Q2 2024 Innospec Inc Earnings Call
David Jones: Thank you. Welcome to Innospec's second quarter earnings call. The earnings released for the quarter in this presentation are posted on the company's website.
Operator: in our posted on the company's website. During this call, we will make four looking statements, which are predictions and predictions about. These statements are based on current expectations and assumptions that are subject to risk and uncertainties because actual results to differ materially from the anticipated results implied by sets for looking statements. The risks and uncertainties are detailed in Innospec, 10-K, 10-Qs, and other filings with the SEC. Please see the SEC site and Innospec site for these and related documents.
Speaker Change: During this call, we will make four looking statements, which are predictions and predictions about...
Speaker Change: These statements are based on current expectations and assumptions that are subject to risk and uncertainties that can cause actual results to differ materially from anticipated results implied by such forward-looking statements.
Speaker Change: The risks and uncertainties are detailed in Innospec's 10-K, 10-Qs, and other filings with the SEC.
Operator: In today's presentation, we have also included non-GAAP financial measures. The reconciliation is the most directly comparable GAAP financial measure in the earnings release. The non-GAAP financial measure should not be considered as a substitute for 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 of these items and events had on financial results.
Speaker Change: Please see the SEC site and Innospec site for these and related documents.
Speaker Change: In today's presentation, we have also included non-GAAP financial measures.
Speaker Change: A reconciliation to the most directly comparable GAAP financial measure is in the earnings release.
Speaker Change: The non-GAAP financial measures should not be considered as a substitute for 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.
David Silver: With me today from Innospec, are Patrick Williams, president and chief executive officer, and Innospec, executive vice president and chief financial officer. And with that, I turn over to you, Patrick.
Speaker Change: With me today from Innospec are Patrick Williams, President and Chief Executive Officer, and Ian Cleminson, Executive Vice President and Chief Financial Officer.
Patrick Williams: Thank you, David, and welcome everyone to Innospec's second quarter 2024 conference call. This was a mixed quarter for Innospec as performance chemicals and fuel specialties delivered strong, billed digit operating income growth and marching improvement, while old build services production results declined as expected. Performance chemicals delivered further improvement as operating income more than doubled over last year. While customers who made disciplined in their order patterns, volumes improved in our key end market driven by our mild and natural personal care technologies. We remain optimistic that we can maintain this improvement in the second half of 2024. Supported by our strong innovation pipeline, our target remains to return operating income rates and margins to full year 2022 levels.
Speaker Change: And with that, I turn it over to you, Patrick.
Patrick: Thank you, David, and welcome, everyone, to Innospec's second quarter 2024 conference call.
Patrick: This was a mixed quarter for Innospec as performance chemicals and fuel specialties delivered strong double-digit operating income growth and margin improvement while all build services production results declined as expected.
Patrick: Performance Chemicals delivered further improvement as operating income more than doubled over last year.
Patrick: while customers remain disciplined in their order patterns.
Patrick: Volumes improved in our key end markets driven by our mild and natural personal care technologies.
Patrick Williams: We remain optimistic that we can maintain this improvement in the second half of 2020. In addition, the integration and performance of our recent QGP acquisition are proceeding as planned. BuildFest 2 delivered double-digit operating income growth driven by higher sales and gross margins, which were at the upper end of our targeted 32 to 35 percent range. Additionally, we are seeing a continuation of below-average inventory levels combined with lower chemical usage and treatment rates in certain high-volume applications.
Patrick: We remain optimistic that we can maintain this improvement in the second half of 2024.
Patrick: Supported by our strong innovation pipeline, our target remains to return operating income rates and margins to full year 2022 levels.
Patrick Williams: In addition, the integration and performance of our recent QGP acquisition is proceeding to plan. Build the best to deliver double-digit operating income growth driven by higher sales and gross margins, which were at the upper end of our target at 32 to 35% range. Leveraging our global footprint and innovation capabilities, our team continues to build a strong pipeline of future growth opportunities in both fuel and non-fuel applications. As expected, oil build services results were impacted by significantly lower production chemical activity in the quarter. We are seeing a continuation of below average inventory levels combined with lower chemical usage and treatment rates in certain high volume applications.
