Innospec Q4 2025 Earnings Report

Innospec EPS Results

• Actual EPS: $1.50
• Consensus EPS: $1.26
• Beat/Miss: Beat by +$0.24
• One Year Ago EPS: $1.41

Innospec Revenue Results

• Actual Revenue: $455.60 million
• Expected Revenue: $460.87 million
• Beat/Miss: Missed by -$5.27 million
• YoY Revenue Growth: -2.40%

Innospec Announcement Details

• Quarter: Q4 2025
• Date: 2/17/2026
• Time: After Market Closes
• Conference Call Date: Wednesday, February 18, 2026
• Conference Call Time: 9:00AM ET

Innospec (NASDAQ:IOSP) Incorporated (NASDAQ: IOSP) is a global specialty chemicals company headquartered in Cleveland, Ohio. The company operates through three principal business segments: Fuel Specialties, Oilfield Services, and Performance Chemicals. In the Fuel Specialties segment, Innospec develops and supplies additives designed to enhance octane levels, improve combustion efficiency, reduce emissions and prevent deposit formation in gasoline and diesel engines. Its Oilfield Services division provides chemical technologies—such as surfactants, corrosion inhibitors and demulsifiers—to support exploration, drilling, production optimization and enhanced oil recovery operations. The Performance Chemicals segment offers a diverse portfolio of ingredients for personal care, household and industrial cleaning, as well as specialty products utilized in food and beverage, pharmaceutical and agricultural applications.

Formed in 2004 through the separation of Octel Chemical Corporation, Innospec has expanded its global footprint through targeted acquisitions and organic growth. The company now serves customers in more than 100 countries, leveraging a network of manufacturing facilities across North America, Europe, Asia-Pacific, the Middle East and Latin America. Complementing its production sites are research and technical service centers that collaborate directly with customers to develop tailored solutions and ensure regulatory compliance.

Innospec’s leadership team, composed of executives with extensive backgrounds in chemical engineering, global operations and sustainability, steers the company’s strategic investments in research and development, digitalization and plant modernization. Emphasizing responsible manufacturing and product stewardship, Innospec holds key industry certifications and engages in partnerships aimed at reducing the environmental impact of its processes and portfolio.

With a broad product offering and deep technical expertise, Innospec is well positioned to address evolving market requirements—such as stricter fuel emissions standards, the digital transformation of oilfield operations and growing demand for high-performance ingredients in consumer markets—reinforcing its reputation as a reliable supplier of specialty chemical solutions worldwide.

Innospec Q4 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: The company posted a stronger GAAP outcome for 2025 with net income of $116.6M (versus $35.6M a year ago) and fourth-quarter Adjusted EPS of $1.50, showing underlying profitability recovery despite lower full-year adjusted EBITDA.
• Positive Sentiment: Fuel Specialties continued to outperform, with Q4 revenue up 1%, operating income up 7% year‑over‑year and full‑year operating income rising 12% to $144.8M, driven by a stronger sales mix and disciplined pricing.
• Negative Sentiment: Performance Chemicals saw volume declines (Q4 volumes down 7%) and margin pressure (Q4 gross margin 18.1% vs 22.7% prior year); management is implementing pricing, manufacturing and product-mix actions but Q1 2026 will be materially hit by the late‑January winter storm and some lost production cannot be fully recovered.
• Neutral Sentiment: Oilfield Services revenue fell (Q4 down 12%, full year down 19%) though margins improved and management expects a recovery from Middle East demand and a DRA capacity ramp with potential mid-single-digit revenue growth (management cited ~5–7% upside) over 2026.
• Positive Sentiment: Financial flexibility is strong with $292.5M cash, no debt, a 10% higher full‑year dividend ($1.71/sh) and $22.2M of share buybacks in 2025, supporting shareholder returns and M&A/organic investment optionality.

Presentation

[Operator]

Good day, and thank you for standing by. Welcome to Innospec's fourth quarter 2025 earnings release conference call and webcast. Speakers on the call today are David Jones, General Counsel and Chief Compliance Officer, Patrick Williams, President and CEO, and Ian Cleminson, Executive Vice President and Chief Financial Officer. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. To ask a question during the session, please press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please note that today's conference is being recorded. I would now like to turn the conference over to your first speaker, Mr. David Jones, General Counsel and Chief Compliance Officer. Please go ahead.

