Good day, and thank you for standing by. Welcome to the Innospec's Fourth Quarter 2025 Earnings Release Conference Call and Webcast. Speakers on the call today are David Jones, General Counsel and Chief Compliance Officer; Patrick Williams, President and CEO; and Ian Cleminson, Executive Vice President and Chief Financial Officer. [Operator Instructions] Please note that today's conference is being recorded. I would now like to turn the conference over to your first speaker, Mr. David Jones, General Counsel and Chief Compliance Officer. Please go ahead.

Thank you. Welcome to Innospec's Fourth Quarter and Full Year Earnings Call. This is David Jones. I'm Innospec's General Counsel and Chief Compliance Officer. The earnings release and this presentation are posted on the company's website. During this call, we will make forward-looking statements, which are predictions and projections 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 materially from the anticipated results implied by such forward-looking statements. The risks and uncertainties are detailed in Innospec's 10-K, 10-Q and other filings with the SEC. Please see the SEC site and Innospec 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 as additional items 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 turn it over to you, Patrick.

Thank you, David. Welcome, everyone, to Innospec's Fourth Quarter 2025 Conference Call. This was a good quarter for Innospec with continued strong operating income growth and margin expansion in Fuel Specialties, combined with improving results in Performance Chemicals and Oilfield Services. In Performance Chemicals, margin improvement actions and lower overheads drove strong sequential operating income growth. We continue to execute on price cost management, manufacturing efficiencies and new product commercialization actions over the short to medium term. New products include the continued expansion of our industry-leading sulfate and 1,4-Dioxine free personal and home care portfolio. Additionally, we are accelerating our growth in new technologies for agriculture, mining, construction and other diversified industrial markets. We expect these combined efforts to drive further growth in 2026. In Fuel Specialties, sales growth and margin expansion drove a 7% increase in operating income over the prior year. As expected, the business has continued to deliver consistently strong results and has a diverse pipeline of fuel and nonfuel growth opportunities across all regions. Oilfield Services operating income and margins improved on a richer sales mix and lower overheads. Sales were down on reduced activity in U.S. completions and the Middle East. We remain focused on delivering operating income growth in 2026 as Middle East activity returns and our recent DRA expansion takes effect. In parallel, we will continue to focus on margin improvement. Our outlook does not assume any resumption of Mexico sales in 2026. Regarding our outlook for the first quarter of 2026, results in Performance Chemicals and Oilfield Services will be negatively impacted by the historic winter storm, which occurred in late January. Despite this, we are optimistic that we will drive full year improvements in both businesses in 2026. Now I will turn the call over to Ian Cleminson, who will review our financial results in more detail. Then I will return with some concluding comments. After that, Ian and I will take your questions. Ian?

Thanks, Patrick. Turning to Slide 7 in the presentation. The company's total revenues for the fourth quarter were $455.6 million, a decrease of 2% from the $466.8 million reported a year ago. Overall, gross margin decreased by 1.2 percentage points from last year to 28%. Adjusted EBITDA for the quarter was $55.7 million compared to $56.6 million last year, and net income for the quarter was $47.4 million compared to a net loss of $70.4 million recorded last year, which was driven by the buyout of the U.K. pension scheme. Our GAAP earnings per share were $1.91, including special items, the net effect of which increased our fourth quarter earnings by $0.41 per share. A year ago, we reported a GAAP loss per share of $2.80, which included a negative impact from special items of $4.20. Excluding special items in both years, our adjusted EPS for the quarter was $1.50 compared to $1.41 a year ago. For the full year, total revenues of $1.8 billion decreased 4% from 2024. Adjusted EBITDA for the year was $203 million compared to $225.2 million in 2024 and net income for 2025 was $116.6 million compared to the prior year net income of $35.6 million. Our full year GAAP earnings per share were $4.67, including special items, which decreased our full year earnings by $0.60 per share. In 2024, we reported GAAP earnings of $1.42 per share, which includes a negative impact from special items of $4.50. Excluding special items in both years, our adjusted EPS for 2025 was $5.27 compared to $5.92 a year ago. Turning to Slide 8. Revenues in Performance Chemicals of $168.4 million were flat with the fourth quarter of last year. Volumes reduced by 7%, offset by a positive price/mix of 3% and a favorable currency impact of 4%.…