Patrick: In addition, the integration and performance of our recent QGP acquisition is proceeding to plan.
Patrick: FieldSpec II has delivered double-digit operating income growth driven by higher sales and gross margins, which were at the upper end of our targeted 32 to 35 percent range.
Patrick: Leveraging our global footprint and innovation capabilities, our team continues to build a strong pipeline of future growth opportunities in both fuel and non-fuel applications.
Patrick: As expected, oil field services results were impacted by significantly lower production chemical activity in the quarter.
Patrick: We are seeing a continuation of below-average inventory levels combined with lower chemical usage and treatment rates in certain high-volume applications.
Patrick Williams: As of the end of July, we have not seen this activity recover as we previously anticipated, and we currently assume these lower levels will persist through the third quarter and possibly through the remainder of the year. We are focusing on working with our customers to optimize levels of consumption and performance on these production chemical applications and expect to have more detail and trajectory of recovery in the coming quarter. In addition, we continue to execute on multiple growth and margin improvement opportunities in our other oil build segments.
Patrick: As of the end of July , we have not seen this activity recover as we previously anticipated, and we currently assume these lower levels will persist through the third quarter and possibly through the remainder of the year.
Patrick: We are focusing on working with our customers to optimize levels of consumption and performance on these production chemical applications and expect to have more detail on the trajectory of recovery in the coming quarter.
Patrick Williams: In addition, we continue to execute on multiple growth and margin improvement opportunities in our other oilfield segments. 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.
Patrick: In addition, we continue to execute on multiple growth and margin improvement opportunities in our other oilfield segments.
Ian Cleminson: Now I turn the call to Ian Cleminson, who will review our financial results in more detail.
Patrick Williams: Then I will return with some concluding comments. After that, Ian and I will take your questions.
Patrick: 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 Cleminson: Ian, thanks, Patrick, for turning to slide seven in the presentation. The company's total revenues for the second quarter were $439 million and 9% decreased from $480.4 million a year ago. Overall gross margin decreased by 2.1 percentage points from last year to 29.2%. I just said EBITDA for the quarter was $54.1 million compared to $47.4 million last year, and netting comfort a quarter was $31.2 million compared to $28.9 million a year ago. Our gap earnings per share were $1.24, including special items, the net effect of which decreased our second quarter earnings by 15 cents per share.
Ian Cleminson: Patrick, turning to slide 7 in the presentation, the company's total revenues for the second quarter were £439 million, a 9% decrease from £480.4 million a year ago. Our adjusted earnings per share were $1.24, including special items.
Ian Cleminson: Thanks Patrick. Turning to slide 7 in the presentation, the company's total revenues for the second quarter were £439 million, a 9% decrease from £480.4 million a year ago.
Ian Cleminson: Overall Gross Margin decreased by 2.1 percentage points from last year to 29.2%.
Ian Cleminson: Adjusted EBITDA for the quarter was £54.1 million compared to £47.4 million last year and net income for the quarter was £31.2 million compared to £28.9 million a year ago.
Speaker Change: Our gap earnings per share were $1.24, including special items, the net effect of which decreased our second quarter earnings by 15 cents per share.
Ian Cleminson: A year ago, we reported gap earnings per share of $1.16, which included the negative impact from special items of 12 cents per share. Excluding special items in both years, adjusted EPS for the quarter was $1.39 compared to $1.28 a year ago.
Speaker Change: A year ago, we reported GAF earnings per share of $1.16, which included a negative impact from special items of $0.12 per share.
Speaker Change: Excluding special items in both years, our adjusted EPS for the quarter was $1.39 compared to $1.28 a year ago.
