Innospec Inc.

Welcome to InSPEC's first quarter earnings call. 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 and other statements about future events. These statements are based on current expectations and assumptions that are subject to risk and uncertainties. They 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 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've 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 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 NSFAC are Patrick Williams, President and Chief Executive Officer, and Ian Clementson, Executive Vice President and Chief Financial Officer.

And with that, turn it over to you, Patrick. Thank you, David, and welcome everyone to NSFAC's first quarter 2024 conference call. I am pleased to report a strong start to 2024. Excellent performance across all our businesses drove double-digit operating income growth and margin improvement. Performance chemicals delivered on our target for sequential improvement has operating income more than doubled over last year. While customers remain disciplined in their order patterns, volumes have improved in our key end markets. Supported by our strong organic growth and technology pipeline, we are cautiously optimistic that we can maintain this improvement in 2024. In addition, our recent QGP acquisition is performing in line with expectations as was immediately accretive. Our focus remains on continued progress returning operating income run rates and margins to levels consistent with full year 2022. Bills Best achieved another steady set of results, Gross and operating margins improved over the prior year and were within our targeted range. Our team has continued to build a strong pipeline of regional product and market growth opportunities in both fuel and non-fuel applications. Oil field services achieved operating income growth and margin expansion over the prior year. Softer production chemicals activity in the corner was more than offset by further improvement and our other segments. In the second quarter, we expect significant headwinds in production chemicals activity. And consequently, operating income will be substantially lower than previous quarters. We are cautiously optimistic that operating income run rates will return to our targeted 15 to 20 million per quarter range in the second half of the year. 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. Ian? Thanks, Patrick, and good morning, everyone.

Turning to slide seven in the presentation, the company's total revenues for the first quarter were $500.2 million, a 2% decrease from $509.6 million a year ago. Overall gross margin increased by 2.1 percentage points from last year to 31.1%. Adjusted EBITDA for the quarter was 64 million compared to 52.7 million last year, and net income for the quarter was 41.4 million compared to 33.2 million a year ago. Our gap earnings per share were $1.65, including special items, the net effect of which decreased our first quarter earnings by 10 cents per share. A year ago, we reported gap earnings per share of $1.33, which included a negative impact from special items of 5 cents per share. Excluding special items in both years, our adjusted EPS for the quarter was $1.75 compared to $1.38 a year ago. Turning to slide 8, revenues in performance chemicals for the first quarter were $160.8 million, up 6% from last year's $151.4 million. Growth attributable to the QGP acquisition of 6% volume growth of 13% and positive currency impact of 1% were offset by an adverse price mix of 14% due mainly to lower raw material costs flowing through to selling prices. Gross margins of 23.4% increased 7.5 percentage points compared to 15.9% in the same quarter in 2023, benefiting from increased sales and production volumes. Operating income of $21.1 million, approximately doubled on last year. Moving on to slide 9, revenues in fuel specialties for the first quarter were $176.9 million, down 7% from the $190.3 million reported a year ago. An adverse price mix of 6% and a 2% reduction in volumes were partially offset by a positive currency impact of 1%. Gross margins of 34.3% were 4.1 percentage points above the same quarter last year. Operating income of 33.4 million was up 3% from 32.4 million a year ago. Adjusting for the 7.4 million inventory write-off in Brazil in the prior year, gross margins were 34.1% and operating income was 39.8%. The decrease in adjusted operating income year on year mostly due to the timing of sales in our Avgas business. Moving on to slide 10, revenues in old field services for the quarter were 162.5 million, down 3% from 167.9 million in the first quarter last year. Gross margins of 35.3% decreased 4.2 percentage points from last year's 39.5% on a weaker sales mix. Operating income of 16.9 million increased 6% on $15.9 million one year ago. In the second quarter, we expect operating income to be significantly lower due to a slowdown in our production chemicals business. We expect operating income will be in the $7 to $10 million range. However, we are cautiously optimistic that operating income run rates will return to our $15 to $20 million per quarter range in the second half of this year. Turning to slide 11, Corporate costs for the quarter were $20.2 million compared with $17.7 million a year ago, due mainly to the growth and timing of IT expenditure and higher performance-related remuneration. The effective tax rate for the quarter was 25.1% compared to 26.2% a year ago. Moving on to slide 12, free cash generation for the quarter was excellent, with an operating cash inflow of 80.2%. As of March 31st, Innespec had $270.1 million in cash and cash equivalents and no debt. And now I'll turn it back over to Patrick for some final comments. Thanks, Ian.