Thanks, Ian. Entering 2026, our focus is unchanged. We will continue to deliver exceptional innovation, value and service to our global customers across all our end markets. We will also continue to prioritize margin and operating income improvements in Performance Chemicals and Oilfield Services. In addition, we expect Fuel Specialties to continue to deliver consistent results. Operating cash generation was excellent in the quarter, and our new cash position closed at over $292 million after making our semiannual dividend payment of $21.6 million. We continue to have significant balance sheet flexibility for dividend growth, buybacks, organic investment and M&A. Now I will turn the call over to the operator, and Ian and I will take your questions.

[Operator Instructions] And the questions come from the line of Jon Tanwanteng from CJS Securities.

Really nice job on the mix and margin there. I was wondering if you could go a little bit into the Oilfield business and how you see the mix evolving there, especially in the coming quarters as you continue to diversify that business.

Yes, Jon, let me start with that one. We're really pleased with the progress that we've seen in the Oilfield business in Q4. We were with the team yesterday, and I've got to say we're really encouraged by the activity levels that are going on, the creativity, the focus on technology. As we head into 2026, we're going to take a little tough on the brakes because of the weather impacts in Q1. But beyond that, our DRA expansion is coming online, and we're starting to ramp up volumes there, spreading the customer base and improving the profitability and the gross margins in that business is critical for us. Also, the Middle East remains a real hot spot for us. We can see lots of opportunities there, advancing technologies and a real nice opportunity for us to grow the business above average rates in the region. Outside of that, we've had a tough time in the U.S., but we've got lots of opportunities with new technologies and new ways of going to market starting to happen. So when we wrap all that together, we do feel confident that we'll be able to outpace what we did in 2025. The mix will be a little bit more towards the Middle East and DRA, and we feel that we can improve the profitability of those other core businesses in production and stim as well.

Okay. Great. You mentioned the impact of weather a couple of times. I guess that less people driving, maybe there's some styles with production, but I would also expect probably maybe an offsetting impact on cold flow. Could you just quantify what you think the impact is going to be this quarter from cold weather and winter storms?

Yes. I'll let Ian take the financial portion of the negative effects. But in Oilfield, it was production activity. People couldn't get to the well sites, couldn't deliver product. There was a multitude of issues. If you look at North Carolina, I mean, it was an extreme snow and ice event where our plants are located Probably the biggest ice event in a century in that area. So we did have a lot of plant downtime, couldn't get raw materials in. And then obviously, Jon, when you start the plant back up, you're going to have a lot of issues, and that's what we've done. In conjunction with that, though, being that we've had these issues with cold weather hit us, we've also decided at the same time to really work on the plant inefficiencies to make the plant more efficient, get better yield, better product quality, work on some of the manufacturing processes that we probably would have had done at some point in time. So we're going to go ahead and do it all since we had the plant issue and had the cold weather issue, just knock it all out at once. So I think it's -- I wouldn't say it's a blessed to disguise by any means because I think we would have had a really strong first quarter. So we would have backed up the fourth quarter with another strong quarter. But it is something that has to be done. It's an event that was unexpected. We'll get it fixed. It won't happen again because we will prepare for it. But we'll also make that plant in a much better condition to move forward for growth.

Yes. Just to add to that, John, when you roll that into our expectations for Q1, within the Oilfield business, we're probably going to be posting operating income around about $5 million to $6 million. That's probably a couple of million below where we would like to have been. And that's for the reasons Patrick explained. In Performance Chemicals, it's a bigger impact because we've obviously got quite a large manufacturing footprint down there, which was closed for an extended period and there's been some damage to the site as well. So it's going to take a little time for us to build that back up. So we're expecting the Performance Chemicals Q1 operating income to be close to $10 million to $11 million. Again, that's probably $5 million to $6 million below where we would have liked to have been. So it's quite a significant impact from the weather in Q1 in both of those businesses.

