Innospec Q3 2026 net income rises to $31.8M
During the first nine months of 2026, Innospec paid $22.7 million in dividends and repurchased $13.5 million of common stock.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Innospec Inc. reported third-quarter 2026 net sales of $473.6 million, up 7% from $441.9 million a year earlier, and gross profit of $129.1 million, up 11%. Operating income was $41.7 million versus $5.9 million, while net income attributable to Innospec was $31.8 million versus $12.9 million; diluted earnings per share were $1.29 versus $0.52.
Oilfield Services sales rose to $112.4 million from $99.1 million, with the company attributing the increase to its DRA plant expansion and associated demand. Performance Chemicals gross margin increased 3.7 percentage points, while Fuel Specialties' decreased 0.5 percentage points. For the nine months ended September 30, 2026, net sales were $1,418.2 million versus $1,322.4 million, but operating cash flow fell to $42.2 million from $77.9 million. Cash was $251.9 million as of September 30, 2026; the $250.0 million revolving credit facility was undrawn and available until May 30, 2028.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointThird-quarter net sales increased 7% to $473.6 million year over year.
- Moderate pointThird-quarter gross profit increased 11% to $129.1 million year over year.
Negative
- Moderate pointNine-month operating cash flow declined to $42.2 million from $77.9 million in 2025.
Filing Explained
The cash-flow statement shows a decline in cash over the nine months ended
Key Figures
Key Terms
contingent consideration financial
adjusted working capital financial
foreign currency forward exchange contracts financial
weighted-average grant-date fair value financial
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What were IOSP's third-quarter 2026 sales?
How much net income did IOSP attribute to the company in the third quarter?
How much operating cash flow did IOSP generate in the first nine months of 2026?
How much credit was available to IOSP under its revolving facility?
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
or
For the transition period from to
Commission file number 1-13879
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
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(Address of principal executive offices) |
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(Zip Code) |
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Registrant’s telephone number, including area code: (303 ) 792 5554
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
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Trading Symbol(s) |
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Name of each exchange on which registered |
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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.
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.
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.
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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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.
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Outstanding as of October 31, 2026 |
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Common Stock, par value $0.01 |
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TABLE OF CONTENTS
PART I |
FINANCIAL INFORMATION |
2 |
Item 1 |
Condensed Consolidated Financial Statements |
2 |
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Condensed Consolidated Statements of Income |
2 |
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Condensed Consolidated Statements of Comprehensive Income |
3 |
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Condensed Consolidated Balance Sheets |
4 |
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Condensed Consolidated Statements of Cash Flows |
5 |
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Condensed Consolidated Statements of Equity |
6 |
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Notes To The Unaudited Interim Condensed Consolidated Financial Statements |
7 |
Item 2 |
Management’s Discussion and Analysis of Financial Condition and Results of Operations for the Three and Nine months ended September 30, 2026 |
16 |
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Critical Accounting Estimates |
16 |
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Results of Operations |
16 |
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Liquidity and Financial Condition |
24 |
Item 3 |
Quantitative and Qualitative Disclosures about Market Risk |
26 |
Item 4 |
Controls and Procedures |
26 |
PART II |
OTHER INFORMATION |
27 |
Item 1 |
Legal Proceedings |
27 |
Item 1A |
Risk Factors |
27 |
Item 2 |
Unregistered Sales of Equity Securities and Use of Proceeds |
27 |
Item 3 |
Defaults Upon Senior Securities |
28 |
Item 4 |
Mine Safety Disclosures |
28 |
Item 5 |
Other Information |
28 |
Item 6 |
Exhibits |
29 |
SIGNATURES |
30 |
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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,” “outlook” 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, 2025, 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.
1
PART I FINANCIAL INFORMATION
Item 1 Condensed Consolidated Financial Statements
INNOSPEC INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
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Three Months Ended |
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Nine Months Ended |
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(in millions, except share and per share data) |
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2026 |
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2025 |
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2026 |
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2025 |
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Net sales |
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$ |
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$ |
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$ |
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$ |
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Cost of goods sold |
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Gross profit |
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Operating expenses: |
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Selling, general and administrative |
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Research and development |
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Adjustment to fair value of contingent consideration |
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Restructuring charge |
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Impairment of property, plant and equipment |
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Impairment of intangible assets |
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Profit on disposal of property, plant and equipment |
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Total operating expenses |
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Operating income |
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Other income/(expense), net |
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Interest income, net |
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Income before income taxes |
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Income taxes |
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Net income |
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Net loss/(income) attributable to non-controlling interests |
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Net income attributable to Innospec |
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$ |
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$ |
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Earnings per share: |
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Basic |
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$ |
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Diluted |
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Weighted average shares outstanding (in thousands): |
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Basic |
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Diluted |
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The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
2
INNOSPEC INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
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Three Months Ended |
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Nine Months Ended |
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(in millions) |
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2026 |
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2025 |
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2026 |
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2025 |
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Net income attributable to Innospec |
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$ |
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$ |
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$ |
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Other comprehensive income/(loss): |
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Changes in cumulative translation adjustment |
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Other comprehensive income/(loss), before tax |
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Tax related to cumulative translation adjustment |
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Income tax income/(expense) related to other comprehensive income |
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Total comprehensive income attributable to Innospec |
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$ |
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$ |
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$ |
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$ |
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The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
3
INNOSPEC INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in millions, except share and per share data) |
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September 30, |
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December 31, |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Trade and other accounts receivable (less allowances of $ |
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Inventories (less allowances of $ |
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Finished goods |
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Raw materials |
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Total inventories |
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Prepaid expenses |
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Prepaid income taxes |
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Other current assets |
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Total current assets |
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Net property, plant and equipment |
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Operating lease right-of-use assets |
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Goodwill |
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Other intangible assets |
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Deferred tax assets |
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Other non-current assets |
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Total assets |
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$ |
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$ |
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Liabilities and Equity |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued liabilities |
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Current portion of operating lease liabilities |
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Current portion of plant closure provisions |
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Current portion of acquisition-related contingent consideration |
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Accrued income taxes |
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Total current liabilities |
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Operating lease liabilities, net of current portion |
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Plant closure provisions, net of current portion |
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Deferred tax liabilities |
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Pension liabilities and post-employment benefits |
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Acquisition-related contingent consideration |
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Other non-current liabilities |
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Total liabilities |
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Equity: |
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Common stock, $ |
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Additional paid-in capital |
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Treasury stock ( |
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( |
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( |
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Retained earnings |
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Accumulated other comprehensive loss |
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( |
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( |
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Total Innospec stockholders’ equity |
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Non-controlling interest |
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Total equity |
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Total liabilities and equity |
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$ |
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$ |
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The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
4
INNOSPEC INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
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Nine Months Ended |
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|||||
(in millions) |
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2026 |
