Q3 2020 Innospec Inc Earnings Call
Ladies and gentlemen, thank you for standing by and welcome today [laughter] worked at trying to drive any conference call.
All participants are in a listen only mode. After the speaker presentations that would be a question and answer session to EPS question. During the session you would need to press star one on yet that I must advise you that this conference is being recorded today.
And they called French telecom.
Today.
General.
He's got Sir.
Thank you welcome to <unk> third quarter earnings call.
Today's call is being recorded.
Yesterday, we reported our financial results for the quarter.
This release and this presentation are posted on the company side will be available on the site for at least six months.
During this call will make forward looking statements, which are predictions projections and other statements about future events.
These statements are based on current expectations and assumptions that are subject to risk and uncertainty.
These statements involve a number of risks uncertainties and assumptions, including the effects of the cobot Notching <unk>.
Duration.
And patch measures taken by government authority to address it in a manner, which then Jim Mcmahon precipitate exacerbate.
Certainties that could cause actual results to differ materially from the anticipated results implied by forward looking statements.
These risks and uncertainties are detailed in Innospecs Kincaid drink queues and other filings with the <unk>.
Thanks to the FCC side respect site for these and other documents.
In our discussion today, we have also included non-GAAP financial measures.
A reconciliation to the most directly comparable GAAP financial measures contained in our earnings release.
Which is available on the Innospec side.
They are included as additional clarifying items to aid investors in further understanding the company's performance. In addition to the impact these items and events have on the financial results.
Also with US today from Innospec are Patrick Williams, President and Chief Executive Officer, and increments and 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 Innospecs third quarter 2020 conference call.
As we remain focused on returning all our businesses to pre cobot growth and profitability.
I am pleased to report a solid improvement in our results over the second quarter 2020.
Operating cash flow was very strong and allowed us to repay all our external bank debt in the quarter.
I'm also pleased the board has decided to maintain our dividend for the second half of this year at 52 cents, bringing our dividend to a dollar for for the full year.
Performance chemicals <unk> delivered another very strong set of results with operating income up 33%.
Over the same period 2019.
Our positive outlook for the performance chemicals is supported by a pipeline of new technology, driven by increasing consumer preferences for products, which are more natural mild and environmentally sustainable.
We also continue to support our customers and meeting new regulatory requirements, such as limitations on one for dioxin.
As projected global fuel demand begins to recover in the third quarter, which drove increased sales in fuel specialties. Although this recovery has been slower than anticipated.
Gross margins returned to our expected range and operating income grew 17.5 million over the second quarter 2020.
Barring a second wave of Cobiz induced economic shutdowns.
We expect that demand for fuel additives will continue to move towards 2019 levels throughout Q4 and into 2021.
In oilfield services, we remain focused on our strategy to reduce cyclicality by growing our DRA in production chemicals sales and by expanding the middle East.
In Q3 US completion activity remained low but was somewhat offset by increased drag reducing agent and production chemicals sales as previously shut in wells came back online in the quarter.
Our local team have done a good job in restructuring their base cost.
And our expectation is they will retain a significant portion of these savings as activity levels recover.
Now I'll turn the call over to Ian Clemmensen Who'll review, our financial results in more detail then I will return with some concluding comments.
After that we will take your questions.
Thanks, Patrick seems to slide eight in the presentation. The company's total revenues for the third quarter with 265.1 million a two.
29% decrease from 371.9 million a year ago.
Joe Real gross margin decreased 2.3 percentage points from last year to 29.7% due to a strong prior year comparative in fuel specialties.
EBITDA for the quarter was $31.5 million compared to 51.1 million last year.
GAAP earnings per share was 51 cents, including special items, the net effect of which decreased our third quarter earnings by 20 cents.
A year ago, we reported GAAP earnings per share of $1.22, which included adverse impact from special items of 18 cents.
Excluding special items in both years, our adjusted EPS for the quarter was 71 cents compared to $1.40 a year ago, what was the significant improvements over the last of 18 cents in the second quarter of Twentytwenty.
Moving on to slide nine revenues for fuel specialties in the third quarter were $120 million down 17% from last year, driven by a 12% reduction in volumes combined with an adverse price mix 5%.
