IOSP 10-K & 10-Q changes, risk factors and insider trading

The level of inflation and energy costs may result in an adverse impact toon the group’s results from employee wages and other costs of operations of our manufacturing sites.

We are currently in the process of developing and implementing a new, company-wide, information system platform. The new platform provider is well established in the market. The implementation is a phased, risk-managed, site deployment following a multistage user acceptance program with the existing platforms providing a fallback position. WeIn 2025 and 2024 we have implemented the new platform for a number of our sites across EMEAEMEA, ASPAC and ASPAC in the third quarter of 2024.Americas. In connection with this implementation, the Company has updated, and continues to update, its internal controls over financial reporting, as necessary, to accommodate modifications to its business processes and accounting procedures.

Furthermore, the potential for problems with any of our integrated and stand-alone information technology systems, including communication technologies, could negatively impact our customers, suppliers and employees. As a result, there could be a consequential adverse impact on our results of operationsoperations, financial condition and financialcash condition.flows.

The sales of our AvGas product line for use in aviation gasoline are recorded within our Fuel Specialties business. The piston aviation industry has been, and is currently, researching a safe replacement fuel to replace leaded fuel. The U.S. Federal Aviation Administration (“FAA”) program (Piston Aviation Fuels Initiative) has been established to identify a replacement fuel, and candidate fuels are undergoing testing. In 2022, various general aviation industry groups in conjunction with the US EPA and FAA created a new team named Eliminate Aviation Gasoline Lead Emissions (“EAGLE”). This is a government-industry partnership that also encompasses fuel producers and distributors, airport operators, communities that support general aviation airports, and environmental experts. The most significant announcement impacting the Company is the stated aim of EAGLE to eliminate lead emissions from general aviation in the U.S. by the end of 2030.2030 Therewith areAlaska alsohaving regulatorya actionsderogation underwayout forto end 2032. Regulatory action in the E.U., which are proposing a banEU on the productionprohibition of TEL use by EU based leaded fuelavgas blenders under the EU REACH Regulations has resulted in three users successfully applying for the aviation industry earlier than the FAA timetable, unless an authorization under E.U.EU REACH isAuthorization grantedpermitting tocontinued theTEL fueluse producer.until end of April 2032.

The outcome of new or potential legislation or regulation in the U.S. and other jurisdictions in which we operate may result in new or additional requirements, additional charges to fund energy efficiency activities, fees or restrictions on certain activities. Compliance with these initiatives may also result in additional costs to us, including, among other things, increased production costs, additional taxes, reduced emission allowances or additional restrictions on production or operations. Any climate change regulations enacted in the future could also negatively impact our ability to compete with companies situated in areas not subject to such limitations. Even without such regulation, increased public awareness and adverse publicity about potential impacts on climate change emanating from us or our industry could harm us. We may not be able to recover the cost of compliance with new or more stringent laws and regulations, which could adversely affect our business and negatively impact our growth. Furthermore, the potential impacts of climate change and related regulation on our customers are highly uncertain and may adversely affect us.our results of operations, financial position and cash flows.

Approximately 45%37% of our common stock is held by fourthree stockholders. A decision by any of these, or other substantial, stockholders to sell all or a significant part of its holding, or a sudden or unexpected disposition of our stock, could result in a significant decline in our stock price. This could in turn adversely impact our ability to access equity markets, which could adversely impact our results of operations, financial position and cash flows.

In 20242025, Innospec achieveddelivered anothera goodmixed set of results.results Strengthwith continued strong operating income growth and margin expansion in Fuel Specialties offsetting lower results in Performance Chemicals and Fuel Specialties offset lower results in Oilfield Services.

