innospec growing our balanced portfolio - · pdf fileor presented in accordance with generally...

INNOSPECGROWING OUR BALANCED PORTFOLIO

December 2017

2FORWARD-LOOKING STATEMENTS

This presentation contains certain "forward-looking statements" within the meaning of the PrivateSecurities Litigation Reform Act of 1995. All statements other than statements of historical factsincluded or incorporated herein may constitute forward-looking statements. Such forward-lookingstatements include statements (covered by words like “expects,” “estimates,” “anticipates,” “may,”“believes,” “feels” or similar words or expressions), for example, which relate to earnings, growthpotential, operating performance, events or developments that we expect or anticipate will or may occurin the future. Although forward-looking statements are believed by management to be reasonable whenmade, they are subject to certain risks, uncertainties and assumptions, including those associated withthe United Kingdom’s exit from the European Union and our actual performance or results may differmaterially from these forward-looking statements. Additional information regarding risks, uncertaintiesand assumptions relating to Innospec and affecting our business operations and prospects aredescribed in Innospec’s Annual Report on Form 10-K for the year ended December 31, 2016 and otherreports filed with the U.S. Securities and Exchange Commission. You are urged to review ourdiscussion of risks and uncertainties that could cause actual results to differ from forward-lookingstatements under the heading "Risk Factors” in such reports. Innospec undertakes no obligation topublicly update or revise any forward-looking statements, whether as a result of new information, futureevents or otherwise.

© 2017. All Rights Reserved. Innospec, Inc.

3USE OF NON-GAAP FINANCIAL MEASURES

The information presented in this presentation includes financial measures that are not calculatedor presented in accordance with Generally Accepted Accounting Principles in the United States(GAAP). These non-GAAP financial measures comprise EBITDA, income before income taxesexcluding special items and net income excluding special items and related per share amounts.EBITDA is net income per our consolidated financial statements adjusted for the exclusion ofcharges for interest expense, net, income taxes, depreciation, amortization and impairment ofOctane Additives segment goodwill. The Company believes that such non-GAAP financialmeasures provide useful information to investors and may assist them in evaluating the Company’’’’sunderlying performance and identifying operating trends. In addition, management uses these non-GAAP financial measures internally to allocate resources and evaluate the performance of theCompany’’’’s operations. While the Company believes that such measures are useful in evaluatingthe Company’’’’s performance, investors should not consider them to be a substitute for financialmeasures prepared in accordance with GAAP. In addition, these non-GAAP financial measures maydiffer from similarly-titled non-GAAP financial measures used by other companies and do notprovide a comparable view of the Company’’’’s performance relative to other companies in similarindustries.


4

Corporate HQEnglewood, CO

Regional Locations USA, UK, Continental Europe, Africa, Russia, Brazil and Asia

ManufacturingGlobal Network of Offices & Testing Facilities: USA, UK, France, Italy, Spain Germany

COMPANY PROFILE: Innospec, Inc. NASDAQ (IOSP)


4

Run-rate $1.3 billion sales

1800 Employees in

23 countries

Business Profile Key Transaction

(added $230m of sales and 430 employees)

Surfactants Acquisitionfrom Huntsman

Q4 2016

5

Technology Centres

Regional Offices

Sales & Branch Offices

Manufacturing & Toll Manufacturing

LOCATIONS - AMERICAS

Rio de Janeiro

Itajai

DenverPencader

Houston

Chatsworth

Crowley

High PointSalisbury

Pleasanton

Midland

Williston

Casper

Oxnard

5

Oilfield Services Operations

Fruita

OKC


Sao Paulo

Montreal

Calgary

6

Technology Centres

Regional Offices



LOCATIONS – ASIA PACIFIC

Beijing

Seoul

Singapore

Guangzhou

New Delhi

6


7

Ellesmere Port

Herne

Vernon

Milan

Limassol

Piraeus

Leuna

Madrid

Zug Castiglione

Barcelona

St Mihiel

Everberg

Moscow

LOCATIONS – EUROPE, MIDDLE EAST & AFRICA

Technology Centres

Regional Offices



7

Dubai

Cape Town


8BUSINESS UNITS FINANCIAL PERFORMANCE

SALES Q3 2017 YTD

Fuel Specialties Oilfield ServicesPerformance Chemicals Octane Additives

SALES GROWTH 2004 – Q3 2017

0

200

400

600

800

1000

1200

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q32017

Sale

s($

m)


