Innospec Inc.

Welcome to InnoSpec's earnings call for the quarter and year-ended December 31st, 2021. The earnings released in this presentation are posted on the company's site at InnoSpecInc.com. During this call, we will make 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 risk 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-Q, and other filings with the SEC. Please see the SEC site or InnoSpec site for these and other documents. In our discussions today, we've also included some non-GAAP financial measures. A reconciliation is the most directly comparable GAAP financial measures contained in our earnings release. The non-GAAP financial measures should not be considered as a substitute for or superior to those prepared in accordance with GAAP. They are included as additional clarification items to aid investors in further understanding the company's performance in addition to the impact that these items have 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. Pat, I'll turn it over to you, Patrick.

Thank you, David, and welcome everyone to Inispec's fourth quarter 2021 conference call. I am pleased to present another very strong set of quarterly results for Innispec. Despite sustained supply chain, labor, and inflationary headwinds, we ended the year with record quarterly sales and full-year operating income up 74% on the prior year. Cash flow was extremely strong in the quarter, and our net cash position improved to $140 million. In addition, Today, we announced that our board has approved a new $50 million share repurchase program. I'm extremely proud of the way our InnoSpec team has navigated this year's volatile market conditions to deliver these strong set of quarterly results and full-year results. Our business teams remain safe, resourceful, and customer-focused throughout this challenging year. We believe we are entering 2022 well-positioned for continued innovation and growth in all our businesses. Performance Chemicals achieved record quarterly sales and surpassed a half a billion dollars in full-year sales for the first time. The business delivered its fourth consecutive year of operating income growth and margin expansion with full-year operating income up an impressive 29% over 2020. With our $70 million organic growth investment plans in motion and our new state-of-the-art global technology center on track for completion by Q2 of this year, we are well positioned to meet our customers' growing technology demands. Customers and consumers want sustainability, but they also want high performance. This dual requirement will continue to drive exciting technology-led future growth opportunities across all our performance chemical and markets. Fuel specialties achieved record quarterly and full year sales along with improved operating leverage. Gross margins ran below our target 32% to 35% range, but this was primarily due to continued delay in jet fuel demand recovery, sales mix, and contract formula price increases, which naturally lag cost inflation. As jet fuel demand continues to recover and cost inflation moderates, we expect gross margins to return to our target range. Consistent with our performance chemicals business, the majority of our current sales and future growth opportunities in fuel specialties are directly tied to sustainability. I am proud of the role that InnoSpec's technology plays in directly addressing these global initiatives to deploy cleaner fuels and increase fuel economy. Our technology adds critical safety, emission reduction, and performance properties to diesel, renewable, and distillate fuels. As society moves towards cleaner fuels, tighter emission standards, and higher efficiency engines, our addressable market expands. The global drive to find cost-effective ways to reduce emissions, burn cleaner fuels, and increase operational efficiency plays directly to our technology leadership. Oilfield services grew sales and expanded operating margin for the sixth consecutive quarter. The overall market environment in terms of commodity prices Completion and production activity is expected to continue to improve in 2022. As in the prior quarter, with this backdrop, there continues to be significant potential for operating growth. Now I will turn the call over to Ian Clemson, who will review our financial results in more detail. Then I will return with some concluding comments. After that, Ian and I will take your questions.

Thanks, Patrick. Turning to slide seven in the presentation, the company's total revenues for the fourth quarter were 413.2 million, a 33% increase from 310.8 million a year ago, driven by recovering demand in all our businesses compared to a COVID-impacted prior year. Overall, group's margin decreased by two percentage points from last year to 27.3%. EBITDA for the quarter was 44.8 million compared to 40.2 million last year, and net income for the quarter was 23.9 million compared to 22.6 million a year ago. Our gap earnings per share were 96 cents, including special items, the net effect of which decreased our fourth quarter earnings by 34 cents per share. A year ago, we reported gap earnings per share of 91 cents, which included the negative impact from special items of 36 cents per share. Excluding special items in both years, our adjusted EPS for the quarter was $1.30 compared to $1.27 a year ago. For the full year, total revenues of $1.5 billion increased 24% from $1.2 billion in 2020. EBITDA for the year was $178.2 million compared to $108.9 million in 2020 and net income was $93.1 million compared to $28.7 million a year ago. Our full year gap earnings per share were $3.75, including special items, which decreased our full year earnings by $1.05 per share. In 2020, we reported gap earnings of $1.16 per share, which included the negative impact on special items of $2.06 per share. Excluding special items in both years, our adjusted EPS for the year was $4.80, compared to $3.22 a year ago. Turning to slide 8, revenues in performance chemicals for the fourth quarter were $138.4 million, up 21% from last year's $114.6 million. Volumes grew 2%, with a positive price mix of 21%, offsetting an adverse currency impact of 2%. Gross margins of 21.4%, were down 2.4 percentage points compared to 23.8% same quarter in 2020, impacted by the slowdown of our manufacturing facilities over the holiday period and one-off inventory provisions. We expect gross margins to return to 24% in Q1 2022. Operating income increased 16% from last year to 16.9 million. For the full year, Performance Chemicals revenues of £525.3 million, were up 23% from last year's £425.4 million, and operating income increased by 29% to £70.9 million. Moving on to slide 9, revenues in fuel specialties for the fourth quarter were £179.5 million, 30% higher than the £138.3 million reported a year ago. Volumes grew by 10%, and there was a positive price mix effect of 22%, offsetting a negative currency impact of 2%. Fuel Specialty's gross margins for the quarter were below our expected range at 27.4%, compared to 31.4% in the same quarter in 2020, driven by a weaker sales mix and contract formula price increases, which naturally lag cost inflation. We believe gross margins will return to 32% being the lower end of our expected range in Q1 2022 as pricing action takes effect. Operating income increased 1% from last year to 25.7 million. For the full year, fuel specialties revenues were up 21% to 618.3 million and operating income was up 24% to 104.6 million. Moving on to slide 10, Revenues in oilfield services for the quarter were 95.3 million, up 65% from 57.9 million in the fourth quarter last year, as customer activity continues to increase. Gross margins of 35.9% were up 0.8 percentage points on last year's 35.1%. Operating income of 4.3 million was a 4.1 million improvement from a year ago. For the full year, oilfield services revenues of £339.8 million were up 33% from last year's £255 million, an operating income of £10.4 million compared to an operating loss of £9.5 million in 2020. Turning to slide 11, corporate costs for the quarter were £13.2 million compared with £10.7 million a year ago, due mainly to higher compensation accruals. The full year adjusted effective tax rate was 22.7% compared to 23.5% a year ago, due mainly to the geographical distribution of profits. For 2022, we expect the adjusted effective tax rate to be 24%. Moving on to slide 12, this was another excellent quarter for cash, with cash generated from operations of 68.8 million before net capital expenditure of 9.2 million. In the quarter, we paid the previously announced semi-annual dividend of 59 cents per common share. This brought the total dividend for the full year to $1.16 per share, a 12% increase over 2020. For the full year, cash from operations after net capital expenditure was 57 million compared to 116.2 million during 2020. As of December 31st, 2021, NSBIC had net cash of $141.7 million, a substantial improvement compared to net cash of $104.7 million a year ago. And now I'll turn it back over to Patrick for some final comments.