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2025 |
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Cash Flows from Operating Activities |
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Net income |
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$ |
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$ |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation and amortization |
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Adjustment to fair value of contingent consideration |
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( |
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( |
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Impairment of property, plant and equipment |
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Impairment of intangible assets |
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Deferred taxes |
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( |
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( |
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Profit on disposal of property, plant and equipment |
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( |
) |
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Movements on defined benefit pension plans |
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( |
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Stock option compensation |
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Changes in assets and liabilities, net of effects of acquired and divested companies: |
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Trade and other accounts receivable |
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( |
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Inventories |
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( |
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( |
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Prepaid expenses |
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Accounts payable and accrued liabilities |
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( |
) |
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( |
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Plant closure provisions |
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Income taxes |
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( |
) |
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Other assets and liabilities |
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( |
) |
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( |
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Net cash provided by operating activities |
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Cash Flows from Investing Activities |
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Capital expenditures |
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( |
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( |
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Internally developed software |
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( |
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( |
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Business combinations, net of cash acquired |
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( |
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Proceeds on disposal of property, plant and equipment |
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Net cash used in investing activities |
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( |
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( |
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Cash Flows from Financing Activities |
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Dividend paid |
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( |
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( |
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Issue of treasury stock |
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Repurchase of common stock |
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( |
) |
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( |
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Net cash used in financing activities |
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( |
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( |
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Effect of foreign currency exchange rate changes on cash |
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( |
) |
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Net change in cash and cash equivalents |
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( |
) |
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( |
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Cash and cash equivalents at beginning of period |
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Cash and cash equivalents at end of period |
|
$ |
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$ |
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||
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
5
INNOSPEC INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
(in millions) |
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Common |
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Additional |
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Treasury |
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Retained |
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Accumulated |
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Non- |
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Total |
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Balance at December 31, 2025 |
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$ |
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$ |
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$ |
( |
) |
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$ |
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$ |
( |
) |
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$ |
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$ |
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Net income attributable to Innospec |
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'Dividend paid ($ |
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( |
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( |
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|||||
Changes in cumulative translation adjustment, |
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( |
) |
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( |
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Share of net income |
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Treasury stock reissued |
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( |
) |
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Treasury stock repurchased |
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( |
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( |
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Stock option compensation |
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|||||||
Balance at September 30, 2026 |
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$ |
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$ |
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$ |
( |
) |
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$ |
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$ |
( |
) |
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$ |
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$ |
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|||||
(in millions) |
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Common |
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Additional |
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Treasury |
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Retained |
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Accumulated |
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Non- |
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Total |
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|||||||
Balance at December 31, 2024 |
|
$ |
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|
$ |
|
|
$ |
( |
) |
|
$ |
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|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||||
Net income attributable to Innospec |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
'Dividend paid ($ |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|||||
Changes in cumulative translation adjustment, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Share of net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Treasury stock reissued |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Treasury stock repurchased |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||||
Stock option compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Balance at September 30, 2025 |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||||
(in millions) |
|
Common |
|
|
Additional |
|
|
Treasury |
|
|
Retained |
|
|
Accumulated |
|
|
Non- |
|
|
Total |
|
|||||||
Balance at June 30, 2026 |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||||
Net income attributable to Innospec |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Changes in cumulative translation adjustment, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|||||
Share of net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|||||
Treasury stock reissued |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Treasury stock repurchased |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Stock option compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Balance at September 30, 2026 |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||||
(in millions) |
|
Common |
|
|
Additional |
|
|
Treasury |
|
|
Retained |
|
|
Accumulated |
|
|
Non- |
|
|
Total |
|
|||||||
Balance at June 30, 2025 |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||||
Net income attributable to Innospec |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Changes in cumulative translation adjustment, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|||||
Share of net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|||||
Treasury stock repurchased |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||||
Stock option compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Balance at September 30, 2025 |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||||
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
6
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 a fair statement of the condensed consolidated financial statements. 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, 2025, filed on February 18, 2026 (the “2025 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
The Chief Operating Decision Maker (“CODM”) is the President and Chief Executive Officer (the Principal Executive Officer).
7
The following table analyzes sales and other financial information by the Company’s reportable segments:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
(in millions) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Net Sales: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Personal Care |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Home Care |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Performance Chemicals |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Refinery and Performance |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fuel Specialties |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Oilfield Services |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Gross profit: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Performance Chemicals |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Fuel Specialties |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Oilfield Services |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total gross profit |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Operating income/(loss): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Performance Chemicals |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Fuel Specialties |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Oilfield Services |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate costs |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Adjustment to fair value of contingent consideration |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Restructuring charge |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Impairment of property, plant and equipment |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Impairment of intangible assets |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Profit on disposal of property, plant and equipment |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total operating income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The difference between net sales and gross profit is defined as cost of goods sold. The difference between segmental gross profit and operating income/(expense) is split between selling, general and administrative expenses and research and development expenses.
The following table analyzes cost of goods sold by the Company’s reportable segments:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
(in millions) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Performance Chemicals |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Fuel Specialties |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Oilfield Services |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total cost of goods sold |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The following table analyzes selling, general and administrative expenses and research and development expenses by the Company’s reportable segments:
8
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
(in millions) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Performance Chemicals |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Fuel Specialties |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Oilfield Services |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total selling, general and administrative expenses and research and development expenses |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
NOTE 3 – EARNINGS PER SHARE
Basic earnings per share is based on the weighted average number of common shares outstanding during the period.