[David Jones, General Counsel and Chief Compliance Officer at Innospec Inc]

Thank you. Welcome to Innospec's fourth quarter and full-year earnings call. This is David Jones. I'm Innospec's General Counsel and Chief Compliance Officer. The earnings release in this presentation are posted on our company's website. During this call, we will make forward-looking statements which are predictions and projections about future events. These statements are based on current expectations and assumptions that are subject to risk and uncertainty that can cause actual results to differ materially from the anticipated results implied by such forward-looking statements. The risks and uncertainties are detailed in Innospec's 10-K, 10-Qs, and other filings with the SEC. Please see the SEC site and Innospec's 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.

[David Jones, General Counsel and Chief Compliance Officer at Innospec Inc]

The non-GAAP financial measures 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 and adjust 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 Cleminson, Executive Vice President and Chief Financial Officer. With that, I turn it over to you, Patrick.

[Patrick Williams, President and CEO at Innospec Inc]

Thank you, David. Welcome, everyone, to Innospec's fourth quarter 2025 conference call. This was a good quarter for Innospec, with continued strong operating income growth and margin expansion in Fuel Specialties, combined with improving results in Performance Chemicals and Oilfield Services. In Performance Chemicals, margin improvement actions and lower overheads drove strong sequential operating income growth. We continue to execute on price-cost management, manufacturing efficiencies, and new product commercialization actions over the short to medium term. New products include the continued expansion of our industry-leading sulfate-free and 1,4-dioxane-free personal and home care portfolio. Additionally, we are accelerating our growth in new technologies for agriculture, mining, construction, and other diversified industrial markets. We expect these combined efforts to drive further growth in 2026. In Fuel Specialties, sales growth and margin expansion drove a 7% increase in operating income over the prior year.

[Patrick Williams, President and CEO at Innospec Inc]

As expected, the business has continued to deliver consistently strong results and has a diverse pipeline of Fuel and non-Fuel growth opportunities across all regions. Oilfield Services operating income and margins improved on a richer sales mix and lower overheads. Sales were down on reduced activity in U.S. completions and the Middle East. We remain focused on delivering operating income growth in 2026 as Middle East activity returns and our recent DRA expansion takes effect. In parallel, we will continue to focus on margin improvement. Our outlook does not assume any resumption of Mexico sales in 2026. Regarding our outlook for the first quarter of 2026, results in Performance Chemicals and Oilfield Services will be negatively impacted by the historic winter storm which occurred in late January. Despite this, we are optimistic that we will drive full year improvements in both businesses in 2026.

[Patrick Williams, President and CEO at Innospec Inc]

Now, I will turn the call over to Ian Cleminson, 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?

[Ian Cleminson, EVP and CFO at Innospec Inc]

Thanks, Patrick. Turning to slide seven in the presentation, the company's total revenues for the fourth quarter were $455.6 million, a decrease of 2% from the $466.8 million reported a year ago. Overall, gross margin decreased by 1.2 percentage points from last year to 28%. Adjusted EBITDA for the quarter was $55.7 million, compared to $56.6 million last year, and net income for the quarter was $47.4 million, compared to a net loss of $70.4 million recorded last year, which was driven by the buyouts of the U.K. pension scheme. Our GAAP earnings per share were $1.91, including special items, the net effect of which increased our fourth quarter earnings by $0.41 per share.

[Ian Cleminson, EVP and CFO at Innospec Inc]

A year ago, we reported a GAAP loss per share of $2.80, which included a negative impact from special items of $4.20. Excluding special items in both years, our Adjusted EPS for the quarter was $1.50, compared to $1.41 a year ago. For the full year, total revenues of $1.8 billion decreased 4% from 2024. Adjusted EBITDA for the year was $203 million, compared to $225.2 million in 2024, and net income for 2025 was $116.6 million, compared to the prior year net income of $35.6 million. Our full-year GAAP earnings per share were $4.67, including special items, which decreased our full-year earnings by $0.60 per share.