Gross margins were within our expected range of 33.6%, although although they were down 3.9 percentage points. This is a strong comparative quarter.
This resulted in operating income of 22.8 million compared to 31.1 billion a year ago.
Fuel demand began to improve in the third quarter from its second quarter locals honestly.
On a sequential quarter basis operating income increased by 17.5 million over the second quarter of this year.
Turning to slide 10.
Revenues in performance chemicals for the third quarter 102 million okay.
2% to $99.9 million a year ago.
5% higher volumes and adverse price mix of 6% on a positive currency impact of 3%.
Gross margins of 23.5% no 0.9 percentage points on operating income was up an impressive 33% in the third quarter 2019 to 12.4 million.
Moving on to slide 11.
Oil field services revenues of 43.1 million were down by 64% on the same period last year.
Reflecting the reduction in customer activity in the U.S. onshore markets.
Gross margins were down slightly by normal five percentage points to 33.4%.
Operating losses of $4.5 million for the quarter compared to an operating income of $10 million a year ago.
On a sequential quarter basis operating results improved by 7.9 million over the second quarter of this year benefiting from cost reduction initiatives on the Capex.
Remains on track to achieve breakeven EBITDA in quarter four.
Turning to slide 12, corporate costs for the quarter were $13.3 million and within our expected range broadly similar to the 30 million recorded a year ago.
The adjusted effective tax rate for the quarter was 23.3% compared to 21.8% last year and increased slightly as a greater proportion of our profits now being in higher tax jurisdictions.
Moving on to slide 13, net cash provided by operating activities in the quarter was once again excellent 55.5 million.
Thats, a $40 million a year ago.
In the quarter, we repaid all our external bank debt.
September 30 is Twentytwenty Innospec had 66.6 million in cash and cash equivalents and finance lease debt have no point 6 million, resulting in a net cash position of $66 million.
As a result, we continue to have substantial liquidity headroom.
And now I'll turn the call back over to Patrick for some final comments.
Thanks, Dan.
Our results show the Innospec has started the recovery from the covered impacted second quarter we.
We are mindful that economic uncertainty lingers and then a second way pandemic could delay a global recovery.
The prospects for continued strong growth in performance chemicals are supported by secular consumer and regulatory trends, which are driving demand for our technologically advanced products such as sulfate free product lines.
We are cautiously optimistic that the man and activity levels in our fuel specialties and oilfield services businesses.
We will continue to improve through Q4 and into 2021.
We ended the third quarter, the very strong net cash position, which enables us to fund key organic growth projects and potential strategic acquisition opportunities that complement our business.
Again I am pleased the board has decided to maintain our semi annual dividend at 52 cents per share, which brings our full year dividend to dollar for now.
Now I'll turn the call over to the operator, any and I will take your questions.
Thank you.
Ladies and gentlemen, we will now begin the question and answer session.
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Kathy.
The ASP once again.
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Our first question comes from the line of John.
CJS Securities. Please ask your question. Your line is now open.
Hi, Good morning, gentlemen, thank you for taking my questions and really nice job on the margin there.
I was wondering if you could give us a kind of a picture how do you expect that opex to trend into Q4, either pretty basic question decline. Patrick you mentioned a lot of that holding but I was just wondering what percentage of that actually comes back as your business.
Starts to turn back to normal.
Sure I mean, why don't you pick this up and I'll add to it sure. John are you talking any business in particular or joint folks and oilfield or which segments are going to go through.
We can we can do oil first and then maybe on a consolidated basis after that.
Sure so ill.
No Phil businesses as you are aware, we took some cost initiatives in the second quarter.
Taken out round about $12 million of overhead.
Overhead costs.
We expect that to continue.
Gain will stabilize in Q4 and into Twentytwenty wall. So we don't expect to actually have to have an outlet anymore overhead. It so any leverage we get off the top line, we'll drop straight through so our expectation is that quarterly right Wes.
Quarterly yet so we're setting up Q4.
Will improve over Q3 the game in order.
I had for EBITDA neutral.
We think we can get that we may even with a following wind maybe even get to operating income breakeven as well that's a that's the next target on the on the list. So we are hopeful that our business will see some growth in oil field and.
