Good day, and thank you for standing by. Welcome to the Innospec's Second Quarter 2025 Earnings Release Conference Call and Webcast. [Operator Instructions] Please note that today's conference is being recorded. I would now like to turn the conference over to your first speaker, David Jones, General Counsel and Chief Compliance Officer. Please go ahead.

Thank you. Welcome to Innospec's second quarter earnings call. This is David Jones, and I'm Innospec's General Counsel and Chief Compliance Officer. The earnings release for the quarter and this presentation are posted on the company's website. During this call, we will make forward-looking statements, which are predictions about future events. These statements are based on current expectations and assumptions that are subject to risks and uncertainties that could cause actual results to differ from the anticipated results implied by such 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's site and Innospec's site for these and related documents. In today's presentation, we have also included non-GAAP financial measures. A reconciliation to the most directly comparable GAAP financial measure is contained in the earnings release. The non-GAAP financial measures should not be considered as a substitute for or superior to those prepared in accordance with GAAP. They are included to aid investor understanding of the company's performance in addition to the impact that these items and events had on financial results. With me today from Innospec are Patrick Williams, President and Chief Executive Officer; and Ian Cleminson, Executive Vice President and Chief Financial Officer. And with that, I'll turn it over to you, Patrick.

Thank you, David, and welcome, everyone, to Innospec's Second Quarter 2025 Conference Call. This was a good quarter for Innospec [indiscernible] portfolio benefited from strong growth in Fuel Specialties operating income, which offset lower results in Performance Chemicals and Oilfield Services. Performance Chemicals delivered strong high single-digit sales growth, but gross margins remain below our expectations. We are focused on delivering sequential gross margin improvement and operating growth in the second half of the year. This is a priority for the business, and we are cautiously optimistic that we can achieve these results through a broad range of opportunities that have been identified and actioned by the team. Fuel Specialties had another strong quarter. Operating income grew by double digits and margins expanded. The business benefited from good performance across all regions and end markets, including nonfuel applications. Our outlook continues to be for steady performance in this business with focus on operating income growth and margin improvement. Oilfield Services operating income improved on a sequential basis due to our focus on margin improvement as discussed last quarter. Our medium-term operating income margin target is above 10%, and our teams will continue to drive sales, technology and cost management actions to meet these objectives. We remain focused on delivering further operating income and margin improvement through the second half of this year. Our outlook does not anticipate any resumption of Latin America activity for the remainder of the year. Now I'll 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. Ian?

Thanks, Patrick. Turning to Slide 7 in the presentation. The company's total revenues for the second quarter were $439.7 million, a 1% increase from $435 million a year ago. Overall gross margin decreased by 1.2 percentage points from last year to 28%. Adjusted EBITDA for the quarter, was $49.1 million compared to $54.1 million last year, and net income for the quarter was $23.5 million compared to $31.2 million a year ago. Our GAAP earnings per share were $0.94, including special items, the net effect of which decreased our second quarter earnings by $0.32 per share. A year ago, we reported GAAP earnings per share of $1.24, which included a negative impact from special items of $0.15 per share. Excluding special items in both years, our adjusted EPS for the quarter was $1.26 compared to $1.39 a year ago. Turning to Slide 8. Revenues in Performance Chemicals for the second quarter were $173.8 million, up 9% from last year's $160.1 million. Volumes grew 4%, driven by lower-margin products with a positive price/mix up 2% and a positive currency impact of 3%. Gross margins of 17.5% decreased 5.1 percentage points compared to the same quarter in 2024 due to lower sales pricing and a weaker sales mix. Operating income of $14.3 million decreased 33% from $21.2 million last year. Moving on to Slide 9. Revenues in Fuel Specialties for the second quarter were $165.1 million, down 1% from the $166.6 million reported a year ago. Volumes were down 7% with price/mix up 4% and a positive currency impact of 3%. Fuel Specialties gross margin of 38.1% were 3.5 percentage points at the same quarter last year, benefiting from a stronger sales mix and disciplined pricing. Operating income of $35.4 million was up 16% and from $30.4 million a year ago. Moving on to Slide 10. Revenues in Oilfield Services for the quarter were $101 million, down 7% from $108.3 million in the second quarter last year. Gross margins of 29.6% decreased 1 percentage point from last year on a weaker sales mix. Operating income of $6.2 million improved sequentially, helped by cost control measures have decreased 15% from $7.3 million 1 year ago. Turning to Slide 11. Corporate costs for the quarter of $20.9 million compared with $17.6 million a year ago, and included a $2.3 million of legacy environmental provision. The effective tax rate for the quarter was 26.3% compared to 28.6% a year ago, benefiting from the geographical location of profits. Moving on to Slide 12. Cash from operating activities was $9.3 million before capital expenditures of $16.2 million. In the second quarter, we bought back almost 90,000 shares at a cost of $8.2 million and paid a semiannual dividend of $20.8 million. As of June 30, [indiscernible] $266.6 million in cash and cash equivalents and no debt. And now I'll turn it back over to Patrick for some final comments.