[Ian Cleminson, EVP and CFO at Innospec Inc]

In 2024, we reported GAAP earnings of $1.42 per share, which included the negative impact from special items of $4.50. Excluding special items in both years, our Adjusted EPS for 2025 was $5.27, compared to $5.92 a year ago. Turning to slide eight. Revenues in Performance Chemicals of $168.4 million were flat with the fourth quarter of last year. Volumes reduced by 7%, offset by a positive price mix of 3% and a favorable currency impact of 4%. Gross margins of 18.1% decreased 4.6 percentage points compared to 22.7% in the same quarter in 2024, due to higher costs and a weaker product mix.

[Ian Cleminson, EVP and CFO at Innospec Inc]

Operating income of $17.7 million decreased 14% from $20.6 million last year. As expected, our fourth quarter results improved sequentially over the third quarter as improvement actions took effect. Fourth quarter gross margins of 18.1% improved three percentage points compared to the third quarter, and operating income of $17.7 million almost doubled from the $9.2 million recorded in the third quarter last year. For the full year, revenues of $681.4 million were up 4% from last year's $653.7 million, and operating income decreased by 26% to $61 million. Moving on to slide nine. Revenues in Fuel Specialties for the fourth quarter were $194.1 million, up 1% from the $191.8 million reported a year ago.

[Ian Cleminson, EVP and CFO at Innospec Inc]

Volumes were up 8%, with an adverse price mix of 10% and a positive currency impact of 3%. Fuel Specialties gross margins of 34.7% were 0.3 percentage points above the same quarter last year, benefiting from a stronger sales mix and disciplined pricing. Operating income of $37.2 million was up 7% from $34.9 million a year ago. For the full year, revenues were unchanged at $701.5 million, and operating income increased 12% to $144.8 million. Moving on to slide 10. Revenues in Oilfield Services for the quarter were $93.1 million, down 12% from $105.8 million in the fourth quarter last year.

[Ian Cleminson, EVP and CFO at Innospec Inc]

Gross margins of 31.9% increased 1.8 percentage points from last year's 30.1%. Operating income of $8.2 million increased 9% from $7.5 million one year ago. For the full year, revenues of $395.1 million were down 19% from last year's $490.6 million, and operating income decreased 40% to $23.3 million. Turning to slide 11. Corporate costs for the quarter of $16 million decreased by $4.6 million from a year ago, driven by lower personnel-related costs. The full-year adjusted effective tax rate for the quarter was 24.1%, compared to 26.4% in the same period last year, due to the geographical mix of taxable profits.

[Ian Cleminson, EVP and CFO at Innospec Inc]

For 2026, we expect the full-year effective tax rate to be around 26%. Moving on to slide 12. Cash flow from operating activities was $61.4 million, before capital expenditures of $20.5 million. In the quarter, we paid the previously announced semiannual dividend of $0.87 per share. This brought the total dividend for the full year to $1.71 per share, a 10% increase over 2024. There were no share repurchases in the quarter, and for the full year, we have repurchased a total of 247,000 shares at a cost of $22.2 million. For the full year, cash from operations after capital expenditures was $63.9 million, compared to $122.7 million in 2024.

[Ian Cleminson, EVP and CFO at Innospec Inc]

As of December 31, Innospec had $292.5 million in cash and cash equivalents and no debt. Now I'll turn it back over to Patrick for some final comments. Patrick?

[Patrick Williams, President and CEO at Innospec Inc]

Thanks, Ian. Entering 2026, our focus is unchanged. We will continue to deliver exceptional innovation, value, and service to our global customers across all our end markets. We will also continue to prioritize margin and operating income improvements in Performance Chemicals and Oilfield Services. In addition, we expect Fuel Specialties to continue to look to deliver consistent results. Operating cash generation was excellent in the quarter, and our new cash position closed at over $292 million after making our semi-annual dividend payment of $21.6 million. We continue to have significant balance sheet flexibility for dividend growth, buybacks, organic investment, and M&A. Now I will turn the call over to the operator, and Ian and I will take your questions.

