IOSP - Earnings call transcript Q4 2020

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Operator

Thank you all for standing by ladies and gentlemen. Welcome to today's Innospec's Fourth Quarter 2020 Earnings Release and Conference Call.

Our presentation for today will be followed by a question-and-answer session. [Operator Instructions]. Please be advised the call is being recorded. like the now your over would Mr. speaker, I to call hand to And Jones. David

David Jones

for six David posted be is site and yesterday, finance and and full Officer. this and will earnings The company's months. Chief Late quarter at release results for site year our innospecinc.com XXXX. reported presentation Hello, the we Jones, the Compliance available Counsel are on I’m its fourth least and on the Innospec’s General at

be long-term making Cleminson, and most other risks other and Officer. Chief that, site included measures Executive the and will SEC duration, it non-GAAP that site. that and statements, by forward-looking the you, in XX-K, the is Williams, and the today, taken and filings authorities are it us which comparable future and also over have During results other Innospec contained measures. financial discussion These with number see directly implied projections we is Ian we these Innospec's this to GAAP uncertainties documents. Please today financial with Patrick reconciliation exacerbate of and its based that which uncertainties. could assumptions forward-looking site available are on XX-Q statements. are manner in earnings predictions, SEC. involve With actual for including from And and Executive a effects to the the expectations measures of other events. Chief to Innospec's copy Innospec's of in by These risks COVID-XX call, Patrick. statements or our risks pandemic, the are hand to detailed the or In release, economic precipitate President A subject and a our President to about impact, Financial differ risks, Vice Officer address materially from statements These and results assumptions, the uncertainties on uncertainties anticipated cause may its pandemic statements are current and government

Patrick Williams

welcome and job Thanks while the and incredible quarter fourth maintaining meeting And has a our safety our phenomenal challenges the requirement. consistently year you conference David. Throughout of everyone health staying focussed XXXX Innospec’s the of done XXXX, of Innospec call. to team full on customer’s operations,

margin underpinned continued Our cash turnaround of has in margins, flow its year year growth, second and XX% increased results from well delivering XXXX was growth, consecutive The flow a performed since an our focus and control income Performance Chemicals cash over third on expansion cost operations. quarter. team impressive Full XXXX. the throughout income operating significant up operating

growth additional our center in technology R&D agriculture, including key home new advance in capabilities care, of customer the markets, will collaboration investing global are and North care, state personal art construction. and such which Carolina, We as

In mild new demand in handling facilities North addition, Carolina, leading this industry surfactants. growing we added quarter support our railcar innovative manufacturing for capacity to in

opportunities. road still a aviation has XXXX and in that that recovery in fuel. will bring pipeline levels. Exiting the In technology demand our focused for the sequential the income. below sales fuel expected, of quarter, market second key to continue to in serve fuel long operating growth growth investing as XX% global average the term we grew large and organic this We increase consumption markets of specialties, And resulting fuel support was lagged and consecutive of business XXXX

along additives the should consumption. any improve As important. sustained with demand and advances, have reduction further been lockdown, barring for and more vaccine emissions Fuel fuel economy rollout fuel never economic

miles and per diesel reduces such fuels improves low Our renewable marine, as products emissions. boost the performance and of gallon cleaner sulfur

end most oil regulatory performance in quarter following Sequential impacted quarter substantial the have improvement noted earnings in customer the actions levels. second with to business, global $XX to improving keep In on Our specialties, the line our second reacted marks structure activity of plus outlook we in $XX.X pace OPEC oilfield fundamental of transportation a world been sustainability the third positive drop oil industry quarter. remain increased enabling unprecedented prices demand. we This our have upper call. cost expectations from leading operating technology improved with reset sales fleets supportive loss an as million standards. global quickly Oil will recently delivered and settled in and the demand and above income the the XX% supply

increase balance expectation production, they oil sequential outlook to activity U.S. will oil flow. EMP with at in East, Middle and stable business is current fashion companies assuming our our production XXXX. the XXXX DRA field disciplined In including in cash segments, in continued a continue levels, growth in as the throughout Our completions to prices look for other

exceptional and service recovery market technology us than positions accelerates. leading Our faster as the the to grow broader

in we to restructure our continue as took that cost operating improvements base will addition, leverage recovery deliver continues. the actions to In XXXX the

detail. in Now to will financial turn will we your questions. take over call some will results our I After I return Cleminson more that, Then review to with the Ian concluding comments.