Ian Cleminson: Turning to slide eight, revenues in performance chemicals for the second quarter were $160.1 million, up 25% from last year's $127.8 million. Growth is attributable to the QGP acquisition of 7% and volume growth of 29%, which were offset by an adverse price mix of 11% due mainly to lower raw material costs flowing through to selling prices. Growth margins of 22.6% increased 5.4 percentage points compared to the same quarter in 2023, benefiting from increased sales and production volumes. Operating income of 21.2 million increased 130% over last year.
Speaker Change: Turning to slide 8, revenues in performance chemicals for the second quarter were £160.1 million, up 25% from last year's £127.8 million.
Speaker Change: Growth attributable to the QGP acquisition of 7% and volume growth of 29% were offset by an adverse price mix of 11% due mainly to lower raw material costs flowing through to selling prices.
Speaker Change: Gross margins of 22.6% increased 5.4 percentage points compared to the same quarter in 2023, benefiting from increased sales and production volumes.
Speaker Change: Operating income of £21.2 million, increased 130% over last year.
Ian Cleminson: We expect to be able to maintain this level of operating profits in the second half of the year.
Speaker Change: We expect to be able to maintain this level of operating profits in the second half of the year.
Ian Cleminson: Moving on to slide nine, revenues in fuel specialties for the second quarter were $166.6 million, up 8% from the $154.2 million reported a year ago. At 20% increase in volume was offset by an adverse price mix of 12%, with a favorable sales mix outweighed by lower pricing from the easing of raw material costs. Fuel specialties' growth margins of 34.6% were 5.5% points about the same quarter last year. Operating income of 30.4 million was up 78% from 17.1 million a year ago. Adjusting for the 8 million loss in Brazil in the prior year, the comparable growth margins were 32.3%, and operating income was 25.1 million.
Speaker Change: Moving on to slide 9, revenues and fuel specialties for the second quarter were £166.6 million, up 8% from the £154.2 million reported a year ago.
Ian Cleminson: A 20% increase in volume was offset by an adverse price mix of 12%, with a favourable sales mix outweighed by lower pricing from the easing of raw material costs. Moving on to slide 10, revenues and oilfield services for the quarter were £108.3 million, down 45% from £198.4 million in the second quarter last year. Turning to slide 11, corporate costs for the quarter were £17.6 million compared with £20.1 million a year ago. As of June 30th, Innospec had £240.2 million in cash and cash equivalents and no debt. Now I'll turn it back over to Patrick for some final comments.
Speaker Change: Operating income of £30.4 million was up 78% from £17.1 million a year ago.
Speaker Change: Adjusting for the £8 million loss in Brazil in the prior year, the comparable gross margins were 32.3% and operating income was £25.1 million.
Ian Cleminson: Moving on to slide 10, revenues in all fuel services for the quarter were $108.3 million, down 45% from $198.4 million in the second quarter last year. Growth margins of 30.6% decreased 11.5 percentage points from last year on a weaker sales mix. 6. Operating income of 7.3 million decreased 74% on 28 million one year ago.
Speaker Change: Gross margins of 30.6% decreased 11.5 percentage points from last year on a weaker sales mix.
Speaker Change: Operating income of £7.3 million decreased 74% on £28 million one year ago.
Ian Cleminson: Due to the reduced activity in our production chemical business, we expect our operating income in quarter three to continue at a run rate similar to this quarter.
Ian Cleminson: So, in the society 11, corporate cost for the quarter was 17.6 million compared with 20.1 million a year ago. The affected tax rates of quarter was 28.6% compared to 21% a year ago. For the full year, we now expect our tax rate to be 27% due to the change in the geography of our taxable profits.
Speaker Change: The effective tax rate for the quarter was 28.6% compared to 21% a year ago.
Ian Cleminson: Moving on to slide 12, for the quarter, operating cash flow was 4.7 million before capital expenditures of 15.2 million. As of June 30, in respect of 250.2 million in cash and cash equivalents and no debt.
