Form 10-Q - Quarterly report [Sections 13 or 15(d)]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-13879

INNOSPEC INC.

(Exact name of registrant as specified in its charter)


	DELAWARE		98-0181725
	(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

	8310 South Valley Highway Suite 350 Englewood

	Colorado		80112
	(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (303) 792 5554

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

Title of each class

Trading 
Symbol(s)

Name of each exchange
on which registered

Common stock, par value $0.01 per share

IOSP

NASDAQ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such file. Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


	Class		Outstanding as of November 1, 2023
	Common Stock, par value $0.01		24,865,799

TABLE OF CONTENTS


PART I	FINANCIAL INFORMATION	2
Item 1	Condensed Consolidated Financial Statements	2
	Condensed Consolidated Statements of Income	2
	Condensed Consolidated Statements of Comprehensive Income	3
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Cash Flows	5
	Condensed Consolidated Statements of Equity	6
	Notes To The Unaudited Interim Condensed Consolidated Financial Statements	8
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations for the Three and Nine Months Ended September 30, 2023	18
	Critical Accounting Estimates	18
	Results of Operations	18
	Liquidity and Financial Condition	25
Item 3	Quantitative and Qualitative Disclosures about Market Risk	27
Item 4	Controls and Procedures	27
PART II	OTHER INFORMATION	28
Item 1	Legal Proceedings	28
Item 1A	Risk Factors	28
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 3	Defaults Upon Senior Securities	28
Item 4	Mine Safety Disclosures	28
Item 5	Other Information	28
Item 6	Exhibits	29
SIGNATURES		30

CAUTIONARY STATEMENT RELATIVE TO FORWARD-LOOKING STATEMENTS

This Form 10-Q contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts included or incorporated herein may constitute forward-looking statements. Such forward-looking statements include statements (covered by words like “expects,” “estimates,” “anticipates,” “may,” “could,” “believes,” “feels,” “plans,” “intends” or similar words or expressions, for example) which relate to earnings, growth potential, operating performance, events or developments that we expect or anticipate will or may occur in the future. Although forward-looking statements are believed by management to be reasonable when made, they are subject to certain risks, uncertainties and assumptions, and our actual performance or results may differ materially from these forward-looking statements. Additional information regarding risks, uncertainties and assumptions relating to Innospec and affecting our business operations and prospects are described in Innospec’s Annual Report on Form 10-K for the year ended December 31, 2022 and other reports filed with the U.S. Securities and Exchange Commission ("SEC"). You are urged to review our discussion of risks and uncertainties that could cause actual results to differ from forward-looking statements under the heading “Risk Factors” in such reports. Innospec undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

PART I FINANCIAL INFORMATION

Item 1 Condensed Consolidated Financial Statements

INNOSPEC INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions, except share and per share data)	2023			2022			2023			2022
Net sales	$	464.1		$	513.0		$	1,454.1		$	1,453.0
Cost of goods sold		(326.9	)		(357.0	)		(1,018.7	)		(1,017.9	)
Gross profit		137.2			156.0			435.4			435.1
Operating expenses:
Selling, general and administrative		(83.7	)		(95.8	)		(285.5	)		(264.1	)
Research and development		(11.6	)		(10.1	)		(32.8	)		(30.3	)
Total operating expenses		(95.3	)		(105.9	)		(318.3	)		(294.4	)
Operating income		41.9			50.1			117.1			140.7
Other income/(expense), net		4.8			(0.9	)		11.2			(0.2	)
Interest income/(expense), net		0.8			(0.3	)		0.8			(1.1	)
Income before income tax expense		47.5			48.9			129.1			139.4
Income tax expense		(8.3	)		(10.2	)		(27.8	)		(31.9	)
Net income	$	39.2		$	38.7		$	101.3		$	107.5
Earnings per share:
Basic	$	1.58		$	1.56		$	4.08		$	4.34
Diluted	$	1.57		$	1.55		$	4.05		$	4.30
Weighted average shares outstanding (in thousands):
Basic		24,866			24,786			24,845			24,794
Diluted		25,006			24,965			25,000			24,976

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

INNOSPEC INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2023			2022			2023			2022
Net income	$	39.2		$	38.7		$	101.3			107.5
Other comprehensive income/(loss):
Changes in cumulative translation adjustment, net of tax of $0.5 million, $1.0 million, $(0.2) million and $2.2 million, respectively		(7.9	)		(16.4	)		(1.8	)		(37.1	)
Amortization of prior service cost, net of tax of $(0.1) million, $0.0 million, $(0.1) million and $(0.1) million, respectively		0.1			0.1			0.3			0.3
Amortization of actuarial net losses/(gains), net of tax of $0.2 million, $0.0 million, $0.4 million and $0.0 million, respectively		(0.4	)		0.1			(1.2	)		0.4
Total other comprehensive income/(loss)		(8.2	)		(16.2	)		(2.7	)		(36.4	)
Total comprehensive income	$	31.0		$	22.5		$	98.6		$	71.1

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

INNOSPEC INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


(in millions, except share and per share data)	September 30, 2023		December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	207.2	$	147.1
Trade and other accounts receivable (less allowances of $7.8 million and $7.7 million respectively)		305.2		334.6
Inventories (less allowances of $27.4 million and $27.1 million respectively):
Finished goods		234.0		259.3
Raw materials		97.5		113.8
Total inventories		331.5		373.1
Prepaid expenses		7.7		14.1
Prepaid income taxes		10.7		3.3
Other current assets		1.4		0.4
Total current assets		863.7		872.6
Net property, plant and equipment		244.6		220.9
Operating lease right-of-use assets		42.5		45.3
Goodwill		357.9		358.8
Other intangible assets		47.8		45.0
Deferred tax assets		5.9		5.9
Pension asset		49.7		48.1
Other non-current assets		6.5		7.1
Total assets	$	1,618.6	$	1,603.7


Liabilities and Equity
Current liabilities:
Accounts payable	$	146.1		$	165.3
Accrued liabilities		165.1			202.9
Current portion of operating lease liabilities		13.1			13.9
Current portion of plant closure provisions		4.7			5.3
Current portion of accrued income taxes		15.2			18.4
Total current liabilities		344.2			405.8
Operating lease liabilities, net of current portion		29.4			31.4
Plant closure provisions, net of current portion		51.1			51.9
Accrued income taxes, net of current portion		11.6			21.0
Unrecognized tax benefits		14.1			13.4
Deferred tax liabilities		26.4			26.2
Pension liabilities and post-employment benefits		12.2			12.2
Other non-current liabilities		1.5			1.4
Total liabilities		490.5			563.3
Equity:
Common stock, $0.01 par value, authorized 40,000,000 shares, issued 29,554,500 shares		0.3			0.3
Additional paid-in capital		358.9			354.1
Treasury stock (4,687,975 and 4,788,966 shares at cost, respectively)		(94.2	)		(95.4	)
Retained earnings		1,008.3			924.2
Accumulated other comprehensive loss		(147.9	)		(145.2	)
Total Innospec stockholders’ equity		1,125.4			1,038.0
Non-controlling interest		2.7			2.4
Total equity		1,128.1			1,040.4
Total liabilities and equity	$	1,618.6		$	1,603.7

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

INNOSPEC INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Nine Months Ended September 30,
(in millions)	2023			2022
Cash Flows from Operating Activities
Net income	$	101.3		$	107.5
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		29.1			30.9
Deferred taxes		0.5			0.6
Non-cash movements on defined benefit pension plans		(2.5	)		(1.9	)
Stock option compensation		5.9			4.7
Changes in assets and liabilities, net of effects of acquired and divested companies:
Trade and other accounts receivable		29.5			(70.1	)
Inventories		42.0			(112.6	)
Prepaid expenses		6.5			11.2
Accounts payable and accrued liabilities		(57.2	)		38.9
Plant closure provisions		(1.2	)		0.3
Accrued income taxes		(20.2	)		(4.0	)
Unrecognized tax benefits		0.7			—
Other assets and liabilities		0.5			(2.2	)
Net cash provided by/(used in) operating activities		134.9			3.3
Cash Flows from Investing Activities
Capital expenditures		(45.2	)		(27.1	)
Internally developed software		(10.8	)		—
Proceeds on disposal of property, plant and equipment		—			0.1
Net cash used in investing activities		(56.0	)		(27.0	)
Cash Flows from Financing Activities
Non-controlling interest		0.3			1.9
Proceeds from revolving credit facility		—			—
Repayments of revolving credit facility		—			—
Repayments of finance leases		—			(0.1	)
Refinancing costs		(1.4	)		—
Dividend paid		(17.2	)		(15.6	)
Issue of treasury stock		0.7			2.1
Repurchase of common stock		(1.0	)		(5.0	)
Net cash used in financing activities		(18.6	)		(16.7	)
Effect of foreign currency exchange rate changes on cash		(0.2	)		(0.9	)
Net change in cash and cash equivalents		60.1			(41.3	)
Cash and cash equivalents at beginning of period		147.1			141.8
Cash and cash equivalents at end of period	$	207.2		$	100.5

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

INNOSPEC INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)


(in millions)	Common Stock		Additional Paid-In Capital			Treasury Stock			Retained Earnings			Accumulated Other Comprehensive Loss			Non- Controlling Interest		Total Equity
Balance at December 31, 2022	$	0.3	$	354.1		$	(95.4	)	$	924.2		$	(145.2	)	$	2.4	$	1,040.4
Net income										101.3								101.3
Dividend paid ($0.69 per share)										(17.2	)							(17.2	)
Changes in cumulative translation adjustment, net of tax													(1.8	)				(1.8	)
Share of net income																0.3		0.3
Treasury stock reissued				(1.1	)		2.2											1.1
Treasury stock repurchased							(1.0	)										(1.0	)
Stock option compensation				5.9														5.9
Amortization of prior service cost, net of tax													0.3					0.3
Amortization of actuarial net gains, net of tax													(1.2	)				(1.2	)
Balance at September 30, 2023	$	0.3	$	358.9		$	(94.2	)	$	1,008.3		$	(147.9	)	$	2.7	$	1,128.1


(in millions)	Common Stock		Additional Paid-In Capital		Treasury Stock			Retained Earnings			Accumulated Other Comprehensive Loss			Non- Controlling Interest		Total Equity
Balance at December 31, 2021	$	0.3	$	346.7	$	(90.6	)	$	822.9		$	(46.9	)	$	0.6	$	1,033.0
Net income									107.5								107.5
Dividend paid ($0.63 per share)									(15.6	)							(15.6	)
Changes in cumulative translation adjustment, net of tax												(37.1	)				(37.1	)
Non-controlling interest														1.8			1.8
Share of net income															0.1		0.1
Treasury stock reissued				0.8		1.0											1.8
Treasury stock repurchased						(5.0	)										(5.0	)
Stock option compensation				4.7													4.7
Amortization of prior service cost, net of tax												0.3					0.3
Amortization of actuarial net losses, net of tax												0.4					0.4
Balance at September 30, 2022	$	0.3	$	352.2	$	(94.6	)	$	914.8		$	(83.3	)	$	2.5	$	1,091.9

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

INNOSPEC INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)


(in millions)	Common Stock		Additional Paid-In Capital		Treasury Stock			Retained Earnings		Accumulated Other Comprehensive Loss			Non- Controlling Interest		Total Equity
Balance at June 30, 2023	$	0.3	$	356.7	$	(94.2	)	$	969.1	$	(139.7	)	$	2.6	$	1,094.8
Net income									39.2							39.2
Changes in cumulative translation adjustment, net of tax											(7.9	)				(7.9	)
Share of net income														0.1		0.1
Treasury stock reissued				0.2		0.1										0.3
Treasury stock repurchased						(0.1	)									(0.1	)
Stock option compensation				2.0												2.0
Amortization of prior service cost, net of tax											0.1					0.1
Amortization of actuarial net gains, net of tax											(0.4	)				(0.4	)
Balance at September 30, 2023	$	0.3	$	358.9	$	(94.2	)	$	1,008.3	$	(147.9	)	$	2.7	$	1,128.1


(in millions)	Common Stock		Additional Paid-In Capital			Treasury Stock			Retained Earnings		Accumulated Other Comprehensive Loss			Non- Controlling Interest		Total Equity
Balance at June 30, 2022	$	0.3	$	350.9		$	(92.3	)	$	876.1	$	(67.1	)	$	0.7	$	1,068.6
Net income										38.7							38.7
Changes in cumulative translation adjustment, net of tax												(16.4	)				(16.4	)
Non-controlling interest														1.8			1.8
Treasury stock reissued				(0.2	)												(0.2	)
Treasury stock repurchased							(2.3	)									(2.3	)
Stock option compensation				1.5													1.5
Amortization of prior service cost, net of tax												0.1					0.1
Amortization of actuarial net losses, net of tax												0.1					0.1
Balance at September 30, 2022	$	0.3	$	352.2		$	(94.6	)	$	914.8	$	(83.3	)	$	2.5	$	1,091.9

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

INNOSPEC INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – BASIS OF PRESENTATION

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X under the Securities Exchange Act of 1934. Accordingly, they do not include all the information and notes necessary for a comprehensive presentation of financial position, results of operations and cash flows.