Ian Cleminson

Patrick. Thanks

due decrease $XX.X decreased XX.X%. for quarter Turning slide eight year by ago, was income to margin million year $XX.X demand services oilfield to reduced one were last net for million was from infield specialties. by to customer quarter $XXX.X million, million quarter $XX.X EBITDA total to gross percentage year. revenues point $XX.X compared from in the $XXX.X and the Overall million the year the compared the to a slightly last in for last company's driven million The presentation. pandemic lower fourth and activity XX% a

of earnings XX, per share which $X.XX. our $X.XX items, we impact which decreased earnings special including quarter items a were$X. reported of by GAAP per fourth the A included earnings ago, of net special share, year per Our share. $X.XX effect on negative GAAP

year in EPS a the Excluding for items our to ago. special years, compared $X.XX was $X.XX both adjusted quarter

$XXX.X reduced oilfield services and demand $XX.X year $X.X revenues EBITDA XX% lower million in Again, a of total million was year, customer million, full was compared driven billion in billion $XXX.X compared $X.X million in to fuel from the to pandemic. the net XXXX ago. $XXX.X activity a year decreased for in income and specialties to due For by the XXXX.

Our special our $X.XX, from which items, share which full were by share, year $X.XX. earnings items impact year including we of per earnings GAAP decreased GAAP negative XXXX, reported earnings full $X.XX special per In per $X.XX include the share. of

EPS Excluding a special year adjusted for $X.XX was ago. $X.XX compared years, both year items the to in our

of were and were negative there currency slide $XXX.X ago. sales lower income the to the Fuel specialties a the the segment for a positive X% mix. effects price XX.X% down lower XX.X% of margin X% was for a by was same revenues year Moving quarter in specialties the X% to $XXX.X XX% nine, million to down compared our mix was of for X% range million quarter $XX.X from a fourth a Operating due than expected million year quarter gross Volumes the on fuel weaker impact. in in at end offsetting XXXX reported ago.

year, second demand XX% along continued any million, was in to full subject fuel $XX.X revenues income to our with fuel XXXX. $XXX.X XXXX. lockdowns $XXX.X quarter demand and in sustained to further million should from improve operating has improve to the For its compared sequentially economic consumption were points for Fuel million low fuel down and specialties additives

in were Income revenues and points, X.X million margins of million adverse year an fourth XX, and $XX.X Slide to last XX.X% Gross year's X% or X%. same percentage slightly was a $XXX.X increase volumes X% the in at Chemicals from as XX.X% down XXXX. by Performance of price for Operating of from of compared million. in were quarter down a positive strong mix to currency last quarter offset the in impact $XXX XX% Turning X%

believe can For to broadly operating single revenue mid-to-high our pipeline increased growth similar the have. were of XXXX. into $XXX.X of strong revenues Reflecting year, $XXX.X million. in million $XX.X Performance Chemicals business we XXXX. digit the to XX% organic full sustain income growth by million And We

XX million XXXX on low points XX% in customer up driven oilfield revenues fourth Gross slide in of over by were in same a the down levels the with has last Operating on down quarter U.S. the further quarter sequential quarter services in year. business improvements Income last were $X.X expected the Moving seen XX.X% of for on third X.X of $XX.X million operating was million improvements margins income and the to quarter, XX.X%. year's from strong $XX.X The breakeven completions. fourth XXXX. of activity percentage reached

