Ladies and gentlemen, thank you for standing by, and welcome to Innospec's first quarter 2022 earnings release and conference call. At this time, all participants are in listen only mode. After the speaker presentation, there will be a question- and- answer session. To ask a question, you will need to press Star and one on your telephone. I would now like to hand the conference over to David Jones, the General Counsel and Chief Compliance Officer. Please go ahead. Thank you. Late yesterday, we reported our financial results for the quarter- ended March 31st, 2022. The earnings release in this presentation are posted on the company's site. During this call, we will be making forward-looking statements which are predictions, projections and other statements about future events. These statements are based on current expectations and assumptions that are subject to risk and uncertainties that could cause actual results to differ materially from the anticipated results implied by forward-looking statements. These risks and uncertainties are detailed in Innospec's 10-K, 10-Qs, and other filings with the SEC. Please see the SEC site or Innospec's site for these and other documents. In our discussions today, we've also included some non-GAAP financial measures. A reconciliation to the most directly comparable GAAP financial measures is contained in our earnings release posted on our site. The non-GAAP financial measures should not be considered as a substitute for those prepared in accordance with GAAP. They are included as additional clarification items to help investors further understand the company's performance in addition to the impact these events, items and events have on financial results. With us today from Innospec are Patrick Williams, President and Chief Executive Officer, and Ian Cleminson, Executive Vice President and Chief Financial Officer. With that, I'll turn it over to you, Patrick. Thank you, David, and welcome everyone to Innospec's first quarter 2022 conference call. I am very pleased to report another set of strong results for Innospec. Improvements in all businesses drove a 39% increase in revenues and a 57% increase in operating income over last year. Gross margins improved significantly over the sequential quarter and were in line with the prior year and our expectations. Despite continued inflationary pressure, end market demand remains strong. The benefits of our products are increasingly important in the current high cost, supply constrained environment that we expect will persist through the year. We will continue to work closely with our customers to responsibly manage any additional required price actions. Performance Chemicals delivered a 38% increase in operating income over a very strong comparative quarter last year. We are moving quickly to increase capacity in order to keep up with strong demand across all our product lines. The additional capacity can be used for multiple products and is supported by multi-year contracts. Personal care now represents over 75% of Performance Chemicals operating income. Complementing personal care, we have a diverse pipeline of growth opportunities in our other end markets which include home care, mining, agriculture and construction. Fuel Specialties delivered a 49% increase in operating income over the prior year as additional pricing actions took effect and volumes increased. Sequential gross margins recovered significantly. However, we expect gross margins to remain on the lower end of our target range until inflation moderates. As inflation slows, we expect lagging price action to catch up to cost and drive further gross margin improvement. Our outlook is for slow long-term growth in global consumption of diesel, jet and marine fuel, both in fossil and renewable forms. We see increasing opportunities for our technologies to lower emissions while enhancing performance in these end markets. In Oilfield Services, operating income was approximately double that of last year, and sales continued to grow sequentially in the quarter. However, shipment delays led to a sequential quarter decline in operating income. As we move through 2022, we believe markets will further improve as oil prices remain high and activity rates increase. Our expectations for gradual improvement in the profitability of our Oilfield business. Now I will turn the call over to Ian Cleminson, who will review our financial results in more detail. Then I will return with some concluding comments. After that, Ian and I will take your questions. Thanks, Patrick. Turning to Slide 7 in the presentation. The company's total revenues for the first quarter were $472.4 million, a 39% increase from $339.6 million a year ago. Overall gross margin decreased slightly by 0.2% points from last year to 29.5%. EBITDA for the quarter was $59 million, compared to $41.4 million last year, and net income for the quarter was $36.5 million, compared to $23.4 million a year ago. Our GAAP earnings per share were $1.46, including special items, the net effect of which decreased our first quarter earnings by $0.07 per share. A year ago, we reported GAAP earnings per share of $0.94, which included the negative impact from special items of $0.12 per share. Excluding special items in both years, our adjusted EPS for the quarter was $1.53 compared to $1.06 a year ago. Turning to Slide 8. Revenues in Performance