INNOSPEC INC

Working Capital

In the first three months of 2025 our working capital increased by $34.3 million, while our adjusted working capital increased by $27.1 million. The difference is primarily due to the exclusion of the increases for cash and cash equivalents, together with the changes for the current portion of income taxes.

The Company believes that adjusted working capital, a non-GAAP financial measure (defined by the Company as trade and other accounts receivable, inventories, prepaid expenses, accounts payable and accrued liabilities rather than total current assets less total current liabilities) provides useful information to investors in evaluating the Company’s underlying performance and identifying operating trends. Management uses this non-GAAP financial measure internally to allocate resources and evaluate the performance of the Company’s operations. Items excluded from working capital in the adjusted working capital calculation are listed in the table below and represent factors which do not fluctuate in line with the day to day working capital needs of the business.

We had a $1.8 million increase in trade and other accounts receivable due to the timing of cash collections and sales in each of our segments. Days’ sales outstanding increased in our Performance Chemicals segment from 61 days to 63 days; increased from 57 days to 60 days in our Fuel Specialties segment; and decreased from 83 days to 75 days in our Oilfield Services segment.

We had a $14.4 million increase in inventories, including a $1.2 million increase in allowances, driven by higher levels of finished goods due to higher production in advance of planned maintenance shutdowns. The Company continues to maintain inventory levels necessary to manage the risk of potential supply chain disruption for certain key raw materials, especially in our Fuel Specialties segment. Days’ sales in inventory in our Performance Chemicals segment increased from 63 days to 67 days; increased from 113 days to 129 days in our Fuel Specialties segment; and decreased from 76 days to 67 days in our Oilfield Services segment.

Prepaid expenses decreased $5.0 million, from $21.0 million to $16.0 million, primarily due to the normal expensing of prepaid invoices.

We had a $15.9 million decrease in accounts payable and accrued liabilities, which was dependent on the timing of payments for each of our reporting segments. Creditor days (including goods received not invoiced) have increased in our Performance Chemicals segment from 46 days to 47 days; increased from 44 days to 54 days in our Fuel Specialties segment; and decreased from 68 days to 59 days in our Oilfield Services segment. The changes for creditor days have been impacted by the timing of sales and cost of sales in the quarter, when using a countback methodology.

Operating Cash Flows

We generated cash from operating activities of $28.3 million in the first three months of 2025 compared to $80.6 million in the first three months of 2024. The decrease in cash generated from operating activities was related to decreased operating income and less favorable working capital cash flows primarily related to the increased inventory levels needed to secure the supply of certain raw materials.

Cash

At March 31, 2025 and December 31, 2024, we had cash and cash equivalents of $299.8 million and $289.2 million, respectively, of which $143.9 million and $133.9 million, respectively, were held by non-U.S. subsidiaries principally in the United Kingdom.

The increase in cash and cash equivalents of $10.6 million for the first three months of 2025 was primarily driven by our positive trading cash flow, being partly offset by our continued investments in capital projects and our repurchases of common stock.

Debt

We continue to have available a $250.0 million multicurrency revolving credit facility.

At March 31, 2025, and December 31, 2024, we had no debt outstanding under the revolving credit facility and no obligations were outstanding under finance leases. See Note 8 of the Notes to the Condensed Consolidated Financial Statements for additional information.