$XXX.X million For to loss year, million a this were an revenues income the And million, in from XXXX. compared ago. year translated operating million of $XX.X $X.X an XX% of down operating into full $XXX

by offset year, last Turning XX.X% profits XX. are expenses $X.X by was as on-going Corporate year lower tax our earned our personnel of to down to from full effective adjusted slide a accruals were slightly The $XX.X last increased year, related partially rate to million efforts. primarily driven compared related M&A costs jurisdictions. of greater and tax proportion XX.X% million higher in being

be tax expect rates XX%. tax to For approximately XXXX, we full the year effective

we increase semi-annual was cash This the million paid $X announced generated dividend of year In brought previously dividend slight Moving onto net quarter $XX.X from quarter, million. share, share. the the total $X.XX for This XX. with XXXX. to of for full common $X.XX slide a another excellent per per of operations before cash, expenditures the capital over

during XXXX. from operations compared million was full million the For cash net $XXX.X $XXX.X to year,

December ago. $XXX.X final of a Patrick call million, some of and in cash had now to cash debt Innospec a and position resulting equivalents for And cash $X.X XX I'll cash position $XXX.X million net year compared XXXX, over turn lease in As the net a comments. million back million of to $XX.X finance of

Patrick Williams

mild exact virus end of the uncertainty pandemic customer Chemical, that to trends regional pull continues strong the less recovery, of timing point demand packaging as Innospec trajectory This created which aligned the accelerated year with has has current technologies second customer secular markets case forward demand. opportunities to ingredients. and focus including to improve more Performance in the the downs our many are our address, of organic with exited from quarter. adding the Despite Ian. and on investments lock In natural some momentum, continued and growth levels the low Thanks

services, is improvement While re-opening. economy activity specialties for the both are full in well below to path further levels fuel oilfield progresses the along positioned still as pre-pandemic global and

and our further flow to strengthen cash continue balance generate sheet. excellent We

to in We are forward businesses. meaningful growth increase value. would acquisitions, investments new continue shareholder which all add to and pull evaluate In parallel, our we potential the organic seeing

some been interesting incurred have have deal we we quarter, cost opportunities. This as significant appraising some

We remain progress, can hopeful in but make we'll have further we remain approach. report disciplined nothing our to and

with year, I've been And Since acquisitive challenges. in improved and Innospec growth forward market are we've to an balance way unprecedented and sheet, been dealing exciting XXXX opportunities. very new XXXX team a very portfolio We We've looking the and optimism. organic strong conditions, of March with has with responded. proud entered exceptional last which both

over turn then to and Now take I questions. will will I your call operator the the

Operator

is question first The CJS from the Instructions] Jon line [Operator Tanwanteng of Securities. from

Jon Tanwanteng

my Everyone taking thank very you questions, nice for quarter. and

Patrick Williams

Thanks, Jon.

Jon Tanwanteng

fuels? just thinking in my that you first forward, what my the we And first something they Maybe trend that headwind Or how be mix as there go do was was are should mostly about one there? is to else aviation? we expect

Patrick Williams

a Yes, it's dusting, AvTel it a obviously decent aviation. lot aircraft quarter and, Jon, private and a of had crop because was etcetera.

have fuel. you're but which it in was be a more And, aviation. slow, obviously progress mostly you had but that going burning economy, steady still to decent the quarter, commercial improving So a

really but definitely come it's little to of a headwinds, that demand see little So that everything starting back. a bit bit we're constitute of

Jon Tanwanteng

Got it.

you're you get XXXX of and to you revenue levels what, QX? picture Patrick, as like the field could keep heading kind for there, outlook you're rising; rises expecting levels if profitability, prices it the not oilfield or you for head vaccinations. what's what At into I Obviously, you do hit you the what had profitability and year, then looks think about And can demand can rising a you year demand? into of the better much talk the fuels going with Okay. assume demand maybe from,

Patrick Williams

oil in the in years going field. a recovery Yes, I than to think I it's little slower mean, No, optimistic we're extremely be past.

you're that chasing equity, think I having a P [ph] lot not private of companies.

debt. there's think down more cash paying I focus on and flow,

lot a new capital in back the market. coming not there's So working of

XXXX. want think a more to Ian, So to it. to as you see And going recovery. But to might numbers about well, where global extremely starting to controlled at about I we're a think from markets me, extremely positive on the globally. feel market what in this the U.S. that's excited We and be beneficial positivity we're standpoint the the are the shale slower, and from seeing We're going. comment year. yet looking you market it's

forward see, income a operating positive Ian… year. moving you'll think throughout the I