Chemicals for the first quarter were $167.1 million, up 33% from last year's $125.9 million. Volumes grew 7%, with a positive price mix of 32% offsetting an adverse currency impact of 6%. Gross margins of 24.4% were down slightly by 0.5% points compared to 24.9% in the same quarter in 2021. Operating income increased 38% from last year to $25.3 million. Moving on to Slide 9. Revenues in Fuel Specialties for the first quarter were $191.8 million, 38% higher than the $139.3 million reported a year ago. Volumes grew by 23%, and there was a positive price mix effect of 21% offsetting a negative currency impact of 6%. Fuel Specialties gross margins of 31.6% were 0.6% points below the same quarter last year. Operating income increased 49% from last year to $35.5 million. Moving on to Slide 10. Revenues in Oilfield Services for the quarter were $113.5 million, up 53% from $74.4 million in the first quarter last year. Gross margins of 33.3% were up 0.4% points on last year's 32.9%. Operating income of $2.5 million was a $1.3 million improvement from $1.2 million a year ago. Turning to Slide 11. Corporate costs for the quarter were $19 million, compared with $15.1 million a year ago, due mainly to higher personnel related expenses driven by increased share-based compensation accruals. The effective tax rate for the quarter was 24.3%, compared to 24% a year ago. Moving on to Slide 12. Due to a strong sequential sales growth, cash generation for the quarter was impacted by an increase in working capital, which resulted in an operating cash outflow of $29 million before capital expenditures of $8.4 million. As of March 31st, 2022, Innospec had $105.6 million in cash and cash equivalents and no debt. Now I'll turn it back over to Patrick for some final comments. Thanks, Ian. We are mindful of the uncertainty around continued inflation, rising interest rates, the Ukraine war, China lockdowns, and other factors that could impact global economic growth. We are cautiously optimistic that as inflation moderates, our margins will benefit further. Regardless of any near-term economic volatility, we believe the sustainability trends that many of our technologies directly address provide us with a strong platform for sustained growth over the medium to long- term. With the support of our strong balance sheet, we continue to deliver on our record of returning value to shareholders while maintaining flexibility to pursue M&A. This quarter, we commenced share repurchases under our previously announced $50 million share buyback facility, and our Board has approved an 11% increase in our semiannual dividend to $0.63 per share. Now I will turn the call over to the operator, and Ian and I will take your questions. Ladies and gentlemen, we now begin the question- and- answer session. If you wish to ask a question, please press Star and one on your telephone. The first question is from Mike Harrison from Seaport Research Partners. Please go ahead. Your line is open. Hi. Good morning. Morning, Mike. Good morning, Mike. Congrats on a nice start to the year. Thank you. Wanted to start out with a question on the Fuel Specialties. The volume growth there was fairly impressive. Can you give us some numbers around what happened with volume sequentially, and maybe provide some color on how much of that volume strength was related to further recovery in diesel? How much was better jet fuel demand? I guess were there any new products or non-fuel applications that helped to drive some of that growth? Yeah, Mike, let me take the first part of that. Yeah, we've seen some nice growth certainly year-over-year. Volume growth is something like 23% higher from Q1 last year. Sequentially from Q4, we have seen a little bit more expansion. Our diesel additives are pretty much back to pre-COVID levels. In particular, in the Americas, we've seen very strong growth in the first quarter. Much of that, again, around diesel additives and cold flow. As you know, the Q1 numbers are impacted by the colder weather, and we've had a good cold season that we're about to come out of now. It's really across the board. The only part of our business that has yet to fully recover is the aviation piece, in terms of jet travel, and that's still probably around about 20%-25% down, year-over-year from where it was. We've got nice momentum from Q4 into Q1, and we've got good demand going into the second quarter as well, albeit that the winter season is about to come to an end. All right. Thanks for that. Then over on the Performance Chemicals side, we're definitely seeing a lot of inflation everywhere, and there are some concerns that inflation could be creating some pressure on consumer demand, potentially leading to some trading down in the personal care space. Can you break down your performance chemicals business and how much of that goes into mainstream or more value-oriented products as opposed to higher end, more expensive products? Are you currently seeing any change in consumer demand within that personal care space or hearing about potential changes from your customers? Yeah, Mike, it's Patrick. It's pretty well balanced. You know, we are on the high end with our sulfate-free product lines and our natural product lines. But as well, in some of our areas like home care and personal care, we're also in the mid-markets. We are seeing a slight slowdown mostly in home care in the European