INNOSPEC INC.
For the period ended Jun 30, 2025. Filed Aug 6, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2025 · Filed Aug 6, 2025
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Item 2. Results of Operations
RESULTS OF OPERATIONS
The Company reports its financial performance based on three reportable segments, which are Performance Chemicals, Fuel Specialties and Oilfield Services.
The following table provides sales, gross profit and operating income by reporting segment:
| Three Months EndedJune 30, | Six Months EndedJune 30, | |||
|---|---|---|---|---|
| (in millions) | 2025 | 2024 | 2025 | 2024 |
| Net sales: | ||||
| Performance Chemicals | $173.8 | $160.1 | $342.2 | $320.9 |
| Fuel Specialties | 165.1 | 166.6 | 335.4 | 343.5 |
| Oilfield Services | 100.8 | 108.3 | 202.9 | 270.8 |
| $439.7 | $435.0 | $880.5 | $935.2 | |
| Gross profit: | ||||
| Performance Chemicals | $30.5 | $36.2 | $65.8 | $73.9 |
| Fuel Specialties | 62.9 | 57.6 | 123.7 | 118.2 |
| Oilfield Services | 29.8 | 33.1 | 58.8 | 90.5 |
| $123.2 | $126.9 | $248.3 | $282.6 | |
| Operating income/(loss): | ||||
| Performance Chemicals | $14.3 | $21.2 | $34.1 | $42.3 |
| Fuel Specialties | 35.4 | 30.4 | 72.3 | 63.8 |
| Oilfield Services | 6.2 | 7.3 | 10.3 | 24.2 |
| Corporate costs | (20.9) | (17.6) | (38.6) | (37.8) |
| Adjustment to fair value of contingent consideration | (0.8) | (0.6) | (1.5) | (1.4) |
| Profit on disposal of property, plant and equipment | 0.1 | — | 0.2 | 0.1 |
| Total operating income | $34.3 | $40.7 | $76.8 | $91.2 |
Three Months Ended June 30, 2025
The following table shows the changes in sales, gross profit and operating expenses by reporting segment for the three months ended June 30, 2025, and the three months ended June 30, 2024:
| Three Months EndedJune 30, | ||||
|---|---|---|---|---|
| (in millions, except ratios) · 2025 · 2024 · Change | ||||
| Net sales: | ||||
| Performance Chemicals | $173.8 | $160.1 | $13.7 | +9% |
| Fuel Specialties | 165.1 | 166.6 | (1.5) | -1% |
| Oilfield Services | 100.8 | 108.3 | (7.5) | -7% |
| $439.7 | $435.0 | $4.7 | +1% | |
| Gross profit: | ||||
| Performance Chemicals | $30.5 | $36.2 | $(5.7) | -16% |
| Fuel Specialties | 62.9 | 57.6 | 5.3 | +9% |
| Oilfield Services | 29.8 | 33.1 | (3.3) | -10% |
| $123.2 | $126.9 | $(3.7) | -3% | |
| Gross margin (%): | ||||
| Performance Chemicals | 17.5 | 22.6 | -5.1 | |
| Fuel Specialties | 38.1 | 34.6 | +3.5 | |
| Oilfield Services | 29.6 | 30.6 | -1.0 | |
| Aggregate | 28.0 | 29.2 | -1.2 | |
| Operating expenses: | ||||
| Performance Chemicals | $(16.2) | $(15.0) | $(1.2) | +8% |
| Fuel Specialties | (27.5) | (27.2) | (0.3) | +1% |
| Oilfield Services | (23.6) | (25.8) | 2.2 | -9% |
| Corporate costs | (20.9) | (17.6) | (3.3) | +19% |
| Adjustment to fair value of contingent consideration | (0.8) | (0.6) | (0.2) | +33% |
| Profit on disposal of property, plant and equipment | 0.1 | — | 0.1 | n/a |
| $(88.9) | $(86.2) | $(2.7) | +3% | |
Performance Chemicals
| Change (%) | Americas | EMEA | ASPAC | Total |
|---|---|---|---|---|
| Volume | +11 | -4 | +13 | +4 |
| Price and product mix | -7 | +11 | -1 | +2 |
| Exchange rates | — | +5 | +2 | +3 |
| +4 | +12 | +14 | +9 |
Higher sales volumes for the Americas were driven by increased demand for our personal care products, being partly offset by an adverse price and product mix due to pricing erosion and higher demand for our lower priced products. The volume decline in EMEA was offset by a favorable price and product mix, primarily driven by higher demand for higher priced personal care products. ASPAC volumes were higher driven by increased demand for our personal care products, partly offset by an adverse price and product mix due to higher demand for lower priced products. EMEA and ASPAC benefited from favorable foreign currency exchange rate movements.