Ian Cleminson

couple points, just had Patrick. a Yes, of I

Jon, of is in XXXX. great in of million way good a in way feel generated got the we we about XXXX We've are And, We revenue $XXX fields. the that spot. all technology. we're We're the a that, right

downs going going all targets. that ready we activity, to We over are that around customer go. XXXX. Our are to high. lock see we rate. to evolve to rolls as prices in But, we're That's the economic a in oil as help. start lifted. of more running know need And moving much to But XXXX towards as vaccination primed and are hit people not we to that that going year, just That's run stay

Jon Tanwanteng

level sales, usually be into QX? as same how is Okay, flow point given great. seasonal reason just step should head to from has with a for Or there high we be that And then you think it the seasonal sequential could cold demand of down just is improvement, expecting we perspective, QX a improved?

Patrick Williams

you'll to you as And, think as just benefit starting snaps cold I that you're the seeing said bit definitely see come of that QX. Being has to common think a demand started back. I will improvement. start well, little

margin higher that a have help should QX. portfolio should fuel we which and balanced So product, throughout specialties,

Jon Tanwanteng

year? one on head bit that the any any update delayed a the IMO stuff, the we Okay, last into efforts, newer the XXXX the little great. pandemic, then product GDI me, as from maybe by update And just those just on got

Patrick Williams

in a back. vaccine to know, more still come map the due see the still is, seeing little mid-year some area. these these We slow, to to market. lock as get But start see I we'll would movement delayed the probably some activity of say downs out should pandemic. product of and You start that we

Jon Tanwanteng

great. Okay,

right? no mostly change, So

Patrick Williams

No of change as correct. That's right now.

Jon Tanwanteng

it. Appreciate Patrick. Thanks, Okay.

Patrick Williams

Thank you.

Operator

Thank you.

from Silver. is line of the question next David Our

You may ask question. your

David Silver

Yes. Hi. Good morning.

Patrick Williams

morning, Good David.

David Silver

Yes, questions. of thanks. I have handful kind of a

for Ian, you just were out maybe calling special think just quarter your to items. items, I except exceptional start but, when this

it's as one was I think first acquisition was The referred X.X of million related costs. to

just a So wondering what wasn't the Huntsman or acquisition curious, that aware payment just I'm activity, I from contingent to? of, was is but I deal current that, might refer

Ian Cleminson

Yes.

diligence expenses will We're material. what approach. we, and were these in targets, acquisition our what the with identify and said these we're the opportunities, quarter going disciplined that, David, remarks further So, we but on-going of targets the earlier the are costs was efforts for to that to progress fairly these stay and our hopeful in

of to So cost homework you think our diligence doing on need as about targets. and costs the these the

David Silver

Okay….

Patrick Williams

cover An be additional on-going going to is not these that to cost. that are David

David Silver

Right.

or the Okay. really kind is? domestically three for even in a that months the producer. we the And And I of based to had in crude was ago, But, we've a point, when happened starts during oilfield the months I of couple point Thank let's the I or you had touch say ago, spoke there you services crude, do shale I XXs. your call But guess was where recently a you the where something Patrick, where, its that. XX typical trigger asked demand respond. is maybe the on question of of questions. the point three inflection price products for I think and for the think or Or think WTI. most price high services

think quarter, XXs, that Where mid During is highlight you was think, the you the was? fourth point do where XXs. low could just inflection you it

Patrick Williams

bit the I all you at basins, point inflection different if a mean, they're what the than look little Yes, all is.

David Silver

Right.

Ian Cleminson

through through are as beyond, think them them. a that, mark, start activity to more start a E&P costs companies. probably so the definitely well. the getting you're every within you I And When right. have and profitability variable you and has variable lift they little But their more company XXs mid And -- all seeing XXs

we activity So, general The the have seen levels is increase. activity seeing increase. levels market

of more is some pandemic capital a you past, that a being little market, is David, Because of now. right there, there. issue disciplined the still the think approach it's flow lot into recoveries as I in the unlike out had the where a

of on drop chasing full not are not prices to sure to aren't No, on that demand least want there board. They of So these I people lot low it. make down still sustainability all the is a going a think to at is XXs again. sudden

So, you're right I seeing which growth now, we And growth. think a it's and responsible sustainable, like.