It is our opinion, however, that all adjustments (consisting of normal, recurring adjustments, unless otherwise disclosed) have been made which are necessary for the condensed consolidated financial statements to be fairly stated. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 filed on February 22, 2023 (the “2022 Form 10-K”).

The results for the interim period covered by this report are not necessarily indicative of the results to be expected for the full year.

When we use the terms “Innospec,” “the Corporation,” “the Company,” “Registrant,” “the Group,” “we,” “us” and “our,” we are referring to Innospec Inc. and its consolidated subsidiaries unless otherwise indicated or the context otherwise requires.

NOTE 2 – SEGMENT REPORTING

The Company reports its financial performance based on three reportable segments, which are Performance Chemicals, Fuel Specialties and Oilfield Services.

The Company evaluates the performance of its segments based on operating income. The following table analyzes sales and other financial information by the Company’s reportable segments:


	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2023			2022			2023			2022
Net Sales:
Personal Care	$	97.0		$	102.4		$	263.8		$	311.1
Home Care		22.3			22.6			65.7			72.3
Other		25.9			34.7			94.9			112.4
Performance Chemicals		145.2			159.7			424.4			495.8
Refinery and Performance		126.0			133.2			394.6			405.5
Other		43.3			45.5			119.2			141.4
Fuel Specialties		169.3			178.7			513.8			546.9
Oilfield Services		149.6			174.6			515.9			410.3
	$	464.1		$	513.0		$	1,454.1		$	1,453.0
Operating income/(loss):
Performance Chemicals	$	16.9		$	25.4		$	36.5		$	79.5
Fuel Specialties		27.6			27.9			77.1			94.9
Oilfield Services		16.4			14.2			60.3			21.2
Corporate costs		(19.0	)		(17.4	)		(56.8	)		(54.9	)
Total operating income	$	41.9		$	50.1		$	117.1		$	140.7

NOTE 3 – EARNINGS PER SHARE

Basic earnings per share is based on the weighted average number of common shares outstanding during the period. Diluted earnings per share includes the effect of options that are dilutive and outstanding during the period under the treasury stock method. Per share amounts are computed as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Numerator (in millions):
Net income available to common stockholders	$	39.2	$	38.7	$	101.3	$	107.5
Denominator (in thousands):
Weighted average common shares outstanding		24,866		24,786		24,845		24,794
Dilutive effect of stock options and awards		140		179		155		182
Denominator for diluted earnings per share		25,006		24,965		25,000		24,976
Net income per share, basic:	$	1.58	$	1.56	$	4.08	$	4.34
Net income per share, diluted:	$	1.57	$	1.55	$	4.05	$	4.30

In the three and nine months ended September 30, 2023, the average number of anti-dilutive options excluded from the calculation of diluted earnings per share were 21,950 and 29,293, respectively (three and nine months ended September 30, 2022 – 109,377 and 54,522, respectively).

NOTE 4 – GOODWILL

The following table summarizes the goodwill movements in the year:


(in millions)	Gross Cost
Opening balance at January 1, 2023	$	358.8
Exchange effect		(0.9	)
Closing balance at September 30, 2023	$	357.9

The exchange effect for the nine months ended September 30, 2023 was $0.9 million relating to our Performance Chemicals segment.

NOTE 5 – OTHER INTANGIBLE ASSETS

The following table analyzes other intangible assets movements in the year:


(in millions)	2023
Gross cost at January 1	$	291.1
Additions		10.8
Exchange effect		(0.3	)
Gross cost at September 30		301.6
Accumulated amortization at January 1		(246.1	)
Amortization expense		(8.0	)
Exchange effect		0.3
Accumulated amortization at September 30		(253.8	)
Net book amount at September 30	$	47.8

The amortization expense for the nine months ended September 30, 2023 was $8.0 million (nine months ended September 30, 2022 – $11.4 million).

In 2023, we capitalized $10.8 million in relation to our internally developed software for a new Enterprise Resource Planning (“ERP”) system covering our EMEA and ASPAC regions. The expenses capitalized include the acquisition costs for the software as well as the external and internal costs of the development.

NOTE 6 – PENSION AND POST EMPLOYMENT BENEFITS

The Company maintains a defined benefit pension plan covering certain current and former employees in the United Kingdom (the “UK Plan”). The UK Plan is closed to future service accrual and has a large number of deferred and current pensioners. The assets of the UK Plan are predominantly insurance policies, operating as investment assets, covering all liabilities. This reduces the UK Plan’s potential reliance on the Company for future cash funding requirements.

The Company also maintains an unfunded defined benefit pension plan covering certain current and former employees in Germany (the “German plan”). The German plan is closed to new entrants and has no assets.

The net periodic benefit of these plans is shown in the following table:


	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2023			2022			2023			2022
Service cost	$	(0.9	)	$	(0.6	)	$	(2.7	)	$	(1.8	)
Interest cost on projected benefit obligation		(5.1	)		(2.4	)		(15.0	)		(7.8	)
Expected return on plan assets		6.5			3.8			19.0			12.3
Amortization of prior service cost		(0.2	)		(0.1	)		(0.4	)		(0.4	)
Amortization of actuarial net gains/(losses)		0.6			(0.1	)		1.6			(0.4	)
Net periodic benefit	$	0.9		$	0.6		$	2.5		$	1.9

The service cost has been recognized in selling, general and administrative expenses. All other items have been recognized within other income and expense. The amortization of prior service cost and actuarial net losses are a reclassification out of accumulated other comprehensive loss into other income and expense.

In addition, we have obligations for post-employment benefits in some of our other European businesses. As at September 30, 2023, we have recorded a liability of $3.9 million (December 31, 2022 – $4.1 million).

NOTE 7 – INCOME TAXES

A roll-forward of unrecognized tax benefits and associated accrued interest and penalties is as follows:


(in millions)	Unrecognized Tax Benefits		Interest and Penalties		Total
Opening balance at January 1, 2023	$	10.2	$	3.2	$	13.4
Net change for tax positions of prior periods		—		0.7		0.7
Closing balance at September 30, 2023		10.2		3.9		14.1
Current		—		—		—
Non-current	$	10.2	$	3.9	$	14.1

All of the $14.1 million of unrecognized tax benefits, interest and penalties would impact our effective tax rate if recognized.

In 2021 a non-U.S. subsidiary, Innospec Limited, entered into a review by the U.K. tax authorities under the U.K.’s Profit Diversion Compliance Facility (“PDCF”) in relation to the period 2017 to 2020 inclusive. The Company has determined that additional tax and interest totaling $1.1 million may arise as a result of the ongoing review. This includes an increase in interest accrued of $0.1 million recorded in the nine months to September 30, 2023.

A non-U.S. subsidiary, Innospec Performance Chemicals Italia Srl, is subject to an ongoing tax audit in relation to the period 2011 to 2014 inclusive. The Company has determined that additional tax, interest and penalties totaling $3.2 million may arise as a consequence of the tax audit. As any additional tax arising as a consequence of the tax audit would be reimbursed by the previous owner under the terms of the sale and purchase agreement, an indemnification asset of the same amount is recorded in the financial statements to reflect this arrangement.

In 2018 the Company recorded an unrecognized tax benefit in relation to a potential adjustment that could arise as a consequence of the Tax Cuts and Jobs Act of 2017 (“Tax Act”), but for which retrospective adjustment to the filed 2017 U.S. federal income tax returns was not permissible. The Company has determined that additional tax, interest and penalties totaling $9.8 million may arise in relation to this item. This includes an increase in interest accrued of $0.6 million in the nine months to September 30, 2023.

Aside from certain tax returns that are closed after completion of a U.S. Internal Revenue Service (“IRS”) audit, the Company and its U.S. subsidiaries remain open to examination by the IRS for certain elements of year 2017 and for years 2019 onwards under the statute of limitations. The Company’s subsidiaries in foreign tax jurisdictions are open to examination including Brazil (2018 onwards), Germany (2018 onwards), and the U.K. (2017 onwards).

NOTE 8 – LONG-TERM DEBT

As at September 30, 2023, and December 31, 2022, the Company had not drawn down on its revolving credit facility.

On May 31, 2023, Innospec Inc. and certain subsidiaries of the Company (together with the Company, the “Borrowers”) entered into a Multicurrency Revolving Facility Agreement with various lenders (the “Agreement”) which replaces the Company’s credit facility agreement dated September 26, 2019. The Agreement provides for a $250,000,000 four-year multicurrency revolving loan facility available to the Borrowers (the “Facility”). The Agreement also contains an accordion feature whereby the Company may elect to increase the total available borrowings by an aggregate amount of up to $125,000,000. The termination date of the Facility is May 30, 2027, but the Company has an option to request an extension of the Facility for a further year. As a consequence, the Company has capitalized $1.5 million of costs relating to the new Agreement which are to be amortized over the period to May 30, 2027. In addition the Company has written-off $0.5 million of capitalized costs relating to the previous agreement.

As at September 30, 2023, the deferred finance costs of $1.3 million (December 31, 2022 - $0.6 million) related to the arrangement of the credit facility, are included within other current and non-current assets at the balance sheet dates.

NOTE 9 – PLANT CLOSURE PROVISIONS

The Company has continuing plans to remediate manufacturing facilities at sites around the world as and when those operations are expected to cease, or we are required to decommission the sites according to local laws and regulations. The liability for estimated plant closure costs includes costs for environmental remediation liabilities and asset retirement obligations.

The principal site giving rise to asset retirement obligations is the manufacturing site at Ellesmere Port in the United Kingdom. There are also asset retirement obligations and environmental remediation liabilities on a much smaller scale in respect of other manufacturing sites.

Movements in the provisions are summarized as follows:


(in millions)	2023
Total at January 1	$	57.2
Charge for the period		2.7
Utilized in the period		(3.9	)
Exchange effect		(0.2	)
Total at September 30		55.8
Due within one year		(4.7	)
Due after one year	$	51.1

The charge for the nine months ended September 30, 2023 was $2.7 million (nine months ended September 30, 2022 – $2.7 million). The current year charge represents the accounting accretion only, with no changes for the expected cost and scope of future remediation activities. Amounts due within one year refer to provisions where expenditure is expected to arise within one year of the balance sheet date.

NOTE 10 – FAIR VALUE MEASUREMENTS

The following table presents the carrying amount and fair values of the Company’s financial assets and liabilities measured on a recurring basis:


	September 30, 2023				December 31, 2022
(in millions)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets
Non-derivatives:
Cash and cash equivalents	$	207.2	$	207.2	$	147.1	$	147.1
Derivatives (Level 1 measurement):
Other current and non-current assets:
Foreign currency forward exchange contracts		1.0		1.0		—		—
Emissions Trading Scheme credits		3.2		3.2		2.7		2.7
Liabilities
Derivatives (Level 1 measurement):
Other current and non-current liabilities:
Foreign currency forward exchange contracts		—		—		0.5		0.5
Non-financial liabilities (Level 3 measurement):
Other current and non-current liabilities:
Stock equivalent units		17.4		17.4		26.4		26.4

The following methods and assumptions were used to estimate the fair values:

Cash and cash equivalents: The carrying amount approximates fair value because of the short-term maturities of such instruments.

Emissions Trading Scheme credits: The fair value is determined by the open market pricing at the end of the reporting period.

Foreign currency forward exchange contracts: The fair value of derivatives relating to foreign currency forward exchange contracts are derived from current settlement prices and comparable contracts using current assumptions. Foreign currency forward exchange contracts primarily relate to contracts entered into to hedge future known transactions or hedge balance sheet net cash positions. The movements in the carrying amounts and fair values of these contracts are largely due to changes in exchange rates against the U.S. dollar.

Stock equivalent units: The fair values of stock equivalent units are calculated at each balance sheet date using either the Black-Scholes or Monte Carlo method depending on the terms of each grant.

NOTE 11 – DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT

The Company enters into various foreign currency forward exchange contracts to minimize currency exchange rate exposure from expected future cash flows. As at September 30, 2023, the contracts have maturity dates of up to twelve months at the date of inception. These foreign currency forward exchange contracts have not been designated as hedging instruments, and their impact on the income statement for the first nine months of 2023 was a loss of $1.2 million (first nine months of 2022 – a gain of $6.5 million). The gain or loss has been recorded in other income or expense.