Thanks, Ian. Our immediate priority is margin improvement in Performance Chemicals and Oilfield Services. These improvements are expected to come from sales, cost actions, new technology and other opportunities across all regions and end markets. Fuel Specialties has delivered strong results year-to-date and is expected to remain steady. Overall, our balanced portfolio is well positioned for growth and improved margins as our business teams deliver on these objectives. This quarter, we paid our semiannual dividend of $0.84 per share and repurchased 8.2 million shares. With over $266 million in net cash, we have significant balance sheet flexibility for further organic investment, complementary M&A and shareholder returns through dividend growth and buybacks. Now I will turn the call over to the operator, Ian and I will take your questions.

[Operator Instructions] We are now going to proceed with our first question. And the questions come from the line of Mike Harrison from Seaport Research Partners.

I had a handful of questions here on the Performance Chemicals business. First of all, you noted that you were seeing higher volumes of some lower-margin products and that mix was a drag on margin. Can you give us a little more color on what those products were? And is this something you guys are doing internally? Or is this more of a customer shift or trading down? And I guess the end question is do you expect that trend weaker mix to continue into the second half? Or was it more isolated in the second quarter?

I think there's a little bit of hesitancy in the market, Mike. I think that with all the tariff talk and geopolitics going on, there's been a little bit of a consumer shift to a lower commoditized product. We don't give actual products out on the phone calls, but that's what we generally see in the markets. And additionally, when you start looking at the recovery in pricing, there's always a lag going up as Oleochemicals go up, the lag going up takes considerable time, you get the benefit as raw materials come up on the back end. But right now, we're still climbing that ladder. I think for us as a company, it sits on us that we need to control pricing a little better. And that is going to be our focus in Q3, not only from procurement but pricing to the customers. So we've got a long way to go. There is a minor shift in the market, but it's not the market that's causing this. We need to take care of this internally.

All right. So you mentioned Oleochemicals there, and we've heard that there's kind of a spike going on in those raw material costs. Is that the bigger driver then that we need to be thinking about and that the key to margin improvement in the second half is more of a pricing versus raw material cost issue?

Yes, I'd probably say that's the bigger driver at this point. I think the other drivers are things internally that we need to do a better job of, and we're on top of it. I think you're going to see unfortunately, a little bit of that lag in Q3. I don't see us coming out of this until Oleos come off a little bit, but it's over until we get to the spike of the -- or the height of the increase, which I think you'll see in probably Q4.

And then I guess on the more positive side, the strength that you saw in Fuel Specialties margin was pretty impressive, maybe almost seemed a little bit unusual. Can you help us understand what drove that strong gross margin performance in Fuel Specialties and what aspects of that strength could be sustainable going forward?

Yes. I mean it's quite frankly, it's price discipline. It's product mix. It's nonfuel applications. They've done a really good job in moving this business forward in a market that's somewhat stagnant. And I think the non-field applications have been a big benefit. And as I said earlier, disciplined pricing. We've got great technology. We've got great people. That's a very high margin for this business, and it's going to be tough to sustain that in Q3, Q4. I do see that coming off a bit, but I do think we'll still stay at the high end of what we usually -- when we say that 30% to 34% of margin, I think we'll still stay on that high end, but it should come up a little bit probably in Q3.

All right. And then, I guess, just kind of bringing it all together as we're trying to think about what earnings could look like in the third quarter, it sounds like Performance Chemicals and Oilfield should both show a little bit of sequential improvement from Q2 earnings levels. Maybe Fuel Specialties comes off a little bit and net-net, Q3 should look pretty similar to Q2. Any other color around earnings guidance is always helpful.