And outgrow think consistently to the right I Oilfield think see improvement, our you'll market. I So, business fact the the just Services year. typically improved a consistently outgrow throughout we with along it. that improved due we've see should And that you'll

solid crude you XX. a in with think as And touching we're spot. So, said, I prices,

as long should this year be blip, a specialties. short isn't for As term it oilfield healthy a very

David Silver

individual has quarter -- is the a lack I carte services. profitability kind portfolio? of And of I'm or great. months called demand. drew you And your going appetite a people Okay, bundle I ago see the of three maybe opportunities. of a that your returns so la of and we the you regarding noticeably more, better your little fourth to distinction and shopping of maybe pickup? or services? your term due between out products maybe to don't Just you suite crude you. for another services could kind the Oilfield -- just follow up quarter were stronger another or characterizing carte price full Services a of comment seeking bundle customers as Do to the kind What's and Thank more They distinction profitability la seek relative fourth products changed? a pickup of for was think, know, mean, bit

Patrick Williams

the a bit We're of approach. de-bundled actually little It's Sure. opposite. the

are we supply horsepower. don't technology, the that of we to suppliers specialty due the fact Just chemicals

you production specialty your a stimulation. not use. best group the want the who to we want your if And out chemicals, and as best our our so, of We're the people if company. you our of That's you Or are of through horsepower. technicians approach providers are our want pipeline, wells. Or frac best not is chemicals the and of throughput the

at so we'll best and I XXXX giving customer price And of for think of throughout QX the basins. that best approach target giving product stay the on this customer those throughout the

that a so, we've And continued had. strategy it's

We portfolio. continue technology to our upgrade

the DRA that we see, you that that's now structure is we service standpoint. chemical best being give perfection And customer can felt the have As a the as we provide from you like to in portfolio your well.

And it's customers and benefits so, it's to that on track. going benefit been been our stay a us, to a we're

David Silver

Okay. term And the medium a to maybe America quarters. let's on one then And to And the segment. this ultimately, Thank Europe here. fuel North referring outlook, would one this is about other Patrick, question, maybe going you. regions. more And to say let's specialties to focus near be or say, three I'm versus

a you. And it's whether to that or is of to off current that quite or of -- fuel -- But there that North of fuel of it's we in prevalent as is the how quickly temper maybe weeks specialties our their is just the resume recovery a sense recovery maybe the the relative should the effects maybe respond, optimism pandemic, elsewhere? pandemic path start might in top be the I'm the as whether a economic pace post-pandemic quarters just current line your the to a the to conditions America thinking market or or trajectory whether for if activity. seemed Recovery of effects was couple kind trajectory my or So, doesn't European wondering, some as the recovery global mix comment I Economic little Europe slower mean, the whole. Thank about specialties, business of recovery a overall quarter. next on going on bit

Patrick Williams

will cost It's not about we It's Sure. a the in you're business take It's ground. all where with business. heavy of along rises, fuel rise business not have consumption out. And fuel as very going Yes. lot that consumption. tin fuel our right a a It's flexible a it. business to specialty

and The pandemic a you beauty that's And And this the lot of consumption with back business. see, it UK see coming are that parts as free back strictly can along of specific to struggle gets get quickly back, It right flow. David. is. you kicks think hell come fuel and comes the business I it as in back out But herd you a Along as cash variants this back. are see significantly. Europe, As will I and And the of are with the correct, the it. think out is society, come almost demand more out different you a about to a having immunity, comes U.S. quite and you'll there. vaccination as in

in see whether going second in there's quarter. been that travel, of not that been of on it's a up. pent-up are whether to probably people third Now, it's business all we kinds the going first quarter, different haven't travel, But able tied lot the it's cargo and that's been whether vacation,

as see the herd immunity. that of release getting I think a comes you'll out you and start vaccine lot

So, to start lot come see back. the watch the it's significantly, still, well, it's But probably quarter-over-quarter, But is, a people consumption. our on. than still optimistic. you've pretty going up put we it's tempered we starting we're think. ticking of we fuel come we And And to quicker quite that it because brakes until seen obviously, back as view

David Silver

I'll two back go back do anyway, or I just Okay. queue. queue. think, to one I in But go But more. have in going I'm

Thanks lot, Okay. guys. a

Patrick Williams

Thanks.