NOTE 12 – CONTINGENCIES

Legal matters

We are involved from time to time in claims and legal proceedings that result from, and are incidental to, the conduct of our business including business and commercial litigation, and employee and product liability claims.

As previously reported in the first and second quarters of 2023, we have lodged a civil and criminal legal claim related to a misappropriation of inventory and other losses incurred in Brazil. There is also an ongoing insurance claim related to the misappropriation of inventory element of the matter. Consistent with our accounting treatment in the first and second quarters, a corresponding asset for the potential legal or insurance recoveries has not been recorded for the resulting financial losses arising from this matter.

In addition, unrelated to the Brazil matter, in the unlikely event there are an unexpectedly large number of individual claims or proceedings with an adverse resolution, this could in the aggregate have a material adverse effect on the results of operations for a particular year or quarter.

Guarantees

The Company and certain of the Company’s consolidated subsidiaries are contingently liable for certain obligations of affiliated companies primarily in the form of guarantees of debt and performance under contracts entered into as a normal business practice. This includes guarantees of non-U.S. excise taxes and customs duties. As at September 30, 2023, such guarantees which are not recognized as liabilities in the condensed consolidated financial statements amounted to $6.0 million (December 31, 2022 - $7.0 million). The remaining terms of the fixed maturity guarantees are up to 9 years, with some further guarantees having no fixed expiry date.

Under the terms of the guarantee arrangements, generally the Company would be required to perform the obligations should the affiliated company fail to fulfill its obligations under the arrangements. In some cases, the guarantee arrangements have recourse provisions that would enable the Company to recover any payments made under the terms of the guarantees from securities held of the guaranteed parties’ assets.

The Company and its affiliates have numerous long-term sales and purchase commitments in their various business activities, which are expected to be fulfilled with no adverse consequences material to the Company.

NOTE 13 – STOCK-BASED COMPENSATION PLANS

The compensation cost recorded for stock options for the three months ended September 30, 2023 and 2022 was $2.0 million and $1.5 million, respectively. The compensation cost recorded for stock equivalent units for the three months ended September 30, 2023 and 2022 was $2.0 million and $1.8 million, respectively.

The compensation cost recorded for stock options for the first nine months of 2023 and 2022 was $5.9 million and $4.7 million, respectively. The compensation cost recorded for stock equivalent units for the first nine months of 2023 and 2022 was $7.1 million and $15.9 million, respectively.

The following table summarizes the transactions of the Company’s share-based compensation plans for the nine months ended September 30, 2023.


	Number of shares			Weighted Average Grant-Date Fair Value
Nonvested at December 31, 2022		757,040		$	69.0
Granted		159,322		$	94.3
Vested		(208,803	)	$	66.3
Forfeited		(50,911	)	$	77.1
Nonvested at September 30, 2023		656,648		$	75.1

New grants in the quarter have similar vesting conditions to those granted in previous periods. The valuation methodologies of the new grants are consistent with previous periods.

As of September 30, 2023, there was $23.5 million of total unrecognized compensation cost related to nonvested share-based compensation arrangements. That cost is expected to be recognized over a weighted-average period of 1.9 years.

NOTE 14 – RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE LOSS

Reclassifications out of accumulated other comprehensive loss (“AOCL”) for the first nine months of 2023 were:


(in millions) Details about AOCL Components	Amount Reclassified from AOCL			Affected Line Item in the Statement where Net Income is Presented
Defined benefit pension plan items:
Amortization of prior service cost	$	0.4		See (1) below
Amortization of actuarial net gains		(1.6	)	See (1) below
		(1.2	)	Total before tax
		0.3		Income tax expense
Total reclassifications	$	(0.9	)	Net of tax

(1)

These items are included in other income and expense. See Note 6 of the Notes to the Condensed Consolidated Financial Statements for additional information.

Changes in AOCL for the first nine months of 2023, net of tax, were:


(in millions)	Defined Benefit Pension Plan Items			Cumulative Translation Adjustments			Total
Balance at December 31, 2022	$	(58.4	)	$	(86.8	)	$	(145.2	)
Other comprehensive income before reclassifications		—			(1.8	)		(1.8	)
Amounts reclassified from AOCL		(0.9	)		—			(0.9	)
Total other comprehensive income/(loss)		(0.9	)		(1.8	)		(2.7	)
Balance at September 30, 2023	$	(59.3	)	$	(88.6	)	$	(147.9	)

Reclassifications out of AOCL for the first nine months of 2022 were:


(in millions) Details about AOCL Components	Amount Reclassified from AOCL			Affected Line Item in the Statement where Net Income is Presented
Defined benefit pension plan items:
Amortization of prior service cost	$	0.4		See (1) below
Amortization of actuarial net losses		0.4		See (1) below
		0.8		Total before tax
		(0.1	)	Income tax expense
Total reclassifications	$	0.7		Net of tax

(1)

These items are included in other income and expense. See Note 6 of the Notes to the Condensed Consolidated Financial Statements for additional information.

Changes in AOCL for the first nine months of 2022, net of tax, were:


(in millions)	Defined Benefit Pension Plan Items		Cumulative Translation Adjustments			Total
Balance at December 31, 2021	$	10.7	$	(57.6	)	$	(46.9	)
Other comprehensive income before reclassifications		—		(37.1	)		(37.1	)
Amounts reclassified from AOCL		0.7		—			0.7
Total other comprehensive income/(loss)		0.7		(37.1	)		(36.4	)
Balance at September 30, 2022	$	11.4	$	(94.7	)	$	(83.3	)

NOTE 15 – RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In October 2023, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2023-06, Disclosure Improvements. This guidance covers a number of disclosure improvements intended to align with the SEC's disclosure update and simplification initiative. The effective dates for any required changes to the specified disclosures are aligned with the timing of changes to the relevant SEC regulations. The Company does not expect the new standard to have a material impact on the Company’s consolidated financial statements, including its accounting policies, processes and systems.

NOTE 16 – RELATED PARTY TRANSACTIONS

Mr. Patrick S. Williams has been an executive director of the Company since April 2009 and has been a non-executive director of AdvanSix, a chemicals manufacturer, since February 2020. In the first nine months of 2023 the Company purchased product from AdvanSix for $0.3 million (first nine months of 2022 – $0.4 million). As at September 30, 2023, the Company owed $0.0 million to AdvanSix (December 31, 2022 – $0.0 million).

Mr. Robert I. Paller has been a non-executive director of the Company since November 1, 2009. The Company has retained and continues to retain Smith, Gambrell & Russell, LLP (“SGR”), a law firm with which Mr. Paller holds a position. In the first nine months of 2023 the Company incurred fees from SGR of $0.2 million (first nine months of 2022 – $0.2 million). As at September 30, 2023, the Company owed $0.0 million to SGR (December 31, 2022 – $0.0 million).

Mr. David F. Landless has been a non-executive director of the Company since January 1, 2016 and is a non-executive director of Ausurus Group Limited which owns European Metal Recycling Limited (“EMR”). The Company has sold scrap metal to EMR in the first nine months of 2023 for a value of $0.1 million (first nine months of 2022 – $0.1 million). A tendering process is operated periodically to select the best buyer for the sale of scrap metal by the Company. As at September 30, 2023, EMR owed $0.0 million for scrap metal purchased from the Company (December 31, 2022 – $0.0 million).

Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations for the Three and Nine Months Ended September 30, 2023

This discussion should be read in conjunction with our unaudited interim condensed consolidated financial statements and the notes thereto.

CRITICAL ACCOUNTING ESTIMATES

The policies and estimates that the Company considers the most critical in terms of complexity and subjectivity of assessment are those related to environmental liabilities, pensions, income taxes, goodwill, property, plant and equipment and other intangible assets (net of depreciation and amortization). These policies have been discussed in the Company’s 2022 Form 10-K.

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 Ended September 30,						Nine Months Ended September 30,
(in millions)	2023			2022			2023			2022
Net sales:
Performance Chemicals	$	145.2		$	159.7		$	424.4		$	495.8
Fuel Specialties		169.3			178.7			513.8			546.9
Oilfield Services		149.6			174.6			515.9			410.3
	$	464.1		$	513.0		$	1,454.1		$	1,453.0
Gross profit:
Performance Chemicals	$	30.3		$	39.1		$	76.4		$	123.5
Fuel Specialties		53.0			53.4			155.2			171.0
Oilfield Services		53.9			63.5			203.8			140.6
	$	137.2		$	156.0		$	435.4		$	435.1
Operating income/(loss):
Performance Chemicals	$	16.9		$	25.4		$	36.5		$	79.5
Fuel Specialties		27.6			27.9			77.1			94.9
Oilfield Services		16.4			14.2			60.3			21.2
Corporate costs		(19.0	)		(17.4	)		(56.8	)		(54.9	)
Total operating income	$	41.9		$	50.1		$	117.1		$	140.7

Three Months Ended September 30, 2023

The following table shows the changes in sales, gross profit and operating expenses by reporting segment for the three months ended September 30, 2023 and the three months ended September 30, 2022:


	Three Months Ended September 30,
(in millions, except ratios)	2023			2022			Change
Net sales:
Performance Chemicals	$	145.2		$	159.7		$	(14.5	)	(9	)%
Fuel Specialties		169.3			178.7			(9.4	)	(5	)%
Oilfield Services		149.6			174.6			(25.0	)	(14	)%
	$	464.1		$	513.0		$	(48.9	)	(10	)%
Gross profit:
Performance Chemicals	$	30.3		$	39.1		$	(8.8	)	(23	)%
Fuel Specialties		53.0			53.4			(0.4	)	(1	)%
Oilfield Services		53.9			63.5			(9.6	)	(15	)%
	$	137.2		$	156.0		$	(18.8	)	(12	)%
Gross margin (%):
Performance Chemicals		20.9			24.5			(3.6	)
Fuel Specialties		31.3			29.9			1.4
Oilfield Services		36.0			36.4			(0.4	)
Aggregate		29.6			30.4			(0.8	)
Operating expenses:
Performance Chemicals	$	(13.4	)	$	(13.7	)	$	0.3		(2	)%
Fuel Specialties		(25.4	)		(25.5	)		0.1		(0	)%
Oilfield Services		(37.5	)		(49.3	)		11.8		(24	)%
Corporate costs		(19.0	)		(17.4	)		(1.6	)	9	%
	$	(95.3	)	$	(105.9	)	$	10.6		(10	)%

Performance Chemicals

Net sales: the table below details the components which comprise the year over year change in net sales spread across the markets in which we operate:


	Three Months Ended September 30, 2023
Change (%)	Americas		EMEA		ASPAC		Total
Volume		+11		+5		-16		+7
Price and product mix		-22		-17		-9		-19
Exchange rates		-		+6		+2		+3
		-11		-6		-23		-9

Higher sales volumes for the Americas and EMEA was due to increased demand from consumers, while ASPAC suffered from weaker demand. All our regions were negatively impacted by an adverse price and product mix primarily due to an adverse sales mix with the greater proportion of sales from lower priced products.

Gross margin: the year over year decrease of 3.6 percentage points was due to an adverse sales mix from reduced sales of higher margin products and the adverse impact of reduced manufacturing efficiency resulting from lower production volumes.

Operating expenses: decreased $0.3 million year over year, due to lower acquired intangibles amortization following the end of the expected life of the assets together with lower performance related remuneration accruals, being partly offset by higher research and development expenditure.

Fuel Specialties

Net sales: the table below details the components which comprise the year over year change in net sales spread across the markets in which we operate:


	Three Months Ended September 30, 2023
Change (%)	Americas		EMEA		ASPAC		AvGas		Total
Volume		-3		-11		-5		+20		-4
Price and product mix		-3		-2		-9		-6		-4
Exchange rates		-		+8		+2		-		+3
		-6		-5		-12		+14		-5

Sales volumes in all our regions have decreased year over year due to a reduction in the sales of lower margin higher volume products. Price and product mix was adverse, with a favorable sales mix being offset by lower pricing. AvGas volumes were higher than the prior year due to variations in the demand from customers, being partly offset by an adverse price and product mix with a higher proportion of sales to lower margin customers.

Gross margin: the year over year increase of 1.4 percentage points was driven by an improved sales mix from increased sales of higher margin products, partially offset by the continued impact of raw material and other inflationary pressures.

Operating expenses: the year over year decrease of $0.1 million was primarily due to lower provisions for doubtful debts and lower performance related remuneration accruals, being partly offset by higher research and development expenditure.

Oilfield Services

Net sales: have decreased year over year by $25.0 million, or 14 percent, with the majority of our customer activity concentrated in the Americas region. We believe that customer demand remains strong despite operating income growth beginning to moderate as we expected for the second half of the year. We remain on track for significant full year growth in 2023.