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Numerator (in millions): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income available to Innospec |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Denominator (in thousands): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Dilutive effect of stock options and awards |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Denominator for diluted earnings per share |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income per share, basic: |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Net income per share, diluted: |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
In the three and nine months ended September 30, 2026, the average number of anti-dilutive options excluded from the calculation of diluted earnings per share were
NOTE 4 – GOODWILL
The following table summarizes the goodwill movements in the year:
(in millions) |
|
2026 |
|
|
Opening balance at January 1 |
|
$ |
|
|
Exchange effect |
|
|
|
|
Performance Chemicals |
|
|
( |
) |
Fuel Specialties |
|
|
( |
) |
Closing balance at September 30 |
|
$ |
|
|
9
NOTE 5 – OTHER INTANGIBLE ASSETS
The following table analyzes other intangible assets movements in the year:
(in millions) |
|
2026 |
|
|
Gross cost at January 1 |
|
$ |
|
|
Additions |
|
|
|
|
Exchange effect |
|
|
( |
) |
Gross cost at September 30 |
|
|
|
|
Accumulated amortization at January 1 |
|
|
( |
) |
Amortization expense |
|
|
( |
) |
Exchange effect |
|
|
|
|
Accumulated amortization at September 30 |
|
|
( |
) |
Net book amount at September 30 |
|
$ |
|
|
The amortization expense for the nine months ended September 30, 2026, was $
NOTE 6 – PENSION AND POST EMPLOYMENT BENEFITS
The Company 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. As of September 30, 2026, we have recorded a liability of $
The net periodic benefit/(cost) is shown in the following table:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
(in millions) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Service credit/(cost) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|||
Interest cost on projected benefit obligation |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Amortization of actuarial net gains |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net periodic benefit/(cost) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
The prior year includes a service cost related to the now closed United Kingdom (U.K.) defined benefit pension scheme. The service cost has been recognized in selling, general and administrative expenses. All other items have been recognized within other income and expense.
In addition, we have obligations for post-employment benefits in some of our other European businesses. As of September 30, 2026, we have recorded a liability of $
10
NOTE 7 – INCOME TAXES
As of January 1, 2026, the Company had
As of September 30, 2026, the Company and its U.S. subsidiaries remain open to examination by the IRS for years 2022 onwards under the statute of limitations. The Company’s subsidiaries in foreign tax jurisdictions are open to examination including Brazil (2021 onwards), Germany (2021 onwards), and the U.K. (2024 onwards).
NOTE 8 – LONG-TERM DEBT
As of September 30, 2026, and December 31, 2025, the Company had
The Company continues to have available a $
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 the estimated plant closure costs includes costs for asset retirement obligations and environmental remediation liabilities.
The principal site giving rise to asset retirement obligations is the manufacturing site at Ellesmere Port in the U.K.. There are also asset retirement obligations and environmental remediation liabilities in respect of our other manufacturing sites, which are relatively insignificant.
Movements in the provisions are summarized as follows:
(in millions) |
|
2026 |
|
|
Total at January 1 |
|
$ |
|
|
Charge for the period |
|
|
|
|
Utilized in the period |
|
|
( |
) |
Exchange effect |
|
|
( |
) |
Total at September 30 |
|
|
|
|
Due within one year |
|
|
( |
) |
Due after one year |
|
$ |
|
|
The charge for the nine months ended September 30, 2026, was $
11
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, 2026 |
|
|
December 31, 2025 |
|
||||||||||
(in millions) |
|
Carrying |
|
|
Fair |
|
|
Carrying |
|
|
Fair |
|
||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Derivatives (Level 1 measurement): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other current and non-current assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Emissions Trading Scheme credits |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign currency forward exchange contracts |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Non-financial liabilities (Level 3 measurement): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other current and non-current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Acquisition-related contingent consideration |
|
|
|
|
|
|
|
|
|
|
|
|
||||
The following methods and assumptions were used to estimate the fair values:
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.
Acquisition-related contingent consideration: Contingent consideration payable in cash is discounted to its fair value at each balance sheet date. Where contingent consideration is dependent upon pre-determined financial targets, an estimate of the fair value of the likely consideration payable is made at each balance sheet date. The contingent consideration payable has been calculated based on the latest forecast. The movement in the current year relates to a $
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 of September 30, 2026, the contracts have maturity dates of up to two years 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 nine months ended September 30, 2026, was a gain of $
12
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 reported in our Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Form 10-K"), we have incurred financial losses and lodged a civil and criminal legal claim related to a misappropriation of inventory in Brazil. At the time of filing, there have been no significant developments to report in relation to the claims being made. Consistent with prior 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 of September 30, 2026, such guarantees, which are not recognized as liabilities in the condensed consolidated financial statements, amounted to $
Under the terms of the guarantee arrangements, generally the Company would be required to fulfil the obligations should the affiliated company fail to fulfil 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.
13
NOTE 13 – STOCK-BASED COMPENSATION PLANS
The following table summarizes the transactions of the Company’s share-based compensation for 2026 and 2025:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
(in millions) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Stock options |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Stock equivalent units |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The following table summarizes the transactions of the Company’s share-based compensation plans for the nine months ended September 30, 2026.
|
|
Number of |
|
|
Weighted |
|
||
Nonvested at December 31, 2025 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
$ |
|
||
Vested |
|
|
( |
) |
|
$ |
|
|
Forfeited |
|
|
( |
) |
|
$ |
|
|
Nonvested at September 30, 2026 |
|
|
|
|
$ |
|
||
For the awards granted with market conditions, a Monte Carlo model has been used to calculate the grant-date fair value. For all other awards, a fair market value methodology or a Black-Scholes model has been used to calculate the grant-date fair value.