Operator

Shaw. Thank the question. line It's of take We'll Chris you. our next from Mr.

You your may question. ask

Chris Shaw

any attributable year? know, a step-up for volumes your Fuel Or they to market. there at very thought is Did guess, of UK maybe the good. benefit But was end this And I me, sort is, B A, borders? any or have the presence. outpacing that a Specialty from benefits you were The all? I Brexit you was decent moving guys of businesses. I what But were to? of question

Fuel Specialty was what curious volumes and So of attributable the strength I just to? was sort

Patrick Williams

was at obviously, And back, saw really you during But at consistently. off pandemic, quite -- see happened products you started locations the is, that consumption the came it time. they were just our inventories that for their drop think, volumes what I significantly. current up think I I as demand used the our to come back Chris, think sitting No, quite

we wasn't the wasn't cold It thing. exception across we market a in. was we orders wasn't It the There the a was as specific with one that think as started getting Europe necessarily the down of So the then market there pandemic. soon Brexit. And draw or during came big and anything was point coming U.S. it back, lot can to there not that

So, we the product think so any specific that that other. outpacing more than was one line

Chris Shaw

at Thanks. Okay. profits in I Then sales think, the of showing being you achievement. great had the Got quarter, oilfield a level in is it. --

lot to was, you any How back? volumes of So, much it Can how could come much when -- that you back how took of costs. come give is the a much insight the that? question And definitely is variable? does

Patrick Williams

then you Ian, Yes. and at I'll some of the that add color do want pick it? up, to end

Ian Cleminson

Yes.

cost very that business. cost staff keen to in with fixed that this the retain the more pretty there. raw activity to profit at have and SAR Most probably about of quality wellhead. material sales It's our is down levels. there's of And think bit costs, way down in a it, of to we we've Because gross variable. people do up So, is and little Beneath goes that been the costs most is that the that mostly and what Chris, of line, line. sort the to out that in of

they full business of a that. in the people tactfully when got to we've So the return, that right and grow advantage starts and place again that

of as cost So the in line. the then real much the SAR not line, variability goods

that that Now less And variable depending COGS that on helps. than activity. line, up if does and down, the go is probably

Chris Shaw

getting leverage guess come I ultimately. it's guess to to obviously, some then when there's I at Yes. That's definitely back. what volume

Patrick Williams

doubt No that. about

Chris Shaw

know What like talking Sorry. year you that mix sound it are last that prevalent were Performance a products very mix that price I year, strong or it prevalent less products about? Was issue This year? issue more last we impact that year, Chems, was this mix just last talking margin. What about margin it talked way? different. were mix and a year was the we about.

Patrick Williams

couple a of was Chris. really, There Yes. things

of product. inventory first think, ahead XXXX, were all I of of a new launch QX, in we building a

flat our sites So were running manufacturing absolutely out.

highly very our variances then didn't there demand So a positive. business the towards We little manufacturing that facilities was have margin bit manufacturing as year. on this same well. mix were And also lower of

is of strong quarter this Now, strong XXXX. comparing QX in a really against of quarter a QX XXXX really

quarters. We're So business, you longer at pleased here. And last issues two improvement over really there's in term spectacular. or we've no pretty delivered it's when with both the look margin the that years been three this

we're dip So concerned we're shape, great in and overly not by a small year-over-year.

Chris Shaw

Does the XQ? the also, of Yes. yard And was and on impacted cost I the the capacity, rail something. has startup loading this that quarter new or of the guess, side

Patrick Williams

start the the see of we'll first In quarter and XXXX coming the quarter, beyond. No. to in benefits fourth through

Chris Shaw

it. Got a Thanks lot. Alright.

Patrick Williams

you. Thank Chris. Welcome

Operator

you. Thank

Mr. Jon Tanwanteng will take you. We Thank questions again.