[Operator]

Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Once again, please press star one one and wait for your name to be announced. To withdraw your question, please press star one one again. We are now going to proceed with our first question. The questions come from the line of Jonathan Tanwanteng from CJS Securities. Please ask your question.

[Jonathan Tanwanteng, Managing Director at CJS Securities]

Hi, guys. Good morning, and thank you for taking my questions, and really nice job on the mix and margin there. I was wondering if you'd go a little bit into the oil field business, and how you see the mix evolving there, especially in the coming quarters, as you know, you continue to diversify that business.

[Patrick Williams, President and CEO at Innospec Inc]

Yeah, John, let me start with that one. We're really pleased with the progress that we've seen in the oil field business in Q4. We were with the team yesterday, and I've got to say, we're really encouraged by the activity levels that are going on, the creativity, the focus on technology. As we head into 2026, we're gonna take a little tap on the brakes because of the weather impacts in Q1. But beyond that, our DRA expansion is coming online, and we're starting to ramp up volumes there. Spreading the customer base and improving the profitability and the gross margins in that business is critical for us. Also, the Middle East remains a real hot spot for us.

[Patrick Williams, President and CEO at Innospec Inc]

We can see lots of opportunities there, advancing technologies, and a real nice opportunity for us to grow the business above average rates in the region. Outside of that, we've had a tough time in the U.S., but we've got lots of opportunities with new technologies and new ways of going to market starting to happen. So when we wrap all that together, we do feel confident that we'll be able to outpace what we did in 2025. The mix will be a little bit more towards the Middle East and DRA, and we feel that we can improve the profitability of those other core businesses in production and Stim as well.

[Jonathan Tanwanteng, Managing Director at CJS Securities]

Okay, great. You mentioned the impact of weather a couple times. I would—I guess that, you know, less people driving, maybe there's some snarls with production, but I would also expect probably, maybe an offsetting impact from cold flow. Could you just quantify what you think the impact is gonna be this quarter from cold weather and winter storms?

[Patrick Williams, President and CEO at Innospec Inc]

Yeah, I'll let Ian take the financial portion of the negative effects. But, you know, in oilfield, it was production activity. You know, people couldn't get to the well sites, couldn't deliver product. There was a multitude of issues. If you look at North Carolina, I mean, it was an extreme snow and ice event where our plants are located. Probably the biggest ice event in a century in that area. So we did have a lot of plant downtime, couldn't get raw materials in. And then, obviously, John, when you start the plant back up, you're gonna have a lot of issues, and that's what we've done.

[Patrick Williams, President and CEO at Innospec Inc]

In conjunction with that, though, being that we've had these issues with cold weather and hit us, we've also decided at the same time to really work on the plant's inefficiencies, to make the plant more efficient, get better yields, better product quality, work on some of the manufacturing processes that we probably would have had done at some point in time. So we're gonna go ahead and do it all since we had the plant issue and had the cold weather issue, just knock it all out at once. So, you know, I think it's. I wouldn't say it's a blessing in disguise by any means, because I think we would've had a really strong first quarter, so we would have backed up the fourth quarter with another strong quarter. But it is something that has to be done.

[Patrick Williams, President and CEO at Innospec Inc]

It's an event that was unexpected. We'll get it fixed, and it won't happen again, because it will, we will prepare for it. But we'll also make that plant in much better condition to move forward for growth.

[Ian Cleminson, EVP and CFO at Innospec Inc]

Yeah, just to add to that, John, when you roll that into our expectations for Q1, within the oil field business, we're probably gonna be posting operating income around $5 million-$6 million. That's probably a couple of million below where we would have liked to have been, and that's for the reasons Patrick explained. In Performance Chemicals, it's a bigger impact because we've obviously got a quite large manufacturing footprint down there, which was closed for an extended period, and there's been some damage to the site as well, so it's gonna take a little time for us to build that back up. So we're expecting the Performance Chemicals Q1 operating income to be close to $10 million-$11 million.

[Ian Cleminson, EVP and CFO at Innospec Inc]

Again, that's probably $5 million-$6 million below where we were—would have liked to have been, so it's, it's quite a significant impact from the weather in Q1, both of those businesses.