markets. But for the most part, personal care globally has still remained strong. And our further outlook through Q2 still remains strong from the order patterns that we've seen so far. You know, it's just gonna be something that we're gonna have to really watch carefully and work with our customers on either, A, new technologies, product technologies, and pricing models that not only fit us, but the consumer. To date, we've done a really good job as a group in doing that with our customers and our end users. We're still confident in Q2, but, you know, as you said just in the call, we're just gonna have to watch it very carefully as we get to the end of Q2. All right, great. Then, a quick one on the share repurchase. Any thoughts on the timing of additional share repurchase activity? I would think that given your strong balance sheet, maybe this is an area of capital allocation where you could afford to get a little bit more aggressive. Yeah, Mike, this is Ian. So at the moment, we're doing a fairly low level buyback consistently throughout the month. You'll see us do a little bit more in Q2, just because we'll have completed the full quarter. Right now, we're just gonna sit and watch the share price, and if we think there's an opportunity to step in in a larger way, and take advantage of a lot more value in the market, we'll do that. For the time being, our expectation is that we'll be nice and steady throughout the quarter at a fairly low level, and we'll continue that throughout the year. Yeah. I think, Mike, just to add to that, it's Patrick. When we originally put out the buyback, it was to be opportunistic in the market, but number one was to prevent dilution. We've done that, and we're gonna continue to do that and be opportunistic in the market when we see fit. The other is, as you can see, we've increased our dividend again, which we've done that between 10%-12% as a whole throughout the year, and we'll continue to do that as we see fit. The other is, if you look at the balance sheet, we wanna have a lot of dry powder for our $70 million growth that we previously announced in personal care as well as the M&A activity that we've been discussing in the marketplace. I think we're very well balanced right now. You know, obviously, as the markets perceive and as we move forward, we'll look at our balance sheet and see what we wanna do, if anything, to change things up. Right now, we feel very comfortable where we are. All right. My last question, in terms of the strong start to the year, I was hoping that you could give us a sense of whether we should expect continued sequential improvement in earnings. Can you perhaps talk about some of the puts and takes that maybe could impact the cadence of earnings as we go through the rest of this year? Yeah. I'll take first go at that, Mike. I don't think we'll see sequential improvement, and this is really due to the point I noted earlier on. In our Fuel Specialties business, it isn't seasonal. We tend to have a much stronger Q4 and Q1 with our winter products, and we're coming out of that seasonality now. Q2 and Q3 do tend to be a little bit more subdued in terms of revenue and operating income. Our expectations for Performance Chemicals are that they will continue to perform close to the level they performed at in the first quarter. There may well be a little bit more pressure on gross margins, given some of the comments that Patrick made around home care. In the Oilfield, we expect that business to get back to sequential improvements in Q2 and beyond. When you wrap all that up together, our expectations for Q2 is that earnings will be down on the first quarter, but will still be strong compared to the second quarter of last year. Great. Thank you very much. Thank you. Thanks, Mike. Thank you for your question. The next question from Jon Tanwanteng from CJS Securities. Please go ahead. Hi. Good morning. Thanks for taking my questions. Really nice quarter there. It's really impressive in this environment. Thanks, Jon. Thank you, Jon. My first question is what happened in the oilfield business? Kind of help me understand what were the logistics and shipment problems you had and where do margins go from here? Yeah. It was a product, Jon, that was going overseas into the South American market that just got held up at the border. It should be released in Q2 of this year, was really the issue. It was just a hold up and, you know, with all the shipping delays and transportation delays, it just got caught up in the quarter. Was that a shipment that a revenue for you, or was that something that just only on the cost side? A little bit of both. It held back our revenues, Jon, but we also had to incur additional costs for those delays, which we've taken in the quarter. Okay, great. I was wondering if you could comment on the jet fuel market, where it is relative to where it was pre-pandemic and kind of what your expectations are, you know, if it gets back to 80% or 90% of what it used to be and kind of what the impact would be on the fuel business? Yeah, it's still off a little bit because of international travel. You know, you've got strong domestic travel in the Americas. You're starting to pick up domestic travel in Europe. Obviously, Asia is still dead. But I think once you see Asia pick back up and you see international travel come back, you'll see it at probably same as 