Jon Tanwanteng

on of baseline the to a repeated in an QX? be as forward. progress the amount that year? the what wanted maybe from we you QX for And we the OpEx how the thinking next in SAR should get growth of exceptional as kind QX, we follow-up just I years won't some depending Hi. into commentary kind items Is go representative OpEx be over as spent perspective, on of

Ian Cleminson

little quite the accruals itself as doubt with Jon, some costs we out in QX, bit nicely. not no as some There of compensation our partly accruals balancing as a oilfield. a fields some in up and just within levels businesses. high that corporate within at puts And the was of QX, compensation activity bit And was traveling, lighter the we're because your and partly of takes actually Performance and obviously a Chemicals Sure, balanced acquisition few aren't it balance the little level. because cost That well. of

will look see better expectation to that is level. our hope And feelings we level. activity see a that that, we start XXXX, into our we As forward much and is activity

the So will put more into need SAR to we system.

about the the XXX, We to we maybe -- year be million. move the through even things as would with and lifted. I that. was the if go that higher of full think business lockdowns economy's up open XXX expect for to and also sort would grow are year SAR Probably closest we to So $XXX well. But will than

Jon Tanwanteng

then preview you're amount, if you And mean, Okay, interesting that great. diligence. you're Can know, you pretty follow the about market valuations Thanks and spending from that assume And path. on significant an for a the like us due attractive prior up a on I give color. question of the end to out there? spending just you just what are what far down looking perspective? I looking

Patrick Williams

that tech well. looking mean, or what technology as M&A that businesses know, technologies about we're put we're much the we activity based is our around adjacent sector. markets is in we've -- is into can't as adjacent say doing, can for what it Chemical colors Around the of the say. what we say we Performance could But what our you kind give I further can that

Valuations are from We're it's deals. really side. So consistently M&A that looking fairly -- high in the focus market. that's at our

it. You've got chasing SPACS

time money you -- chasing and equity When back Chemicals got right they struggled, Performance segments. private into got market. of side chased You've long a they oilfield a for this the it lot went

going business. on the like term And very that. past. kind position. go lot we and that know if we in of to But just the of companies of but market you know, something higher a obviously, for cautious valuations the go pandemic out we're multiple put afraid pretty a going benefit not we hit, that a de-leverage, after on We've are to a slowdown, very seen balance what not we And lot our ourselves pay we've this the high. not had multiple, with and afraid seen to had term for we're So, only short do in cautious struggle. little to when we're we're We're And companies you our had as of not long not team sheet, benefit pay.

gotten and out it. consistently at it deals very And be And for the about minute. down with shareholders at just constantly last where M&A We're responsible We're for to We've on academic. just a going us. cash. make time. still still pulled So, few didn't path very quite it's our we we're to talked some an the looking We've ongoing. going be sense

we'll our to benefit employees, what and it do disciplined, because benefit you, will just happen. and we're doing, a So and to to sense, makes continue the shareholders, it's to it's stay and got something a we

Jon Tanwanteng

us out if you. Thank your you Understood. remind big do find limits just And what leverage something there. are

Patrick Williams

up even go little we maybe having would always comfortable one quickly. talk that We've a one very a deliver that and over, with to in three, half. quite could We're to we the leverage

have So quite to that fast. would de-leverage We we high. went

sides standpoint, have we'd lot have obviously, to of both of from benefit So a lot from from and a a synergies synergistic growth.

and term we we know, fast. and we we're So, go fast can three, maybe know, that. doing term, be short can we we deal It a have that little long to I think but term. can comfortable not really term, grow up long it to would a de-leverage Short higher,

Jon Tanwanteng

you. Got Understood. it. Thank

Operator

Silver question take again. Thank David Mr. you. We'll

David Silver

questions. I XXXX. Thanks. on maybe mean, of or one had CapEx the be couple outlook for a would I I Okay. think the investment first

out in or And focusing in the call if more of XXXX you sustaining, where So, going give that's too kind discretionary kind mean, the just CapEx wondering its going I of next $XX see outlook important maybe the growth I'm year you close to I'm us you. that CapEx. then I'm the XXXX? that to could more growth million that you're if quick a Thank you thinking on point, really be on not so? level. to or guessing much projects could

Ian Cleminson

Sure.

sort I first of come that you half Patrick, then the of and over top. the So take if

Patrick Williams

Sure.

