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IOSP Innospec

Filed: 4 Aug 21, 11:31am
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10-Q
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2021
or
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission file number
1-13879
INNOSPEC INC.
(Exact name of registrant as specified in its charter)
 
DELAWARE
 
98-0181725
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
  
8310 South Valley Highway
  
Suite 350
  
Englewood
  
Colorado
 
80112
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code: (303) 792 5554
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
 
Title of each class
 
Trading
Symbol(s)
 
Name of each exchange
on which registered
Common stock, par value $0.01 per share
 
IOSP
 
NASDAQ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T
(§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such file.    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated
filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule
12b-2
of the Exchange Act.
 
Large accelerated filer   Accelerated filer 
    
Non-accelerated
filer
   Smaller reporting company 
    
Emerging growth company      
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial standards provided pursuant to Section 13(a) of the Exchange Act.  ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule
12b-2
of the Exchange Act).    Yes  ☐    No  ☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
 
Class
  
Outstanding as of July 28, 2021
Common Stock, par value $0.01
  
24,641,904

CAUTIONARY STATEMENT RELATIVE TO FORWARD-LOOKING STATEMENTS
This Form
10-Q
contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts included or incorporated herein may constitute forward-looking statements. Such forward-looking statements include statements (covered by words like “expects,” “estimates,” “anticipates,” “may,” “could,” “believes,” “feels,” “plans,” “intends” or similar words or expressions, for example) which relate to earnings, growth potential, operating performance, events or developments that we expect or anticipate will or may occur in the future. Although forward-looking statements are believed by management to be reasonable when made, they are subject to certain risks, uncertainties and assumptions, including, the effects of the
COVID-19
pandemic, such as its duration, its unknown long-term economic impact, measures taken by governmental authorities to address it and the manner in which the pandemic may precipitate or exacerbate other risks and/or uncertainties, and our actual performance or results may differ materially from these forward-looking statements. Additional information regarding risks, uncertainties and assumptions relating to Innospec and affecting our business operations and prospects are described in Innospec’s Annual Report on Form
10-K
for the year ended December 31, 2020 and other reports filed with the U.S. Securities and Exchange Commission. You are urged to review our discussion of risks and uncertainties that could cause actual results to differ from forward-looking statements under the heading “Risk Factors” in such reports. Innospec undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
 
1

PART I    FINANCIAL INFORMATION
Item 1    Condensed Consolidated Financial Statements
INNOSPEC INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
 
   
Three Months Ended
June 30
  
Six Months Ended
June 30
 
(in millions, except share and per share data)
  
2021
  
2020
  
2021
  
2020
 
Net sales
  $354.5  $244.9  $694.1  $617.2 
Cost of goods sold
   (246.2  (185.8  (485.0  (444.2
   
 
 
  
 
 
  
 
 
  
 
 
 
Gross profit
   108.3   59.1   209.1   173.0 
Operating expenses:
                 
Selling, general and administrative
   (62.7  (63.5  (126.3  (127.9
Research and development
   (8.6  (8.1  (17.6  (16.7
Restructuring charge
   0.0   (21.1  0.0   (21.1
Impairment of intangible assets
   0.0   (19.8  0.0   (19.8
   
 
 
  
 
 
  
 
 
  
 
 
 
Total operating expenses
   (71.3  (112.5  (143.9  (185.5
   
 
 
  
 
 
  
 
 
  
 
 
 
Operating income/(loss)
   37.0   (53.4  65.2   (12.5
Other income, net
   3.4   0.1   6.4   4.0 
Interest expense, net
   (0.3  (0.5  (0.7  (1.1
   
 
 
  
 
 
  
 
 
  
 
 
 
Income/(loss) before income tax expense
   40.1   (53.8  70.9   (9.6
Income tax (expense)/credit
   (17.7  14.1   (25.1  3.0 
   
 
 
  
 
 
  
 
 
  
 
 
 
Net income/(loss)
  $22.4  $(39.7 $45.8  $(6.6
   
 
 
  
 
 
  
 
 
  
 
 
 
Earnings per share:
                 
Basic
  $0.91  $(1.62 $1.86  $(0.27
   
 
 
  
 
 
  
 
 
  
 
 
 
Diluted
  $0.90  $(1.62 $1.84  $(0.27
   
 
 
  
 
 
  
 
 
  
 
 
 
Weighted average shares outstanding (in thousands):
                 
Basic
   24,628   24,564   24,615   24,547 
   
 
 
  
 
 
  
 
 
  
 
 
 
Diluted
   24,869   24,564   24,856   24,547 
   
 
 
  
 
 
  
 
 
  
 
 
 