Got it. And just a follow-up on that. Do you expect to make that up in the following quarters for the whole year? Or is that something that gets lost as you look at the whole '26?

It's slightly different in both businesses. The Oilfield business potentially could make up some of that, Jon, but it's going to be a tough ask for them because their customers have closed down. If they come back and come back strong, we may make up some of it. Performance Chemicals because it's production based, we've lost that production time. We will not be able to make that back up. And it's going to take us a quarter or 2 for the reasons Patrick was explaining some of the additional efficiencies that we're going to be looking for on that side. We won't be able to make up that volume of production. So with those sales and those costs will be lost to us. What we do expect is as we exit Q2 is that the Q3 numbers will be showing much stronger benefits of the changes that we're making and a much stronger benefit from the direction and the discipline the business is driving into customer contracts, pricing and general efficiencies.

Yes. It's just unfortunate timing, Jon. We -- our expectation is we're rolling into a nice Q4 to roll into a really strong 2026. And we're just going to take advantage of it now that it did happen. We're going to make it even better coming out of Q2.

The next questions come from the line of Mark Harrison from Seaport Research Partners.

I had just a couple of questions on the Performance Chemicals business. Can you talk a little bit about what drove the volume decline that you saw in Q4? I assume that was not weather related. Was that customers taking inventory down? Or what else is going on there? And then I guess just in terms of the price -- specific to the pricing actions you need to take in order to cover the higher cost of Oleochemicals and maybe other raw material inputs, are those prices in place and where you need them to be? Or are there going to be some additional actions that may contribute to better kind of price versus raw material cost margin contribution as we get into '26?

Yes. We'll hit your questions by both of us. I think to start with Q4 volumes, Mike, a lot of it was just uncertainty in the marketplace. I think tariffs in general just have put a downturn on any kind of inventory build. I think that was part of it. Typically, Q4 is a little slower in the business by nature. But I think overall, if you look at the quality of business that we have moving into the year, we felt very strong. I think for us, there is -- we've done a lot of price action around margins and around raw materials. A lot of our national contracts and international contracts with multinationals has price mechanisms built into the contracts. So we had to go back and just make sure we're following those guidelines that have set forth in the contracts. In other areas where we saw price spikes around Oleos, et cetera, we have finally gotten out in front of those. And therefore, you saw the margin increase. I do think over time, probably more towards the middle of this year, you'll start to see us even get ahead of that. But because of the weather event that we had, I think first quarter is going to affect us a little bit and a little bit into Q2. But overall, I think we're heading in the right direction with margins. The volume is there. The sales are there, the revenue is there. The business is there. We're increasing our output on new products in the portfolio, which is going to build upon throughout the year as well. And those are higher-margin products, too. So if you look at the overall business, I would say it's not a negative, it's a positive. I think it's the weather event that's going to affect us upfront, but we're starting to really manage these processes the way they should have been. But additionally to that, the pipeline is full of new products, which will benefit us moving forward. I think that probably covered all of it.

All right. And then a couple on Oilfield. I'm just curious, this was a year -- 2025 was a year when you guys again saw some further declines in revenue. Obviously, you didn't see any recovery from the Latin American customer. But I'm just curious, as you're starting to think about what top line growth could look like next year, it sounds like you're really encouraged by what you're seeing in the Middle East, some contribution from DRAs. Is it your view that as we think about the entire year, we could see some maybe mid- to high single-digit type of top line growth? And then the second piece of that question is, as we're talking about Latin America, is it possible that we see any business opportunities start to show up in Venezuela?