Gross margin: the year over year decrease of 5.1 percentage points was primarily due to pricing erosion and higher demand for our lower priced products.
Operating expenses: increase by $1.2 million year over year due to higher selling expenses including higher provisions for doubtful debts together with higher research and development expenses, being partly offset by lower provisions for performance-related remuneration accruals.
Fuel Specialties
| Change (%) | Americas | EMEA | ASPAC | AvGas | Total |
|---|---|---|---|---|---|
| Volume | -5 | - | -21 | -19 | -7 |
| Price and product mix | +6 | +1 | +5 | +7 | +4 |
| Exchange rates | — | +4 | +1 | — | +2 |
| +1 | +5 | -15 | -12 | -1 |
Sales volumes in the Americas and ASPAC decreased year over year due to decreased demand from customers, while sales volumes in EMEA were unchanged year over year. All our regions benefited from a favorable price and product mix due to an improved sales mix and disciplined pricing. AvGas volumes were lower than the prior year due to variations in the demand from customers, being partly offset by a favorable price and product mix due to a favorable customer mix. EMEA and ASPAC benefited from favorable foreign currency exchange rate movements.
Gross margin: the year over year increase of 3.5 percentage points was driven by an improved sales mix from increased sales of higher margin products, together with disciplined pricing and reduced raw material and other inflationary pressures.
Operating expenses: the year over year increase of $0.3 million was primarily due to higher commissions.
Oilfield Services
Net sales: have decreased year over year by $7.5 million, or 7 percent. Sales in the Americas were higher year over year, being outweighed by lower sales in EMEA due to reduced demand. The majority of our customer activity is concentrated in the Americas region. Management continues to see potential growth opportunities for many of our oilfield markets.
Gross margin: the year over year decrease of 1.0 percentage points was due to a weaker sales mix.
Operating expenses: the year over year decrease of $2.2 million was primarily due to lower provisions for doubtful debts and lower provisions for performance-related remuneration accruals.
Other Income Statement Captions
Corporate costs: the year over year increase of $3.3 million was primarily due to increased provisions for environmental remediation in relation to legacy operations, together with the additional investment in our IT infrastructure, the amortization of our new group-wide ERP system and lower provisions for performance-related remuneration accruals.
Other net income/(expense): for the three months ended June 30, 2025 and 2024, included the following:
| (in millions) | 2025 | 2024 | Change |
|---|---|---|---|
| Net pension credit | $— | $1.6 | $(1.6) |
| Profit attributable to non-controlling interests | (0.4) | (0.8) | 0.4 |
| Foreign exchange gains/(losses) on translation | (0.6) | 0.7 | (1.3) |
| Foreign currency forward contracts gains/(losses) | (4.1) | (0.6) | (3.5) |
| $(5.1) | $0.9 | $(6.0) |
Interest income/(expense), net: in the three months ended June 30, 2025 was $2.7 million of income compared to $2.1 million of income in the three months ended June 30, 2024, driven by the interest income being earned from our higher cash balances.
Income taxes: the effective tax rate was 26.3% and 28.6% in the second quarter of 2025 and 2024, respectively. The adjusted effective tax rate, once adjusted for the items set out in the following table, was 23.5% in 2025 compared with 28.4% in 2024. The 4.9% decrease in the adjusted effective rate was primarily due to the fact that a higher proportion of the Company’s profits are being generated in lower tax jurisdictions. The Company believes that this adjusted effective tax rate, a non-GAAP financial measure, provides useful information to investors and may assist them in evaluating the Company’s underlying performance and identifying operating trends. In addition, management uses this non-GAAP financial measure internally to evaluate the performance of the Company’s operations and for planning and forecasting in subsequent periods.