Patrick Williams: And now I'll turn back to Patrick for some final comments. Thanks, Ian. I am very pleased with the strong results of performance chemicals and fuel specialties, which drove overall double-digit operating income growth in the quarter.
Speaker Change: Thanks Ian. I am very pleased with the strong results performance chemicals and fuel specialties.
Speaker Change: which drove overall double-digit operating income growth in the quarter.
Patrick Williams: In which we remain intensely committed to delivering solutions and innovation to our customers, which we believe will drive recovery in this business. With over 240 million in net cash on our balance sheet, we continue to pursue organic investments and complement RM&A while we turn in value to shareholders through dividend growth.
Speaker Change: and Oilfield Services, despite the short-term outlook being clearly below our target range.
Patrick Williams: which we believe will drive recovery in this business. We continue to pursue organic investments and complementary M&A while returning value to shareholders through dividend growth. Now, I will turn the call over to the operator, and Ian and I will take your questions.
Speaker Change: We remain intensely committed to delivering solutions and innovation to our customers, which we believe will drive recovery in this business.
Speaker Change: with over 240 million in net cash on our balance sheet.
Operator: Now I'll turn the call over to the operator, and Ian and I will take your questions. Thank you, sir. As a reminder to ask a question, please press star 1 and 1 on your telephone and wait for your name to be announced. Do we throw your question? Please press star 1 and 1 again. Once again, please press star 1 and 1 on your telephone and wait for your name to be announced. Do we throw your question? Please press star 1 and 1 again. Thank you.
Speaker Change: Thank you, sir. As a reminder, to ask a question, please press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again.
Operator: We are now going to proceed with our first question.
Operator: We are now going to proceed with our first question. The questions come from the line of David Silver from CL King & Associates. Please ask your question.
David Silver: The questions come from the line over David Silver from Steel King and Associates.
Speaker Change: We are now going to proceed with our first question.
David Silver: Please ask a question. Yeah, hi, good morning. Thank you. So I would like to just start out with the oil field services and the decline on the production chemical side. I was wondering if you could maybe just kind of outline it a little bit more detail. I mean, is this a customer-specific problem? Is this tied to a particular region, one of your shale base and regions? Just maybe just a little bit of color on that so that we can kind of assess what's going on there a little bit better. Thank you. Yes, sure, David. It's in our South America Mexico region, so it's not in the US and it's not in Saudi.
David Silver: Yeah, hi, good morning. Thank you. So I would like to just start out with the oil field services and the decline on the production chemical side. Um, I was wondering if you could, you know, maybe just kind of outline it.
Speaker Change: Yeah, hi, good morning. Thank you.
Speaker Change: Thank you.
Speaker Change: So I would like to just start out with the oil field services and the decline on the production chemical side.
Speaker Change: A little bit more detail, I mean, is this a customer specific problem? Is this tied to a particular, you know, region, one of your shale basin regions?
Speaker Change: You know, maybe just a little bit of color on that so that we can kind of assess what's going on there a little bit better. Thank you.
Speaker Change: It's in our South America, Mexico region, so it's not in the U.S., and it's not in Saudi. It's a customer who has been using dilution to bring inventory levels down.
Patrick Williams: and it's not in Saudi Arabia. It's a customer who has been using dilution to bring inventory levels down. It's been a very political situation due to election years. And we feel like they have to be at the end of their inventory now, and at some point in time, we should start seeing some kind of orders, but we've been saying that for a quarter. So there's obviously politics involved, but it's hard for us to put a handle on it.
Patrick Williams: It's a customer who has been using delusion on to bring in maturi levels down. It's been a very political situation due to election years, and we feel like they have to be at the end of their inventory now. At some point in time, we should start seeing some kind of orders, but we've been saying that for a quarter. So there's obviously politics involved, there's obviously delusion involved. We are heavily involved in what's going on in the process, but it's hard for us to put a handle on it, and that's why we say in the text that we'll keep everybody updated through the quarters.