2019 levels. We just don't see it dropping off that much. It's come back quite significantly. As you see Asia open back up, you'll see it come up even more. Okay. Any sense of what the improvement would be if we get close to the level just in terms of the profitability? Yeah. It's certainly gonna help our gross margins, Jon, because it's a high value product for us. It's not a particularly great big revenue change, but it's a higher margin business for us, so it's that little bit of cream on top of the cake, shall we say. Okay. Understood. Lastly, just the cash flow expectation going forward, and I know you have the buyback going on, you have some working capital expansion. What should we be thinking throughout the rest of the year and if that kind of normalizes out? Yeah. I think really a lot of it depends on the inflationary environment, Jon. You know, if we continue to see inflation increasing, then obviously we've got to fund that through our working capital through inventory receivables and payables. You know, we could continue to see a drag on cash there. If our business continues to expand, again, that will pull down on our cash flow. You know, things being normalized, if inflation moderates and flattens out, then you'll start to see cash tumbling back into the business. It's a little bit early to say that yet. I think Q2 might see positive cash flow as Fuel Specialties moderates off the strong winter period. You know, we are still growing in Performance Chemicals and Oilfield. That aligns with our strong dividend play and our buybacks. It might be that, you know, we are neutral on cash in the second quarter. As we move into the back half of the year with moderate or moderation in inflation, that's when you'll start to see much more positive cash flow. Yeah. I think, Jon, just to add to that, you've seen volume growth in the businesses, and a lot of that's because we've had to carry longer inventories due to supply constraints and inventory and shipping constraints. Because we've done that, we've been able to supply our customers, and that's enabled us to pick up new customers who've had supply problems from our competition. That goes in all three of the business segments. We will continue to do that to meet customer expectations and requirements. As Ian said, it could, you know, just pull back some of that cash as that goes forward. Understood. Thanks. If I could slip in one more, Patrick, did you mention the M&A environment and what you're seeing out there and the likelihood of anything closing in the near- term? Yeah, I mean, it slowed down a little bit. We do see some compression in multiples. You know, I think you're gonna see another Fed's interest rate hike, which we've already seen. I think that's gonna slow things down a little bit as well. You know, things are starting to come back into an area that makes us look even a little harder. I think that we've expanded our horizons in looking at Fuel Specialties businesses, but our primary focus is still personal care, home care, and our ag and adjacent markets in the Performance Chemicals business. But there's, you know, there's a lot out there. You know, there's a lot out there in Oilfield which does not interest us. You know, if you go into our core businesses that look at M&A growth, we're starting to see a little bit of compression, and I would hope we'll get something done sometime this year. Okay, great. Thanks, Patrick. Thank you, Ian Cleminson. Thank you. Thank you for your question. The next question is David Silver for C.L. King. Please go ahead. Yeah. Hi, good morning. Good morning. Thanks. I think the first question I wanted to ask you about broadly would be the impact of currency on your reported results. I may have missed it, but I didn't really pick up too much commentary or detail on that. I mean, broadly speaking, with your you know, significant European exposure, I mean, was this the case where maybe, I don't know, you know, your strong sales growth came in the face of, you know, meaningful foreign currency headwinds. Just maybe on the revenue side and if there's a way to think about the translation effect on operating income, that would be helpful. Thank you. Sure, Jon. In the script earlier, we talked about the sort of volume price mix and exchange impact on each of the businesses. In Fuel Specialties and Performance Chemicals, there was a negative headwind of 6% points in Q1 this year versus Q1 last year. That was a headwind that we overcame with strong volume growth and a positive price mix impact. In both Fuel Specialties and Performance Chemicals, there is pretty much a natural hedge to our European euro and sterling cost base. The way we've constructed the business is such that we are able to offset that with raw material purchases in local currency and overhead costs, SG&A costs in local currency as well. What we tend to say is that our businesses are naturally hedged at the operating income level, so there's very little impact that we tend to see when we get down to operating income. We call it out at the sales level, but by the time we get to operating income, we're naturally hedged, and there's pretty much zero impact there. Okay, thank you for that. I had a question, I think, about the diesel fuel markets. In particular, I mean, there's a number of headlines just pointing out the unusual tightness in that market, maybe even