Gross margin: the year over year decrease of 0.4 percentage points was due to an unfavorable sales mix when compared to a strong prior year comparative.

Operating expenses: the year over year decrease of $11.8 million was driven by the lower customer service costs and commissions related to the lower demand from certain customers.

Other Income Statement Captions

Corporate costs: the year over year increase of $1.6 million was due to one-off acquisition related costs together with revaluation charges relating to our United Kingdom Emission Trading Scheme credits driven by the open market pricing.

Other net income/(expense): for the third quarter of 2023 and 2022, included the following:


(in millions)	2023		2022			Change
Net pension credit	$	1.8	$	1.2			0.6
Foreign exchange gains/(losses) on translation		2.6		(6.2	)		8.8
Foreign currency forward contracts gains/(losses)		0.4		4.1			(3.7	)
	$	4.8	$	(0.9	)	$	5.7

Interest income/(expense), net: was income of $0.8 million in the third quarter of 2023 compared to an expense of $0.3 million in the third quarter of 2022, driven by the higher interest income being earned in 2023 for our increasing cash balances.

Income taxes: the effective tax rate was 17.5% and 20.9% in the third quarter of 2023 and 2022, respectively. The adjusted effective tax rate, once adjusted for the items set out in the following table, was 17.6% in 2023 compared with 20.1% in 2022. The 2.5% decrease in the adjusted effective rate was primarily due to foreign currency fluctuations arising in the Company's non-U.S. operations and a lower proportion of the Company’s profits being generated in higher 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 Ended September 30,
(in millions)	2023			2022
Income before income taxes	$	47.5		$	48.9
Indemnification asset regarding tax audit		0.1			0.2
Adjustment for stock compensation		2.0			1.5
Acquisition costs		0.3			—
Legacy costs of closed operations		0.7			0.7
Adjusted income before income taxes	$	50.6		$	51.3
Income taxes	$	8.3		$	10.2
Tax on stock compensation		0.2			—
Adjustment of income tax provision		0.1			—
Tax on acquisition costs		0.1			—
Tax on legacy cost of closed operations		0.2			0.1
Adjusted income taxes	$	8.9		$	10.3
GAAP effective tax rate		17.5	%		20.9	%
Adjusted effective tax rate		17.6	%		20.1	%

Nine Months Ended September 30, 2023

The following table shows the changes in sales, gross profit and operating expenses by reporting segment for the nine months ended September 30, 2023 and the nine months ended September 30, 2022:


	Nine Months Ended September 30,
(in millions, except ratios)	2023			2022			Change
Net sales:
Performance Chemicals	$	424.4		$	495.8		$	(71.4	)	(14	)%
Fuel Specialties		513.8			546.9			(33.1	)	(6	)%
Oilfield Services		515.9			410.3			105.6		26	%
	$	1,454.1		$	1,453.0		$	1.1		0	%
Gross profit:
Performance Chemicals	$	76.4		$	123.5		$	(47.1	)	(38	)%
Fuel Specialties		155.2			171.0			(15.8	)	(9	)%
Oilfield Services		203.8			140.6			63.2		45	%
	$	435.4		$	435.1		$	0.3		0	%
Gross margin (%):
Performance Chemicals		18.0			24.9			(6.9	)
Fuel Specialties		30.2			31.3			(1.1	)
Oilfield Services		39.5			34.3			5.2
Aggregate		29.9			29.9			0.0
Operating expenses:
Performance Chemicals	$	(39.9	)	$	(44.0	)	$	4.1		(9	)%
Fuel Specialties		(78.1	)		(76.1	)		(2.0	)	3	%
Oilfield Services		(143.5	)		(119.4	)		(24.1	)	20	%
Corporate costs		(56.8	)		(54.9	)		(1.9	)	3	%
	$	(318.3	)	$	(294.4	)	$	(23.9	)	8	%

Performance Chemicals

Net sales: the table below details the components which comprise the year over year change in net sales spread across the markets in which we operate:


	Nine Months Ended September 30, 2023
Change (%)	Americas		EMEA		ASPAC		Total
Volume		-11		-3		-21		-8
Price and product mix		-10		-5		+3		-6
Exchange rates		-		-		-		-
		-21		-8		-18		-14

Lower sales volumes for all our regions were primarily driven by reduced demand for our personal care products resulting from cautious consumer demand together with the impact of destocking by our customers. The Americas and EMEA were impacted by an adverse price and product mix due to a higher proportion of lower priced products being sold. ASPAC benefited from a favorable price and product mix due to a higher proportion of higher priced products being sold.

Gross margin: the year over year decrease of 6.9 percentage points was due to an adverse sales mix from reduced sales of higher margin products and the adverse impact of reduced manufacturing efficiency resulting from lower production volumes.

Operating expenses: decreased $4.1 million year over year, due to lower selling expenses including commissions, lower performance-related remuneration accruals and lower acquired intangibles amortization following the end of the expected life of the assets.

Fuel Specialties

Net sales: the table below details the components which comprise the year over year change in net sales spread across the markets in which we operate:


	Nine Months Ended September 30, 2023
Change (%)	Americas		EMEA		ASPAC		AvGas		Total
Volume		-14		-15		-22		+6		-14
Price and product mix		+9		+10		+6		-12		+8
Exchange rates		-		-		-		-		-
		-5		-5		-16		-6		-6

Sales volumes in all our regions have decreased year over year, primarily due to a reduction in the sales of lower margin higher volume products. Price and product mix was favorable in all our regions due to an increased proportion of higher margin products being sold. AvGas volumes were higher than the prior year due to variations in the demand from customers, being offset by an adverse price and product mix due to a higher proportion of sales to lower margin customers.

Gross margin: the year over year decrease of 1.1 percentage points was primarily due to the impact of the Brazil inventory misappropriation and the ending of that trading relationship, being partly offset by a favorable sales mix from increased sales of higher margin products.

Operating expenses: the year over year increase of $2.0 million includes higher provisions for doubtful debts related to the ending of the Brazilian trading relationship, being partly offset by lower performance-related remuneration accruals.

Oilfield Services

Net sales: have increased year over year by $105.6 million, or 26 percent, with the majority of our customer activity concentrated in the Americas region. We believe that customer demand remains strong despite operating income growth beginning to moderate as expected for the second half of the year, and we remain on track for significant full year growth in 2023.

Gross margin: the year over year increase of 5.2 percentage points was due to a favorable sales mix and the benefit of improved pricing.

Operating expenses: the year over year increase of $24.1 million was driven by higher customer service costs which are necessary to support the increase in demand with certain customers, together with higher performance related remuneration accruals.

Other Income Statement Captions

Corporate costs: the year over year increase of $1.9 million was primarily due to one-off acquisition related costs.

Other net income/(expense): for the first nine months of 2023 and 2022, included the following:


(in millions)	2023			2022			Change
Net pension credit	$	5.2		$	3.7		$	1.5
Foreign exchange gains/(losses) on translation		7.2			(10.4	)		17.6
Foreign currency forward contracts gains/(losses)		(1.2	)		6.5			(7.7	)
	$	11.2		$	(0.2	)	$	11.4

Interest income/(expense), net: was income of $0.8 million in the first nine months of 2023 compared to an expense of $1.1 million in the first nine months of 2022. Interest income from our cash balances has increased in recent periods due to global increases in central bank interest rates. Interest expenses in the current and the prior year relate to the ongoing commitment fee the Company pays to retain the revolving credit facility during the term of the agreement.

Income taxes: the effective tax rate was 21.5% and 22.9% in the first nine months of 2023 and 2022, respectively. The adjusted effective tax rate, once adjusted for the items set out in the following table, was 21.4% in 2023 compared with 22.4% in 2022. The 1.0% decrease in the adjusted effective rate was primarily due to a lower proportion of the Company's profits being generated in higher tax jurisdictions, in addition to foreign currency fluctuations arising in the Company's non-U.S. operations which had a greater positive impact in the third quarter of 2023. 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:


	Nine Months Ended September 30,
(in millions)	2023			2022
Income before income taxes	$	129.1		$	139.4
Indemnification asset regarding tax audit		—			0.4
Adjustment for stock compensation		5.9			4.7
Acquisition costs		1.8			—
Legacy cost of closed operations		2.4			2.6
Adjusted income before income taxes	$	139.2		$	147.1
Income taxes	$	27.8		$	31.9
Tax on stock compensation		0.2			0.5
Adjustment of income tax provision		0.7			—
Tax on acquisition costs		0.5			—
Tax on legacy cost of closed operations		0.6			0.5
Adjusted income taxes	$	29.8		$	32.9
GAAP effective tax rate		21.5	%		22.9	%
Adjusted effective tax rate		21.4	%		22.4	%

LIQUIDITY AND FINANCIAL CONDITION

Working Capital

In the first nine months of 2023 our working capital increased by $52.7 million, while our adjusted working capital decreased by $20.4 million. The difference is primarily due to the exclusion of the increases for cash and cash equivalents, together with the changes for prepaid income taxes and the current portion of accrued 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.


(in millions)	September 30, 2023			December 31, 2022
Total current assets	$	863.7		$	872.6
Total current liabilities		(344.2	)		(405.8	)
Working capital		519.5			466.8
Less cash and cash equivalents		(207.2	)		(147.1	)
Less prepaid income taxes		(10.7	)		(3.3	)
Less other current assets		(1.4	)		(0.4	)
Add back current portion of accrued income taxes		15.2			18.4
Add back current portion of plant closure provisions		4.7			5.3
Add back current portion of operating lease liabilities		13.1			13.9
Adjusted working capital	$	333.2		$	353.6

We had a $29.4 million decrease in trade and other accounts receivable driven by positive cash collections. Days’ sales outstanding decreased in our Performance Chemicals segment from 60 days to 54 days; increased from 54 days to 55 days in our Fuel Specialties segment; and increased from 54 days to 62 days in our Oilfield Services segment.

We had a $41.6 million decrease in inventories, net of a $0.3 million increase in allowances, partially driven by lower production volumes in our Performance Chemicals segment together with the misappropriation of $7.4 million of inventory in Brazil during the first quarter of 2023. 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, despite some easing of the pressures during the year. Days’ sales in inventory decreased in our Performance Chemicals segment from 78 days to 60 days; increased from 138 days to 146 days in our Fuel Specialties segment; and increased from 58 days to 64 days in our Oilfield Services segment.

Prepaid expenses decreased $6.4 million, from $14.1 million to $7.7 million, primarily due to the normal expensing of prepaid invoices.

We had a $57.0 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) decreased in our Performance Chemicals segment from 42 days to 34 days; increased from 45 days to 46 days in our Fuel Specialties segment; and decreased from 54 days to 47 days in our Oilfield Services segment.

Operating Cash Flows

We generated cash from operating activities of $134.9 million in the first nine months of 2023 compared to cash outflows of $3.3 million in the first nine months of 2022. The increase in cash generated from operating activities

was principally related to decreases in working capital in the first nine months of 2023, compared to increases in working capital in the first nine months of 2022. The increases in 2022 were driven by higher trade receivables linked with revenue growth, together with the need to secure the supply of certain raw materials at that time.

Cash

At September 30, 2023 and December 31, 2022, we had cash and cash equivalents of $207.2 million and $147.1 million, respectively, of which $76.4 million and $76.4 million, respectively, were held by non-U.S. subsidiaries principally in the United Kingdom.

The increase in cash and cash equivalents of $60.1 million for the first nine months of 2023 was driven by our positive trading cash flow generation, being partly offset by the timing of tax payments, our continued investments in capital projects and the payment of our semi-annual dividend.

Debt

At September 30, 2023, and December 31, 2022, we had no debt outstanding under the revolving credit facility and no obligations were outstanding under finance leases.

On May 31, 2023, Innospec Inc. and certain subsidiaries of the Company entered into a Multicurrency Revolving Facility Agreement with various lenders, providing for a $250,000,000 four-year multicurrency revolving loan facility. The termination date of the facility is May 30, 2027, but the Company has an option to request an extension of the facility for a further year. This agreement replaced the Company’s credit facility agreement dated September 26, 2019. See Note 8 of the Notes to the Condensed Consolidated Financial Statements for additional information.

Item 3 Quantitative and Qualitative Disclosures about Market Risk

The Company uses floating rate debt to finance its global operations. The Company is subject to business risks inherent in non-U.S. activities, including political and economic uncertainty, import and export limitations, and market risk related to changes in interest rates and foreign currency exchange rates. The political and economic risks are mitigated by the stability of the major countries in which the Company’s largest operations are located. Credit limits, ongoing credit evaluation and account monitoring procedures are used to minimize bad debt risk. Collateral is not generally required.