Speaker Change: It's been a very political situation.
Patrick Williams: And that's why we say in the text that we'll keep everybody updated through the quarters, and the applications that, you know, we have the best technology. But right now, it's just caught up in politics, and we have to just sit tight and see it play itself out.
David Silver: It's offshore and onshore, and the applications that we know we have the best technology, but right now it's just caught up in politics, and we have to just sit tight and see if we play itself out. Okay, no thank you for that very good.
Speaker Change: It's offshore and onshore.
David Silver: Okay, no, thank you for that. Very good. Um, I would like to just switch over to the fuel specialties segment for a moment. So, the gross margin, I guess, in that segment is at the highest level it's been at, for a pretty long time. And should we read the, you know, the absolute level of gross margin and the pickup? Is this a sign that maybe your business mix, your sales mix, is getting back to your desired target levels? Or might there be something else going on, and maybe, you know, there's some further upside on the gross margin side?
Patrick Williams: I would like to just switch over to the fuel specialties segment for a moment. So the gross margin, I guess, in that segment is at the highest level it's been at, I guess, in a pretty long time since the pandemic began, I guess. And should we read the absolute level of gross margin, and the pickup? Is this a sign that maybe your sales mix is getting back to your desired target levels, or might there be something else going on, and maybe there's some further upside on the gross margin side? Thank you. We're really pleased with the performance that the fuel specialties team have put together in the quarter.
Ian Cleminson: Thank you.
Speaker Change: The gross margin, I guess, in that segment is at the highest level it's been at, I guess, in a pretty long time.
Speaker Change: since the pandemic began, I guess.
Speaker Change: And should we read the, you know, the absolute level of gross margin and the pickup? Is this a sign that maybe your business mix, sales mix, is getting back to your desired target levels?
Speaker Change: Or might there be something else going on and maybe, you know, there's some further upside on the gross margin side. Thank you.
Ian Cleminson: We're really pleased with the performance that the field specialties team put together in the quarter.
Patrick Williams: They've been focused on pricing, and as you know, in the fuel specialties, pricing can have a little like to it as raw material prices go up and down. We've really worked hard with our customers to keep the tight control over that, and that's part of the reason why we're seeing good gross margins in this quarter. I think the other side of it is that we did have the benefit of the positive sales mix this quarter compared to the comparable quarter. But I do think, you know, we're in that range, which was the top hand of the range that we normally quote, and our feeling is that as we go through the rest of the year, there's no reason why we should step outside that range and certainly step away from the top hand of the range. So we feel pretty good about where we're at right now.
Speaker Change: We're really pleased with the performance that the field specialties team have put together in the quarter.
Speaker Change: Focused on pricing, and as you know in fuel specialties, pricing can have a little lag to it as raw material prices go up and down.
Speaker Change: But I do think, you know, we're in that range, we're towards the top end of the range that we normally quote, and our feeling is that as we go through the rest of the year there's no reason why we should step outside that range and certainly step away from the top end of the range. So we feel pretty good about where we're at right now.
Patrick Williams: Okay, thank you for that. And then just one, just one to follow up on fuel specialties. But in your, in the press release, I think Patrick, you highlighted within fuel specialties fuel and non-fuel. Yeah, fuel and non-fuel opportunities. I was wondering if you could just elaborate a little bit more on the non-fuel. Is this the stationary power opportunities, or might there be something beyond that? A little bit, it's a little bit everything, David. We have some products within that portfolio that treat applications that are outside of fuel, and so some of those applications are coming through this quarter, and we expect those to grow throughout the year. So, as you're aware, a lot of the technologies we make based around surface active technology have other applications, and we just tapped into another market that's outside the fuel market.
Speaker Change: Okay thank you for that and then just one just one to follow up on fuel specialties but in your in the press release I think Patrick you highlighted
Speaker Change: within fuel specialties, fuel and non-fuel, yeah, fuel and non-fuel opportunities. I was wondering if you could just elaborate a little bit more on the non-fuel. Is this the stationary power opportunities or might there be something beyond that?