relative to gasoline or whatnot. I'm just wondering, you know, how what you're seeing out there in terms of, you know, the ability of the diesel market to continue to, you know, maybe respond to price, and whether, you know, you see that impacting your additive volumes going forward. Yeah. What we've seen is that diesel demand has come back to pre-COVID levels. The expectations at the refinery level was to not see demand come back as quick as it did. When you say there's a tightness, there is a little bit of a tightness at the refinery level because of the fact that diesel demand came back so fast. They'll catch back up. It should not be an issue moving forward. We see no effect on our fuel additives business whatsoever. Okay, great. This is just more of a broader question, but when I look at your Fuel Specialties and especially Performance Chemicals sales growth, you know, and especially if I look at it on a sequential basis, I mean, it does seem like, you know, there's a step change in volume growth there that, well, I, you know, I didn't have it in my model. It almost feels like there are some share gains or some new wins, new customers that have been added to the mix, maybe, you know, starting January 1. Could you comment on, maybe, you know, have you been able to capture some market share within some of your, you know, important product lines that is showing up starting this quarter? Yeah, I think it's a little bit of both. I mean, it's demand from diesel has come back up significantly, so that's helped out. Additionally, as you just alluded to in your question, is that we have picked up customer demand as well, new customers. It's been a little bit of both that we've benefited from. I think we'll continue to see that through the year, at least through second quarter. You know, the third and fourth quarter is kind of the unknown for everybody in all of our businesses. I think through second quarter, we'll still see a nice rebound in Fuel Specialties as we did in Q1. Just to add to that, David, in Performance Chemicals, as you know, we've targeted high single-digit volume growth, and that's exactly what we delivered in the first quarter. Some of that is built around our capacity expansions. We brought more capacity online in the first quarter. We've got more scheduled for middle of the year, and then late part of this year and early next year. That's all designed to help that sequential volume growth and that year-over-year volume growth as well. Ian, you kind of read my mind there because my next question was just gonna be an update on that two-year $70 million, you know, build out. I was wondering if, you know, there were some tranches or some elements of that that, you know, had been completed and put into service. You're saying that was a factor on Performance Chemicals in the first quarter, right? Yeah, yeah. We brought volume capacity online early part of the quarter. We've got some more planned for the middle of the year and then later this year or the back end of this year as well. You know, it's a difficult environment right now with steel supply and, you know, raw material supply and availability of engineers, people, and all the rest of it. Nonetheless, we're on track for those that core personal care volume to be built out and to deliver that high single- digit volume growth in Performance Chemicals. Okay, thank you. Then the last question, I admit this is pretty unfair, but I was wondering, you know, Patrick, I mean, this has to do with, you know, geopolitics in Europe, right? I think last night or this morning, you know, there's another layer of sanctions that are gonna be put into place on Russia. As a result, you know, Russian oil shipments, I guess, will be reduced dramatically further. But just in general, you know, Patrick, taking advantage of your, you know, broad perspective, when you see these different, you know, sanctions going into place and the necessary rerouting or, you know, new supply lines created, I mean, do you feel that this is a process that's gonna proceed, you know, smoothly? In other words, will the refineries be able to receive, you know, the crude inputs, and other inputs kind of on a normal basis? Or do you see any potential for, you know, meaningful disruptions as you know as supply lines adjust to the political realities? You know, it could be global, but I mean, I'm thinking particularly, you know, in Europe based on the headlines. Thank you. Yeah. I mean, if you look at it right now, and as you just said in the call, there's continual changes in the sanctions and regulatory market with Russia. The sentiment is across the board globally now is to eventually get away from any hydrocarbons coming out of Russia. So that's gonna do two things. It's gonna still put a lot of emphasis on inflation. It's gonna put a lot of emphasis on oil and natural gas prices. We don't see any refineries that are gonna be affected somewhat by not taking Russian crude. So I don't think that there's a concern there. The big issue is that you have the three majors that have pulled out of Russia. A lot of that volume that Russia was gonna send to China and India, really quite frankly, Russia's gonna be in a little bit of a push to get volumes out because of the fact that the three majors are pulling out. What we do see is probably sustainable prices in oil and nat gas through the year. You