Innospec Inc.

Welcome to Inispec's earnings call. This is David Jones. I'm Inispec's General Counsel and Chief Compliance Officer. The earnings released for the quarter in 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 can 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. We've also included non-GAAP financial measures, a reconciliation to the most directly comparable GAAP financial measure contained in the earnings release. The non-GAAP financial measure should not be considered as a 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 that 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 third quarter 2023 conference call. InnoSpec delivered another set of good results. We are well positioned for continued organic growth through innovation and customer partnerships across all our businesses. Performance Chemicals delivered strong sequential operating income growth along with margins expansion as new personal care contracts commenced and volumes from our existing business improved. While destocking remains a headwind, we believe that it has peaked. We are cautiously optimistic that we will achieve further sequential operating income growth and margin improvement in the coming quarters. In addition, we believe that our continued investments in technologies like our industry-leading 1,4-dioxide-free and sulfate-free chemistries are well aligned with ongoing consumer and regulatory trends. In fuel specialties, operating income was broadly similar to last year as approved margins offset lower sales volumes. These results were below our internal targets, but we expect sequential margin improvement and operating income growth with our chemistries into the winter quarters. Margin improvement remains a key median term focus and opportunity for our fuel specialties business. Oilfield Services had another strong quarter with double digit operating income growth and margin expansion over the prior year. As expected, activity levels moderated on a sequential basis, but remained on track for significant four-year improvement in 2023. In the fourth quarter, we anticipate similar results to this quarter as we continue to have a strong pipeline of opportunities across all our oil field segments and geographies. Now I will turn the call over to Ian Clemmonson, 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 slide seven in the presentation, the company's total revenues for the third quarter were $464.1 million, a 10% decrease from $513 million a year ago. Overall, gross margin decreased slightly by 0.8 percentage points last year to 29.6%. EBITDA for the quarter was 56.5 million compared to 59.2 million last year and net income for the quarter was 39.2 million compared to 38.7 million a year ago. Our gap earnings per share were $1.57 including special items, the net effect of which decreased our third quarter earnings by 2 cents per share. A year ago we reported gap earnings per share of $1.55, which included a negative impact from special items of 19 cents per share. Excluding special items in both years, our adjusted EPS for the quarter was $1.59 compared to $1.74 a year ago. Turning to slide eight, revenues and performance chemicals for the third quarter were 145.2 million, down 9% from last year's £159.7 million, driven by a negative price mix of 19%, being partially offset by higher volumes of 7% and a positive currency impact of 3%. Gross margins of 20.9% decreased by 3.6 percentage points compared to 24.5% in the same quarter in 2022, due to a weaker sales mix and higher cost of inventory. Operating income decreased 33% from last year to £16.9 million. Moving on to slide 9, revenues in fuel specialties for the third quarter were £169.3 million, down 5% from the £178.7 million reported a year ago. Volume reductions of 4% and a negative price mix of 4% were partially offset by a positive currency impact of 3%. Fuel Specialty's gross margins of 31.3% were 1.4 percentage points above the same quarter last year due to a richer sales mix. Operating income of £27.6 million was down slightly from £27.9 million a year ago. Moving on to slide 10, revenues and oilfield services for the quarter were £149.6 million, down 14% from £174.6 million in the third quarter last year. Gross margins of 36% were down 0.4 percentage points from last year's 36.4%. Operating income of 16.4 million was up 15% over the prior year. Turning to slide 11, corporate costs of the quarter were 19 million and within our expected range, compared with 17.4 million a year ago. The effective tax rate for the quarter was 17.5% compared to 20.9% a year ago, due mainly to the favourable geographical split of our profits. Moving on to slide 12, cash generation for the quarter was very strong with an operating cash inflow of £58.1 million before capital expenditures of £16.7 million. As of September 30th, 2023, Innerspec had £207.2 million in cash and cash equivalents and no debt. And now I'll turn it back over to Patrick for some final comments.