Ian Cleminson: It's a little bit of everything, David. We have some products within that portfolio that treat applications that are outside of fuel. And so some of those applications are coming through this quarter, and we expect those to grow throughout the year. As you are aware, a lot of the technologies we make based around surface active technology have other applications, and we just tapped into another market that's outside the field market.
Speaker Change: It's a little bit.
David Jones: It's a little bit of everything, David. We have some products within that portfolio that treat applications that are outside of fuel.
Speaker Change: And so some of those applications are coming through this quarter, and we expect those to grow throughout the year.
Speaker Change: So, as you're aware, a lot of the technologies we make based around surface active technology have other applications, and we just tapped into another market that's outside the fuel market.
David Silver: Okay, great. Thanks a lot. I'll get back in queue. Thank you.
David Silver: Okay, great. Thanks a lot. I'll get back to you.
Speaker Change: Okay, great. Thanks a lot. I'll get back in queue.
John Tanwanteng: We are now going to proceed with our next question. The questions come from the line of John Tanwanteng from CJS Securities. Please ask your question. Hi, good morning. Thank you for taking the questions. I was wondering if you could go a little bit more into detail with the situation.
Operator: The questions come from the line of Jon Tanwanteng from CJS Securities. Please ask your question.
Speaker Change: The questions come from the line of Jon Tanwanteng from CJS Securities. Please ask your question.
Jonathan Tanwanteng: Hi, good morning. Thank you for taking the questions. I was wondering if you could go a little bit more into detail with the oil field situation. What is the political issue at hand, number one? And, number two, I recall that there was a technological change or switchover also that was involved. Could you elaborate on both of those, if you could, just so we could understand what really is driving this?
Jon Tanwanteng: Hi, good morning. Thank you for taking the questions. I was wondering if you could go a little bit more into detail with the oil field situation.
Patrick Williams: What is the political issue at hand number one and number two? I recall that there is a technological change or switchover also that was involved. Could you elaborate on both of those if you could, just so we could understand what really is driving us? Yes, much as we can. We obviously get some information, some limited information, depending on who we're talking to. But it's election year. There, they had numerous of our products sitting in inventory. They have not reordered since probably in the middle of first quarter. They've been diluting inventories and trying to lease treat products that go into A to pipeline or down hole or offshore.
Jon Tanwanteng: What is the political issue at hand, number one? And number two, I recall that there was a technological change or switchover also that was involved. Could you elaborate on both of those, if you could, just so we can understand what really is driving this?
Patrick Williams: Yes, as much as we can. We obviously get some information, some limited information, depending on who we're talking to.
Patrick Williams: It's election year. They had numerous of our products sitting in inventory. They have not reordered since probably the middle of the first quarter. They've been diluting inventories and trying to at least treat products that go into, A, the pipeline, or downhole, or offshore. We know they're critically low. But it's highly political, John. That's the problem.
Speaker Change: They've been diluting inventories and trying to at least treat products that go into, A, the pipeline or downhole or offshore. We know they're critically low.
Patrick Williams: We know they're critically low. We are just waiting and hoping to have some answers and some orders here in the near term. I don't see it until probably fourth quarter. But it's highly political, John. That's the problem. We only get as much information as they want to give us. And we do know that the application is starving for product. We know that production is down. We know that there's been some safety issues. So we know that they're critically low, and they need product. We know our product works. It's proven. It's been stated in the public.
Speaker Change: We are just waiting and hoping to have some answers and some orders here in the near term. I don't see it until probably fourth quarter.
Patrick Williams: We only get as much information as they want to give us. We know our product works. It's proven, and has been stated in the public. That's probably as much information as I can give you. I mean, you know, as we stated, next quarter we'll give you more color, you know, but I just don't see how they can't start coming back with our technology in the situation that they're in right now.