In Fuel Specialties, full year revenues were upunchanged 1on percentthe prior year and operating income increased 1812 percent.percent Operatingbenefiting marginfrom improveda stronger sales mix and disciplined pricing. The business has continued to justdeliver belowconsistently ourstrong targetresults and has a diverse pipeline of 19fuel toand 21non-fuel percent.growth Weopportunities remainacross focusedall on further margin improvement in parallel with topline growth.regions. With our industry-leading innovation and customer service capabilities, we are well positioned to continue advancing our global customers’ initiatives. Our technology will continue to focus on cleaner fuels, lowering emissions and improving efficiency in traditional, renewable and non-fuel applications.

In Oilfield Services, full year revenues were down 2919 percent fromon lastthe yearprior year, and operating income decreased 5140 percent ondriven by no recovery in our Latin American business and lower Latinthan Americaexpected productionMiddle activity. Excluding this Latin America activity, our core business salesEast and US completion activity in the second half of 2025. We remain focused on delivering operating income grewgrowth yearin over2026 year.as OurMiddle expectationEast foractivity 2025returns, issales thatfrom weour willrecent seeDRA furtherexpansion sequentialtake effect, and our focus on margin improvement in the core Oilfield business including U.S. completions and production, DRA and the Middle East.continues. We currently do not expect the Latin America production activity to resume in the near term.2026.

We are subject to environmental laws in the countries in which we conduct business. Ellesmere Port in the U.K. is our principal site giving rise to asset retirement obligations, associatedprimarily withconnected to the production of TEL.tetra ethyl lead. There are also asset retirement obligations and environmental remediation liabilities on a much smaller scale in respect of other manufacturing sites. At Ellesmere Port there is a continuing asset retirement program related to certain manufacturing units that have been closed.

Plant closure provisions at December 31, 20242025 amounted to $60.3$65.1 million and relate principally to asset retirement obligations at our Ellesmere Port site in the U.K.. We recognize environmental remediation liabilities when they are probable and costs can be reasonably estimated, and asset retirement obligations when there is a legal requirement, including those arising from a Company promise, and the costs can be reasonably estimated. The Company must anticipatemake significant judgments when anticipating the program of work required and the associated future expected costs, and comply with environmental legislation in the countries in which it operates or has operated in. We develop these assumptions utilizing the latest information available together with recent costs. While we believe our assumptions for plant closure provisions are reasonable, they are subjective good faith estimates and it is possible that variations in any of the assumptions will result in materially different calculations to the liabilities we have reported.

Higher sales volumes for all our regions were driven by increased demand for our personal care and home care products resulting from higher consumer demand, in particular for lower priced higher volume products. The acquisition of the QGP businessin December 2023 has also delivered increased volumes year over year. All our regions recorded an adverse price and product mix due to lower selling prices, driven by lower raw material costs, together with the greater demand from consumers for lower priced products.

Operating expenses: the year over year increase of $4.9 million iswas due to higher research and development expenditure and higher performance-related remuneration accruals, being partly offset by lower provisions for doubtful debts.

Income taxes: The effective tax rate was 13.6% and 20.2% in 2024 and 2023, respectively. The adjusted effective tax rate, onceas adjustedcalculated by adjusting income before taxes and by adjusting income taxes for the items set out in the following table, was 26.4% in 2024 compared with 23.0% in 2023. The Company believes this adjusted effective tax rate, a non-GAAP financial measure, provides useful information to investors and may assist them in evaluating the Company’s underlying performance and identifying operating trends. In addition, management uses this non-GAAP financial measure internally to evaluate the performance of the Company’s operations and for planning and forecasting in subsequent periods.

The adjusted effective tax rate iswas higher in 2024 than the GAAP effective tax rate, primarily due to the current year recognition of previously unrecognized tax benefits being eliminated in determining the adjusted effective tax rate. This item arose due to the lapse of the statute of limitations associated with the unrecognized tax benefit in the final quarter of 2024.