know, you might have some fluctuations of $10-$15 a barrel up or down. There is a lot of uncertainty in that market. When it comes to the refineries, there won't be any real effect if they can take heavy or if they can take light. There will be a natural cause and effect both ways. You know, if one refinery's used to taking a heavy, they'll get a heavy from somebody. Just at what price is the issue. You know, I think as time goes on, and as this gets further and further down the road, the world is gonna learn how to live with it. I think that that's exactly what the refineries are gonna do, and I think that's exactly what the consumer's gonna do as well. Okay, great. Maybe one last one, and it has to do with the buildup in working capital this quarter. I guess I was just wondering if you would categorize, you know, that buildup as more reactive, in other words, you know, just from, I guess customers not being able to accept your finished goods, or is it more maybe strategic or proactive, where you're purposefully, you know, adding some raw materials or inputs where you can to, you know, as maybe an insurance policy against an unexpected outage or shortfall down the road? You know, maybe the offensive and defensive or strategic and reactive elements within that, you know, pretty significant working capital build would be helpful. Thank you. Yeah, sure, David. It's Ian. I mean, part of the building working capital is on the back of a really strong quarter. You know, you've seen the volume growth, and you've seen the price inflation working itself through. You know, there's a large element is that our demand is up, and we're just operating at a higher level. And that's great working capital to have. What we've also done, like we did in Q4, and we spoke about it then, and we spoke about it a little bit earlier, is that we've also taken some strategic decisions to hold more finished goods inventory and some more raw materials, given all the disruption that we've seen in the tightness in the supply chain and also in the transportation globally. A little bit is defensive, and a little bit is because of our strong performance in the quarter. Okay, great. That's it for me. Thank you very much. Thanks, David. Thanks, David. Thank you for your question. The next question from Chris Shaw from Monness, Crespi. Please go ahead. Good morning, gentlemen. How you doing? Morning, Chris. How are you? How are you? All right. I'll join the chorus. Congratulating you. Doing a great quarter. Thank you. Well done. Was there any pull forward, you think? We've had some companies comment that, you know, customers were eager to get, you know, build up their inventories as well. Is there any maybe like extra ordering, you know, to just be, have sort of safety stock or people worried about supplies later on in the year? Were they ordering ahead of time? Do you notice anything in any of your businesses? No, we really haven't seen that, and it is a little bit more difficult to do a pull forward due to the fact of the tightness in the raw material market anyway. We really have not seen that. It's been a fairly normal pattern to us due to the fact that we've got a pretty good look at what the contracts are and the volumes are over a pre- and post-COVID year. We haven't seen it, and I think a lot of companies, even if you did, a pull forward would be difficult just due to supply tightness. Got it. Then, obviously you're achieving a lot of pricing, which is done well to obviously sustain margins or grow margins. You know, you have a longer history, I think, in the Fuel Specialties business. If you look at that and Performance Chemicals, what do you think the odds are? You know, how sticky can that pricing be? I assume it might be different for each segment. It's, you know. Longer term. Sorry. Yeah. Typically in our contracts, you know, you have that three to six- month lag going up and down. When you're in a flying inflationary market like we are now, where prices are literally changing by the hour, by the day, you know, you can get cut, you can get contracted margins real quick, especially in your longer- term contracts. The opposite is, if we do see some flattening of raw materials and inflation starting to pull back a little bit, you know, we think we could see a boost in margins on the way back down. That's typically historically how it's been, and we'll just have to watch that and monitor it closely. Historically, within our company, that's really what we've seen. Now, we haven't seen this big of a rise, this drastic, this quick, but we've done a really good job, as you can see, managing that. It's just, again, managing those expectations on the way down as well. Is it the same for Performance Chemicals? I mean, or personal care specifically? You know, it's Absolutely. Your contracts have a 3-6-month kind of thing that they go up and down. They're not just- Absolutely. It's not that good. Okay. Got it. Yep. That's all I have. Thanks a lot. Thank you, Chris. Appreciate it. Thank you for your question. There are no further questions at the moment. If you have any further questions about Innospec or matters discussed today, please give us a call. We look forward to meeting up with you again to discuss our second quarter 2022 results in August. Have a great day. That concludes the conference for today. Thank you for participating. You may all disconnect.