The awards granted with market and non-market conditions include performance measures that can result in a maximum
As of September 30, 2026, there was $
14
NOTE 14 – RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE LOSS
There were
Changes in AOCL for the nine months ended September 30, 2026, net of tax, were:
(in millions) |
|
Defined |
|
|
Cumulative |
|
|
Total |
|
|||
Balance at December 31, 2025 |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
Other comprehensive income/(loss) before reclassifications |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Amounts reclassified from AOCL |
|
|
|
|
|
|
|
|
|
|||
Total other comprehensive income/(loss) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Balance at September 30, 2026 |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
There were
Changes in AOCL for the nine months ended September 30, 2025, net of tax, were:
(in millions) |
|
Defined |
|
|
Cumulative |
|
|
Total |
|
|||
Balance at December 31, 2024 |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
Other comprehensive income/(loss) before reclassifications |
|
|
|
|
|
|
|
|
|
|||
Amounts reclassified from AOCL |
|
|
|
|
|
|
|
|
|
|||
Total other comprehensive income/(loss) |
|
|
|
|
|
|
|
|
|
|||
Balance at September 30, 2025 |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
NOTE 15 – RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
There were no new accounting pronouncements relevant to Innospec in the quarter.
NOTE 16 – RELATED PARTY TRANSACTIONS
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”) which from time to time purchases scrap metal from the Company. The Company has sold less than $
15
Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations for the Three and Nine Months Ended September 30, 2026
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 plant closure provisions, goodwill, other intangible assets and property, plant and equipment. These policies have been discussed in the Company’s 2025 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 |
|
|
Nine Months Ended |
|
||||||||||
(in millions) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Net sales: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Performance Chemicals |
|
$ |
180.5 |
|
|
$ |
170.8 |
|
|
$ |
540.2 |
|
|
$ |
513.0 |
|
Fuel Specialties |
|
|
180.7 |
|
|
|
172.0 |
|
|
|
548.0 |
|
|
|
507.4 |
|
Oilfield Services |
|
|
112.4 |
|
|
|
99.1 |
|
|
|
330.0 |
|
|
|
302.0 |
|
|
|
$ |
473.6 |
|
|
$ |
441.9 |
|
|
$ |
1,418.2 |
|
|
$ |
1,322.4 |
|
Gross profit: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Performance Chemicals |
|
$ |
34.0 |
|
|
$ |
25.8 |
|
|
$ |
95.4 |
|
|
$ |
91.6 |
|
Fuel Specialties |
|
|
63.4 |
|
|
|
61.2 |
|
|
|
195.7 |
|
|
|
184.9 |
|
Oilfield Services |
|
|
31.7 |
|
|
|
29.7 |
|
|
|
99.8 |
|
|
|
88.5 |
|
|
|
$ |
129.1 |
|
|
$ |
116.7 |
|
|
$ |
390.9 |
|
|
$ |
365.0 |
|
Operating income/(loss): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Performance Chemicals |
|
$ |
16.9 |
|
|
$ |
9.2 |
|
|
$ |
44.0 |
|
|
$ |
43.3 |
|
Fuel Specialties |
|
|
35.6 |
|
|
|
35.3 |
|
|
|
109.7 |
|
|
|
107.6 |
|
Oilfield Services |
|
|
6.7 |
|
|
|
4.8 |
|
|
|
21.0 |
|
|
|
15.1 |
|
Corporate costs |
|
|
(18.6 |
) |
|
|
(18.2 |
) |
|
|
(62.5 |
) |
|
|
(56.8 |
) |
Adjustment to fair value of contingent consideration |
|
|
1.1 |
|
|
|
17.7 |
|
|
|
5.7 |
|
|
|
16.2 |
|
Restructuring charge |
|
|
— |
|
|
|
(0.9 |
) |
|
|
— |
|
|
|
(0.9 |
) |
Impairment of property, plant and equipment |
|
|
— |
|
|
|
(22.9 |
) |
|
|
— |
|
|
|
(22.9 |
) |
Impairment of intangible assets |
|
|
— |
|
|
|
(19.1 |
) |
|
|
— |
|
|
|
(19.1 |
) |
Profit on disposal of property, plant and equipment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.2 |
|
Total operating income |
|
$ |
41.7 |
|
|
$ |
5.9 |
|
|
$ |
117.9 |
|
|
$ |
82.7 |
|
16
Three Months Ended September 30, 2026
The following table shows the changes in sales, gross profit and operating expenses by reporting segment for the three months ended September 30, 2026, and the three months ended September 30, 2025:
|
|
Three Months Ended |
|
|
|
|
|
|
||||||
(in millions, except ratios) |
|
2026 |
|
|
2025 |
|
|
Change |
|
|
|
|||
Net sales: |
|
|
|
|
|
|
|
|
|
|
|
|||
Performance Chemicals |
|
$ |
180.5 |
|
|
$ |
170.8 |
|
|
$ |
9.7 |
|
|
+6% |
Fuel Specialties |
|
|
180.7 |
|
|
|
172.0 |
|
|
|
8.7 |
|
|
+5% |
Oilfield Services |
|
|
112.4 |
|
|
|
99.1 |
|
|
|
13.3 |
|
|
+13% |
|
|
$ |
473.6 |
|
|
$ |
441.9 |
|
|
$ |
31.7 |
|
|
+7% |
Gross profit: |
|
|
|
|
|
|
|
|
|
|
|
|||
Performance Chemicals |
|
$ |
34.0 |
|
|
$ |
25.8 |
|
|
$ |
8.2 |
|
|
+32% |
Fuel Specialties |
|
|
63.4 |
|
|
|
61.2 |
|
|
|
2.2 |
|
|
+4% |
Oilfield Services |
|
|
31.7 |
|
|
|
29.7 |
|
|
|
2.0 |
|
|
+7% |
|
|
$ |
129.1 |
|
|
$ |
116.7 |
|
|
$ |
12.4 |
|
|
+11% |
Gross margin (%): |
|
|
|
|
|
|
|
|
|
|
|
|||
Performance Chemicals |
|
|
18.8 |
|
|
|
15.1 |
|
|
|
+3.7 |
|
|
|
Fuel Specialties |
|
|
35.1 |
|
|
|
35.6 |
|
|
|
-0.5 |
|
|
|
Oilfield Services |
|
|
28.2 |
|
|
|
30.0 |
|
|
|
-1.8 |
|
|
|
Aggregate |
|
|
27.3 |
|
|
|
26.4 |
|
|
|
+0.9 |
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|||
Performance Chemicals |
|
$ |
(17.1 |
) |
|
$ |
(16.6 |
) |
|
$ |
(0.5 |
) |
|
+3% |
Fuel Specialties |