Three Months Ended MarchJune 31,30, 2026

The following table shows the changes in sales, gross profit and operating expenses by reporting segment for the three months ended MarchJune 31,30, 2026, and the three months ended MarchJune 31,30, 2025:

Volumes for theThe Americas volumes were lower due to some supply constraints and reduced demand for our personal care products, partly offset by a favorable price and product mix due to pricing improvements. Volumes in EMEA were lower,higher due to increased demand for our personal care products, combined with ana adversefavorable price and product mixmix, driven by higher demand for lowerour higher priced products. ASPAC volumes were lower drivendue byto some supply constraints and decreased demand for our personal carecertain products, slightlybeing offset by a favorable price and product mix.mix, driven by higher demand for our higher priced products. EMEA and ASPAC benefited from favorable foreign currency exchange rate movements.

Gross margin: the year over year decrease of 4.20.2 percentage points was primarily due to an adverse sales mix, together with the negative manufacturing variances in North America due to lower production volumes in North America, as we continue to advance our plant repairs, process improvements and upgrades following severe weather conditions atin the start of thefirst quarter.

Operating expenses: the year over year increase of $2.2$0.4 million year over year was primarily due to adverse movements to thehigher provisions for doubtfulperformance-related debtsremuneration driven by our aged debtor accounting policy, together with increased research and development expenses.accruals.

Sales volumes in allthe our regionsAmericas increased year over year due to increased demand from customers.customers, Allbeing ourpartly regions were impactedoffset by an adverse price and product mixmix. Sales volumes in EMEA increased year over year due to higherincreased salesdemand offrom lowercustomers, pricedcombining products.with a favorable price and product mix. Sales volumes in ASPAC decreased year over year due to decreased demand from customers, being offset by a favorable price and product mix. AvGas volumes were lower than the prior year due to variations in the demand from customers, beingcombined offsetwith byan a favorableadverse customer mix. EMEAAll andour ASPACregions benefited from favorable foreign currency exchange rate movements.

Gross margin: the year over year decrease of 0.31.5 percentage points was due to an adverse sales mix in the Americas from increased sales of lower margin products, being partly offset by sales in EMEA of higher margin products.

Operating expenses: the year over year increase of $2.6$4.2 million was primarily due to adverse movements to the provisions for doubtful debts driven by our aged debtor accounting policy,debts, together with increased administrativeemployee-related expenses.costs, including higher provisions for performance-related remuneration accruals.

Net sales: have increased year over year by $0.1$14.6 million.million, Sales in the Americas were higher year over year, being partly outweigheddriven by lowerour salesDRA inplant EMEA.expansion and associated demand. The majority of ourthe customersegment's activitysales isare concentrated in the Americas region.

Operating expenses: the year over year increase of $0.3$5.0 million was primarily due to adverse movements to the provisions for doubtful debts, together with increased operating expenses and increased employee-related costs, including higher sellingprovisions expenses.for performance-related remuneration accruals.

Corporate costs: the year over year increase of $4.6$0.7 million was primarily due to higher legal and compliance expenses, together with higher information technology costs including additional amortization for our new ERP system, and higher provisions for performance-related remuneration accruals, being partly offset by lower legacy costs of closed operations,operations anand adversea favorable revaluation for theour U.K. emissions trading scheme carbon credits, higher legal and compliance expenses and additional amortization for the new ERP system.credits.

Adjustment to fair value of contingent consideration: is aan creditexpense in the current year of $4.7$0.1 million compared to an expense in the prior year of $0.7$0.8 million. The adjustment relates to the acquisition of QGP within our Performance Chemicals segment. The year over year decrease relates to reduced accretion, due to the reduction in the overall expected payable compared to the prior year. See Note 10 of the Notes to the Condensed Consolidated Financial Statements for additional information.

InterestOther net income/(expense),: net:for the three months ended June 30, 2026 was $1.1 million income compared to a $4.7 million expense in the three months ended MarchJune 31, 2026 was $0.8 million of income compared to $2.4 million of income in the three months ended March 31,30, 2025, primarily driven by lowerthe interestrevaluation ratesof foreign currency forward contracts, and lowerthe cashforeign currency translation of non-USD balances in the current year.group.