Speaker Change: But it's highly political John , that's the problem. We only get as much information as they want to give us.
Speaker Change: And we do know that the application is starving for product. We know that production is down. We know that there's been some safety issues. So we know that they're critically low and they need product.
Speaker Change: We know our product works. It's proven.
Patrick Williams: That's probably as much information as I can give you. I mean, you know, as we, as we stated, next quarter will give you more color. But I just don't see how they can't start coming back with our technology and the situation that they're in right now.
John: It's been stated in the public.
Speaker Change: That's probably as much information as I can give you. As we stated, next quarter we'll give you more color. But I just don't see how they can't start coming back with our technology in the situation that they're in right now.
Patrick Williams: I guess the question I was trying to ask is it's a political question hand using your product or someone else's or reducing production versus whether or not you're actually in the customer at all. I think it's neither. I think it's a political issue where there's, there's politicians within fighting each other on how they want to run this business. And so therefore they put they put critical put the whole business in a critical state. And I think what you're seeing right now is the built personnel are up in hands and it's got to be fixed at the top.
Jonathan Tanwanteng: Got it. I guess the question I was trying to ask is a political question at hand: using your product or someone else's or reducing production versus whether or not you're actually, you know, in the customer at all.
Speaker Change: I guess the question I was trying to ask is, is the political question at hand using your product or someone else's or reducing production versus whether or not you're actually, you know, in the customer at all?
Patrick Williams: I think it's neither. I think it's a political issue where there are politicians within fighting each other on how they want to run this business. And so, therefore, they put the whole business in a critical state. And I think what you're seeing right now is the field personnel are up in arms. And it's got to be fixed at the top. It has nothing to do with whether we are going to use Innospec or are we going to use the other 10 vendors that they have. It's an issue of when they are going to finally figure out how they're going to run the business.
Speaker Change: I think it's neither. I think it's a political issue where there's politicians within fighting each other on how they want to run this business.
Speaker Change: and so therefore they put the whole business in a critical state.
Speaker Change: And I think what you're seeing right now is the field personnel are up in hands.
Patrick Williams: It has nothing to do with are we going to use in a spec or are we going to use the other 10 vendors that they have? It's an issue of when are they going to finally figure out how they're going to run the business. And that's really the issue, and it's not just the business.
Speaker Change: And it's got to be fixed at the top. It has nothing to do with are we going to use Innospec or are we going to use the other 10 vendors that they have.
Speaker Change: It's an issue of when are they going to finally figure out how they're going to run the business.
John Tanwanteng: It's general country politics as well. Understood. That's very helpful. Thank you.
Speaker Change: And that's really the issue, and it's not just the business, it's general country politics as well.
Jonathan Tanwanteng: Secondly, I was just wondering if you could just talk about the different buckets of demand and performance chemicals and where you're seeing, you know, just in terms of trends or, you know, strengths and weaknesses, between personal care, industrial ag, some of the other stuff, you know, if you could give some color on that.
Patrick Williams: Secondly, I was just wondering if you could just talk about the different buckets of demand and performance chemicals. who's seeing, you know, just in terms of trends or strengths and weaknesses between personal care and thus shows ag that some of the other stuff that I'm querying for, you know, if you could get some color, that would be helpful. Yeah, we've seen strong demand coming back in personal care as we expected. And that's, you know, that's why we've said that we see very similar quarters moving forward and trending upward. So we're very happy there. Agriculture, quite frankly, starting to come back in industrial markets are pretty flat.
Speaker Change: Understood. That's very helpful. Thank you.
Speaker Change: Secondly, I was just wondering if you could just talk about the different buckets of demand and performance chemicals and what you're seeing, you know, just in terms of trends or, you know, strengths and weaknesses between personal care, industrial, ag, some of the other stuff, you know, if you could give some color on that, that would be helpful.
Speaker Change: Yeah, we've seen strong demand coming back in personal care as we expected.
