Innospec Inc.

Late yesterday, we reported our financial results for the quarter ended March 31st, 2022. The earnings released in this presentation are posted on the company's site. 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 risk and uncertainties that can 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 InnoSpec site for these and other documents. In our discussions 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 site. The non-GAAP financial measures should not be considered as a substitute for those prepared in accordance with GAAP. They are included as additional clarification items to help investors further understand the company's performance in addition to the impact that these events 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. With that, I'll turn it over to you, Patrick.

Thank you, David, and welcome everyone to Inispec's first quarter 2022 conference call. I am very pleased to report another set of strong results for InnoSpac. Improvements in all businesses drove a 39% increase in revenues and a 57% increase in operating income over last year. Gross margins improved significantly over the sequential quarter and were in line with the prior year and our expectations. Despite continued inflationary pressure, in-market demand remains strong. The benefits of our products are increasingly important in the current high-cost, supply-constrained environment that we expect will persist through the year. We will continue to work closely with our customers to responsibly manage any additional required price actions. Performance Chemicals delivered a 38% increase in operating income over a very strong comparative quarter last year. We are moving quickly to increase capacity in order to keep up with strong demand across all our product lines. The additional capacity can be used for multiple products and is supported by multi-year contracts. Personal care now represents over 75% of Performance Chemical's operating income. Complementing personal care, we have a diverse pipeline of growth opportunities in our other end markets which include home care, mining, agriculture, and construction. Fuel specialties delivered a 49% increase in operating income over the prior year as additional pricing actions took effect and volumes increased. Sequential gross margins recovered significantly. However, we expect gross margins to remain on the lower end of our target range until inflation moderates. As inflation slows, we expect lagging price action to catch up to cost and drive further gross margin improvement. Our outlook is for slow, long-term growth in global consumption of diesel, jet, and marine fuel, both in fossil and renewable forms. We see increasing opportunities for our technologies to lower emissions while enhancing performance in these end markets. In oilfield services, operating income was approximately double that of last year, and sales continued to grow sequentially in the quarter. However, shipment delays led to a sequential quarter decline in operating income. As we move through 2022, we believe markets will further improve as oil prices remain high and activity rates increase. Our expectations for gradual improvement in the profitability of our oilfield business. 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, Ian and I will take your questions.

Thanks, Patrick. Turning to slide seven in the presentation, the company's total revenues for the first quarter were $472.4 million, a 39% increase from $339.6 million a year ago. Overall gross margin decreased slightly by 0.2 percentage points from last year to 29.5%. EBITDA for the quarter was £59 million compared to £41.4 million last year and net income for the quarter was £36.5 million compared to £23.4 million a year ago. Our gap earnings per share were $1.46 including special items the net effect of which decreased our first quarter earnings by seven cents per share. A year ago, we reported gap earnings per share of 94 cents, which included the negative impact from special items of 12 cents per share. Excluding special items in both years, our adjusted EPS for the quarter was $1.53 compared to $1.06 a year ago. Turning to slide eight, Revenues in performance chemicals for the first quarter were 167.1 million, up 33% from last year's 125.9 million. Volumes grew 7% with a positive price mix of 32% offsetting an adverse currency impact of 6%. Gross margins of 24.4% were down slightly by 0.5 percentage points compared to 24.9% in the same quarter in 2021. Operating income increased 38% from last year to 25.3 million. Moving on to slide nine, revenues in fuel specialties for the first quarter were 191.8 million, 38% higher than the 139.3 million reported a year ago. Volumes grew by 23% and there was a positive price makes effect of 21% offsetting a negative currency impact of 6%. Fuel Specialty's gross margins of 31.6% were 0.6 percentage points below the same quarter last year. Operating income increased 49% from last year to 35.5 million. Moving on to slide 10, revenues in oilfield services for the quarter were 113.5 million, up 53% from 74.4 million in the first quarter last year. Gross margins of 33.3% were up 0.4 percentage points on last year's 32.9%. Operating income of 2.5 million was a 1.3 million improvement from 1.2 million a year ago. Turn to slide 11. Corporate costs for the quarter were $19 million compared with $15.1 million a year ago, due mainly to higher personnel-related expenses driven by increased share-based compensation accruals. The effective tax rate for the quarter was 24.3% compared to 24% a year ago. Moving on to slide 12, due to a strong sequential sales growth, cash generation for the quarter was impacted by an increase in working capital. which resulted in an operating cash outflow of 29 million before capital expenditures of 8.4 million. As of March 31st, 2022, Interspec had 105.6 million in cash and cash equivalents and no debt. And now I'll turn it back over to Patrick for some final comments.