|
|
(27.8 |
) |
|
|
(25.9 |
) |
|
|
(1.9 |
) |
|
+7% |
Oilfield Services |
|
|
(25.0 |
) |
|
|
(24.9 |
) |
|
|
(0.1 |
) |
|
+0% |
Corporate costs |
|
|
(18.6 |
) |
|
|
(18.2 |
) |
|
|
(0.4 |
) |
|
+2% |
Adjustment to fair value of contingent consideration |
|
|
1.1 |
|
|
|
17.7 |
|
|
|
(16.6 |
) |
|
-94% |
Restructuring charge |
|
|
— |
|
|
|
(0.9 |
) |
|
|
0.9 |
|
|
-100% |
Impairment of property, plant and equipment |
|
|
— |
|
|
|
(22.9 |
) |
|
|
22.9 |
|
|
-100% |
Impairment of intangible assets |
|
|
— |
|
|
|
(19.1 |
) |
|
|
19.1 |
|
|
-100% |
|
|
$ |
(87.4 |
) |
|
$ |
(110.8 |
) |
|
$ |
23.4 |
|
|
-21% |
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, 2026 |
|
|||||||||||||
Change (%) |
|
Americas |
|
|
EMEA |
|
|
ASPAC |
|
|
Total |
|
||||
Volume |
|
|
-10 |
|
|
|
-3 |
|
|
|
+14 |
|
|
|
-5 |
|
Price and product mix |
|
|
+16 |
|
|
|
+7 |
|
|
|
+14 |
|
|
|
+12 |
|
Exchange rates |
|
|
- |
|
|
|
-1 |
|
|
|
- |
|
|
|
-1 |
|
|
|
|
+6 |
|
|
|
+3 |
|
|
|
+28 |
|
|
|
+6 |
|
The Americas volumes were lower due to continued supply constraints and reduced demand for our personal care products, being offset by a favorable price and product mix due to pricing improvements and higher raw material costs.
EMEA volumes were lower due to decreased demand for our personal care products, being offset by a favorable price and product mix, driven by higher demand for our higher priced products and higher raw material costs.
ASPAC volumes were higher due to increased demand for certain products, together with a favorable price and
17
product mix, driven by higher demand for our higher priced products and higher raw material costs.
EMEA was impacted by adverse foreign currency exchange rate movements.
Gross margin: the year-over-year increase of 3.7 percentage points was primarily due to pricing improvements in the current year, and improved manufacturing variances compared to the prior year.
Operating expenses: the year-over-year increase of $0.5 million was primarily due to higher selling expenses and higher provisions for performance-related remuneration accruals, being partly offset by lower administrative costs.
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, 2026 |
|
|||||||||||||||||
Change (%) |
|
Americas |
|
|
EMEA |
|
|
ASPAC |
|
|
AvGas |
|
|
Total |
|
|||||
Volume |
|
|
+33 |
|
|
|
-10 |
|
|
|
-17 |
|
|
|
-29 |
|
|
|
+3 |
|
Price and product mix |
|
|
-2 |
|
|
|
+1 |
|
|
|
+7 |
|
|
|
+13 |
|
|
|
+2 |
|
Exchange rates |
|
|
+1 |
|
|
|
-1 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
+32 |
|
|
|
-10 |
|
|
|
-10 |
|
|
|
-16 |
|
|
|
+5 |
|
Sales volumes in the Americas were higher year-over-year due to the increase and timing of demand from customers, while partly offset by an adverse price and product mix.
Sales volumes in EMEA decreased year-over-year primarily due to the timing of demand from customers, being partly offset by a favorable price and product mix.
Sales volumes in ASPAC decreased year-over-year primarily due to the timing of demand from customers, being partly offset by a favorable price and product mix.
AvGas sales volumes were lower than the prior year due to changing demand from customers, partly offset by a favorable customer mix.
The favorable impact of foreign currency exchange rate movements in the Americas was offset in EMEA.
Gross margin: the year-over-year decrease of 0.5 percentage points was due to an adverse sales mix in the Americas from increased sales of lower-margin products, being partly offset by sales in EMEA of higher margin products.
Operating expenses: the year-over-year increase of $1.9 million was primarily due to adverse movements to the provisions for doubtful debts, together with increased employee-related costs, including higher provisions for performance-related remuneration accruals.
Oilfield Services
Net sales: have increased year-over-year by $13.3 million, driven by our DRA plant expansion and associated demand. The majority of the segment's sales are concentrated in the Americas region.
Gross margin: the year-over-year decrease of 1.8 percentage points was primarily due to higher raw materials costs and pricing pressures.
18
Operating expenses: the year-over-year increase of $0.1 million was primarily due to an increase in research and development expenses and selling expenses, being partly offset by lower performance-based remunerations accruals.
Other Income Statement Captions
Corporate costs: the year-over-year increase of $0.4 million was primarily due to higher provisions for performance-related remuneration accruals, being partly offset by a favorable revaluation for our U.K. emissions trading scheme credits.
Adjustment to fair value of contingent consideration: is a credit in the current year of $1.1 million compared to a credit in the prior year of $17.7 million. The adjustment relates to the acquisition of QGP within our Performance Chemicals segment and a small acquisition in our Oilfield Services segment. The credits in both years relate to a reduction in the expected payables, together with the lower accretion charge calculated on the lower expected consideration payable. See Note 10 of the Notes to the Condensed Consolidated Financial Statements for additional information.