The following table shows a reconciliation of the GAAP effective tax charge to the adjusted effective tax charge:
| Three Months EndedJune 30, | ||
|---|---|---|
| (in millions) | 2025 | 2024 |
| Income before income taxes | $31.9 | $43.7 |
| Adjustment for stock compensation | 2.1 | 2.1 |
| Adjustment to fair value of contingent consideration | 0.8 | 0.6 |
| Legacy costs of closed operations | 3.0 | 0.8 |
| Adjusted income before income taxes | $37.8 | $47.2 |
| Income taxes | $8.4 | $12.5 |
| Tax on stock compensation | (0.2) | 0.2 |
| Adjustment of income tax provision | — | (3.1) |
| Tax on adjustment to fair value of contingent consideration | — | 0.2 |
| Tax on legacy cost of closed operations | 0.7 | 0.2 |
| Adjustments to tax charge of prior periods | — | 3.4 |
| Adjusted income taxes | $8.9 | $13.4 |
| GAAP effective tax rate | 26.3% | 28.6% |
| Adjusted effective tax rate | 23.5% | 28.4% |
Six Months Ended June 30, 2025
The following table shows the changes in sales, gross profit and operating expenses by reporting segment for the six months ended June 30, 2025, and the six months ended June 30, 2024:
| Six Months EndedJune 30, | ||||
|---|---|---|---|---|
| (in millions, except ratios) · 2025 · 2024 · Change | ||||
| Net sales: | ||||
| Performance Chemicals | $342.2 | $320.9 | $21.3 | +7% |
| Fuel Specialties | 335.4 | 343.5 | (8.1) | -2% |
| Oilfield Services | 202.9 | 270.8 | (67.9) | -25% |
| $880.5 | $935.2 | $(54.7) | -6% | |
| Gross profit: | ||||
| Performance Chemicals | $65.8 | $73.9 | $(8.1) | -11% |
| Fuel Specialties | 123.7 | 118.2 | 5.5 | +5% |
| Oilfield Services | 58.8 | 90.5 | (31.7) | -35% |
| $248.3 | $282.6 | $(34.3) | -12% | |
| Gross margin (%): | ||||
| Performance Chemicals | 19.2 | 23.0 | -3.8 | |
| Fuel Specialties | 36.9 | 34.4 | +2.5 | |
| Oilfield Services | 29.0 | 33.4 | -4.4 | |
| Aggregate | 28.2 | 30.2 | -2.0 | |
| Operating expenses: | ||||
| Performance Chemicals | $(31.7) | $(31.6) | $(0.1) | +0% |
| Fuel Specialties | (51.4) | (54.4) | 3.0 | -6% |
| Oilfield Services | (48.5) | (66.3) | 17.8 | -27% |
| Corporate costs | (38.6) | (37.8) | (0.8) | +2% |
| Adjustment to fair value of contingent consideration | (1.5) | (1.4) | (0.1) | n/a |
| Profit on disposal of property, plant and equipment | 0.2 | 0.1 | 0.1 | n/a |
| $(171.5) | $(191.4) | $19.9 | -10% | |
Performance Chemicals
| Change (%) | Americas | EMEA | ASPAC | Total |
|---|---|---|---|---|
| Volume | +11 | -3 | +21 | +4 |
| Price and product mix | -6 | +10 | +3 | +3 |
| Exchange rates | — | -1 | — | — |
| +5 | +6 | +24 | +7 |
Higher sales volumes for the Americas were driven by increased demand for our personal care products, being partly offset by an adverse price and product mix due to pricing erosion and higher demand for our lower priced products. The volume decline in EMEA was offset by a favorable price and product mix, primarily driven by increased demand for our higher priced products. ASPAC volumes were higher driven by increased demand for our personal care products, together with a favorable price and product mix due to higher demand for higher priced personal care products.
Gross margin: the year over year decrease of 3.8 percentage points was primarily due to pricing erosion and higher demand for our lower priced products.
Operating expenses: increased by $0.1 million year over year due to higher selling expenses and higher research and development expenses, being partly offset by lower provisions for performance-related remuneration accruals.