Ian Cleminson

of DRA terms are short is up. of expansions capabilities we further XXXX, organically So, And identified $XX we David, of further demand in in between are to continues Chemicals we've $XX as that got the the in now grow right of for are looking Performance that expansion for that And couple also fill to where spend, CapEx and business, opportunities great our There somewhere some our our plant we million have in growth. expectations million business. there probably XXXX. to projects spent a of just be we'll million $XX

So these stories. news are all good

growth what moment the think seeing accelerate at quite We that -- business. if can to CapEx do we reviewing a we're if As strategy the and Performance we we the beyond in there's greater XXXX. Chemicals. opportunity that there spend out doing growth And is look we're in the if an see of that some five-year that -- can we accelerate build

back remains for for later something million. good a that XXXX $XX might we $XX the with. come number in But that's now, million to year at So

Patrick Williams

Yes.

question. you've I think, answered Ian, the

to the also added some we've the new Performance have Carolina and off that, also and is a center in think expressed in put color on been for David of today. We've the kicked North rail. additional that technology But questions has I Chemicals. content expressing

amounts organic money. but there So large, large some are of projects, aren't these

and we've touched are put product expansions And current Ian the in so, I expansions place growth organic new think as all for line on that our products line.

we're set future what now. for it's right up So the doing well really for

David Silver

build to but focused technology the and on whatnot, And in new comment, line, there spend narrowly with on I last just your along that? increase Patrick, structural the a too maybe CapEx with be was center R&D might that

Patrick Williams

minimal. we it's Because, be yes, is but little R&D number. have we've how to our talked bit to large we'll going do R&D there be a in But an If going not increase spend. spend, it's a about

David Silver

And seen balance was markets this that, you sensitive isn't I based that But, question. pension XX mean, another it XX probably source guessing of financial a that way over too than And I'm fund. me, XX-K, surplus the debt over whatever. sheet, just hoping have I building be, your last would gone you ago. advance. liquidity. haven't have but months bigger you're highlight the potentially on a And cash. just apologies the past funded it's I'm there's I'm free ability Okay, in months or that but it facilities, banks at do directly the could you and your surplus should look organically. That either an to, or out your indirectly mean, you about the size I something are to to terms whether mean, willing strategic credit how we pension get thinking or in or when expand revolver go asset the of be, they're about in they is tapped war can if you. chest that? think wondering there? to characterize, of, that Thank done and can I it consider to

Patrick Williams

that's of United made of relates years, The That's at expenses plan any any this that least Kingdom longer Company terms pension any plan. for that actually contributions in the a plan, contributions David, accrual of now haven't a we to now. plan. running for to for probably to member been and make closed decade So, a number the no contributions

actually where Just It's the a to Board by to is little it, assets our position sheet. it have see to no sheet. sold What is we business. to an Company future, our two about or explain the separate appears balance show a But pension in entities balance the liabilities balance or plan a legal and assets of the we to longer where in separate next not that maybe and likely in year it's actually legally, a you're to plan, insurance the liability over the from because Trustees. bit have it's that of form the

tap trade place legacy deal a and it final into We've years not cash from balance in [ph] trade where to us. over last not remove us. it's of of to it from And with a source on sheet. on as it of that business now can have our a the that isn't So legacy our issue been work couple the cash lot we years a are put able we something done cash. It's XX

David Silver

Okay, it thanks the clarification, you. for me. very That's Thank clear. for

Patrick Williams

David. Thanks,

Operator

continue. further no are questions there And at this Please time.

Patrick Williams

for and in to interest today. your for support. employees Innospec our And thanks all shareholders, you all us joining Thank customers

If about questions a day. call. forward first in look further us a you our any up in Have please again Innospec to quarter with May today, on results meeting We you matters discussed have discuss give great to XXXX

Operator

our concludes you. Thank That call today. for

you a all You for Thank disconnect. day. participating. great may all Have

Innospec (IOSP) 17 Feb 212020 Q4 Earnings call transcript