Yes. So good questions. I do think you're going to start seeing that probably between 5% to 7% revenue growth in that in Oilfield. Oilfield needs consolidation in the marketplace, at least in North America. And there's also a need for technology. And as Ian alluded to earlier in the conversation, there's been a big emphasis and a big push to bring new technologies to the marketplace that really this market hasn't seen in quite some time. And I do think that we're on the edge of that happening. As you said, I think Middle East will start to really pull its weight in Q2, Q3, Q4. And it's not just with Saudi Aramco, it's in the general market area, the regional area of the Middle East. In regards to Latin America, I do think we're going to start seeing sales in Mexico again. I think it's a function of how we're going to get paid. We're not going to sell products for free, but I do think that they -- well, we do know they need the technology. We know our technology works. It's proven. So I do think Mexico at some point in time, we will see something not to the magnitude we've had in the past. And in regards to Venezuela, it's a very heavy crude. We know that crude up there very well. Chevron has operated in that region for quite some time. So as soon as you start getting some stability, political stability in that area and you start seeing international investment primarily from the U.S., that is definitely an open market for Oilfield where I think we can make a big difference. So there's a lot of positives there. We've got to extract those and the market's got to come our way. And I think it's up for our guys to really push the envelope and make it happen.

All right. One of the special items that you guys called out in the quarter referred to the tax impact from an internal reorganization. I was wondering if you could explain what that reorganization entails and what impacts that could have on the P&L going forward?

Yes, I'll take that one, Mike. It was a reorganization we did over a year ago at the top end of the organization just to simplify the structure and allow us to move cash overseas into the U.S. in a much more tax-efficient way. There was a deferred tax impact to that reorganization. That has a -- I think it's a 15-year benefit to tax. It will be about $600,000 a year for the next 15 years in cash taxes, Mike. So it's all below operating income. There's no business benefit, but it does simplify our operations at the way we are able to move cash around the way we are able to file tax returns in the U.S. and it gives us a little bit of benefit to the tax line as well.

All right. Last one for me is just on corporate costs. They were quite a bit lower in Q4. I was just curious, was that some incentive comp that was lower or what drove that? And if you can give any kind of an outlook or guidance for corporate costs in the first quarter and for 2026, that would be very helpful.

Yes, you're spot on, Mike. It was personnel-related costs. As we look forward into '26, that's sort of $20 million per quarter, $8 million for the full year. That's the level that we're expecting for 2026.

And the questions come from the line of David Silver from Freedom Capital Markets.

Yes. So I would like to start with maybe just a question or two on Fuel Specialties. And firstly, on the quarter, if I'm not mistaken, my model goes back about, I don't know, 10 years or so. I believe the revenues in the quarter were your highest ever and your operating profit, $37 million was, I think, your second highest ever. So obviously, the business is functioning pretty well. And I know that your view is that it's a very stable business, low single-digit grower from year-to-year. But it does seem like you're shaking things up a little bit or operating the business a little bit differently. So what maybe led to the record revenue near record operating profit this quarter? In other words, did you have some incremental success with new products or just a richer mix overall. But just maybe some thoughts about that and then why that strength on an annual basis, let's say, couldn't continue on into 2026?

Yes, David. They've really done a really good job in that business. I think you're spot on. It was a record revenue. It was very close to a record [ op ]. A lot of it was product mix, but a lot of it is outside of even fuels. I think they've done a really good job of expanding their portfolio, getting out there with new technologies, making sure that we've got the right costing in place, making sure that we're staying up on innovation. And it was a good overall effort globally by all parts. It is a business that's typically a 2% to 3% growth business. And occasionally, we see those spikes like when you went to ULSD, we had the big spike. You're starting to see some regulatory movement. You're starting to see GDI take effect in some aftermarkets in Europe, our marine business. All the businesses that we've been talking about for quite some time are starting to come along as expected. And the group who manages that division have really stepped it up and you got to give them credit. I think that it's always been our stable business. It's a light on CapEx. It's got great free cash flow, and we'll continue to push it there. I think it's also an area -- just to expand a little bit off your question, it's an area we'd love to acquire into if we found something that was worth purchasing. The team deserves it. They've built it. They're ready for it. We've just got to find the right thing to buy. But overall, great job. I do expect them to have another strong consistent year.