[Jonathan Tanwanteng, Managing Director at CJS Securities]

Got it. And just to follow up on that, do you expect to make that up in the following quarters for the whole year, or is that something that gets lost, as you look at the whole of 2026?

[Ian Cleminson, EVP and CFO at Innospec Inc]

It's slightly different in both businesses. The oil field business potentially could make up some of that, John, but it's gonna be a tough ask for them because the, you know, their customers are closed down, and if they come back and come back strong, we may make up some of it. Performance Chemicals, because it's production-based, we've lost that production time. We will not be able to make that back up, and it's gonna take us a quarter or two for the reasons Patrick was explaining, some of the additional efficiencies that we're gonna be looking for on that site. We won't be able to make up that volume of production, and those costs will be lost to us.

[Ian Cleminson, EVP and CFO at Innospec Inc]

What we do expect is as we exit Q2, is that the Q3 numbers will be showing much stronger benefits of the changes that we're making and a much stronger benefit from the direction and the discipline the business is driving into customer contracts, pricing, and general efficiencies.

[Patrick Williams, President and CEO at Innospec Inc]

Yeah, it's just unfortunate timing, John. It's, you know, our expectations were rolling into a nice Q4 to roll into a really strong 2026, and we're just gonna take advantage of it now that it did happen. We're gonna make it even better coming out of Q2.

[Jonathan Tanwanteng, Managing Director at CJS Securities]

Got it. Thank you. I'll jump back in queue.

[Ian Cleminson, EVP and CFO at Innospec Inc]

Thanks, John.

[Operator]

We are now going to proceed with our next question. The next question comes from the line of Mike Harrison from Seaport Research Partners. Please ask your question.

[Mike Harrison, Managing Director and Senior Chemicals Analyst at Seaport Research Partners]

Hi, good morning.

[Ian Cleminson, EVP and CFO at Innospec Inc]

Morning, Mike.

[Patrick Williams, President and CEO at Innospec Inc]

Good morning, Mike.

[Mike Harrison, Managing Director and Senior Chemicals Analyst at Seaport Research Partners]

Just a couple questions on the Performance Chemicals business. Can you talk a little bit about what drove the volume decline that you saw in Q4? I assume that was not weather related. Was that customers taking inventory down or what else is going on there? And then, I guess, just in terms of the price. Specific to the pricing actions you need to take in order to cover the higher cost of oleochemicals and maybe other raw material inputs, are those prices in place and where you need them to be? Or are there gonna be some additional actions that may contribute to better, kinda, price versus raw material cost margin contribution as we get into 2026?

[Patrick Williams, President and CEO at Innospec Inc]

Yeah, we'll hit your questions by both of us. I think to start with Q4 volumes, Mike, a lot of it was just uncertainty in the marketplace. You know, I think tariffs in general have put a down tone on any kind of inventory build. I think that was part of it. Typically, Q4 is a little slower in the business by nature, you know? But I think overall, if you look at the quality of business that we have moving into the year, we felt very strong. I think for us, there is. We've done a lot of price action around margins and around raw materials. A lot of our national contracts, international contracts, and multinationals, it has price mechanisms built into the contract.

[Patrick Williams, President and CEO at Innospec Inc]

So we had to go back and just make sure we're following those guidelines that have set forth in the contracts. In other areas where we saw price spikes around oleos, et cetera, we have finally gotten out in front of those, and that therefore, you saw the margin increase. I do think over time, probably more towards the middle of this year, you'll start to see us even get ahead of that. But, you know, because of the weather event that we had, I think first quarter is gonna affect us a little bit and a little bit into Q2. But overall, you know, I think we're heading in the right direction with margins. The volume is there, the sales are there, the revenue is there, the business is there.

[Patrick Williams, President and CEO at Innospec Inc]

We're increasing our output on new products in the portfolio, which is gonna build upon throughout the year as well, and those are higher margin products, too. So if you look at the overall business, I would say it's not a negative, it's a positive. I think it's the weather event that's going to affect us upfront, but we're starting to really manage these processes the way they should have been. But additionally, that the pipeline is full of new products, which will benefit us moving forward. I think that probably covered all of it. Yeah.