Speaker Change: And that's why we've said that we see very similar quarters moving forward and trending upward. So we're very happy there. Agriculture, quite frankly, is starting to come back.
Ian Cleminson: and the industrial markets are pretty flat.
Patrick Williams: But, you know, we're happy with that business. I think we're on a nice trajectory of return. And you know, people are worried about: are we running from inflation to an immediate recession? You know, is the freight train going to hit everybody all at once? We're not seeing that yet, John. We're still seeing a pretty strong quarter of order patterns in Q3 and even moving into Q4. So we're pretty confident that business is pretty optimistic. Got it. Thank you.
Jonathan Tanwanteng: Got it. Thank you. And then just regarding the $240 million in cash that you have, I mean, any more urgency in a sense to put that to work, especially if rates are coming down and you're getting less interest income?
Patrick Williams: And then just regarding the 240 million in cash that you have, I mean, any more agency in the sense to put that to work, especially rates are coming down, you're getting less interesting to come on. Yeah, I mean, I think that a lot of these companies right now are looking at, you know, their assets and justification of assets. So I, we're still looking at a lot of M&A opportunities. We do have a lot of organic growth opportunities as well, which is obviously, as I always say, you don't have to pay a multiple on organic growth.
Patrick Williams: Yeah, I think that a lot of these companies right now are looking at their assets and justifying their assets, so we're still looking at a lot of M&A opportunities. We do have a lot of organic growth opportunities as well, which, as I always say, you don't have to pay a multiple on organic growth. So that's on our radar. You know, increasing the dividend by 10%. We've been doing that consistently. And, you know, again, as you start looking at our share price, you know, being opportunistic on buybacks. So if our share price is down, we're going to potentially be optimistic about the buyback.
Speaker Change: We do have a lot of organic growth opportunities as well, which is obviously, as I always say, you don't have to pay a multiple on organic growth.
Patrick Williams: So that's on our radar, you know, increasing the dividend 10%. We've been doing that consistently. And you know, again, as you start looking at our share price, you know, being opportunistic on buybacks, that's not off the radar. We have a strong business. And as you know, we always come back fighting like hell and increase EPS and sales as we always do. And we will do that. So if our share price is down, we're going to potentially be optimistic and buybacks. So has it really changed on what we've been saying from day one? I think that we're going to stay steady as we always have.
Speaker Change: So that's on our radar. You know, increasing the dividend 10%. We've been doing that consistently. And you know, again, as you start looking at our share price, you know, being opportunistic on buybacks.
Speaker Change: That's not off the radar. We have a strong business, and as you know, we always come back fighting like hell and increase CPS and sales as we always do, and we will do that. So if our share price is down, we're going to potentially be opportunistic in buybacks.
Speaker Change: So has it really changed on what we've been saying from day one? I think that we're going to stay steady as we always have
John Tanwanteng: Got it.
Jonathan Tanwanteng: Got it. Thank you, guys.
Operator: Thank you, guys. Thank you.
Speaker Change: Thank you guys. Thank you.
Patrick Williams: We will now end the question on sufficient or not done to Patrick for closing remarks. Thank you.
Speaker Change: Thank you. We will now end the question and answer session. I'll now turn to Patrick for closing remarks. Thank you.
Patrick Williams: Thank you all for joining us today. And thanks to all our shareholders, customers, and introspect employees for your interest and support. If you have any further questions about introspect or matters discussed today, please give us a call.
Patrick: Thank you all for joining us today, and thanks to all our shareholders, customers, and Innospec employees for your interest and support.
Patrick Williams: We look forward to meeting up with you again to discuss our third quarter, 2024 results in November. Have a great game.
Patrick: 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 2024 results in November . Have a great day.
Operator: This concludes today's conference. Thank you all for participating. You may now disconnect your lines. Thank you. Have a great day. Bye-bye.
Speaker Change: This concludes today's conference call. Thank you all for participating. You may now disconnect your lines. Thank you and have a great day. Bye-bye.