Innospec Inc.

Thank you. Welcome to NSVAC's first quarter earnings call. The earnings release for the quarter and this presentation are posted on the company's website. 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 such forward-looking statements. The risk and uncertainties are detailed in InnoSpec's 10-K, 10-Qs, and other filings with the SEC. Please see the SEC site and InnoSpec site for these and related documents. In our discussions today, we have also included non-GAAP financial measures. A reconciliation to the most directly comparable GAAP financial measure is contained in the earnings release. The non-GAAP financial measure should not be considered as substitute for or superior to those prepared in accordance with GAAP. They are included as additional items to aid investor understanding of the company's performance in addition to the impact these items and events had on financial results. With me today from InnoSpec are Patrick Williams, President and Chief Executive Officer, and Ian Clementson, Executive Vice President and Chief Financial Officer. And with that, I turn it over to you, Patrick.

Thank you, David, and welcome everyone to InnoSpec's first quarter 2023 conference call. I am pleased to present another good set of results for InnoSpec. Our balanced portfolio again delivered strong operating results this quarter. Sales growth and margin improvement in oilfield services partially offset lower activity in performance chemicals and a $7.4 million misappropriation of inventory in fuel specialties. As expected, this was a soft quarter for performance chemicals. Weaker demand and customer destocking efforts continue to negatively impact volumes and margins in the quarter. In the near term, we believe that economic uncertainty will remain a headwind. However, we see no change in our customers' medium to long-term plans to shift to more mild and natural formulations. Our priorities remain focused on developing technology and margin improvement opportunities that will position us well beyond any short-term recessionary concerns. As new personal care contracts begin the third quarter, our target is for sequential operating income growth and margin improvement. In field specialties, gross margins improved sequentially over the prior quarter. The pace of inflation has slowed in some of our markets, and we have continued to take price action where required. This combined with strong sales mix contributes to a sequential margin improvement. As indicated in our earnings release, Field Specialty's results were impacted by $7.4 million misappropriation of inventory in Brazil. Adjusting for this, Field Specialty's operating income grew by 12% to $39.8 million and gross margins expanded to 34.1%. We are aggressively pursuing legal action related to this matter. Despite this isolated event, marginal improvement remains a key focus and opportunity for our global fuels business in 2023. We expect these efforts to support gross margins at the lower end of our target range through the end of the year. Oilfield services had an excellent quarter. Strong orders in production chemicals combined with further sequential growth improvement in our oilfield segments continue to drive significant growth. Operating income was over six times the prior year, and gross margins expanded by 6.2 percentage points. Despite the potential for some moderation of our production chemicals order activity, we feel optimistic that we can deliver full-year operating income growth in 2023. In addition, we continue to pursue margin improvement opportunities across the business. Now I will turn the call over to Ian Clevenson 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. Ian?

Thanks, Patrick. Turning to 5.7 in the presentation, the company's total revenues for the first quarter were $509.6 million, an 8% increase from $472.4 million a year ago. Overall gross margin decreased slightly by 0.5 percentage points from last year to 29%. EBITDA for the quarter was $53.9 million, compared to $59 million last year, and net income for the quarter was $33.2 million compared to $36.5 million a year ago. Our gap earnings per share were $1.33, including special items, the net effect of which decreased our first quarter earnings by $0.05 per share. A year ago, we reported gap earnings per share of $1.46, which included a negative impact from special items of $0.07 per share. Excluding special items in both years, our adjusted EPS for the quarter was $1.38 compared to $1.53 a year ago. Turning to slide 8, revenues in performance chemicals for the first quarter were $151.4 million, down 9% from last year's $167.1 million. Our positive price mix of 6% was offset by a volume decline of 13% and an adverse currency impact of 2%. Gross margins of 15.9% decreased by 8.5 percentage points compared to the same quarter in 2022 due to a weaker sales mix and adverse manufacturing variances resulting from lower production volumes. Operating income decreased 59% from last year to 10.4 million. Moving on to slide nine, Revenues in fuel specialties for the first quarter were $190.3 million, down slightly from the $191.8 million reported a year ago. A positive price mix of 22% partially offset a 20% reduction in volume and an adverse currency impact of 3%. Fuel specialties gross margins of 30.2% were 1.4 percentage points below the same quarter last year. Operating income of 32.4 million was down from 35.5 million a year ago. Adjusting for the 7.4 million misappropriation of inventory in Brazil, adjusted gross margins were 34.1%, benefiting from a richer sales mix and stabilizing raw material prices, allowing pricing to catch up. Adjusted operating income was 39.8 million. Moving on to slide 10, Revenues and appeal services for the quarter were $167.9 million, up 48% from $113.5 million in the first quarter last year. Gross margins of 39.5% were up 6.2 percentage points on last year's 33.3%. Operating income of $15.9 million was a $13.4 million increase over the $2.5 million in the prior year. Turning to slide 11. Corporate costs for the quarter were $17.7 million compared with $19 million a year ago, due mainly to lower share-based compensation accruals. The effective tax rate for the quarter was 26.2% compared to 24.3% a year ago. The increase in the effective tax rate was primarily because a higher proportion of the company's profits are being generated in higher tax jurisdictions. Moving on to slide 12, Free cash generation for the quarter was broadly neutral, with an operating cash inflow of $21.8 million before capital expenditures and internally developed software costs of $22 million. As of March 31st, Interspec had $147.5 million in cash and cash equivalents and no debt. And now I'll turn it back over to Patrick for some final comments.