You poached with that M&A comment, you poached one of my questions for the follow-up discussion. Next question, I wanted to maybe switch over to Performance Chemicals and maybe, I don't know, come at it just a little bit different. But revenue-wise, I mean, I think it was a record or near record year. And there's a number of issues involving kind of the lower operating profit year-over-year. But in general, there's a lot of chatter about the strained kind of middle income consumer and things like that. And I did note, I believe it's like 2 or 3 quarters in a row where you cited kind of a weaker mix within Performance Chemicals. And I'm just wondering, is trading down kind of an issue that you're seeing? Are your customers kind of indicating that, that's part -- a bigger part of their business with you? And then more to the point, I mean, I guess this business has been a mid- to high single-digit grower over the longer term. Is that still kind of your thinking for next year or whether it's due to mix or other factors that maybe the growth potential might be a little slower over the medium term?

Yes. I mean if you look at consumer trends right now, they are trading down to a lower-priced commoditized type products. So we have definitely seen that. Now that moves in ebb and flows. Once you take that market uncertainty out and people see more spending capabilities in their pockets, they'll go out and start spending more on high-end products. So we have seen that push down to more commoditized products. But again, David, you'll see that. That's very typical in markets like this where there's uncertainty or coming out of inflationary markets. For us, it's the continuance on innovation, right, and to get better manufacturing processes and efficiencies so that we can better prepare for that commoditized market where we're making better margins than we have to date is something we're doing at some of our plants right now, which will benefit us towards the latter part of the year. But yes, consumer trends have sent us that way. We -- the way I look at growth in that area is I think you're probably looking at it a little bit flat this year. And then I think you'll start seeing it spike back up probably towards the latter part of this year, but I would probably hold it flat.

Okay. Last one for me. I did want to go to your concluding remarks in your earnings release. And in particular, you cited in Performance Chemicals and Oilfield, you said new technology commercializations and other opportunities for 2026. In particular, on the new technology commercialization, I mean you focused on kind of some of your functional surfactant products for mining and agrochemical and whatnot. But I was just wondering, is that -- are those -- the recent commercializations, are those the products you're talking about maybe expanding the rollout there? Or you haven't been shy about rolling out new products over a longer period of time. Is there another new crop of product introductions we should be thinking about? And qualitatively, maybe could you point us to where those might be?

Yes. These are a series of products, and let's talk Performance Chemicals specifically. There are a series of products that go in multiple applications. They're not mass markets where you're going into a multibillion-dollar industry and capturing $200 million to $300 million of business. They're more specialized. So we will typically launch 2, 3 or 4 of these throughout the year, which is just a nice build on upon our business and which over time will start increasing that margin. And as I said earlier, I think that you'll start seeing the impact of those probably more in the Q3, Q4 range. So there is a nice pipeline of portfolio of products that will be hitting the market throughout the year, but I think it's a buildup over time where you start seeing the big changes in margin profile and in revenue. And it's the same in Oilfield. We've got a lot of creativity in the group. They're finally starting to come together and bring new ideas and creativity market. And sometimes it's not necessarily just products. It could be market approach. And so there's a lot of differentiality going. We have to be different than other people, whether it's technology or whether it's service or whether it's any kind of innovation that's attached to both. And that's really where we're approaching our group. And that's why we feel pretty confident that we'll overcome the barriers that we have in Q1 and Q2, manufacturing barriers. We'll overcome those in Q3, Q4 by all the things that we have going on internally with the organization.

We have no further questions at this time. So I'll hand back to the President and CEO, Patrick Williams, for closing remarks.

Thank you 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 first quarter 2026 results in May. 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.