Innospec Inc.

Thank you. Welcome to InnoSpec's fourth quarter earnings call. This is David Jones, and I'm InnoSpec's general counsel and chief compliance officer. The earnings released 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 those anticipated results implied by such forward-looking statements. The risks and uncertainties are detailed in Introspect 10-K, 10-Qs, and other correlations with the SEC. Please see the SEC site and Introspect site for these and related documents. In today's presentation, 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 a substitute for 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 such events had on financial results. With me today from InnoSpec are Patrick Williams, President and Chief Executive Officer, and E. 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 fourth quarter and full year 2023 conference call. I am pleased to present another excellent quarter for Innispec. Performance Chemicals and Field Specialties delivered improved margins and double-digit operating income growth over the fourth quarter last year, while Oilfield Services maintained a strong performance. In December, we completed the acquisition of QGP Chemica. This acquisition aligned with our previously stated M&A goals to further strengthen our Performance Chemicals segment and add strategic manufacturing in South America. QGP brings meaningful capabilities that complement many of the end markets we serve, including agriculture, personal care, home care, industrial, construction, and mining. In addition, there is significant manufacturing flexibility for future organic expansion. We expect this transaction to be immediately accretive and added approximately $0.08 of EPS in 2024. In performance chemicals, operating income in the quarter grew by double digits over the prior year and margins improved. Our focus remains on returning operating income and run rates and margins to levels consistent with the full year 2022. While the economic environment remains a challenge, We are making progress against that objective. On a sequential basis, Performance Chemicals delivered its second consecutive quarter of operating income growth and margin improvement. We continue to have strong technology pipeline and organic growth opportunities in all end markets. In fuel specialties, Operating income grew by double digits over the same quarter last year, and gross margins were within our target range of 32 to 35 percent. Excluding Brazil, inventory charges incurred the first half of 2023. Full-year operating income grew by 3 percent, and operating margins improved to 18 percent. We will continue to focus on operating margin improvement. In oilfield services, as expected, activity levels in the quarter moderated compared to last year, but remained strong. For the full year, operating income approximately doubled and operating margins expanded above 11%. While we expect production chemicals activity to remain at moderate levels in the coming quarters, We continue to see opportunities for sales growth and margin improvement in all segments and geographies in 2024. 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. Ian?

Thanks, Patrick. Turning to slide seven of the presentation, the company's total revenues for the fourth quarter were $494.7 million. a 3% decrease from 510.7 million a year ago. Overall gross margin increased by 1.8 percentage points from last year to 31.5%. EBITDA for the quarter was 54 million compared to 54.3 million last year, and net income for the quarter was 37.8 million compared to 25.5 million a year ago. Our gap earnings per share were $1.51, including special items, the net effect of which decreased our fourth quarter earnings by $0.33 per share. A year ago, we reported gap earnings per share of $1.02, which included a negative impact from special items of $0.18 per share. Excluding special items in both years, our adjusted EPS for the quarter was $1.84 compared to $1.20 a year ago. For the full year, total revenues of $1.95 billion decreased 1% from $1.96 billion in 2022. EBITDA for the year was 210.6 million compared to 225.4 million in 2022, and net income was 139.1 million compared to 133 million a year ago. Our full year gap earnings per share were $5.56 including special items, which decreased our full year earnings by 53 cents per share. In 2022, we reported gap earnings of $5.32 per share, which included the negative impact from special items of 72 cents. Excluding special items in both years, our adjusted EPS for the year was $6.09 compared to $6.04 a year ago. Turning to slide eight, revenues in performance chemicals for the fourth quarter were 137.2 million, down 5% from last year's 143.9 million. A negative price mix of 14% was offset by higher volumes of 6% and a positive currency impact of 3%. Gross margins of 21.3% were up 2.9 percentage points from last year. Operating income increased 14% from last year to $18 million. For the full year, revenues of $561.6 million were down 12% from last year's $639.7 million and operating income decreased by 43% to $54.5 million. Moving on to slide nine, revenues in field specialties for the fourth quarter were $182.1 million, 1% lower than the $183.3 million reported a year ago. The volumes were flat and a negative price mix of 4% was offset by a positive currency impact of 3%. Fuel Specialty's gross margins at 32.9% improved by 5.1 percentage points from 27.8% last year. Operating income increased 22% from last year to $32.6 million. For the full year, revenues were down 5% to 695.9 million and operating income declined 10% to 109.7 million. Adjusting to the impact of non-recurring Brazil inventory charges in the first half of 2023, operating income grew by 3% to 125.1 million. Moving on to slide 10, Revenues in oilfield services for the quarter were $175.4 million, down 4% from $183.5 million in the fourth quarter last year. Gross margins of 38% were down 2.4 percentage points on last year's 40.4%, and operating income of $18.3 million was down 11% from $20.5 million a year ago. For the full year, revenues of $691.3 million were up 16% from last year's $593.8 million, and operating income increased 88% to $78.6 million. Turning to slide 11, corporate costs of $24.4 million increased by $7.9 million from last year, driven mainly by additional remediation charges and acquisition-related costs. The full year adjusted effective tax rate was 23% compared to 27% last year. The decrease is primarily a consequence of having operations outside of the U.S. where they are exposed to foreign currency fluctuations, together with the changing profile of our taxable profits by territory year on year. For 2024, we expect the full year effective tax rate to be around 25%. Moving on to slide 12, this was an excellent quarter for cash, with cash generated from operations of 72.4 million, before capital expenditures of 21.1 million. In the quarter, we paid the previously announced semi-annual dividend of 72 cents per common share. This brought the total dividends for the full year to $1.41 per share, a 10% increase over 2022. For the full year, cash from operations after capital expenditures was $130.2 million compared to $39.6 million in 2022. As of December 31st, Interspeak had $203.7 million in cash and cash equivalents and no debt. And now I'll turn it back over to Patrick for some final comments.