INNOSPEC INC.

Working Capital

In the six months ended June 30, 2025 our working capital increased by $47.1 million, while our adjusted working capital increased by $42.9 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 $5.6 million decrease in trade and other accounts receivable, which was primarily due to the reduced revenues in our Oilfield Services segment. Days’ sales outstanding increased in our Performance Chemicals segment from 61 days to 65 days; remained unchanged at 57 days in our Fuel Specialties segment; and decreased from 83 days to 61 days in our Oilfield Services segment.

We had a $35.8 million increase in inventories, including a $3.1 million increase in allowances, which was driven by higher levels of finished goods and raw materials in our Fuel Specialties segment, due to higher production relating to expected sales volumes and 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 decreased from 63 days to 61 days; increased from 113 days to 155 days in our Fuel Specialties segment; and decreased from 76 days to 74 days in our Oilfield Services segment.

Prepaid expenses decreased $7.3 million, from $21.0 million to $13.7 million, primarily due to the cyclical expensing of prepaid invoices.

We had a $20.0 million decrease in accounts payable and accrued liabilities, which was dependent on the timing of payments for each of our reporting segments and related to the lower activity in our Oilfield Services segment. Creditor days (including goods received not invoiced) have decreased in our Performance Chemicals segment from 46 days to 45 days; increased from 44 days to 60 days in our Fuel Specialties segment; and decreased from 68 days to 55 days in our Oilfield Services segment. The changes for creditor days are 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 $37.6 million in the six months ended June 30, 2025 compared to $85.3 million in the six months ended June 30, 2024. The decrease in cash generated from operating activities was primarily related to decreased operating income, less favorable working capital cash flows and increased income tax payments.

Cash

At June 30, 2025 and December 31, 2024, we had cash and cash equivalents of $266.6 million and $289.2 million, respectively, of which $141.4 million and $133.9 million, respectively, were held by non-U.S. subsidiaries principally in the United Kingdom.

The decrease in cash and cash equivalents of $22.6 million for the six months ended June 30, 2025 was primarily driven by our continued investments in capital projects, the payment of our semi-annual dividend and the repurchases of our common stock, being partly offset by the cash generated from operating activities.

Debt

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

At June 30, 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.