From time to time, the Company uses derivatives, including interest rate swaps, commodity swaps and foreign currency forward exchange contracts, in the normal course of business to manage market risks. The derivatives used in hedging activities are considered risk management tools and are not used for trading purposes. In addition, the Company enters into derivative instruments with a diversified group of major financial institutions in order to manage the exposure to non-performance of such instruments. The Company’s objective in managing the exposure to changes in interest rates is to limit the impact of such changes on earnings and cash flows and to lower overall borrowing costs. The Company’s objective in managing the exposure to changes in foreign currency exchange rates is to reduce volatility on earnings and cash flows associated with such changes.

The Company offers fixed prices for some long-term sales contracts. As manufacturing and raw material costs are subject to variability, the Company, from time to time, uses commodity swaps to hedge the cost of some raw materials thus reducing volatility on earnings and cash flows. The derivatives are considered risk management tools and are not used for trading purposes. The Company’s objective is to manage its exposure to fluctuating costs of raw materials.

The Company’s exposure to market risk has been discussed in the Company’s 2022 Form 10-K and there have been no significant changes since that time.

Item 4 Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Based on an evaluation carried out as of the end of the period covered by this report, under the supervision and with the participation of our management, our Chief Executive Officer and our Chief Financial Officer concluded that the Company’s “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934) were effective as of September 30, 2023, to provide reasonable assurance that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and (ii) accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

The Company is continuously seeking to improve the efficiency and effectiveness of its operations and of its internal control over financial reporting. This is intended to result in refinements to processes throughout the Company.

There were no changes to our internal control over financial reporting which were identified in connection with the evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II OTHER INFORMATION

Item 1 Legal Proceedings

Legal matters

Item 1A Risk Factors

Information regarding risk factors that could have a material impact on our results of operations or financial condition are described under “Risk Factors” in Item 1A of Part I of our 2022 Form 10-K. In management’s view, there have been no material changes in the risk factors facing the Company as disclosed in those SEC filings.

Item 2 Unregistered Sales of Equity Securities and Use of Proceeds

There have been no unregistered sales of equity securities.

During the quarter ended September 30, 2023, the Company did not repurchase any of its common stock.

Item 3 Defaults Upon Senior Securities

None.

Item 4 Mine Safety Disclosures

Not applicable.

Item 5 Other Information

(a), (b), and (c) – None.

Item 6 Exhibits


31.1		Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2		Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101		XBRL Instance Document and Related Item - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.
104		Cover Page Interactive Data File – The cover page XBRL tags are embedded within the inline XBRL document.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


		INNOSPEC INC.
	Registrant

Date: November 8, 2023	By	/s/ PATRICK S. WILLIAMS
		Patrick S. Williams President and Chief Executive Officer

Date: November 8, 2023	By	/s/ IAN P. CLEMINSON
		Ian P. Cleminson Executive Vice President and Chief Financial Officer

Exhibit 31.1

CERTIFICATION BY PATRICK S. WILLIAMS PURSUANT TO

SECURITIES EXCHANGE ACT 1934 RULE 13a-14 and 15d-14

I, Patrick S. Williams, certify that:

I have reviewed this quarterly report on Form 10-Q of Innospec Inc.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and

15d-15(f)) for the registrant and have:

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ PATRICK S. WILLIAMS

Patrick S. Williams

President and Chief Executive Officer

November 8, 2023

Exhibit 31.2

CERTIFICATION BY IAN P. CLEMINSON PURSUANT TO

SECURITIES EXCHANGE ACT 1934 RULE 13a-14 and 15d-14

I, Ian P. Cleminson, certify that:

I have reviewed this quarterly report on Form 10-Q of Innospec Inc.;

15d-15(f)) for the registrant and have:

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ IAN P. CLEMINSON

Ian P. Cleminson

Executive Vice President and Chief Financial Officer

November 8, 2023

Exhibit 32.1

Section 1350 Certification

by Patrick S. Williams

In connection with the Quarterly Report on Form 10-Q of Innospec Inc. (the “Company”) for the period ended September 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Patrick S. Williams, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ PATRICK S. WILLIAMS

Patrick S. Williams

President and Chief Executive Officer

November 8, 2023

The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of this Report or as a separate disclosure document.

A signed original of this written statement required by 18 U.S.C. § 1350 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission upon request.

Exhibit 32.2

Section 1350 Certification

by Ian P. Cleminson

In connection with the Quarterly Report on Form 10-Q of Innospec Inc. (the “Company”) for the period ended September 30,2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Ian P. Cleminson, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ IAN P. CLEMINSON

Executive Vice President and Chief Financial Officer

Ian P. Cleminson

November 8, 2023

The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of this Report or as a separate disclosure document.

Cover Page - shares	9 Months Ended
Cover Page - shares	Sep. 30, 2023	Nov. 01, 2023
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q3
Document Quarterly Report	true
Document Transition Report	false
Current Fiscal Year End Date	--12-31
Document Period End Date	Sep. 30, 2023
Securities Act File Number	1-13879
Entity Registrant Name	INNOSPEC INC.
Entity Central Index Key	0001054905
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	98-0181725
City Area Code	303
Entity Address, Postal Zip Code	80112
Local Phone Number	792 5554
Security Exchange Name	NASDAQ
Title of 12(b) Security	Common stock
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		24,865,799
Entity Address, Address Line One	8310 South Valley Highway
Entity Address, Address Line Two	Suite 350
Entity Address, City or Town	Englewood
Entity Address, State or Province	CO
Trading Symbol	IOSP
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes

Condensed Consolidated Statements of Income (Unaudited) - USD ($) shares in Thousands, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Income Statement [Abstract]
Net sales	$ 464.1	$ 513.0	$ 1,454.1	$ 1,453.0
Cost of goods sold	(326.9)	(357.0)	(1,018.7)	(1,017.9)
Gross profit	137.2	156.0	435.4	435.1
Operating expenses:
Selling, general and administrative	(83.7)	(95.8)	(285.5)	(264.1)
Research and development	(11.6)	(10.1)	(32.8)	(30.3)
Total operating expenses	(95.3)	(105.9)	(318.3)	(294.4)
Operating income	41.9	50.1	117.1	140.7
Other income/(expense), net	4.8	(0.9)	11.2	(0.2)
Interest income/(expense), net	0.8	(0.3)	0.8	(1.1)
Income before income tax expense	47.5	48.9	129.1	139.4
Income tax expense	(8.3)	(10.2)	(27.8)	(31.9)
Net income	$ 39.2	$ 38.7	$ 101.3	$ 107.5
Earnings per share:
Basic	$ 1.58	$ 1.56	$ 4.08	$ 4.34
Diluted	$ 1.57	$ 1.55	$ 4.05	$ 4.3
Weighted average shares outstanding (in thousands):
Basic	24,866	24,786	24,845	24,794
Diluted	25,006	24,965	25,000	24,976

Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Statement of Comprehensive Income [Abstract]
Net income	$ 39.2	$ 38.7	$ 101.3	$ 107.5
Changes in cumulative translation adjustment, net of tax of $0.5 million, $1.0 million, $(0.2) million and $2.2 million, respectively	(7.9)	(16.4)	(1.8)	(37.1)
Amortization of prior service cost, net of tax of $(0.1) million, $0.0 million, $(0.1) million and $(0.1) million, respectively	0.1	0.1	0.3	0.3
Amortization of actuarial net losses/(gains), net of tax of $0.2 million, $0.0 million, $0.4 million and $0.0 million, respectively	(0.4)	0.1	(1.2)	0.4
Total other comprehensive income/(loss)	(8.2)	(16.2)	(2.7)	(36.4)
Total comprehensive income	$ 31.0	$ 22.5	$ 98.6	$ 71.1

Condensed Consolidated Statements of Comprehensive Income (Parenthetical) (Unaudited) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Statement of Comprehensive Income [Abstract]
Changes in cumulative translation adjustment, tax	$ 0.5	$ 1.0	$ (0.2)	$ 2.2
Amortization of prior service credit, tax	0.1	0.0	0.1	0.1
Amortization of actuarial net losses, tax	$ 0.2	$ 0.0	$ 0.4	$ 0.0

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Millions	Sep. 30, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 207.2	$ 147.1
Trade and other accounts receivable (less allowances of $9.6 million and $7.7 million respectively)	305.2	334.6
Inventories (less allowances of $27.2 million and $27.1 million respectively):
Finished goods	234.0	259.3
Raw materials	97.5	113.8
Total inventories	331.5	373.1
Prepaid expenses	7.7	14.1
Prepaid income taxes	10.7	3.3
Other current assets	1.4	0.4
Total current assets	863.7	872.6
Net property, plant and equipment	244.6	220.9
Operating lease right-of-use assets	42.5	45.3
Goodwill	357.9	358.8
Net book amount at September 30	47.8	45.0
Deferred tax assets	5.9	5.9
Pension asset	49.7	48.1
Other non-current assets	6.5	7.1
Total assets	1,618.6	1,603.7
Current liabilities:
Accounts payable	146.1	165.3
Accrued liabilities	165.1	202.9
Current portion of operating lease liabilities	13.1	13.9
Current portion of plant closure provisions	4.7	5.3
Current portion of accrued income taxes	15.2	18.4
Total current liabilities	344.2	405.8
Operating lease liabilities, net of current portion	29.4	31.4
Plant closure provisions, net of current portion	51.1	51.9
Accrued income taxes, net of current portion	11.6	21.0
Unrecognized tax benefits	14.1	13.4
Deferred tax liabilities	26.4	26.2
Pension liabilities and post-employment benefits	12.2	12.2
Other non-current liabilities	1.5	1.4
Total liabilities	490.5	563.3
Equity:
Common stock, $0.01 par value, authorized 40,000,000 shares, issued 29,554,500 shares	0.3	0.3
Additional paid-in capital	358.9	354.1
Treasury stock (4,688,514 and 4,788,966 shares at cost, respectively)	(94.2)	(95.4)
Retained earnings	1,008.3	924.2
Accumulated other comprehensive loss	(147.9)	(145.2)
Total Innospec stockholders' equity	1,125.4	1,038.0
Non-controlling interest	2.7	2.4
Total equity	1,128.1	1,040.4
Total liabilities and equity	$ 1,618.6	$ 1,603.7

Condensed Consolidated Balance Sheets (Parenthetical) (Unaudited) - USD ($) $ in Millions	Sep. 30, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Allowances for doubtful accounts	$ 7.8	$ 7.7
Inventory allowances	$ 27.4	$ 27.1
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	40,000,000	40,000,000
Common stock, shares issued	29,554,500	29,554,500
Treasury stock, shares	4,687,975	4,788,966

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Cash Flows from Operating Activities
Net income	$ 101.3	$ 107.5
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	29.1	30.9
Deferred taxes	0.5	0.6
Non-cash movements on defined benefit pension plans	(2.5)	(1.9)
Stock option compensation	5.9	4.7
Changes in assets and liabilities, net of effects of acquired and divested companies:
Trade and other accounts receivable	29.5	(70.1)
Inventories	42.0	(112.6)
Prepaid expenses	6.5	11.2
Accounts payable and accrued liabilities	(57.2)	38.9
Plant closure provisions	(1.2)	0.3
Accrued income taxes	(20.2)	(4.0)
Unrecognized tax benefits	0.7	0.0
Other assets and liabilities	0.5	(2.2)
Net cash provided by/(used in) operating activities	134.9	3.3
Cash Flows from Investing Activities
Capital expenditures	(45.2)	(27.1)
Internally developed software	(10.8)	0.0
Proceeds on disposal of property, plant and equipment	0.0	0.1
Net cash used in investing activities	(56.0)	(27.0)
Cash Flows from Financing Activities
Non-controlling interest	0.3	1.9
Proceeds from revolving credit facility	0.0	0.0
Repayments of revolving credit facility	0.0	0.0
Repayments of finance leases	0.0	(0.1)
Refinancing costs	(1.4)	0.0
Dividend paid	(17.2)	(15.6)
Issue of treasury stock	0.7	2.1
Repurchase of common stock	(1.0)	(5.0)
Net cash used in financing activities	(18.6)	(16.7)
Effect of foreign currency exchange rate changes on cash	(0.2)	(0.9)
Net change in cash and cash equivalents	60.1	(41.3)
Cash and cash equivalents at beginning of period	147.1	141.8
Cash and cash equivalents at end of period	$ 207.2	$ 100.5