Fuel Specialties
| Change (%) | Americas | EMEA | ASPAC | AvGas | Total |
|---|---|---|---|---|---|
| Volume | -2 | +1 | -19 | -8 | -3 |
| Price and product mix | +1 | -1 | +4 | +6 | +1 |
| Exchange rates | — | — | — | — | — |
| -1 | — | -15 | -2 | -2 |
Sales volumes in the Americas and ASPAC have decreased year over year due to decreased demand from customers, being partly offset by a favorable price and product mix due to an improved sales mix and disciplined pricing. Sales volumes in EMEA have increased year over year due to increased demand from customers, being offset by an adverse price and product mix. AvGas volumes were lower than the prior year due to variations in the demand from customers, being partly offset by a favorable price and product mix due to a favorable customer mix.
Gross margin: the year over year increase of 2.5 percentage points was driven by an improved sales mix from increased sales of higher margin products, together with disciplined pricing and reduced raw material and other inflationary pressures.
Operating expenses: the year over year decrease of $3.0 million was primarily due to lower provisions for doubtful debts together with lower provisions for performance-related remuneration accruals.
Oilfield Services
Net sales: have decreased year over year by $67.9 million, or 25 percent, with the majority of our customer activity concentrated in the Americas region. Sales volumes in the current year were adversely impacted by the absence of production chemical activity in Latin America. Management continues to see potential growth opportunities for our other oilfield markets.
Gross margin: the year over year decrease of 4.4 percentage points was due to an unfavorable sales mix as our customer demand has weakened.
Operating expenses: the year over year decrease of $17.8 million was due to lower customer service costs and commissions related to the reduced demand from certain customers, together with lower provisions for performance-related remuneration accruals.
Other Income Statement Captions
Corporate costs: the year over year increase of $0.8 million was primarily due to increased provisions for environmental remediation in relation to legacy operations, the additional investment in our IT infrastructure and the amortization of our new group-wide ERP system, being partly offset by lower provisions for performance-related remuneration accruals.
Other net income/(expense): for the six months ended June 30, 2025 and 2024, included the following:
| (in millions) | 2025 | 2024 | Change |
|---|---|---|---|
| Net pension credit/(cost) | $(0.1) | $3.3 | $(3.4) |
| Profit attributable to non-controlling interests | (0.4) | $(0.1) | (0.3) |
| Foreign exchange gains/(losses) on translation | 1.3 | (1.2) | 2.5 |
| Foreign currency forward contracts gains/(losses) | (6.4) | 1.6 | (8.0) |
| $(5.6) | $3.6 | $(9.2) |
Interest income/(expense), net: in the six months ended June 30, 2025 was $5.1 million of income compared to $4.2 million of income in the six months ended June 30, 2024, driven by the interest income being earned from our higher cash balances.
Income taxes: the effective tax rate was 26.2% and 26.7% in the first six months of 2025 and 2024, respectively. The adjusted effective tax rate, once adjusted for the items set out in the following table, was 24.0% in 2025 compared with 26.2% in 2024. The 1.8% decrease in the adjusted effective rate was primarily due to the fact that a higher proportion of the Company’s profits are being generated in lower tax jurisdictions. The Company believes that this adjusted effective tax rate, a non-GAAP financial measure, provides useful information to investors and may assist them in evaluating the Company’s underlying performance and identifying operating trends. In addition, management uses this non-GAAP financial measure internally to evaluate the performance of the Company’s operations and for planning and forecasting in subsequent periods.
The following table shows a reconciliation of the GAAP effective tax charge to the adjusted effective tax charge:
| Six Months EndedJune 30, | ||
|---|---|---|
| (in millions) | 2025 | 2024 |
| Income before income taxes | $76.3 | $99.0 |
| Indemnification asset regarding tax audit | — | 0.1 |
| Adjustment for stock compensation | 4.1 | 4.2 |
| Adjustment to fair value of contingent consideration | 1.5 | 1.4 |
| Legacy cost of closed operations | 3.8 | 1.6 |
| Adjusted income before income taxes | $85.7 | $106.3 |
| Income taxes | $20.0 | $26.4 |
| Tax on stock compensation | (0.3) | 0.1 |
| Adjustment of income tax provision | — | (2.9) |
| Tax on legacy cost of closed operations | 0.9 | 0.4 |
| Tax on adjustment to fair value of contingent consideration | — | 0.5 |
| Adjustments to tax charge of prior periods | — | 3.4 |
| Adjusted income taxes | $20.6 | $27.9 |
| GAAP effective tax rate | 26.2% | 26.7% |
| Adjusted effective tax rate | 24.0% | 26.2% |
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.