And we're hopeful that we can get to that breakeven EBITDA may be breakeven.
Operating from position as well.
Okay, and then on the consolidated operating expenses.
Yes in terms of the pets, a I would say that.
You are really going to be in that similar range to where we were in.
In Q4 last year, probably not so high sixtys to low Seventys number.
I'm, giving you a range that John just because it's a final court and we've got some true today, So I think anything from.
60, probably about 68 to 72 is a broad range and I think we've outgrown the lower end of that range.
Okay, Great Thats helpful. And then just on the on the topline as you head into Q4, and then maybe actually going back to Q3 can you give us progression of how demand trended.
During the third quarter and since October and kind of the Duvernay by business, where you saw the most improvement.
I guess, maybe some weakness.
Yes, I think if you look at what will take it by business segment. If you look at oil field services.
We've definitely seen demand starting to improve in Q4 now it's off a very low.
Sorry, I over Q2, two off a very low obviously.
But you know it's going to be interesting John we'll see how oil prices Pan out, we'll see workover does because obviously the cost of supply demand issue. If demand is not there you could have an overabundance of supply again and go right back to where we were in Q2, but everything that we're seeing in how we've kind of taken cyclicality.
Yeah, the oilfield services businesses with DRA and Middle East.
We have definitely starting to see demand increase for us in that business segment in fuel specialties, you saw demand come back.
It's come back quite quickly, but we want to see it lot faster than it is right now.
And thats strictly due to some of the.
Countries that were going back to work and now we obviously see a pandemic coming back in the second way so that gives us a little bit a concern, but overall because we have our cost base set really well in fuel specialties and demand has come back we've seen a pretty nice increase in Q4 as well carrying over.
From from up from Q3, so positive there in performance chemicals, it's just been strong throughout the guys have done a great job in that business.
We've got great technology, we're well placed and we're seeing very good demand in performance chemicals going into Q4 as well.
Great. Thank you last one from me just you did a great job with cash flow you paid down debt I assume you're going to keep putting it on the balance sheet are there plans to deploy that and in the near term or are you going to hold on to that bill.
No I think through some of these unknown times, we're going to hold onto it.
Obviously, what we want to do is is to take care of organic growth first is we're not paying a.
Multiple on it and it's our best fastest and most conservative growth.
So we'll keep it for organic growth will continue to pay the dividend, we hope to start increasing the dividend again going into next year and Thats, a likelihood because of our strong balance sheet and then we'll look at buybacks when appropriate.
And if appropriate but more importantly, I think it's a good time for us to build upon our strategy and looking at acquisitions that complement our business.
And they are out there and we're looking at multiples are starting to come down into the territory that makes lot of sense for us.
So we are on the look but I think if you look at it it's a pretty it's a pretty much a carryover that we tell you guys every quarter, it's let's start with organic growth first.
And then acquisition growth and then we'll put obviously increase our dividend as I said potentially look at buybacks.
Got it thank you Patrick I'll jump back in queue.
Thank you.
Thank you. Our next question comes from the line of any feedback from CL King.
Good man.
Yeah, Hi, good morning.
I had a couple of questions I think I want to kind of maybe go into the segment results for the quarter.
And let me just say.
Let's start with if you don't mind lets start with performance chemicals. So.
I guess I was wondering usually when you discuss the revenue trends in the in the segment you make a reference to maybe cost pass throughs.
That affected you know the a year over year revenue comparison.
Am I a good.
Could you maybe just discuss that and maybe just discuss the source of the.
Price mix effect and performance chemicals that you cited thank you.
Sure. So what we said David on the call was that we saw a 5% increase in volume.
All right that's probably the the mid range of what we would expect.
We also saw a negative one point price and product mix now I think it's important that most of that is due to raw materials.
And what we're seeing at the moment is that we've got lower raw material prices than we had last year. So that's actually for.
Pressure on our Rep.
I will now raw materials.
Got it.
A positive 3% over lift from exchange rates. So overall, we saw a 2% increase.
Revenues for the important thing here is Dave is that we are absolutely hate to not mid single digits.
Volume and without the pressure on raw material prices that would push the revenue line up a lot more.