Other net income/(expense): for the three months ended September 30, 2026, was $0.5 million of income compared to $3.2 million of income in the three months ended September 30, 2025, primarily driven by the revaluation of foreign currency forward contracts, and the foreign currency translation of non-USD balances in the group.
Interest income/(expense), net: in the three months ended September 30, 2026, was $0.4 million of income compared to $2.2 million of income in the three months ended September 30, 2025, driven by lower interest rates and lower cash balances in the current year.
Income taxes: the effective tax rate was 25.8% and (12.4)% in the third quarter of 2026 and 2025, respectively. The adjusted effective tax rate, once adjusted for the items set out in the following table, was 24.7% in 2026 compared with 22.7% in 2025. The 2.0% increase in the adjusted effective rate was primarily due to the fact that a higher proportion of the Company’s profits are 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:
19
|
|
Three Months Ended |
|
|||||
(in millions) |
|
2026 |
|
|
2025 |
|
||
Income before income taxes |
|
$ |
42.6 |
|
|
$ |
11.3 |
|
Adjustment for stock compensation |
|
|
2.1 |
|
|
|
0.9 |
|
Adjustment to fair value of contingent consideration |
|
|
(1.1 |
) |
|
|
(17.7 |
) |
Impairment of acquired intangible assets |
|
|
— |
|
|
|
19.1 |
|
Impairment of property, plant and equipment |
|
|
— |
|
|
|
22.9 |
|
Legacy costs of closed operations |
|
|
0.9 |
|
|
|
1.0 |
|
Adjusted income before income taxes |
|
$ |
44.5 |
|
|
$ |
37.5 |
|
Income taxes |
|
$ |
11.0 |
|
|
$ |
(1.4 |
) |
Tax on stock compensation |
|
|
(0.2 |
) |
|
|
(0.2 |
) |
Tax on adjustment to fair value of contingent consideration |
|
|
— |
|
|
|
— |
|
Tax on impairment of acquired intangible assets |
|
|
— |
|
|
|
5.1 |
|
Tax on impairment of property, plant and equipment |
|
|
— |
|
|
|
4.8 |
|
Tax on legacy costs of closed operations |
|
|
0.2 |
|
|
|
0.2 |
|
Adjusted income taxes |
|
$ |
11.0 |
|
|
$ |
8.5 |
|
GAAP effective tax rate |
|
|
25.8 |
% |
|
|
(12.4 |
)% |
Adjusted effective tax rate |
|
|
24.7 |
% |
|
|
22.7 |
% |
Nine Months Ended September 30, 2026
The following table shows the changes in sales, gross profit and operating expenses by reporting segment for the nine months ended September 30, 2026, and the nine months ended September 30, 2025:
|
|
Nine Months Ended |
|
|
|
|
|
|
||||||
(in millions, except ratios) |
|
2026 |
|
|
2025 |
|
|
Change |
|
|
|
|||
Net sales: |
|
|
|
|
|
|
|
|
|
|
|
|||
Performance Chemicals |
|
$ |
540.2 |
|
|
$ |
513.0 |
|
|
$ |
27.2 |
|
|
+5% |
Fuel Specialties |
|
|
548.0 |
|
|
|
507.4 |
|
|
|
40.6 |
|
|
+8% |
Oilfield Services |
|
|
330.0 |
|
|
|
302.0 |
|
|
|
28.0 |
|
|
+9% |
|
|
$ |
1,418.2 |
|
|
$ |
1,322.4 |
|
|
$ |
95.8 |
|
|
+7% |
Gross profit: |
|
|
|
|
|
|
|
|
|
|
|
|||
Performance Chemicals |
|
$ |
95.4 |
|
|
$ |
91.6 |
|
|
$ |
3.8 |
|
|
+4% |
Fuel Specialties |
|
|
195.7 |
|
|
|
184.9 |
|
|
|
10.8 |
|
|
+6% |
Oilfield Services |
|
|
99.8 |
|
|
|
88.5 |
|
|
|
11.3 |
|
|
+13% |
|
|
$ |
390.9 |
|
|
$ |
365.0 |
|
|
$ |
25.9 |
|
|
+7% |
Gross margin (%): |
|
|
|
|
|
|
|
|
|
|
|
|||
Performance Chemicals |
|
|
17.7 |
|
|
|
17.9 |
|
|
|
-0.2 |
|
|
|
Fuel Specialties |
|
|
35.7 |
|
|
|
36.4 |
|
|
|
-0.7 |
|
|
|
Oilfield Services |
|
|
30.2 |
|
|
|
29.3 |
|
|
|
+0.9 |
|
|
|
Aggregate |
|
|
27.6 |
|
|
|
27.6 |
|
|
|
— |
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|||
Performance Chemicals |
|
$ |
(51.4 |
) |
|
$ |
(48.3 |
) |
|
$ |
(3.1 |
) |
|
+6% |
Fuel Specialties |
|
|
(86.0 |
) |
|
|
(77.3 |
) |
|
|
(8.7 |
) |
|
+11% |
Oilfield Services |
|
|
(78.8 |
) |
|
|
(73.4 |
) |
|
|
(5.4 |
) |
|
+7% |
Corporate costs |
|
|
(62.5 |
) |
|
|
(56.8 |
) |
|
|
(5.7 |
) |
|
+10% |
Adjustment to fair value of contingent consideration |
|
|
5.7 |
|
|
|
16.2 |
|
|
|
(10.5 |
) |
|
-65% |
Restructuring charge |
|
|
— |
|
|
|
(0.9 |
) |
|
|
0.9 |
|
|
-100% |
Impairment of property, plant and equipment |
|
|
— |
|
|
|
(22.9 |
) |
|
|
22.9 |
|
|
-100% |
Impairment of intangible assets |
|
|
— |
|
|
|
(19.1 |
) |
|
|
19.1 |
|
|
-100% |
Profit on disposal of property, plant and equipment |
|
|
— |
|
|
|
0.2 |
|
|
|
(0.2 |
) |
|
-100% |
|
|
$ |
(273.0 |
) |
|
$ |
(282.3 |
) |
|
$ |
9.3 |
|
|
-3% |
20
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, 2026 |
|
|||||||||||||
Change (%) |
|
Americas |
|
|
EMEA |
|
|
ASPAC |
|
|
Total |
|
||||
Volume |
|
|
-11 |
|
|
|
- |
|
|
|
-11 |
|
|
|
-5 |
|
Price and product mix |
|
|
+13 |
|
|
|
+2 |
|
|
|
+9 |
|
|
|
+7 |
|
Exchange rates |
|
|
- |
|
|
|
+7 |
|
|
|
+2 |
|
|
|
+3 |
|
|
|
|
+2 |
|
|
|
+9 |
|
|
|
- |
|
|
|
+5 |
|
The Americas volumes were lower due to some supply constraints and reduced demand for our personal care products, being offset by a favorable price and product mix driven by improved pricing and higher raw material costs.
