INNOSPEC IMPROVING PORTFOLIO QUALITY. March 2018

Transcription

1 INNOSPEC IMPROVING PORTFOLIO QUALITY March 2018

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, feels 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, including those associated with the United Kingdom s exit from the European Union 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, 2017 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. Innospec 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 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 Adjusted EBITDA, income before income taxes excluding special items and net income excluding special items and related per share amounts. Adjusted EBITDA is net income per our consolidated financial statements adjusted for the exclusion of charges for interest expense, net, income taxes, depreciation, and acquisition fair value adjustments. Income before income taxes, net income and related per share amounts, excluding special items, per our consolidated financial statements are adjusted for the exclusion of tax charge due to U.S. Tax Reform, amortization of acquired intangible assets, foreign currency exchange (gains)/losses, foreign exchange loss on liquidation of subsidiary, fair value acquisition accounting, loss on disposal of subsidiary, adjustment of income tax provisions, adjustment to fair value of contingent consideration, acquisition related costs and settlement of distributor claim. 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. 3

4 COMPANY PROFILE: Innospec, Inc. NASDAQ (IOSP) 4 4 Corporate HQ Englewood, CO Business Profile $1.3 billion sales 1900 Employees in 23 countries Regional Locations USA, UK, Continental Europe, Africa, Russia, Brazil and Asia Manufacturing Global Network of Offices & Testing Facilities: USA, UK, France, Italy, Spain Germany Business Focus Fuel Specialties Performance Chemicals Oilfield Services Octane Additives

5 LOCATIONS - AMERICAS Calgary 5 5 Regional Offices Sales & Branch Offices Technology Centres Manufacturing & Toll Manufacturing Oilfield Services Operations Montreal Williston Casper Oxnard Fruita Chatsworth Denver OKC Midland Pleasanton Houston Crowley Salisbury High Point Pencader Itajai Sao Paulo Rio de Janeiro

6 LOCATIONS ASIA PACIFIC 6 6 Regional Offices Sales & Branch Offices Technology Centres Manufacturing & Toll Manufacturing Beijing Seoul New Delhi Guangzhou Singapore

7 LOCATIONS EUROPE, MIDDLE EAST & AFRICA 7 Regional Offices Sales & Branch Offices Technology Centres Manufacturing & Toll Manufacturing 7 Moscow Ellesmere Port Dubai Everberg Herne Leuna Vernon St Mihiel Zug Castiglione Milan Madrid Barcelona Piraeus Limassol Cape Town

8 BUSINESS UNITS FINANCIAL PERFORMANCE 8 SALES 2017 SALES GROWTH Sales ($m) Fuel Specialties Performance Chemicals Oilfield Services Octane Additives

9 CORPORATE STRUCTURE 9 Fuel Specialties Performance Chemicals Oilfield Services Octane Additives

10 10 Fuel Specialties Oilfield Services Performance Chemicals Octane Additives

11 FUEL SPECIALTIES 11 What We Do Fuel Additives detergents; cold flow improvers; lubricity improvers; corrosion inhibitors; conductivity improvers focused on all fuels Product Benefits Make fuels on-specification ; create brand-leading & premium fuels Customers Major oil companies, fuel marketers /retailers; pipelines, fleets, marine, aviation How We Compete Innovative technology & customer service Market Drivers Miles/vehicles on the road; legislation, fuel economy & engine technology Market Position Market leader Sales Growth Potential 2-3 %pa

12 FUEL SPECIALTIES - STRATEGY 12 Solid underlying growth in distillates for heavy duty EV growth focused on gasoline passenger cars Changes in engine technology offer opportunities New product development key to growth in new gasoline engines Significant growth potential in developing markets Improvements in air quality and fuel quality South America, Middle East, Asia Pacific Maintain operating margins at +20% as market leader Opening of China entity next step in preparing for local growth M&A - opportunities likely to be very limited

13 13 Fuel Specialties Performance Chemicals Oilfield Services Octane Additives

14 PERFORMANCE CHEMICALS (PERSONAL & HOME CARE) 14 What We Do Surfactants, benzoate esters, silicones Product Benefits Cleaning power, Luxurious foam/lather; low irritation; shine; skin-feel Customers Formulators and retailers of skin care, hair care, home care, agrochemical and mining products How We Compete Innovative Technology & Customer Service Market Drivers Product performance skin care and hair care Natural; x-free in premium brands Market Position Established strong in technology innovation Potential adjacent market development ag, mining, construction, agchem Sales Growth Potential Mid single digit %

15 PERFORMANCE CHEMICALS 15 Business improvement Personal & Home Care Grow in existing markets asset utilization More space in the bottle New product introduction upgrade margins Overall Margin improvement Expand into adjacent markets Good technology base for expansion into agrochemical and mining formulations. Focus on gross & operating margin improvements Opening of China entity next step in preparing for local growth Opportunities for further M&A technology or geographical coverage

16 16 Fuel Specialties Performance Chemicals Oilfield Services Octane Additives

17 OILFIELD SERVICES 17 What We Do Work with operators across most major basins to deliver custom chemical solutions and services for drilling, completions, production and pipeline applications Product Benefits A true one-stop shop that provides chemical expertise for drilling, completion, production and midstream; in-house technical expertise and evaluation; firstclass R&D capabilities Customers E&P Operators; service companies; drilling companies; pipelines How We Compete Direct to operator; regional laboratory services; innovative technology and customer service Market Drivers Oil & gas demand; changes to drilling, completion, and production techniques; Minimize environmental impact Market Position Creating a new mid-tier leader based on technology and service Sales Growth Potential Oil and gas price dependent

18 OILFIELD SERVICES 18 Continued growth opportunities in North America De-bundling concept continues to attract new customers Good customer base in strategic low lift cost basins US industry has reduced lift costs by up to 40% - business profitable with crude prices above $40 Business reaching inflexion point where additional revenue growth is highly incremental Expand global business Initial focus on opportunities in the Middle East Key focus on operating margin improvement

19 19 Fuel Specialties Oilfield Services Performance Chemicals Octane Additives

20 TEL MOTOR GASOLINE & AVIATION 20 Motor Gasoline (Octane Additives) One remaining country Expect operating income drop to 50% in 2018 versus 2017 and 2019 to be a year of phase out. Aviation Gasoline (Fuel Specialties) TEL still mandated in 100LL Essential for general aviation fleet FAA program targets first alternatives by All Rights Reserved. Innospec, Inc.

21 BALANCED CAPITAL MANAGEMENT PROGRAM 21 Strong Balance Sheet Leverage at 0.7x Semi-annual dividend increased 10-15% pa for last four years Share Repurchase mandate available Cash generative further improvement from growing businesses Strong Support from excellent banking group

22 SUMMARY 22 Excellent balanced portfolio of growing businesses Adjacent market expansion potential Strong balance sheet Cash generative, track record of dividend growth Stable leadership