Condensed Consolidated Statements of Equity (Unaudited) - USD ($) $ in Millions	Total	Common Stock [Member]	Additional Paid-In Capital [Member]	Treasury Stock [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Loss [Member]	Non-Controlling Interest [Member]
Beginning Balance at Dec. 31, 2021	$ 1,033.0	$ 0.3	$ 346.7	$ (90.6)	$ 822.9	$ (46.9)	$ 0.6
Net income	107.5				107.5
Dividend paid	(15.6)				(15.6)
Changes in cumulative translation adjustment, net of tax	(37.1)					(37.1)
Non-controlling interest	1.8						1.8
Share of net income	0.1						0.1
Treasury stock reissued	1.8		0.8	1.0
Treasury stock repurchased	(5.0)			(5.0)
Stock option compensation	4.7		4.7
Amortization of prior service cost, net of tax	0.3					0.3
Amortization of actuarial net losses, net of tax	0.4					0.4
Ending Balance at Sep. 30, 2022	1,091.9	0.3	352.2	(94.6)	914.8	(83.3)	2.5
Beginning Balance at Jun. 30, 2022	1,068.6	0.3	350.9	(92.3)	876.1	(67.1)	0.7
Net income	38.7				38.7
Changes in cumulative translation adjustment, net of tax	(16.4)					(16.4)
Non-controlling interest	1.8						1.8
Treasury stock reissued	(0.2)		(0.2)
Treasury stock repurchased	(2.3)			(2.3)
Stock option compensation	1.5		1.5
Amortization of prior service cost, net of tax	0.1					0.1
Amortization of actuarial net losses, net of tax	0.1					0.1
Ending Balance at Sep. 30, 2022	1,091.9	0.3	352.2	(94.6)	914.8	(83.3)	2.5
Beginning Balance at Dec. 31, 2022	1,040.4	0.3	354.1	(95.4)	924.2	(145.2)	2.4
Net income	101.3				101.3
Dividend paid	(17.2)				(17.2)
Changes in cumulative translation adjustment, net of tax	(1.8)					(1.8)
Share of net income	0.3						0.3
Treasury stock reissued	1.1		(1.1)	2.2
Treasury stock repurchased	(1.0)			(1.0)
Stock option compensation	5.9		5.9
Amortization of prior service cost, net of tax	0.3					0.3
Amortization of actuarial net losses, net of tax	(1.2)					(1.2)
Ending Balance at Sep. 30, 2023	1,128.1	0.3	358.9	(94.2)	1,008.3	(147.9)	2.7
Beginning Balance at Jun. 30, 2023	1,094.8	0.3	356.7	(94.2)	969.1	(139.7)	2.6
Net income	39.2				39.2
Changes in cumulative translation adjustment, net of tax	(7.9)					(7.9)
Share of net income	0.1						0.1
Treasury stock reissued	0.3		0.2	0.1
Treasury stock repurchased	(0.1)			(0.1)
Stock option compensation	2.0		2.0
Amortization of prior service cost, net of tax	0.1					0.1
Amortization of actuarial net losses, net of tax	(0.4)					(0.4)
Ending Balance at Sep. 30, 2023	$ 1,128.1	$ 0.3	$ 358.9	$ (94.2)	$ 1,008.3	$ (147.9)	$ 2.7

Condensed Consolidated Statements of Equity (Parenthetical) (Unaudited) - $ / shares	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Statement of Stockholders' Equity [Abstract]
Dividend paid, per share	$ 0.69	$ 0.63

Insider Trading Arrangements	9 Months Ended
Insider Trading Arrangements	Sep. 30, 2023
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

Basis of Presentation

9 Months Ended

Sep. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

NOTE 1 – BASIS OF PRESENTATION

The results for the interim period covered by this report are not necessarily indicative of the results to be expected for the full year.

Segment Reporting

9 Months Ended

Sep. 30, 2023

Segment Reporting [Abstract]

Segment Reporting

NOTE 2 – SEGMENT REPORTING

The Company reports its financial performance based on three reportable segments, which are Performance Chemicals, Fuel Specialties and Oilfield Services.

The Company evaluates the performance of its segments based on operating income. The following table analyzes sales and other financial information by the Company’s reportable segments:


	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2023			2022			2023			2022
Net Sales:
Personal Care	$	97.0		$	102.4		$	263.8		$	311.1
Home Care		22.3			22.6			65.7			72.3
Other		25.9			34.7			94.9			112.4
Performance Chemicals		145.2			159.7			424.4			495.8
Refinery and Performance		126.0			133.2			394.6			405.5
Other		43.3			45.5			119.2			141.4
Fuel Specialties		169.3			178.7			513.8			546.9
Oilfield Services		149.6			174.6			515.9			410.3
	$	464.1		$	513.0		$	1,454.1		$	1,453.0
Operating income/(loss):
Performance Chemicals	$	16.9		$	25.4		$	36.5		$	79.5
Fuel Specialties		27.6			27.9			77.1			94.9
Oilfield Services		16.4			14.2			60.3			21.2
Corporate costs		(19.0	)		(17.4	)		(56.8	)		(54.9	)
Total operating income	$	41.9		$	50.1		$	117.1		$	140.7

Earnings Per Share

9 Months Ended

Sep. 30, 2023

Earnings Per Share [Abstract]

Earnings per Share

NOTE 3 – EARNINGS PER SHARE


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Numerator (in millions):
Net income available to common stockholders	$	39.2	$	38.7	$	101.3	$	107.5
Denominator (in thousands):
Weighted average common shares outstanding		24,866		24,786		24,845		24,794
Dilutive effect of stock options and awards		140		179		155		182
Denominator for diluted earnings per share		25,006		24,965		25,000		24,976
Net income per share, basic:	$	1.58	$	1.56	$	4.08	$	4.34
Net income per share, diluted:	$	1.57	$	1.55	$	4.05	$	4.30

Goodwill

9 Months Ended

Sep. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

NOTE 4 – GOODWILL

The following table summarizes the goodwill movements in the year:


(in millions)	Gross Cost
Opening balance at January 1, 2023	$	358.8
Exchange effect		(0.9	)
Closing balance at September 30, 2023	$	357.9

The exchange effect for the nine months ended September 30, 2023 was $0.9 million relating to our Performance Chemicals segment.

Other Intangible Assets

9 Months Ended

Sep. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Other Intangible Assets

NOTE 5 – OTHER INTANGIBLE ASSETS

The following table analyzes other intangible assets movements in the year:


(in millions)	2023
Gross cost at January 1	$	291.1
Additions		10.8
Exchange effect		(0.3	)
Gross cost at September 30		301.6
Accumulated amortization at January 1		(246.1	)
Amortization expense		(8.0	)
Exchange effect		0.3
Accumulated amortization at September 30		(253.8	)
Net book amount at September 30	$	47.8

The amortization expense for the nine months ended September 30, 2023 was $8.0 million (nine months ended September 30, 2022 – $11.4 million).

Pension and Post-Employment Benefits

9 Months Ended

Sep. 30, 2023

Retirement Benefits [Abstract]

Pension and Post-Employment Benefits

NOTE 6 – PENSION AND POST EMPLOYMENT BENEFITS

The net periodic benefit of these plans is shown in the following table:


	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2023			2022			2023			2022
Service cost	$	(0.9	)	$	(0.6	)	$	(2.7	)	$	(1.8	)
Interest cost on projected benefit obligation		(5.1	)		(2.4	)		(15.0	)		(7.8	)
Expected return on plan assets		6.5			3.8			19.0			12.3
Amortization of prior service cost		(0.2	)		(0.1	)		(0.4	)		(0.4	)
Amortization of actuarial net gains/(losses)		0.6			(0.1	)		1.6			(0.4	)
Net periodic benefit	$	0.9		$	0.6		$	2.5		$	1.9

Income Taxes

9 Months Ended

Sep. 30, 2023

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 7 – INCOME TAXES

A roll-forward of unrecognized tax benefits and associated accrued interest and penalties is as follows:


(in millions)	Unrecognized Tax Benefits		Interest and Penalties		Total
Opening balance at January 1, 2023	$	10.2	$	3.2	$	13.4
Net change for tax positions of prior periods		—		0.7		0.7
Closing balance at September 30, 2023		10.2		3.9		14.1
Current		—		—		—
Non-current	$	10.2	$	3.9	$	14.1

All of the $14.1 million of unrecognized tax benefits, interest and penalties would impact our effective tax rate if recognized.

Long-Term Debt

9 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

Long-Term Debt

NOTE 8 – LONG-TERM DEBT

As at September 30, 2023, and December 31, 2022, the Company had not drawn down on its revolving credit facility.

Plant Closure Provisions

9 Months Ended

Sep. 30, 2023

Restructuring and Related Activities [Abstract]

Plant Closure Provisions

NOTE 9 – PLANT CLOSURE PROVISIONS

Movements in the provisions are summarized as follows:


(in millions)	2023
Total at January 1	$	57.2
Charge for the period		2.7
Utilized in the period		(3.9	)
Exchange effect		(0.2	)
Total at September 30		55.8
Due within one year		(4.7	)
Due after one year	$	51.1

Fair Value Measurements

9 Months Ended

Sep. 30, 2023

Fair Value Disclosures [Abstract]

Fair Value Measurements

NOTE 10 – FAIR VALUE MEASUREMENTS

The following table presents the carrying amount and fair values of the Company’s financial assets and liabilities measured on a recurring basis:


	September 30, 2023				December 31, 2022
(in millions)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets
Non-derivatives:
Cash and cash equivalents	$	207.2	$	207.2	$	147.1	$	147.1
Derivatives (Level 1 measurement):
Other current and non-current assets:
Foreign currency forward exchange contracts		1.0		1.0		—		—
Emissions Trading Scheme credits		3.2		3.2		2.7		2.7
Liabilities
Derivatives (Level 1 measurement):
Other current and non-current liabilities:
Foreign currency forward exchange contracts		—		—		0.5		0.5
Non-financial liabilities (Level 3 measurement):
Other current and non-current liabilities:
Stock equivalent units		17.4		17.4		26.4		26.4

The following methods and assumptions were used to estimate the fair values:

Cash and cash equivalents: The carrying amount approximates fair value because of the short-term maturities of such instruments.

Emissions Trading Scheme credits: The fair value is determined by the open market pricing at the end of the reporting period.

Stock equivalent units: The fair values of stock equivalent units are calculated at each balance sheet date using either the Black-Scholes or Monte Carlo method depending on the terms of each grant.

Derivative Instruments and Risk Management

9 Months Ended

Sep. 30, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Risk Management

NOTE 11 – DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT

Contingencies

9 Months Ended

Sep. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Contingencies

NOTE 12 – CONTINGENCIES

Legal matters

Guarantees

Stock-Based Compensation Plans

9 Months Ended

Sep. 30, 2023

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation Plans

NOTE 13 – STOCK-BASED COMPENSATION PLANS

The following table summarizes the transactions of the Company’s share-based compensation plans for the nine months ended September 30, 2023.


	Number of shares			Weighted Average Grant-Date Fair Value
Nonvested at December 31, 2022		757,040		$	69.0
Granted		159,322		$	94.3
Vested		(208,803	)	$	66.3
Forfeited		(50,911	)	$	77.1
Nonvested at September 30, 2023		656,648		$	75.1

New grants in the quarter have similar vesting conditions to those granted in previous periods. The valuation methodologies of the new grants are consistent with previous periods.

Reclassifications out of Accumulated Other Comprehensive Loss

9 Months Ended

Sep. 30, 2023

Equity [Abstract]

Reclassifications out of Accumulated Other Comprehensive Loss

NOTE 14 – RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE LOSS

Reclassifications out of accumulated other comprehensive loss (“AOCL”) for the first nine months of 2023 were:


(in millions) Details about AOCL Components	Amount Reclassified from AOCL			Affected Line Item in the Statement where Net Income is Presented
Defined benefit pension plan items:
Amortization of prior service cost	$	0.4		See (1) below
Amortization of actuarial net gains		(1.6	)	See (1) below
		(1.2	)	Total before tax
		0.3		Income tax expense
Total reclassifications	$	(0.9	)	Net of tax

(1)

These items are included in other income and expense. See Note 6 of the Notes to the Condensed Consolidated Financial Statements for additional information.

Changes in AOCL for the first nine months of 2023, net of tax, were:


(in millions)	Defined Benefit Pension Plan Items			Cumulative Translation Adjustments			Total
Balance at December 31, 2022	$	(58.4	)	$	(86.8	)	$	(145.2	)
Other comprehensive income before reclassifications		—			(1.8	)		(1.8	)
Amounts reclassified from AOCL		(0.9	)		—			(0.9	)
Total other comprehensive income/(loss)		(0.9	)		(1.8	)		(2.7	)
Balance at September 30, 2023	$	(59.3	)	$	(88.6	)	$	(147.9	)

Reclassifications out of AOCL for the first nine months of 2022 were:


(in millions) Details about AOCL Components	Amount Reclassified from AOCL			Affected Line Item in the Statement where Net Income is Presented
Defined benefit pension plan items:
Amortization of prior service cost	$	0.4		See (1) below
Amortization of actuarial net losses		0.4		See (1) below
		0.8		Total before tax
		(0.1	)	Income tax expense
Total reclassifications	$	0.7		Net of tax

(1)

These items are included in other income and expense. See Note 6 of the Notes to the Condensed Consolidated Financial Statements for additional information.