Mike, I think what you'll see is Fuel Specialties may be coming up a little bit, not much. I think you'll see Oilfield services probably about the same as it was this quarter, could have a chance to go up. But I don't think you're going to see Performance Chemicals go up at all. I think we have a full quarter of fixed things before we get back to those normalized run rates in Q4.

[Operator Instructions] We are now going to proceed next question and the questions come from the line of John Tanwanteng from CJS.

Patrick, I was just wondering if you could help us understand the state of progress and diversifying your Oilfield customer base? And if there's any update, and I know you didn't include your guidance, but is there any update on the LatAm customer and if they may come back at some point in the future?

Yes. I don't see it happening this year. I mean, everybody is seeing what's going on with that customer. Let's just call it out specific to Mexico. They're trying to flow $10 billion of bonds. They've got some real big issues internally that they have to overcome in payment issues as well. But there's no doubt that crude oil drives their revenue base in Mexico. So they're kind of caught right now. I don't see any orders coming through in Q3. There's a lot of talk going on, but we don't see anything in Q3 and potentially Q4. I do, Jon, think they will come back. It's just a function of timing. And we're risk averse when it comes to payment terms. They have to be able to pay for us to ship product. And that's kind of where we sit right now. So in answering the rest of your question, I think the oilfield has done a better job diversifying in other countries. Middle East, you're seeing growth. I think you can see good growth in DRA and other areas. But the Latin American customer is going to take some time.

Okay. Great. And just to rehash the Fuel Specialties margin question. You mentioned a number of drivers to get you to that, that really impressive 38% level in Q2. Which specifically is not repeating in Q3 that maybe gets you back to the normal range that you're in even at the high end?

Yes, it's really product mix, Jon. We landed some real nice sales mix this quarter. That will come off a little bit in Q3, and along with -- sort of the solid pricing discipline the business has got, our expectations are that we'll be at the high end of that 32% to 34% range that we normally quote. That's the normalized business go into Q3. As we head into Q4, again, dependent on sales mix, we'll stay within that range, maybe come off a little bit from 34%. Well, let's say, we'll update you on the next call, but certainly, Q3 will be at the high end of the normalized range.

Okay. Great. And then any update on capital allocation. I know you bought back some shares in the quarter, which traditionally, you've done opportunistically, but not very -- a very heavy component of your capital allocation plan. Just wondering if there's any changes that are going on. Obviously, the stock has been lower, but if there's any M&A updates or other things you'd like to do?

Why don't you start Ian and then I'll add to it.

Sure. On the capital allocation side, Jon, you've seen us in the market with the buybacks, and we have been a little bit opportunistic there. We've got a $50 million authority and we're [ tuning ] our way through that. But we're just looking at the market carefully. We don't want to chase the market down and we don't want to chase the market up or the opportunities as and when they arise. The focus really for us is on this longer-term shareholder value, and that comes out of the dividend and that comes out of the business performance. So the dividend, we've increased 10% in the first half of the year. You'll likely see us do that again in the second half of the year. We think we've got the cash flow and we've got the cash reserves to do that. So no real changes on the capital allocation from that respect. M&A. I'll pass it over to Patrick.

Yes. We're still looking at M&A I would probably tell you nothing in Q3 until I get this margin issue fixed in Performance Chemicals. But we will always look, we will continue to look, there are some things coming on the market at the end of this year that have some excitement. But again, we're not look until I get these margins improved and fixed in Performance Chemicals, and I guarantee it will be fixed.

[Operator Instructions] We are now going to take our next question. And the questions come from the line of Jon Tanwanteng from CJS.

Just a quick follow-up, if possible. I know you mentioned that the geographic mix was a little bit better from a tax perspective. Any thoughts on that going forward and for the rest of the year?

Yes. I think sort of 26% is probably the right number, Jon. Obviously, things can change as the business evolves. But right now, that's our sort of full year estimate.

We have no further questions at this time. I will now to hand back to Patrick Williams for closing remarks.

Thank you all for joining us today, and thanks to all our shareholders, customers and Innospec employees for your interest and support. 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 third quarter 2025 results in November. Have a great day.

This concludes today's conference call. Thank you all for participating. You may now disconnect your lines. Thank you, and have a great day.