[Mike Harrison, Managing Director and Senior Chemicals Analyst at Seaport Research Partners]

All right, thanks for that. Then, a couple on oil fields. I'm just curious, you know, this, this was a year, 2025 was a year when you guys again saw some further declines in revenue. You know, obviously, you didn't see any recovery from the Latin American customer, but I'm just curious, as you're starting to think about what top-line growth could look like next year, it sounds like you're really encouraged by what you're seeing in the Middle East, some contribution from DRAs. You know, is it your view that as we think about the entire year, we could see some maybe mid- to high-single-digit type of top-line growth?

[Mike Harrison, Managing Director and Senior Chemicals Analyst at Seaport Research Partners]

And then the second piece of that question is, you know, as we're talking about Latin America, is it possible that we see any business opportunities start to show up in Venezuela?

[Patrick Williams, President and CEO at Innospec Inc]

Yes, so good questions. I do think you're going to start seeing that probably between 5%-7% revenue growth in that, in oilfield. You know, oilfield needs consolidation in the marketplace, at least in North America. And there's also a need for technology. And as Ian alluded to earlier in the conversation, there's been a big emphasis and a big push to bring new technologies to the marketplace that really this market hasn't seen in quite some time. And I do think that we're on the edge of that happening. As you said, I think Middle East will start to really pull its weight in Q2, Q3, Q4, and it's not just with Saudi Aramco, it's in the general market area, the regional area of the Middle East.

[Patrick Williams, President and CEO at Innospec Inc]

In regards to Latin America, you know, I do think we're gonna start seeing sales in Mexico again. I think it's a function of how we're going to get paid. You know, we're not gonna sell products for free, but I do think that they. Well, we do know they need the technology. We know our technology works. It's proven. So I do think Mexico, at some point in time, we will see something, not to the magnitude we've had in the past. And in regards to Venezuela, it's a very heavy crude. We know that crude up there very well. You know, Chevron's operated in that region for quite some time.

[Patrick Williams, President and CEO at Innospec Inc]

As soon as you start getting some stability, political stability in that area, and you start seeing international investment, primarily from the U.S., that is definitely an open market for oilfield, where I think we can make a big difference. There's a lot of positives there. We've got to extract those, and the market's got to come our way, and I think it's up for our guys to really push the envelope and make it happen.

[Mike Harrison, Managing Director and Senior Chemicals Analyst at Seaport Research Partners]

All right. One of the special items that you guys called out in the quarter referred to the tax impact from an internal reorganization. I was wondering if you could explain what that reorganization entails and what impacts that could have on the P&L going forward.

[Ian Cleminson, EVP and CFO at Innospec Inc]

Yeah, I'll take that one, Mike. It was a reorganization we did over a year ago, at the top end of the organization, just to simplify the structure, and allow us to move cash overseas into the US in a much more tax-efficient way. There was a third tax impact to that reorganization, that has, I think, it's a 15-year benefit to tax. It'll be about $600,000 a year for the next 15 years in cash taxes, Mike. So it's all below operating income. There's no business benefit, but it does simplify our operations, like the way we are able to move cash around, the way we are able to file tax returns in the US, and it gives us a little bit of benefit to the tax line as well.

[Mike Harrison, Managing Director and Senior Chemicals Analyst at Seaport Research Partners]

All right, last one for me is just on corporate costs. They were quite a bit lower in Q4. I was just curious, was that some incentive comp that was lower, or what drove that? And if you can give any kind of an outlook or guidance for corporate costs in the first quarter and for 2026, that would be very helpful. Thank you.

[Ian Cleminson, EVP and CFO at Innospec Inc]

Yeah, you're spot on, Mike. It was personnel-related costs. As we look forward into 2026, that sort of $20 million per quarter, $18 million for the full year, that's the, that's the level that we're expecting for 2026.

[Mike Harrison, Managing Director and Senior Chemicals Analyst at Seaport Research Partners]

Thanks so much.

[Ian Cleminson, EVP and CFO at Innospec Inc]

Thanks, Mike.

[Mike Harrison, Managing Director and Senior Chemicals Analyst at Seaport Research Partners]

Thank you.