Changes in AOCL for the first nine months of 2022, net of tax, were:


(in millions)	Defined Benefit Pension Plan Items		Cumulative Translation Adjustments			Total
Balance at December 31, 2021	$	10.7	$	(57.6	)	$	(46.9	)
Other comprehensive income before reclassifications		—		(37.1	)		(37.1	)
Amounts reclassified from AOCL		0.7		—			0.7
Total other comprehensive income/(loss)		0.7		(37.1	)		(36.4	)
Balance at September 30, 2022	$	11.4	$	(94.7	)	$	(83.3	)

Recently Issued Accounting Pronouncements

9 Months Ended

Sep. 30, 2023

Accounting Changes and Error Corrections [Abstract]

Recently Issued Accounting Pronouncements

NOTE 15 – RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Related Party Transactions

9 Months Ended

Sep. 30, 2023

Related Party Transactions

NOTE 16 – RELATED PARTY TRANSACTIONS

Segment Reporting (Tables)

9 Months Ended

Sep. 30, 2023

Segment Reporting [Abstract]

Segment Reporting

The Company evaluates the performance of its segments based on operating income. The following table analyzes sales and other financial information by the Company’s reportable segments:


	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2023			2022			2023			2022
Net Sales:
Personal Care	$	97.0		$	102.4		$	263.8		$	311.1
Home Care		22.3			22.6			65.7			72.3
Other		25.9			34.7			94.9			112.4
Performance Chemicals		145.2			159.7			424.4			495.8
Refinery and Performance		126.0			133.2			394.6			405.5
Other		43.3			45.5			119.2			141.4
Fuel Specialties		169.3			178.7			513.8			546.9
Oilfield Services		149.6			174.6			515.9			410.3
	$	464.1		$	513.0		$	1,454.1		$	1,453.0
Operating income/(loss):
Performance Chemicals	$	16.9		$	25.4		$	36.5		$	79.5
Fuel Specialties		27.6			27.9			77.1			94.9
Oilfield Services		16.4			14.2			60.3			21.2
Corporate costs		(19.0	)		(17.4	)		(56.8	)		(54.9	)
Total operating income	$	41.9		$	50.1		$	117.1		$	140.7

Earnings per Share (Tables)

9 Months Ended

Sep. 30, 2023

Earnings Per Share [Abstract]

Summary of Earnings Per Share


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Numerator (in millions):
Net income available to common stockholders	$	39.2	$	38.7	$	101.3	$	107.5
Denominator (in thousands):
Weighted average common shares outstanding		24,866		24,786		24,845		24,794
Dilutive effect of stock options and awards		140		179		155		182
Denominator for diluted earnings per share		25,006		24,965		25,000		24,976
Net income per share, basic:	$	1.58	$	1.56	$	4.08	$	4.34
Net income per share, diluted:	$	1.57	$	1.55	$	4.05	$	4.30

Goodwill (Tables)

9 Months Ended

Sep. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Summary of Goodwill

The following table summarizes the goodwill movements in the year:


(in millions)	Gross Cost
Opening balance at January 1, 2023	$	358.8
Exchange effect		(0.9	)
Closing balance at September 30, 2023	$	357.9

Other Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Summary of Other Intangible Assets

The following table analyzes other intangible assets movements in the year:


(in millions)	2023
Gross cost at January 1	$	291.1
Additions		10.8
Exchange effect		(0.3	)
Gross cost at September 30		301.6
Accumulated amortization at January 1		(246.1	)
Amortization expense		(8.0	)
Exchange effect		0.3
Accumulated amortization at September 30		(253.8	)
Net book amount at September 30	$	47.8

Pension and Post-Employment Benefits (Tables)

9 Months Ended

Sep. 30, 2023

Plan Net Pension Credit

The net periodic benefit of these plans is shown in the following table:


	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2023			2022			2023			2022
Service cost	$	(0.9	)	$	(0.6	)	$	(2.7	)	$	(1.8	)
Interest cost on projected benefit obligation		(5.1	)		(2.4	)		(15.0	)		(7.8	)
Expected return on plan assets		6.5			3.8			19.0			12.3
Amortization of prior service cost		(0.2	)		(0.1	)		(0.4	)		(0.4	)
Amortization of actuarial net gains/(losses)		0.6			(0.1	)		1.6			(0.4	)
Net periodic benefit	$	0.9		$	0.6		$	2.5		$	1.9

Income Taxes (Tables)

9 Months Ended

Sep. 30, 2023

Income Tax Disclosure [Abstract]

Roll-forward of Unrecognized Tax Benefits and Associated Accrued Interest and Penalties

A roll-forward of unrecognized tax benefits and associated accrued interest and penalties is as follows:


(in millions)	Unrecognized Tax Benefits		Interest and Penalties		Total
Opening balance at January 1, 2023	$	10.2	$	3.2	$	13.4
Net change for tax positions of prior periods		—		0.7		0.7
Closing balance at September 30, 2023		10.2		3.9		14.1
Current		—		—		—
Non-current	$	10.2	$	3.9	$	14.1

Plant Closure Provisions (Tables)

9 Months Ended

Sep. 30, 2023

Restructuring and Related Activities [Abstract]

Movements in Plant Closure and Restructuring Provisions

Movements in the provisions are summarized as follows:


(in millions)	2023
Total at January 1	$	57.2
Charge for the period		2.7
Utilized in the period		(3.9	)
Exchange effect		(0.2	)
Total at September 30		55.8
Due within one year		(4.7	)
Due after one year	$	51.1

Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2023

Fair Value Disclosures [Abstract]

Carrying Amount and Fair Values of the Company's Assets and Liabilities Measured on a Recurring Basis

The following table presents the carrying amount and fair values of the Company’s financial assets and liabilities measured on a recurring basis:


	September 30, 2023				December 31, 2022
(in millions)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets
Non-derivatives:
Cash and cash equivalents	$	207.2	$	207.2	$	147.1	$	147.1
Derivatives (Level 1 measurement):
Other current and non-current assets:
Foreign currency forward exchange contracts		1.0		1.0		—		—
Emissions Trading Scheme credits		3.2		3.2		2.7		2.7
Liabilities
Derivatives (Level 1 measurement):
Other current and non-current liabilities:
Foreign currency forward exchange contracts		—		—		0.5		0.5
Non-financial liabilities (Level 3 measurement):
Other current and non-current liabilities:
Stock equivalent units		17.4		17.4		26.4		26.4

Stock-Based Compensation Plans (Tables)

9 Months Ended

Sep. 30, 2023

Summary of Transactions of the Share Based Compensation Plans

The following table summarizes the transactions of the Company’s share-based compensation plans for the nine months ended September 30, 2023.


	Number of shares			Weighted Average Grant-Date Fair Value
Nonvested at December 31, 2022		757,040		$	69.0
Granted		159,322		$	94.3
Vested		(208,803	)	$	66.3
Forfeited		(50,911	)	$	77.1
Nonvested at September 30, 2023		656,648		$	75.1

Reclassifications out of Accumulated Other Comprehensive Loss (Tables)

9 Months Ended

Sep. 30, 2023

Equity [Abstract]

Summary of Reclassifications Out of Accumulated Other Comprehensive Loss

Reclassifications out of accumulated other comprehensive loss (“AOCL”) for the first nine months of 2023 were:


(in millions) Details about AOCL Components	Amount Reclassified from AOCL			Affected Line Item in the Statement where Net Income is Presented
Defined benefit pension plan items:
Amortization of prior service cost	$	0.4		See (1) below
Amortization of actuarial net gains		(1.6	)	See (1) below
		(1.2	)	Total before tax
		0.3		Income tax expense
Total reclassifications	$	(0.9	)	Net of tax

(1)

These items are included in other income and expense. See Note 6 of the Notes to the Condensed Consolidated Financial Statements for additional information.

Reclassifications out of AOCL for the first nine months of 2022 were:


(in millions) Details about AOCL Components	Amount Reclassified from AOCL			Affected Line Item in the Statement where Net Income is Presented
Defined benefit pension plan items:
Amortization of prior service cost	$	0.4		See (1) below
Amortization of actuarial net losses		0.4		See (1) below
		0.8		Total before tax
		(0.1	)	Income tax expense
Total reclassifications	$	0.7		Net of tax

(1)

These items are included in other income and expense. See Note 6 of the Notes to the Condensed Consolidated Financial Statements for additional information.

Changes in Accumulated Other Comprehensive Loss

Changes in AOCL for the first nine months of 2023, net of tax, were:


(in millions)	Defined Benefit Pension Plan Items			Cumulative Translation Adjustments			Total
Balance at December 31, 2022	$	(58.4	)	$	(86.8	)	$	(145.2	)
Other comprehensive income before reclassifications		—			(1.8	)		(1.8	)
Amounts reclassified from AOCL		(0.9	)		—			(0.9	)
Total other comprehensive income/(loss)		(0.9	)		(1.8	)		(2.7	)
Balance at September 30, 2023	$	(59.3	)	$	(88.6	)	$	(147.9	)

Changes in AOCL for the first nine months of 2022, net of tax, were:


(in millions)	Defined Benefit Pension Plan Items		Cumulative Translation Adjustments			Total
Balance at December 31, 2021	$	10.7	$	(57.6	)	$	(46.9	)
Other comprehensive income before reclassifications		—		(37.1	)		(37.1	)
Amounts reclassified from AOCL		0.7		—			0.7
Total other comprehensive income/(loss)		0.7		(37.1	)		(36.4	)
Balance at September 30, 2022	$	11.4	$	(94.7	)	$	(83.3	)

Segment Reporting - Segment Reporting (Detail) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Segment Reporting Information [Line Items]
Net sales	$ 464.1	$ 513.0	$ 1,454.1	$ 1,453.0
Operating income/(loss)	41.9	50.1	117.1	140.7
Operating Segments [Member] \| Performance Chemicals [Member]
Segment Reporting Information [Line Items]
Net sales	145.2	159.7	424.4	495.8
Operating income/(loss)	16.9	25.4	36.5	79.5
Operating Segments [Member] \| Fuel Specialties [Member]
Segment Reporting Information [Line Items]
Net sales	169.3	178.7	513.8	546.9
Operating income/(loss)	27.6	27.9	77.1	94.9
Operating Segments [Member] \| Oilfield Services [Member]
Segment Reporting Information [Line Items]
Net sales	149.6	174.6	515.9	410.3
Operating income/(loss)	16.4	14.2	60.3	21.2
Operating Segments [Member] \| Personal Care [Member] \| Performance Chemicals [Member]
Segment Reporting Information [Line Items]
Net sales	97.0	102.4	263.8	311.1
Operating Segments [Member] \| Home Care [Member] \| Performance Chemicals [Member]
Segment Reporting Information [Line Items]
Net sales	22.3	22.6	65.7	72.3
Operating Segments [Member] \| Other [Member] \| Performance Chemicals [Member]
Segment Reporting Information [Line Items]
Net sales	25.9	34.7	94.9	112.4
Operating Segments [Member] \| Refinery and Performance [Member] \| Fuel Specialties [Member]
Segment Reporting Information [Line Items]
Net sales	126.0	133.2	394.6	405.5
Operating Segments [Member] \| Other [Member] \| Fuel Specialties [Member]
Segment Reporting Information [Line Items]
Net sales	43.3	45.5	119.2	141.4
Corporate, Non-Segment [Member]
Segment Reporting Information [Line Items]
Corporate costs	$ (19.0)	$ (17.4)	$ (56.8)	$ (54.9)

Earnings Per Share - Additional Information (Detail) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Earnings Per Share [Abstract]
Average number of anti-dilutive options excluded from the calculation of diluted earnings per share	21,950	109,377	29,293	54,522

Earnings Per Share - Summary of Earnings Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Numerator (in millions):
Net income available to common stockholders	$ 39.2	$ 38.7	$ 101.3	$ 107.5
Denominator (in thousands):
Weighted average common shares outstanding	24,866	24,786	24,845	24,794
Dilutive effect of stock options and awards	140	179	155	182
Denominator for diluted earnings per share	25,006	24,965	25,000	24,976
Net income per share, basic:	$ 1.58	$ 1.56	$ 4.08	$ 4.34
Net income per share, diluted:	$ 1.57	$ 1.55	$ 4.05	$ 4.3