EMEA volumes were unchanged, combined with a favorable price and product mix driven by improved pricing and higher raw material costs.
ASPAC volumes were lower driven by some supply constraints and decreased demand for certain products, being partly offset by a favorable price and product mix driven by improved pricing and higher raw material costs.
EMEA and ASPAC benefited from the favorable foreign currency exchange rate movements.
Gross margin: the year-over-year decrease of 0.2 percentage points was primarily due to negative manufacturing variances in North America including the impact of the severe weather conditions in the first quarter, being partly offset by pricing improvements.
Operating expenses: the year-over-year increase of $3.1 million was primarily due to increased research and development expenses, together with higher provisions for performance-related remuneration accruals and adverse provisions for doubtful debts, being partly offset by the reductions for other expenses.
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, 2026 |
|
|||||||||||||||||
Change (%) |
|
Americas |
|
|
EMEA |
|
|
ASPAC |
|
|
AvGas |
|
|
Total |
|
|||||
Volume |
|
|
+14 |
|
|
|
+2 |
|
|
|
-3 |
|
|
|
-12 |
|
|
|
+5 |
|
Price and product mix |
|
|
- |
|
|
|
- |
|
|
|
+1 |
|
|
|
+2 |
|
|
|
- |
|
Exchange rates |
|
|
+1 |
|
|
|
+5 |
|
|
|
+1 |
|
|
|
- |
|
|
|
+3 |
|
|
|
|
+15 |
|
|
|
+7 |
|
|
|
-1 |
|
|
|
-10 |
|
|
|
+8 |
|
The Americas and EMEA volumes increased year-over-year due to higher customer demand.
ASPAC volumes declined due to the timing of demand from customers, while benefiting from a favorable price and product mix with increased sales of higher priced products.
AvGas volumes were lower than the prior year due to changing demand from customers, being partly offset by a favorable customer mix.
21
All our regions benefited from favorable foreign currency exchange rate movements.
Gross margin: the year-over-year decrease of 0.7 percentage points was due to an adverse sales mix in the Americas from increased sales of lower-margin products, being partly offset by sales in EMEA of higher margin products.
Operating expenses: the year-over-year increase of $8.7 million was primarily due to increased operating expenses, including increased employee-related costs and adverse provisions for doubtful debts.
Oilfield Services
Net sales: have increased year-over-year by $28.0 million, driven by our DRA plant expansion and associated demand. The majority of the segment's sales are concentrated in the Americas region.
Gross margin: the year-over-year increase of 0.9 percentage points was primarily due to a favorable sales mix, being partly offset by pricing pressures.
Operating expenses: the year-over-year increase of $5.4 million was primarily due to increased selling administration and research expenses, together with adverse provisions for doubtful debts, being partly offset by lower performance-related remuneration accruals.
Other Income Statement Captions
Corporate costs: the year-over-year increase of $5.7 million was primarily due to higher information technology costs including additional amortization for our new ERP system, higher provisions for performance-related remuneration accruals and higher legal and compliance expenses, being partly offset by lower legacy costs of closed operations and favorable revaluations for our U.K. emissions trading scheme credits.
Adjustment to fair value of contingent consideration: is a credit in the current year of $5.7 million compared to a credit in the prior year of $16.2 million. The adjustment relates to the acquisition of QGP within our Performance Chemicals segment and a small acquisition in our Oilfield Services segment. The credits in both years relate to a reduction in the expected payables, together with the lower accretion charge calculated on the lower expected consideration payable. See Note 10 of the Notes to the Condensed Consolidated Financial Statements for additional information.
Other net income/(expense): for the nine months ended September 30, 2026, was $4.2 million of income compared to $1.2 million of expense in the nine months ended September 30, 2025, primarily driven by the revaluation of foreign currency forward contracts, and the foreign currency translation of non-USD balances in the group.
Interest income/(expense), net: in the nine months ended September 30, 2026, was $2.0 million of income compared to $7.3 million of income in the nine months ended September 30, 2025, driven by lower interest rates and lower cash balances in the current year.
Income taxes: the effective tax rate was 24.6% and 20.9% in the first nine months of 2026 and 2025, respectively. The adjusted effective tax rate, once adjusted for the items set out in the following table, was 23.6% in 2026 compared with 23.4% in 2025. The 0.2% increase in the adjusted effective rate was primarily due to the fact that a higher proportion of the Company’s profits are 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
22
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 |
|
|||||
(in millions) |
|
2026 |
|
|
2025 |
|
||
Income before income taxes |
|
$ |
124.1 |
|
|
$ |
88.8 |
|
Adjustment for stock compensation |
|
|
5.8 |
|
|
|
5.0 |
|
Adjustment to fair value of contingent consideration |
|
|
(5.7 |
) |
|
|
(16.2 |
) |
Impairment of acquired intangible assets |
|
|
— |
|
|
|
19.1 |
|
Impairment of property, plant and equipment |
|
|
— |
|
|
|
22.9 |
|
Legacy costs of closed operations |
|
|
4.1 |
|
|
|
4.8 |
|
Adjusted income before income taxes |
|
$ |
128.3 |
|
|
$ |
124.4 |
|
Income taxes |
|
$ |
30.5 |
|
|
$ |
18.6 |
|
Tax on stock compensation |
|
|
(1.2 |
) |
|
|
(0.5 |
) |
Tax on adjustment to fair value of contingent consideration |
|
|
— |
|
|
|
— |
|
Tax on impairment of acquired intangible assets |
|
|
— |
|
|
|
5.1 |
|
Tax on impairment of property, plant and equipment |
|
|
— |
|
|
|
4.8 |
|
Tax on legacy costs of closed operations |
|
|
1.0 |
|
|
|
1.1 |
|
Adjusted income taxes |
|
$ |
30.3 |
|
|
$ |
29.1 |
|
GAAP effective tax rate |
|
|
24.6 |
% |
|
|
20.9 |
% |
Adjusted effective tax rate |
|
|
23.6 |
% |
|
|
23.4 |
% |
23
LIQUIDITY AND FINANCIAL CONDITION
Working Capital
In the nine months ended September 30, 2026, our working capital increased by $38.7 million, while our adjusted working capital increased by $80.8 million. The difference is primarily due to the exclusion of the movements for cash and cash equivalents and the movements for income taxes, being partly offset by the other movements shown in the table below.