Okay. So the bulk of that 6% is is.
The raw material pass through that pretty much all of that.
Yeah and would that be so if I was to kind of like take that item or take that element and apply it to fuel.
Fuel specialties, where I think you cited negative price mix effects of five five.
5% would that be similar.
Similar.
The similar behavior, there similar cost causation.
At slightly different in fuel specialties David.
Well things we highlighted earlier was that there was a very strong comparative quarter. This time last year.
Not was from our aviation products. So there is a a stronger mix element.
There is some raw materials not as pronounced as a performance chemicals.
Yeah, and just building on that within fuel specialties I was you know.
Positively surprised by the performance in that segment and quite frankly, it's just what you referenced.
My understanding is.
The portion that goes into aviation markets is significant.
And you know in my.
My estimation, I mean that should that element within fuel specialties should be significantly down. So maybe if we could just talk about you know the volume decline of 12% I mean, how much of that was allocated to let's say the aviation side and how would you say the other key.
End markets within fuel specialties did volume wise, you know relative to aviation I guess the diesel truck.
Business and any other elements you might call out would be great. Thank you.
Let me take that I'm sure Patrick Watson, some comments move itself. So.
Of course, the aviation piece at first so as you said the jet fuel additives saw.
Relatively small portion of our sales mix for the have been impacted due to the drop in global jet fuel demand.
Our outside sales however have been more resilience because they go into I guess I wonder, though not since the general aviation market includes personal actress the crop dusting and end markets have been less impacted so.
Although we've seen a drop off in the jet fuel.
Yes.
Obviously, not as most drop off in the October so thats the top.
Outside of it I would say on the diesel have excess demand and that is probably anywhere between 85% to 90% of what we would normally expect at this time of the year we.
We have seen an improvement over Q2, no doubts when we actually still almost demand actually stopped that.
We're not back to where we would like to be David but we also.
Getting close to that so we think that these obviously, it's running about 80 590 cents.
But the jet fuel is through the floor right now.
Yeah, certainly okay. Thank you for for the additional color there.
I wanted to maybe shift over to a strategic question for Patrick but.
You've talked a consistently about the opportunities for for bolt on M&A or something a little bigger.
And then I think you know the the new element this quarter, Patrick who might be you know your your comment on the potential for a second wave.
So this is more like a question of you know the practicalities of trying to get M&A done.
So you know sometimes when markets get unsettled you know companies look at their asset base.
Currently and what strategic from what they want to prioritize them.
Synergy opportunities for some M&A, but then when there is maybe a disruption to the market like approach.
Potential second wave.
You know it may induce.
Some potential targets to kind of pull in there right.
Rains, a little bit you know not not wanting to sell at the bottom or not want to be viewed as a motivated seller. So from your from your perspective from your experience.
You know the potential for a second wave of the pandemic does that does that loosen up or does that make targets more willing to kind of meet you half way.
As far as valuation or or other.
Deal aspects concern or is this the kind of.
Market, where they you know it tends to dry up opportunities because people don't want to.
Put themselves in a position where they might be.
You viewed as motivated sellers are selling at the bottom so you've talked about M&A, just just the practicalities of getting across the finish line in the current environment would be great. Thank you sure.
I think again as you know, we're very conservative in our approach with M&A.
And we remain that way.
And I think as you go through the first wave of covert that hit you watched a lot of companies really.
Buckle up their belts, a little tighter start.
Start looking at their assets, a little harder and really a lot of companies started butting up against bank covenants too.
And so for US. It was you know we've always had such a strong balance sheet.
That we have the ability to weather storms like this.
I've always said in the past that in down markets is when you need to start looking to acquire and we consider this a down market obviously for different reasons, not driven by financially down market, but by a pandemic, but the pandemic flows back into financial balance sheets and for us.
We're going to be opportunistic and I think if you look at a second wave, which has hit some of the European countries as well some of the United States and other parts of the world.
It hasn't changed from the aspect of a lot of companies looking at their business base and saying what do we want to keep our we button up against bank covenants, what do we need to sell to get cash on the balance sheet.