Goodwill - Additional Information (Detail) $ in Millions	9 Months Ended
Goodwill - Additional Information (Detail) $ in Millions	Sep. 30, 2023 USD ($)
Goodwill [Line Items]
Goodwill, foreign currency translation gain (loss)	$ 0.9
Performance Chemicals [Member]
Goodwill [Line Items]
Goodwill, foreign currency translation gain (loss)	$ 0.9

Goodwill - Summary of Goodwill (Detail) $ in Millions	9 Months Ended
Goodwill - Summary of Goodwill (Detail) $ in Millions	Sep. 30, 2023 USD ($)
Goodwill [Line Items]
Gross cost, beginning balance	$ 358.8
Exchange effect	0.9
Gross cost, ending balance	$ 357.9

Other Intangible Assets - Summary of Other Intangible Assets (Detail) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Gross cost at January 1	$ 291.1
Additions	10.8
Exchange effect	(0.3)
Gross cost at September 30	301.6		$ 291.1
Accumulated amortization at January 1	(246.1)
Amortization expense	(8.0)	$ (11.4)
Exchange effect	0.3
Accumulated amortization at September 30	(253.8)
Net book amount at September 30	$ 47.8		$ 45.0

Other Intangible Assets - Additional Information (Detail) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Finite-Lived Intangible Assets [Line Items]
Amortization expense	$ 8.0	$ 11.4
Payments to Develop Software	$ 10.8	$ (0.0)

Pension and Post-Employment Benefits - Additional Information (Detail) - USD ($) $ in Millions	Sep. 30, 2023	Dec. 31, 2022
Europe [Member]
Defined Benefit Plan Disclosure [Line Items]
Post-employment obligations European businesses	$ 3.9	$ 4.1

Pension and Post-Employment Benefits - Plan Net Pension Credit (Detail) - GERMANY - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Defined Benefit Plan Disclosure [Line Items]
Service cost	$ (0.9)	$ (0.6)	$ (2.7)	$ (1.8)
Interest cost on projected benefit obligation	(5.1)	(2.4)	(15.0)	(7.8)
Expected return on plan assets	6.5	3.8	19.0	12.3
Amortization of prior service cost	(0.2)	(0.1)	(0.4)	(0.4)
Amortization of actuarial net gains/(losses)	0.6	(0.1)	1.6	(0.4)
Net periodic benefit	$ 0.9	$ 0.6	$ 2.5	$ 1.9

Income Taxes - Roll-forward of Unrecognized Tax Benefits and Associated Accrued Interest and Penalties (Detail) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2023	Dec. 31, 2022
Income Tax Contingency [Line Items]
Opening balance at January 1	$ 13.4
Net change for tax positions of prior periods	0.7
Closing balance at September 30	14.1
Current	0.0
Non-current	14.1	$ 13.4
Interest and Penalties [Member]
Income Tax Contingency [Line Items]
Opening balance at January 1	3.2
Net change for tax positions of prior periods	0.7
Closing balance at September 30	3.9
Current	0.0
Non-current	3.9
Unrecognized Tax Benefits [Member]
Income Tax Contingency [Line Items]
Opening balance at January 1	10.2
Net change for tax positions of prior periods	0.0
Closing balance at September 30	10.2
Current	0.0
Non-current	$ 10.2

Income Taxes - Additional Information (Detail) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2023	Dec. 31, 2022
Income Tax Contingency [Line Items]
Unrecognized tax benefits would impact effective tax rate if recognized	$ 14.1
Unrecognized tax benefit	$ 14.1	$ 13.4
Income tax examination, description	Aside from certain tax returns that are closed after completion of a U.S. Internal Revenue Service (“IRS”) audit, the Company and its U.S. subsidiaries remain open to examination by the IRS for certain elements of year 2017 and for years 2019 onwards under the statute of limitations. The Company’s subsidiaries in foreign tax jurisdictions are open to examination including Brazil (2018 onwards), Germany (2018 onwards), and the U.K. (2017 onwards).
Increase to income tax expense	$ 0.6
Profit Diversion Compliance Facility [Member]
Income Tax Contingency [Line Items]
Increase to income tax expense	0.1
Italian Tax Authorities [Member]
Income Tax Contingency [Line Items]
Unrecognized tax benefit	3.2
United Kingdom [Member] \| Foreign [Member] \| Profit Diversion Compliance Facility [Member]
Income Tax Contingency [Line Items]
Income tax examination penalties and interest expenses	1.1
United States [Member]
Income Tax Contingency [Line Items]
Unrecognized tax benefit	$ 9.8
Non-US [Member] \| Earliest Tax Year [Member]
Income Tax Contingency [Line Items]
Open tax year	2011
Non-US [Member] \| Latest Tax Year [Member]
Income Tax Contingency [Line Items]
Open tax year	2014

Long-Term Debt - Additional Information (Detail) - USD ($)		9 Months Ended
	May 31, 2023	Sep. 30, 2023	Dec. 31, 2022
Debt Instrument [Line Items]
Capitalized Contract Cost, Net		$ 1,500,000
Capitalized costs amortization period		May 30, 2027
Deferred finance costs, net		$ 1,300,000	$ 600,000
Revolving Loan Facility [Member]
Debt Instrument [Line Items]
Due date of revolving credit	May 30, 2027	Sep. 26, 2019
Line of Credit Facility, Maximum Borrowing Capacity	$ 250,000,000
Expiration period	4 years
Line Of Credit Facility Cumulative Drawn Down		$ 0	$ 0
Revolving Loan Facility [Member] \| Accordion Feature [Member]
Debt Instrument [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	$ 125,000,000
Previous Agreement [Member]
Debt Instrument [Line Items]
Capitalized costs written off		$ 500,000

Plant Closure Provisions - Movements in Plant Closure and Restructuring Provisions (Detail) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2023	Dec. 31, 2022
Restructuring and Related Activities [Abstract]
Beginning Balance	$ 57.2
Charge for the period	2.7
Utilized in the period	(3.9)
Exchange effect	(0.2)
Ending Balance	55.8
Due within one year	(4.7)	$ (5.3)
Due after one year	$ 51.1	$ 51.9

Plant Closure Provisions - Additional Information (Detail) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Remediation [Member]
Restructuring Cost and Reserve [Line Items]
Accretion expense recognized	$ 2.7	$ 2.7

Fair Value Measurements - Carrying Amount and Fair Values of the Company's Assets and Liabilities Measured on a Recurring Basis (Detail) - Recurring [Member] - USD ($) $ in Millions	Sep. 30, 2023	Dec. 31, 2022
Carrying Amount [Member]
Non-derivatives:
Cash and cash equivalents	$ 207.2	$ 147.1
Carrying Amount [Member] \| Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] \| Foreign Currency Forward Exchange Contracts [Member]
Derivatives (Level 1 measurement):
Derivative asset	1.0	0.0
Derivatives (Level 1 measurement):
Foreign currency forward exchange contracts	0.0	0.5
Carrying Amount [Member] \| Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] \| Emission Trading Scheme Credits [Member]
Derivatives (Level 1 measurement):
Derivative asset	3.2	2.7
Carrying Amount [Member] \| Significant Unobservable Inputs (Level 3) [Member]
Non-financial liabilities (Level 3 measurement):
Stock equivalent units	17.4	26.4
Fair Value [Member]
Non-derivatives:
Cash and cash equivalents	207.2	147.1
Fair Value [Member] \| Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] \| Foreign Currency Forward Exchange Contracts [Member]
Derivatives (Level 1 measurement):
Derivative asset	1.0	0.0
Derivatives (Level 1 measurement):
Foreign currency forward exchange contracts	0.0	0.5
Fair Value [Member] \| Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] \| Emission Trading Scheme Credits [Member]
Derivatives (Level 1 measurement):
Derivative asset	3.2	2.7
Fair Value [Member] \| Significant Unobservable Inputs (Level 3) [Member]
Non-financial liabilities (Level 3 measurement):
Stock equivalent units	$ 17.4	$ 26.4

Derivative Instruments and Risk Management - Additional Information (Detail) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Not Designated as Hedging Instrument [Member] \| Foreign Currency Forward Exchange Contracts [Member] \| Other net income/(expense) [Member]
Derivative [Line Items]
Amount of gain/(loss) recognized in income	$ (1.2)	$ 6.5

Contingencies - Additional Information (Detail) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2023	Dec. 31, 2022
Other Commitments [Line Items]
Guarantees	$ 6.0	$ 7.0
Maximum [Member]
Other Commitments [Line Items]
Fixed maturity guarantee remaining term	9 years

Stock-Based Compensation Plans - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock option compensation			$ 5.9	$ 4.7
Total compensation cost related to non-vested stock options not yet recognized	$ 23.5		$ 23.5
Expected compensation cost recognized over the weighted-average period			1 year 10 months 24 days
Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock option compensation	2.0	$ 1.5	$ 5.9	4.7
Stock Equivalent Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation cost	$ 2.0	$ 1.8	$ 7.1	$ 15.9

Stock-Based Compensation Plans - Summary of Transactions of the Share Based Compensation Plans (Detail)	9 Months Ended
	Sep. 30, 2023 $ / shares shares
Share-Based Payment Arrangement, Disclosure [Abstract]
Number of shares, Begining balance \| shares	757,040
Number of shares, Granted \| shares	159,322
Number of shares, Vested \| shares	(208,803)
Number of shares, Forfeited \| shares	(50,911)
Number of shares , Ending balance \| shares	656,648
Weighted Average Grant-Date Fair Value , Begining balance \| $ / shares	$ 69
Weighted Average Grant-Date Fair Value, Granted \| $ / shares	94.3
Weighted Average Grant-Date Fair Value, Vested \| $ / shares	66.3
Weighted Average Grant-Date Fair Value, Forfeited \| $ / shares	77.1
Weighted Average Grant-Date Fair Value, Ending balance \| $ / shares	$ 75.1

Reclassifications out of Accumulated Other Comprehensive Loss - Summary of Reclassifications out of Accumulated Other Comprehensive Loss (Detail) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Total reclassifications	$ 0.9	$ (0.7)
Defined Benefit Pension Plan Items [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Total reclassifications	0.9	(0.7)
Reclassification Out of Accumulated Other Comprehensive Income/(Loss) [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Total before tax	(1.2)	0.8
Income tax expense	0.3	(0.1)
Total reclassifications	(0.9)	0.7
Reclassification Out of Accumulated Other Comprehensive Income/(Loss) [Member] \| Defined Benefit Pension Plan Items [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Amortization of prior service cost	0.4	0.4
Amortization of actuarial net losses	$ (1.6)	$ 0.4

Reclassifications out of Accumulated Other Comprehensive Loss - Changes in Accumulated Other Comprehensive Loss (Detail) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance			$ 1,038.0
Other comprehensive income before reclassifications			(1.8)	$ (37.1)
Amounts reclassified from AOCL			(0.9)	0.7
Total other comprehensive income/(loss)	$ (8.2)	$ (16.2)	(2.7)	(36.4)
Ending Balance	1,125.4		1,125.4
Accumulated Other Comprehensive Loss [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance			(145.2)	(46.9)
Ending Balance	(147.9)	(83.3)	(147.9)	(83.3)
Defined Benefit Pension Plan Items [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance			(58.4)	10.7
Other comprehensive income before reclassifications			0.0	0.0
Amounts reclassified from AOCL			(0.9)	0.7
Total other comprehensive income/(loss)			(0.9)	0.7
Ending Balance	(59.3)	11.4	(59.3)	11.4
Foreign Currency Translation Items [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance			(86.8)	(57.6)
Other comprehensive income before reclassifications			(1.8)	(37.1)
Amounts reclassified from AOCL			0.0	0.0
Total other comprehensive income/(loss)			(1.8)	(37.1)
Ending Balance	$ (88.6)	$ (94.7)	$ (88.6)	$ (94.7)

Related Party Transactions - Additional Information (Detail) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Smith, Gambrell & Russell, LLP [Member]
Related Party Transaction [Line Items]
Fees payable to Smith, Gambrell & Russell	$ 0.2	$ 0.2
European Metal Recycling Limited [Member]
Related Party Transaction [Line Items]
Tendering process to select best buyer of scrap metal	0.1	0.1
Advan Six [Member]
Related Party Transaction [Line Items]
Tendering process to select best buyer of scrap metal	0.3	$ 0.4
Related Party [Member] \| Smith, Gambrell & Russell, LLP [Member]
Related Party Transaction [Line Items]
Amount due to related party	0.0		$ 0.0
Related Party [Member] \| European Metal Recycling Limited [Member]
Related Party Transaction [Line Items]
Amount due to related party	0.0		0.0
Related Party [Member] \| Advan Six [Member]
Related Party Transaction [Line Items]
Amount due to related party	$ 0.0		$ 0.0