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, |
|
|
December 31, |
|
||
Total current assets |
|
$ |
1,034.4 |
|
|
$ |
1,004.6 |
|
Total current liabilities |
|
|
(351.2 |
) |
|
|
(360.1 |
) |
Working capital |
|
|
683.2 |
|
|
|
644.5 |
|
Less cash and cash equivalents |
|
|
(251.9 |
) |
|
|
(292.5 |
) |
Less prepaid income taxes |
|
|
(2.7 |
) |
|
|
(13.1 |
) |
Less other current assets |
|
|
(12.4 |
) |
|
|
(7.3 |
) |
Add back accrued income taxes |
|
|
8.4 |
|
|
|
5.3 |
|
Add back current portion of plant closure provisions |
|
|
4.9 |
|
|
|
4.9 |
|
Add back current portion of acquisition-related contingent consideration |
|
|
2.5 |
|
|
|
7.0 |
|
Add back current portion of operating lease liabilities |
|
|
13.5 |
|
|
|
15.9 |
|
Adjusted working capital |
|
$ |
445.5 |
|
|
$ |
364.7 |
|
We had a $53.3 million increase in trade and other accounts receivable, including a $3.1 million increase in allowances, which was due to increased sales and the timing of collections for different customers. Days’ sales outstanding in our Performance Chemicals segment remained unchanged at 72 days; increased from 57 days to 63 days in our Fuel Specialties segment; and increased from 64 days to 76 days in our Oilfield Services segment.
We had a $32.5 million increase in inventories, including a $0.4 million decrease in allowances, which was driven by higher levels of finished goods for our Fuel Specialties segment due to the timing of production, together with higher levels of raw materials for our Performance Chemicals and Oilfield Services segments, as the Company continues to maintain inventory levels necessary to manage the risk of potential supply chain disruption for certain key raw materials. Days’ sales in inventory in our Performance Chemicals segment increased from 65 days to 66 days; increased from 133 days to 155 days in our Fuel Specialties segment; and decreased from 83 days to 69 days in our Oilfield Services segment.
Prepaid expenses decreased $10.1 million, from $20.1 million to $10.0 million, primarily due to the cyclical expensing of prepaid invoices.
We had a $5.1 million decrease in accounts payable and accrued liabilities, which was dependent on the timing of payments for each of our reporting segments. Creditor days (including goods received not invoiced) have increased in our Performance Chemicals segment from 50 days to 53 days; decreased from 58 days to 45 days in our Fuel Specialties segment; and increased from 46 days to 55 days in our Oilfield Services segment.
24
Operating Cash Flows
We generated cash from operating activities of $42.2 million in the nine months ended September 30, 2026, compared to $77.9 million in the nine months ended September 30, 2025. The decrease in cash generated from operating activities compared to the prior year was primarily related to higher increases in working capital, being partly offset by the timing of income tax payments.
Cash
At September 30, 2026, and December 31, 2025, we had cash and cash equivalents of $251.9 million and $292.5 million, respectively, of which $113.6 million and $145.4 million, respectively, were held by non-U.S. subsidiaries principally in the U.K..
The decrease in cash and cash equivalents of $40.6 million for the nine months ended September 30, 2026, was primarily driven by our continued investments in capital projects, payment of our semi-annual dividend and the repurchases of our common stock, being partly offset by the cash generated from operating activities.
Debt
We continue to have available a $250.0 million multicurrency revolving credit facility.
At September 30, 2026, and December 31, 2025, we had no debt outstanding under the revolving credit facility and no obligations were outstanding under finance leases. See Note 8 of the Notes to the Condensed Consolidated Financial Statements for additional information.
25
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 2025 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, 2026, 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.
26
PART II OTHER INFORMATION
Item 1 Legal Proceedings
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, employee and product liability claims.
As reported in our 2023 Form 10-K, we have incurred financial losses and lodged a civil and criminal legal claim related to a misappropriation of inventory in Brazil. At the time of filing, there have been no significant developments to report in relation to the claims being made. Consistent with prior 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.
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 2025 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.
On May 7, 2026, the Company announced a new repurchase program which allows for up to $75 million of the Company’s common stock to be repurchased in the open market over a three-year period commencing on May 12, 2026. This replaces the $50 million repurchase authorization announced on March 10, 2025.
The company did not repurchase any of its common stock in the quarter ended September 30, 2026.
27
Item 3 Defaults Upon Senior Securities
None.
Item 4 Mine Safety Disclosures
Not applicable.
Item 5 Other Information
(a), (b), and (c) –
28
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. |
29
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 4, 2026 |
By |
|
/s/ PATRICK S. WILLIAMS |
|
|
|
Patrick S. WilliamsPresident and Chief Executive Officer |
|
|
|
|
Date: November 4, 2026 |
By |
|
/s/ IAN P. CLEMINSON |
|
|
|
Ian P. CleminsonExecutive Vice President and Chief Financial Officer |
30