoSpecInc.com. During this call, we will be making forward-looking statements, which are predictions, projections, and other statements about future events. These statements are based on current expectations and assumptions that are subject to risks and uncertainties that could cause actual results to differ materially from the anticipated results implied by forward-looking statements. These risks and uncertainties are detailed in InnoSpec 10-K, 10-Qs, and other filings with the SEC. Please see the SEC site or an aspect site for these and other documents. In our discussion today, we've also included some non-GAAP financial measures. A reconciliation to the most directly comparable GAAP financial measures is contained in our earnings release posted on our website. The non-GAAP financial measures provided should not be considered as a substitute for or superior to those prepared in accordance with GAAP. They are included as additional verification items to aid investors to further understand the company's performance in addition to the impact that these items and events had on financial results. With us today from Inispec are Patrick Williams, President and Chief Executive Officer, and Ian Clementson, Executive Vice President and Chief Financial Officer. With that, I'll turn it over to you, Patrick.

Thank you, David, and welcome everyone to Inispec's second quarter 2021 conference call. This was a strong quarter for Inspec as operating income exceeded the pre-COVID 2019 comparative for the first time. In the absence of any material downturn in economic activity due to the recent surge in global COVID cases, we are entering the second half of 2021 with an optimistic view of continued recovery and momentum in all of our businesses. Performance Chemicals delivered an excellent quarter with record sales and a 47% increase in operating income over 2020. Since 2017 and throughout the pandemic, this business has delivered margin expansion and double-digit annual operating income growth. We are in the early stages of a global effort by the home and personal care industry to reformulate entire product lines around consumers which increasingly prefer more sustainable, natural, and mild ingredients without any compromise in performance. This trend keeps the technical bar high and allows our research, sales, and operations teams to play to their strengths. Our industry-leading technology combined with our formulation expertise positions us as a key development partner with our customers to address these long-term trends. We are adding substantial new capacity to meet current and future customer demand and our new R&D facilities are expected to be online by the first quarter of 2022. In addition, we are fast-tracking further growth investment opportunities in the U.S. and Europe. In fuel specialties, sales and operating income exceeded their pre-COVID comparative levels for the first time. While global fuel demand achieved sequential improvement, there continues to be a gap versus pre-pandemic levels giving us headroom for further growth. Along with critical safety improvements, our fuel add-ups decreased diesel and distillate consumption, resulting in immediate and material customer cost savings, as well as significant reductions in associated carbon emissions footprint. The impact of these costs in greenhouse gas reductions is becoming meaningful in regions like Asia, where fuel demand is expected to grow over the coming decades and where additive use is still relatively limited. In old-field services, sales grew by 12 percent on a sequential basis, and operating income approximately doubled. We believe that there are several opportunities to improve current operating margins, and it is critical that we deliver on them in the second half of 2021. These include further price actions in certain market segments where necessary, rationalization of equipment, and other improvements. These margin expansion opportunities are in addition to ongoing operating leverage gains that we expect to achieve as sequential activity levels improve in all oilfield markets. The industry is advancing along its recovery path, and we are seeing an increased focus by operators on chemistries that can drive both higher returns on capital and long-term sustainability. Our R&D and field service teams are very well positioned to support our OFO customers in achieving these goals. Now I will turn the call over to Ian Clementson, who will review our financial results in more detail. Then I will return with some concluding comments. After that, we will take your questions. Ian?

Thanks, Patrick. Turning to slide seven in the presentation, the company's total revenues for the second quarter were $354.5 million. 45% increase in 244.9 million a year ago, driven by recovering demand in all our businesses compared to that in the COVID-impacted prior year. Overall, gross margin increased 6.5 percentage points from last year to 30.6%. EBITDA for the quarter was 50.6 million compared to a loss of 19.5 million last year. Our gap earnings per share were 90 cents including special items, the net effect of which decreased our second quarter earnings by 40 cents per share. A year ago, we reported a gap loss of $1.62 per share, which included a negative impact on special items of $1.44 per share. Excluding special items in both years, our adjusted EPS for the quarter was $1.30 compared to a loss of 18 cents a year ago. This quarter benefited from above average order phasing for our Avgas fuel additives. The impact of these orders was approximately 16 cents of EPS for the quarter. Turning to slide eight, revenues in performance chemicals for the second quarter were 128.2 million, up 34% from last year's 95.7 million. Volumes grew 18% with a positive price mix of 9% and a favorable currency impact of 7%. Gross margins of 24.6% were down 1.4 percentage points compared to 26% in the same quarter 2020. Operating income increased 47% from last year to 17.9 million. We believe our performance chemicals business can sustain high single digit revenue growth reflecting the strong organic opportunities in the pipeline. Moving on to slide nine, revenues in fuel specialties for the second quarter were 143.1 million, 33% higher than the 107.4 million reported a year ago. Volumes grew by 20% and there was a positive price mix effect of 6% with a favorable currency impact of 7%. Your specialty's gross margin for the quarter was at the upper end of our expected range at 35%, compared to 23.6% in the same quarter in 2020. Operating income for this segment was $28.5 million, up significantly compared to the $4.7 million a year ago. Fuel demand has continued to improve, and subject to any further sustained economic lockdowns, demand for our fuel additives technology should continue to recover over the remainder of 2021 and beyond. Moving on to slide 10, revenues in oil fuel services for the quarter were $83.2 million, approximately doubling the 41.8 million in the second quarter last year, as customer activity continues to increase. Gross margins of 32% were up 8.3 percentage points on last year's 23.7%. Operating income of 2.2 million was a 14.6 million improvement from the loss of 12.4 million a year ago. We expect further sequential improvements driven by a combination of increasing customer activity and internal action, both of which will deliver higher profitability. Turning to slide 11, corporate costs for the quarter were $11.6 million compared with $15.4 million a year ago, due mainly to lower personnel-related expenses. The effective tax rate for the quarter was 44.1% compared to 26.2% last year, primarily due to the enacted change in the UK tax rate impacting deferred tax. The adjusted effective tax rate for the quarter was 24.2% in line with expectations. Moving on to slide 12, cash generation for the quarter was impacted by an increase in working capital due to sales growth, which resulted in an operating cash outflow of 1.1 million before capital expenditures of 9.2 million. As of June 30th, Innespec had 94.4 million in cash and cash equivalents and finance lease debt of $0.2 million, resulting in a net cash position of $94.2 million. And now I'll turn it back over to Patrick for some final comments.