Income taxes: the effective tax rate was 22.8%25.0% and 25.7%26.0% in the firstsecond quarter of 2026 and 2025, respectively. The adjusted effective tax rate, once adjusted for the items set out in the following table, was 22.9%23.1% in 2026 compared with 24.0%23.3% in 2025. The 1.1%0.2% decrease in the adjusted effective rate was primarily due to the fact that a higher proportion of the Company’s profits are being generated in lower tax jurisdictions. The Company believes that this adjusted effective tax rate, a non-GAAP financial measure, provides useful information to investors and may assist them in evaluating the Company’s underlying performance and identifying operating trends. In addition, management uses this non-GAAP financial measure internally to evaluate the performance of the Company’s operations and for planning and forecasting in subsequent periods.

In the threesix months ended MarchJune 31,30, 2026 our working capital increased by $19.8$12.1 million, while our adjusted working capital increased by $20.1$55.1 million. The difference is primarily due to the exclusion of the movements for cash and cash equivalents together withand the changesmovements for income taxes, being partly offset by the changeother movements shown in the valuetable of acquisition-related contingent consideration.below.

We had a $11.9$66.3 million increase in trade and other accounts receivable, including a $2.4$3.6 million increase in allowances, which was primarily due to increased sales for all our Fuel Specialties and Oilfield Services segments. Days’ sales outstanding decreased in our Performance Chemicals segment from 72 days to 66 days; increased from 57 days to 5962 days in our Fuel Specialties segment; and increased from 64 days to 6880 days in our Oilfield Services segment.

We had a $7.8$8.0 million decreaseincrease in inventories, including a $1.0$2.1 million decreaseincrease in allowances, which was primarily driven by lowerhigher levels of rawfinished materialsgoods infor our Performance Chemicals and Fuel Specialties segments.segment due to the timing of production. The Company continues to maintain inventory levels necessary to manage the risk of potential supply chain disruption for certain key raw materials, especially in our Fuel Specialties segment. Days’ sales in inventory in our Performance Chemicals segment decreased from 65 days to 5853 days; decreasedincreased from 184133 days to 132144 days in our Fuel Specialties segment; and decreased from 83 days to 6461 days in our Oilfield Services segment.

We had a $19.2$12.4 million decreaseincrease in accounts payable and accrued liabilities, which was dependent on the timing of payments for each of our reporting segments. Creditor days (including goods received not invoiced) have decreased in our Performance Chemicals segment from 50 days to 4749 days; decreased from 58 days to 5254 days in our Fuel Specialties segment; and increased from 46 days to 4759 days in our Oilfield Services segment. The changes for creditor days are impacted by the timing of sales and cost of sales in the quarter, when using a countback methodology.

We generated cash from operating activities of $17.6$24.8 million in the threesix months ended MarchJune 31,30, 2026 compared to $28.3$38.8 million in the threesix months ended MarchJune 31,30, 2025. The decrease in cash generated from operating activities compared to the prior year was primarily related to decreasedhigher operatingincreases incomein afterworking adjustingcapital, forbeing thepartly changesoffset to the fair value of contingent consideration, together withby the timing of income tax payments.

At MarchJune 31,30, 2026 and December 31, 2025, we had cash and cash equivalents of $289.1$250.2 million and $292.5 million, respectively, of which $120.6$131.4 million and $145.4 million, respectively, were held by non-U.S. subsidiaries principally in the United Kingdom.

The decrease in cash and cash equivalents of $3.4$42.3 million for the threesix months ended MarchJune 31,30, 2026 was primarily driven by our continued investments in capital projects, payments for our new ERP system implementationimplementation, payment of our semi-annual dividend and the repurchases of our common stock, being partly offset by the cash generated from operating activities.

At MarchJune 31,30, 2026, and December 31, 2025, we had no debt outstanding under the revolving credit facility and no obligations were outstanding under finance leases. See Note 8 of the Notes to the Condensed Consolidated Financial Statements for additional information.