INNOSPEC. Chemistry Matters

Transcription

1 INNOSPEC Chemistry Matters

2 FORWARD-LOOKING STATEMENTS 2 This presentation contains certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 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, believes or similar words or expressions), for example, which relate to operating performance, events or developments that we expect or anticipate will or may occur in the future (including, without limitation, any of the Company s guidance in respect of sales, gross margins, pension liabilities and charges, net income, growth potential and other measures of financial performance). 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 the Company and affecting our business operations and prospects are described in the Company s Annual Report on Form 10-K for the year ended December 31, 2015, and other reports filed with the U.S. Securities and Exchange Commission. 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. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

3 USE OF NON-GAAP FINANCIAL MEASURES 3 The information presented in this presentation includes financial measures that are not calculated or presented in accordance with Generally Accepted Accounting Principles in the United States (GAAP). These non-gaap financial measures comprise EBITDA, income before income taxes excluding special items and net income excluding special items and related per share amounts. EBITDA is net income per our consolidated financial statements adjusted for the exclusion of charges for interest expense, net, income taxes, depreciation, amortization and impairment of Octane Additives segment goodwill. The Company believes that such non-gaap financial measures provide useful information to investors and may assist them in evaluating the Company s underlying performance and identifying operating trends. In addition, management uses these non-gaap financial measures internally to allocate resources and evaluate the performance of the Company s operations. While the Company believes that such measures are useful in evaluating the Company s performance, investors should not consider them to be a substitute for financial measures prepared in accordance with GAAP. In addition, these non-gaap financial measures may differ from similarly-titled non-gaap financial measures used by other companies and do not provide a comparable view of the Company s performance relative to other companies in similar industries.

4 INNOSPEC S 2015 REPORTING STRUCTURE 4 FUEL SPECIALTIES FUEL SPECIALTIES OILFIELD SPECIALTIES PERFORMANCE CHEMICALS PERSONAL CARE POLYMERS AROMA CHEMICALS OCTANE ADDITIVES

5 POSSIBLE NEW REPORTING STRUCTURE 5 FUEL SPECIALTIES PERFORMANCE CHEMICALS OILFIELD SPECIALTIES OCTANE ADDITIVES FUEL SPECIALTIES PERSONAL CARE POLYMERS

6 Innospec Inc Sales Growth Fuel Specialties Performance Chemicals Octane Additives

7 INNOSPEC S TRANSFORMATION- SALES YTD Q Fuel Specialties Oilfield Services Performance Chemicals Octane Additives

8 FUEL SPECIALTIES 8

9 FUEL SPECIALTIES 9 WhatWe Do Product Benefits Customers How We Compete Market Drivers Market Position Sales Growth Potential Fuel Additives detergents; cold flow improvers; lubricityimprovers; corrosion inhibitors; conductivity improvers Make fuels on-specification Create brand-leading & premium fuels Major oil companies, Fuel marketers/retailers; fleets, marine, aviation Innovative Technology & Customer Service Miles/vehicles on the road; legislation Fuel economy & engine technology Market Leader GDP points

10 10 FUEL SPECIALTIES BEHIND THE BRANDS

11 OILFIELD SERVICES 11

12 OILFIELD SERVICES 12 WhatWe Do Product Benefits Customers How We Compete Market Drivers Market Position Sales Growth Potential Corrosion& scale inhibition; H2S scavenging; wax modifiers; fracfluids; lost circulation materials Efficient drilling & frac ing; Flow Assurance; Asset Integrity E&P companies; service companies; drilling companies; pipelines Innovative Technology & Customer Service Oil & Gas Demand;Changes to drilling and production techniques; Minimize environmental impact Started very small creating a new mid-tier leader based on technology and service Oil and gas price dependent

13 PERFORMANCE CHEMICALS 13

14 PERFORMANCE CHEMICALS PERSONAL CARE 14 What We Do Product Benefits Customers How We Compete Market Drivers Market Position Surfactants, benzoate esters, silicones Luxurious foam/lather; low irritation; shine; skin-feel Formulators and retailers of premium brands Skin Care & Hair Care Innovative Technology & Customer Service Product performance skin care and hair care premium brands Natural; X-free Very small player strong in technology innovation Sales Growth Potential High single digit / low double digit %

15 PERSONAL CARE BEHIND THE BRANDS 15

16 OCTANE ADDITIVES 16

17 TEL PHASE-OUT (OCTANE ADDITIVES) 17 Motor Gasoline One remaining country (Algeria) Potential Phase out in Aviation Gasoline - (Reported within Fuel Specialties) TEL still mandated in 100LL Essential for general aviation fleet FAA program targets first alternatives by 2018 Management of Mogas phase-out well underway No site exit (not a superfund site) Above ground remediation only (mainly demolition)

18 STRATEGY 18

19 STRATEGY FUEL SPECIALTIES 19 Fuel Specialties Strategy Technology Geography Market Share M&A Core strategy strong and leading R&D pipeline Continue Europe, North America Develop - Latin America; Brazil; Asia Pacific Establish - infrastructure in China, India for later development Continue to move upwards, based on technology & service Limited opportunities in fuel additives Potential backwards integration

20 STRATEGY OILFIELD SERVICES 20 Oilfield Services Strategy Technology Geography Market Share M&A Development of leading edge solutions; focus on R&D Continue focuson North America Expand Canada and Mexico Selective focused global expansion Continue to increase based on technology & service Possible distressed assets; especially technology-based

21 STRATEGY PERSONAL CARE 21 Performance Chemicals Strategy Technology Geography Market Share M&A Improved performance; X-free and natural Taking more space in the bottle All regions; especially outside USA Taking more space in the bottle Key target; acquisitions and partnerships

22 OIL PRICE IMPACT - FUEL SPECIALTIES 22 Parameter Impact on Customers Demand Pricing Raw Material Costs Impact on Competitors Trend Commentary Supply of crude very competitive, especially light sweet Slight improvement in refinery margins Small increase in miles on the road Customer expect pass through of raw material benefits Some advantage; but pass-through to customers Same for everyone; purchasing flexibility is key

23 OIL PRICE IMPACT - OILFIELD SERVICES 23 Parameter Impact on Customers Demand - Drilling Demand Frac/Stim Demand - Production Pricing Raw Material Costs Impact on Competitors Trend Commentary Huge negative impact on customer profitability Market off 50% or more Market well off, but many wells held behind pipe Huge pent up demand when market recovers Has held up, but will suffer as downmarket continues Downward pressure from customers Some improvement, but customers looking for passthrough Many highly leveraged balance sheets suffering Many will go under if this is prolonged

24 OIL PRICE IMPACT - PERSONAL CARE 24 Parameter Impact on Customers Demand Pricing Raw Material Costs Impact on Competitiveness Trend Commentary No significant impact No significant impact No significant impact Reduced costs but only for crude-derived raws Increasing focus on vegetable oils Same for everyone

25 BALANCED CAPITAL MANAGEMENT PROGRAM 25 CONSISTENT OBJECTIVE - BALANCED CAPITAL MANAGEMENT Capital for Organic Growth Capital Expenditure & Working Capital Expansion to fund growth Regular Dividend in Place since Nov 2013 consistent growth $90 million Share repurchase program Further Acquisitions Personal Care and Oilfield Specialties

26 INNOSPEC STRONG BASE FOR EXPANSION 26 Growth businesses in good quality markets Strong technology base and R&D pipeline Building out geographical presence Balance Sheet in great shape Strong balance sheet even after current acquisitions. $200m revolving credit facility with appropriate headroom to execute strategy Leverage still below 1x EBITDA