And for US it really hasn't changed we still look at things the way we should look at them. We run all the models that we should that we should look at but for US. It's been very very stubborn on how we acquire will remain that way and I think than what the market has done though is it's made a lot of companies look inside and say.
What really fits our portfolio and what could we.
Send out the market what kind of multiple could we get on that I think you have seen some multiple compression.
I think that we've seen more businesses that we've had interest in than we ever have before I.
I would probably say, there's a lot of deals out there right now up for sale.
That have some complementary businesses to ours that we're looking at.
But no there's nothing yet that we're ready to pull the trigger on but we will be very opportunistic when the time comes and we have a great balance sheet to do that along with still paying our dividend increasing our dividend and more importantly, as I said earlier in my comments is that no funding organic growth because that your cheapest that most secure and your cheapest growth and.
So.
We're going to stay disciplined we've got opportunities.
Even though you have a second wave it really hasn't changed that much from what we've seen yet now we're cautious but we haven't seen anything change from the first web.
Okay. Thank you for that I do have one other question, but I think I should get back in queue I, just I just want to make sure that the there's at least one other one other question are behind me otherwise you know the call me and so any any ideas is there another caller and then I'm happy to get back in.
Q.
Yes, so we have another question.
Okay. Thank you I'll I'll get in queue. Thank you.
Thank you.
Your next question comes from the line.
From a minus.
He's asking a question.
Hi, Good morning, everyone, how you doing.
Good morning.
Got that's especially that the maybe you mentioned it but what the cost of the octane additives business that they get folded into fuel specialties this quarter.
So and as you know Chris in the second quarter. We we hope this discussion is the EPS analysis business.
Took a restructuring charge so all future operating talks about business.
And now let's open the.
So we don't expect any future income statement impacts.
There is a small accretion charge, which is basically the depreciation charge on the environmental provision that still comes through our income statement and that's now shown in the corporate cost sensors, that's about right about $4 million per year.
Outside of that there's no other costs a cost associated results analysis I'll hit the income statement.
Right, but that the business costs and still running the asset got got pulled into fuel specialties that right.
We still produced so Oh regulations, so that's not part of fuel specialties as it always has been.
Yeah, so that yeah. The margins are pretty good that feel especially good job there.
Okay could you just remind me in oilfield how much of the business approximately now outside of North America.
Progress in the middle East and all but how much total if.
Yeah, it's still pretty small we know we have business in South America, and we've got business in middle East on some other areas of the world, China, but it's I would probably say its 10%.
Okay, Great and then.
Moreover, brought or a long term kind of question I'm when businesses that are sort of on there you know.
Getting hit thing.
Things are down already people like to make up obviously, a pile on sometimes with a longer term negative stories, though you know you've obviously exposed to.
Transportation fuel demand in fuel specialties, and office and oilfield services I mean.
You guys how.
How do you think I mean, if if transportation fuel demand is going to run lower than GDP growth over the longer term as some people think I mean, I guess oilfield still has a lot of I guess geographic expansion and product expansion, but it's like I feel fit, especially if it's a little more mature.
How do you see that growing at Eddie.
And even GDP rates are about I mean, you know.
And I'm, not saying that that's exactly what happened a lot people are kind of you know they never going to be moving on electric cars very shortly or on the go.
That's more aggressive basis, perhaps previously thought so you know that would obviously impact the man I mean, how are you guys thinking about that.
Obviously the performance chemical business is a bit of a response to all that longer term. So.
Yeah.
Tell me, what you can't I guess or what your thoughts are.
I think if you look at fuel specialties.
He these are not not go into effect demand whatsoever for the short period of time, that's a little longer longer out sure. What's what's affecting demand is strictly covered right now and.
And so what weve seen demand increase from Q2 to Q3.
We're starting to see the increase we were starting to see the increase going into Q4, who knows what's going to happen now, but I do think over time as we get control over this pandemic that you will see demand levels come back like they were in 2019. So it's still for US remains as a GDP plus.
And and I think it's the one good thing about that business has its asset light so.
So and it's got great margins in it in the conversion rate is very good and op, Inc. So great business to be and.
Again, it's strictly a supply demand issue.
Based off what's going on with the with the markets with the pandemic. So I think they'll come back 19 level.
It's going to take some time, but.
