INNOSPEC INC.

Working Capital

In the three months ended March 31, 2026 our working capital increased by $19.8 million, while our adjusted working capital increased by $20.1 million. The difference is primarily due to the exclusion of the movements for cash and cash equivalents together with the changes for taxes, being partly offset by the change in the value of acquisition-related contingent consideration.

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 $11.9 million increase in trade and other accounts receivable, including a $2.4 million increase in allowances, which was primarily due to increased sales for our Fuel Specialties and Oilfield Services segments. Days’ sales outstanding decreased in our Performance Chemicals segment from 72 days to 66 days; increased from 57 days to 59 days in our Fuel Specialties segment; and increased from 64 days to 68 days in our Oilfield Services segment.

We had a $7.8 million decrease in inventories, including a $1.0 million decrease in allowances, which was driven by lower levels of raw materials in our Performance Chemicals and Fuel Specialties segments. 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 65 days to 58 days; decreased from 184 days to 132 days in our Fuel Specialties segment; and decreased from 83 days to 64 days in our Oilfield Services segment.

Prepaid expenses decreased $3.2 million, from $20.1 million to $16.9 million, primarily due to the cyclical expensing of prepaid invoices.

We had a $19.2 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 decreased in our Performance Chemicals segment from 50 days to 47 days; decreased from 58 days to 52 days in our Fuel Specialties segment; and increased from 46 days to 47 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 $17.6 million in the three months ended March 31, 2026 compared to $28.3 million in the three months ended March 31, 2025. The decrease in cash generated from operating activities was primarily related to decreased operating income after adjusting for the changes to the fair value of contingent consideration, together with the timing of income tax payments.

Cash

At March 31, 2026 and December 31, 2025, we had cash and cash equivalents of $289.1 million and $292.5 million, respectively, of which $120.6 million and $145.4 million, respectively, were held by non-U.S. subsidiaries principally in the United Kingdom.

The decrease in cash and cash equivalents of $3.4 million for the three months ended March 31, 2026 was primarily driven by our continued investments in capital projects, payments for our new ERP system implementation 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 March 31, 2026, and December 31, 2025, 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.