9CORPORATE STRUCTURE



10

Fuel Specialties Oilfield Services Performance Chemicals Octane Additives


11FUEL SPECIALTIES

• Fuel Additives – detergents; cold flow improvers; lubricity improvers; corrosion inhibitors; conductivity improvers – focused on all fuels

What We Do

• Make fuels on-specification ; create brand-leading & premium fuels

Product Benefits

• Major oil companies, fuel marketers /retailers; pipelines, fleets, marine, aviation

Customers

• Innovative technology & customer service

How We Compete

• Miles/vehicles on the road; legislation , fuel economy & engine technology

Market Drivers

• Market leader

Market Position

• GDP +1-3 points

Sales Growth Potential


12FUEL SPECIALTIES - STRATEGY

� Solid underlying growth in distillates for heavy duty

� EV growth focused on gasoline passenger cars

� Changes in engine technology offer opportunities

� New product development key to growth in new gasoline engines

� Significant growth potential in developing markets

� Improvements in air quality and fuel quality

� South America, Middle East, Asia Pacific

� Maintain operating margins at +20% as market leader

� Opening of China entity next step in preparing for local growth

� M&A - opportunities likely to be very limited


13



14PERFORMANCE CHEMICALS (PERSONAL & HOME CARE)

• Surfactants, benzoate esters, silicones

What We Do

• Luxurious foam/lather; low irritation; shine; skin-feel

Product Benefits

• Formulators and retailers of skin care, hair care, home care, agrochemical and mining products

Customers

• Innovative Technology & Customer Service

How We Compete

• Product performance – skin care and hair care

• Natural; x-free in premium brands

Market Drivers

• Established – strong in technology innovation

• Potential adjacent market development – ag, mining, construction, agchem

Market Position

• Mid single digit %



15PERFORMANCE CHEMICALS

� Business improvement – Personal & Home Care

� Grow in existing markets – globally

� “More space in the bottle”

� New product introduction

� Overall Margin improvement

� Expand into adjacent markets

� Good technology base for expansion into agrochemical and mining formulations.

� Overall operating margin improvement to +10% by 2020

� Opening of China entity next step in preparing for local growth

� Opportunities for further M&A


16BODY WASH

Anionics

Conditioning Polymers

Limited to secondary

and tertiary surfactants

Nonionics

Amphoterics

Anionics

Conditioning Polymers

Nonionics

Amphoterics

85-95%

10-30%

20172016


17



18OILFIELD SERVICES

• Work with operators across most major basins to deliver custom chemical solutions and services for drilling, completions, production and pipeline applications

What We Do

• A true one-stop shop that provides chemical expertise for drilling, completion, production and midstream; in-house technical expertise and evaluation; first-class R&D capabilities

Product Benefits

• E&P Operators; service companies; drilling companies; pipelines

Customers

• Direct to operator; regional laboratory services; innovative technology and customer service

How We Compete

• Oil & gas demand; changes to drilling, completion, and production techniques;

• Minimize environmental impact

Market Drivers

• Creating a new mid-tier leader based on technology and service

Market Position

• Oil and gas price dependent



19OILFIELD SERVICES

� Continued growth opportunities in North America

� De-bundling concept continues to attract new customers

� Good customer base in strategic low lift cost basins

� US industry has reduced lift costs by up to 40% - business profitable with crude prices above $40

� Business reaching inflexion point where additional revenue growth is highly incremental

� Expand global business

� Initial focus on opportunities in the Middle East

� Overall operating margin improvement to +10% by 2021


20

Fuel Specialties Oilfield Services Performance Chemicals Octane Additives


21TEL – MOTOR GASOLINE & AVIATION

• One remaining country• Expect operating income drop to 50% in 2018 versus

2017 and 2019 to be a year of phase out.

• One remaining country• Expect operating income drop to 50% in 2018 versus

2017 and 2019 to be a year of phase out.

Motor Gasoline (Octane Additives)

• TEL still mandated in 100LL • Essential for general aviation fleet• FAA program targets first alternatives by 2019

• TEL still mandated in 100LL • Essential for general aviation fleet• FAA program targets first alternatives by 2019

Aviation Gasoline (Fuel Specialties)

©2017. All Rights Reserved. Innospec, Inc.

22BALANCED CAPITAL MANAGEMENT PROGRAM

Strong Balance Sheet – Leverage at 1.0x

Semi-annual dividend – increased 10-15% pa for last four years

Share Repurchase mandate available

Cash generative – further improvement from growing businesses

Strong Support from excellent banking group


23SUMMARY

Excellent balanced portfolio of growing businesses

Adjacent market expansion potential

Strong balance sheet

Cash generative, dividend paid

Stable leadership


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