[Operator]

We are now going to proceed with our next question, and the question come from the line of David Silver from Freedom Capital Markets. Please ask your question.

[David Silver, Managing Director and Senior Analyst at Freedom Capital Markets]

Yeah. Hi, good morning.

[Ian Cleminson, EVP and CFO at Innospec Inc]

Yeah, hi.

[David Silver, Managing Director and Senior Analyst at Freedom Capital Markets]

Thank you.

[Patrick Williams, President and CEO at Innospec Inc]

Morning, David.

[Ian Cleminson, EVP and CFO at Innospec Inc]

Morning, David.

[David Silver, Managing Director and Senior Analyst at Freedom Capital Markets]

Morning. So, I would like to start with maybe just a question or two on the Fuel Specialties. And firstly, on the quarter, you know, if I'm not mistaken, my model goes back about, I don't know, 10 years or so. I believe the revenues in the quarter were your highest ever, and your operating profit, $37 million, was, I think, your second highest ever. So, you know, obviously, the business is functioning pretty well, and I know that, you know, your view is that it's a very stable business, low single digit grower from year to year. But it does seem like, you know, you're shaking things up a little bit or operating the business a little bit differently. So, you know, what maybe led to the record revenue, near record operating profit this quarter?

[David Silver, Managing Director and Senior Analyst at Freedom Capital Markets]

In other words, did you have some incremental success with new products or just a richer mix overall? But, you know, just maybe some thoughts about that and then why that strength, you know, on an annual basis, let's say, couldn't continue on into 2026.

[Patrick Williams, President and CEO at Innospec Inc]

Yeah, David, they've really done a really good job in that business. I think you're spot on. It was a record revenue. It was very close to a record operating. A lot of it was, it was product mix, but a lot of it is outside of even Fuels. I think they've done a really good job expanding their portfolio, getting out there with new technologies, making sure that we've got the right costing in place, making sure that we're staying up on innovation. It was a good overall effort globally by all parts. It is a business that's typically a 2%-3% growth business, and occasionally we see those spikes, like when you went to ULSD, we had the big spike. You're starting to see some regulatory movement.

[Patrick Williams, President and CEO at Innospec Inc]

You're starting to see GDI take effect in some aftermarkets in Europe, with our marine business. All the businesses that we've been talking about for quite some time are starting to come along and as expected. And, you know, the group who manages that division have really stepped it up, and you got to give them credit. I think that it's always been our stable business. It's a light on CapEx. It's got great free cash flow, and we'll continue to push it there. I think it's also an area, you know, just to expand a little bit off your question, it's an area we'd love to acquire into, if we found something that was worth purchasing. The team deserves it. They've built it. They're ready for it.

[Patrick Williams, President and CEO at Innospec Inc]

We've just got to find the right thing to buy. Overall, great job. I do expect them to have another strong, consistent year.

[David Silver, Managing Director and Senior Analyst at Freedom Capital Markets]

You poached, with that M&A comment, you poached one of my questions for the follow-up discussion. Next question, I wanted to maybe switch over to Performance Chemicals and maybe, I don't know, come at it just a little bit different. But, you know, revenue-wise, I mean, I think it was a record or near record year, and, you know, there's a number of issues, involving kind of the lower operating profit year-over-year. But in general, you know, there's a lot of chatter about, you know, the strained kind of middle income or consumer and things like that. And I did note, I believe it's like two or three quarters in a row where you cited kind of a weaker mix within Performance Chemicals.

[David Silver, Managing Director and Senior Analyst at Freedom Capital Markets]

I'm just wondering, is trading down kind of an issue that you're seeing, you know? Are your customers kind of indicating that that's, you know, a bigger part of their business with you? And then, more to the point, I mean, I guess, this business has been a mid- to high-single-digit, you know, grower over longer term. Is that still kind of your thinking for next year, or whether it's due to mix or other factors, you know, that maybe the growth potential might be a little slower over the medium term?