But again, it's it's just a strong business and it will remain that way I think if you look at performance chemicals, we have a big runway of growth there because of all the technology we have.
Based off all the organic technology, we have right now in place.
And that's obviously an area that we're looking at from an acquisitive standpoint, so strong base their performance chemicals. If you look at oil filled it's basically DRA in middle East.
And you.
You will see things come back we're starting to see wells come back on line use markets.
We're starting to see drilling come back a little bit the rigs increased a little bit as well.
So we're starting to see demand come back in the U.S., but no a lot of our growth the takeout cyclicality in that in that also business like we stated before is going to be the expansion and DRA, which we're doing and we're add more volume of markets as we speak.
As well as the middle East and Weve done both of those and I think as you see over the next three or four quarters, you're going to see that big in being more.
You know a bigger improvement I should say in the overall portfolio for oilfield chemicals.
Great. Thanks, guys.
Thank you. Our next question comes from the line.
From CJS Securities.
Just a question.
Hi, guys. Just a couple of quick follow up Patrick you mentioned flight returning to 2019 levels. I was wondering when do you expect that to be hit and I understand that most things are murky right now number one and number two how much of that is actually new stuff, that's coming on as opposed to just be engaging.
Volume growth demand, whether that JD Iyer IMO.
Or DRA and.
Maybe bracket, what which expectations are.
Sure Judy IMO and have kind of been at a standstill just due to the fact to the pandemic as well and it's not really been anybody focus.
I think you will see it come back to the 19 levels, but again it all you know John all depends on the second wave you know when is it going to when we're going to get control of it.
And when would you start letting up again and get people out in travel, but I think sometime [noise] 2021, you should start going back to some type of 2019 levels.
And again, that's when you'll start seeing you know.
Redesign IMO.
Pick back up so if it's going to be interesting to watch.
But it but we suspect and we expect.
That would get to 2019 levels.
And structurally where your earnings at that at those levels be the same as they were in 2019 or are there puts and takes to that given your cost savings mix changes and all this other stuff going on.
I think that remains to be seen.
Again, if we get back to 2019 levels I would say, yes, that's correct.
And the other thing that we're looking at which we haven't talked about is is we have a we're looking at a big technology right now with DRA for feels right now we're just in light crude and we are looking to get into the heavy crude and in field and hopefully we'll have something commercial.
Here in the near term for the fuels business.
Got it that's helpful color. Thank you.
Thank you.
Once again I want she wants to ask a question.
Your next question comes from the line.
Okay.
Please go ahead Sir.
Okay. Thanks.
I'll just warn you in advance they have kind of a couple of big Big picture questions for you. So.
Just as a preface I mean, the only prediction that was worse than my and the accuracy of my earnings estimate was probably the pollsters for the current presidential election.
And it's the thanks for laughing, but you know it's the morning after and you know my thinking now is that the election in the next four years leadership Mike.
My turn on how people feel about one of the candidates.
Well that both candidates differing opinions on the future of fracking. Okay. So you know from the from your perspective Patrick.
There's there's two candidates, it's a very tight race, who knows what's going to happen in the back rooms here, but you know you might have depending on who emerges you might have two very different approaches.
To oil exploration you know in the United States.
So from your perspective, I mean, how are you thinking about that and how might that you know affect your oilfield services activities.
Going forward I know, it's very early but you get paid to kind of look over the horizon, a bid or look around the corners.
I mean, what do you in practical terms I mean, what do you think the range of possibilities are for you know domestic drilling activity and whatnot based on.
How the next couple of days turn out politically. Thank you yes. Good question when.
When you look at this business and we've always said.
That you've got to take cyclicality out of it and the only way to do that is to expand outside the U.S. and.
And so whether it was politically driven or strategically driven which was for us.
Thats why we went into South America, that's why we're in Mexico. That's why we're in the Middle East and Thats, why we developed our own DRA.
So for us that's a way to strategically take it out and it's also a way to to fight off whichever president comes into the office supply and gets in and starts cutting back on fracking on on what he says on federal land.
If you look at the permitting basis, a lot of the federal lands had been grandfathered in for profit I'd, probably say two to three years.
Permits have already been grandfathered and for federal land.