[Patrick Williams, President and CEO at Innospec Inc]

Yeah, I mean, consumer trends right now, they are trading down to a lower price, commoditized type products. So we have definitely seen that. Now, that moves in, that ebbs and flows. You know, we know once you take up market uncertainty out and people see more spending capabilities in their pockets, they'll go out and start spending more on high-end products. So we have seen that push down to more commoditized products. But again, David, you'll see that. That's very typical in markets like this, where there's uncertainty or coming out of inflationary markets. You know, for us, it's the continuance on innovation, right?

[Patrick Williams, President and CEO at Innospec Inc]

To get better manufacturing processes and efficiencies so that we can, we can better prepare for that commoditized market, where we're making better margins than we have to date, is something we're doing at some of our plants right now, which will benefit us towards the latter part of the year. But, you know, yeah, consumer trends have sent us that way. You know, the way I look at growth in that area is I think you're probably looking at it a little bit flat this year. And then I think you'll start seeing it spike back up probably towards the latter part of this year. But I would probably hold it flat.

[David Silver, Managing Director and Senior Analyst at Freedom Capital Markets]

Okay. Last one for me. I did want to go to your concluding remarks in your earnings release. And in particular, you know, you cited in Performance Chemicals in the oil field, you said new technology commercializations and other opportunities for 2026. In particular, on the new technology commercialization, I mean, you've focused on kind of some of your functional, you know, surfactant products for mining and agrochemical and whatnot. But I was just wondering, is that, are those the recent commercializations? Are those the products you're talking about? Maybe, you know, expanding the rollout there, or... You know, you haven't been shy about rolling out new products over a longer period of time. Is there another, you know, new crop of product introductions we should be thinking about?

[David Silver, Managing Director and Senior Analyst at Freedom Capital Markets]

You know, qualitatively, maybe could you point us to where those might be?

[Patrick Williams, President and CEO at Innospec Inc]

Yeah. These, you know, these are a series of products, and let's talk Performance Chemicals, specifically. They're a series of products that go in multiple applications. You know, they're not mass markets, where you're going into a multi-billion dollar industry and capturing $200 million-$300 million of business. They're more specialized. So we will typically launch two, three, or four of these throughout the year, which is just a nice build on upon our business, and which over time will start increasing that margin. And as I said earlier, I think that you'll start seeing the impact of those probably more in the Q3, Q4 range.

[Patrick Williams, President and CEO at Innospec Inc]

So there is a nice pipeline of portfolio of products that will be hitting the market throughout the year, but I think it's a buildup over time where you start seeing the big changes in margin profile and in revenue. It's the same in oil field. You know, we've got a lot of creativity in the group. They're finally starting to come together and bring new ideas and creativity to market. Sometimes it's not necessarily just products; it could be market approach. So there's a lot of differentiality going. We have to be different than other people, whether it's technology or whether it's service or whether it's any kind of innovation that's attached to both, and that's really where we're pushing our group.

[Patrick Williams, President and CEO at Innospec Inc]

And that's why we feel pretty confident that we'll overcome the barriers that we have in Q1 and Q2, manufacturing barriers. We'll overcome those in Q3, Q4, by all the things that we have going on internally, with the organization.

[David Silver, Managing Director and Senior Analyst at Freedom Capital Markets]

Okay, great. Thank you very much.

[Patrick Williams, President and CEO at Innospec Inc]

Thank you.

[Operator]

We have no further questions at this time, so I'll hand back to the President and CEO, Patrick Williams, for closing remarks.

[Patrick Williams, President and CEO at Innospec Inc]

Thank you for joining us today, and thanks to all our shareholders, customers, and Innospec employees for your interest and support. If you have any further questions about Innospec or matters discussed today, please give us a call. We look forward to meeting up with you again to discuss our first quarter 2026 results in May. Have a great day.

[Operator]

This concludes today's conference call. Thank you all for participating. You may now disconnect your lines. Thank you, and have a great day.

Participants

Executives

• David Jones, General Counsel and Chief Compliance Officer
• Ian Cleminson, EVP and CFO
• Patrick Williams, President and CEO

Analysts

• David Silver, Managing Director and Senior Analyst at Freedom Capital Markets
• Jonathan Tanwanteng, Managing Director at CJS Securities
• Mike Harrison, Managing Director and Senior Chemicals Analyst at Seaport Research Partners