So it'd be awfully difficult for them to they can stop it but it's going to take years before it negatively affects this business.
You have a lot of land, it's not federal land that.
People will just gravitate after they drilled under permits on federal and they'll move off of federal and go on to.
Private land, so I don't think its going to negatively affect us per se.
You know if he completely ban fracking, which he says he is not going to he backtracked on that and I don't think he can.
We're set up still well to make sure that weve diversified the portfolio and that's what we've done.
But I think overall it should not affect this business.
For a lease two to three years, if biden gets an office.
Okay I have a smaller board question and then one bigger one the smaller one would be.
I was and I apologize if I missed this but I did want to know whether.
I am a 2020 mandate and the development of your fuel additive you know solutions for that market.
Maybe you could just give us a quick update on on how much traction that that part of your new product portfolio is getting thank you yes.
Yeah, it's definitely getting traction, but it's small.
[noise], but its gaining as every month goes by they have issues and so whenever you have an issue.
Typically fuel additives or whats cures so.
It's a small part of our business now.
We haven't seen the the increase in big sales like we anticipate it's just going to take some time is there it's just going to take some time.
Okay great.
And then the final question again is another kind of big picture kind of you know.
Softer issue kind of question and it has to do with E.S.G. Okay.
So you know your company was founded you know on the sale of Tetra ethyl lead and Tetra ethyl let alone.
And you know as of a quarter or two ago, you're now 100% out of that business why should you know except for the ads have guess element.
But you're you're out of pure tell for automobiles and you're on to you know many other things, including many with the environmental or health or safety benefits.
And you know I've noticed from a number of my companies you know, there's just an increasing focus.
Focus on E.S.G. and those types of issues at the board level.
And.
I think it's just me personally, but I think the corporate World now has reached kind of that inflection point, where it's it's going to become more of a requirement as opposed to a nice thing to do.
To have [noise].
Can you just maybe give us a sense of either from the regulatory side from a major investor side.
I don't have corporate responsibility I mean does it make a difference in the investment World you know that the Innospec is now 100% you know out of the Tel business for automotive yeah.
Uses and you know does that does that allow I don't know some socially conscious funds consider.
Consider adding you does it.
Give you at a different standing in anyway, what what what benefits are there if any that you might say from you know there's.
Making the final transition out of the automotive retail business.
Sure Ian why don't you pick it up and then I'll talk about the [noise].
Gold Award, we got from May provide us et cetera.
Sure So when you're right Dave Yes, she is a hot topic on our boat what.
Well I would say.
When the coal is we've just released a responsible.
Business reports and it's on our website.
<unk> co is off a huge amount of work on this organization is doing across all our businesses.
It's a great read Ah.
We share with our customers, we shut out with our investors increasingly you got conversations about U.S.J. without investors and I think when you look to our businesses David.
Your rights transitioning from T. out or.
Great step for us when you look at what we do feel special says we improve efficiency reduce emissions in performance chemicals, we provide a lot of naturally balanced.
Environmentally friendly products and then you know Phil you know we improved.
Efficiency.
We protect asset so a lot of what we do.
Green always efficiency related improves the helps improve the environment. So.
We do unless we lost I would encourage you to go and how to look at that before and if you would like to do it.
Digging through the bet, we'd be more than happy to do that with you.
Yeah, I think and I think just to add to what Im saying is you got to look at that from an overall perspective too.
Is that you know we got the the gold again for you provide us which was a much more stringent this year than it was last year.
I think if you look at as a holistic too you got to look at that the General Board. We just added another female member and she's going to be a very strong asset to our company.
If you look at the report that he is referring to talks about less water talks about C. O. Two emissions of talks about sustainability. It talks about the greenway and all the things that our company does to support that so it is definitely high on everybody and more importantly to investors.
And so its really driving not just us it's driving the whole market.
Really be focused on on this whole year, three and this whole sustainability responsibility market.
Okay, Great I appreciate that thanks very much.
From.
Thank you.
No further questions for.
For him.
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 discuss our Q4 2020 results in February have a great day.
Ladies and gentlemen that does conclude your conference for today. Thank you for.
Speaking.
Thanks.
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Mm.
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