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
 
2

INNOSPEC INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 
   
Three Months Ended
June 30
  
Six Months Ended
June 30
 
(in millions)
  
2021
   
2020
  
2021
  
2020
 
Net income/(loss)
  $22.4   $(39.7  45.8   (6.6
   
 
 
   
 
 
  
 
 
  
 
 
 
Other comprehensive income/(loss):
                  
Changes in cumulative translation adjustment, net of tax of $(0.5) million, $(0.1) million, $0.5 million and $1.5 million, respectively
   3.8    5.5   (7.5  (2.4
Amortization of prior service cost/(credit), net of tax of $0.0 million, $0.0 million, $0.0 million and $0.1 million, respectively
   0.0    (0.2  0.1   (0.4
Amortization of actuarial net losses, net of tax of $0.0 million, $0.0 million, $(0.1) million and $(0.1) million, respectively
   0.6    0.6   1.2   0.8 
   
 
 
   
 
 
  
 
 
  
 
 
 
Total other comprehensive income/(loss)
   4.4    5.9   (6.2)  (2.0
   
 
 
   
 
 
  
 
 
  
 
 
 
Total comprehensive income/(loss)
  $26.8   $(33.8  39.6   (8.6
   
 
 
   
 
 
  
 
 
  
 
 
 
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
 
3

INNOSPEC INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, except share and per share data)
  
June 30,

2021
   
December 31,
2020
 
   
(Unaudited)
     
Assets
          
Current assets:
          
Cash and cash equivalents
  $94.4   $105.3 
Trade and other accounts receivable (less allowances of $4.2 million and $4.5 million respectively)
   281.6    221.4 
Inventories (less allowances of $21.1 million and $19.4 million respectively):
          
Finished goods
   174.0    156.3 
Raw materials
   76.5    63.7 
   
 
 
   
 
 
 
Total inventories
   250.5    220.0 
Prepaid expenses
   11.6    14.9 
Prepaid income taxes
   3.5    4.2 
Other current assets
   1.5    0.4 
   
 
 
   
 
 
 
Total current assets
   643.1    566.2 
Net property, plant and equipment
   214.1    210.8 
Operating lease
right-of-use
assets
   36.4    40.1 
Goodwill
   368.2    371.2 
Other intangible assets
   66.4    75.3 
Deferred tax assets
   7.4    7.6 
Pension asset
   121.2    118.0 
Other
non-current
assets
   5.0    8.2 
   
 
 
   
 
 
 
Total assets
  $1,461.8   $1,397.4 
   
 
 
   
 
 
 
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
 
4

INNOSPEC INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS - (Continued)
 
(in millions, except share and per share data)
  
June 30,
2021
  
December 31,
2020
 
   
(Unaudited)
    
Liabilities and Equity
         
Current liabilities:
         
Accounts payable
  $123.5  $98.7 
Accrued liabilities
   142.3   129.8 
Current portion of finance leases
   0.2   0.5 
Current portion of plant closure provisions
   6.6   6.6 
Current portion of accrued income taxes
   6.3   5.5 
Current portion of operating lease liabilities
   12.1   11.3 
   
 
 
  
 
 
 
Total current liabilities
   291.0   252.4 
Finance leases, net of current portion
   0.0   0.1 
Operating lease liabilities, net of current portion
   24.4   28.9 
Plant closure provisions, net of current portion
   51.0   51.9 
Accrued income taxes, net of current portion
   28.6   32.4 
Unrecognized tax benefits
   16.3   16.0 
Deferred tax liabilities
   54.4   46.9 
Pension liabilities and post-employment benefits
   19.5   20.5 
Other
non-current
liabilities
   2.4   3.4 
   
Equity:
         
Common stock, $0.01 par value, authorized 40,000,000 shares, issued 29,554,500 shares
   0.3   0.3 
Additional
paid-in
capital
   339.5   336.1 
Treasury stock (4,912,939 and 4,958,599 shares at cost, respectively)
   (93.1  (93.3
Retained earnings
   790.4   758.6 
Accumulated other comprehensive loss
   (63.5  (57.3
   
 
 
  
 
 
 
Total Innospec stockholders’ equity
   973.6   944.4 
Non-controlling
interest
   0.6   0.5 
   
 
 
  
 
 
 
Total equity
   974.2   944.9 
   
 
 
  
 
 
 
Total liabilities and equity
  $1,461.8  $1,397.4 
   
 
 
  
 
 
 
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
 
5

INNOSPEC INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
   
Six Months Ended

June 30
 
(in millions)
  
2021
  
2020
 
Cash Flows from Operating Activities
         
Net income
  $45.8  $(6.6
Adjustments to reconcile net income to net cash provided by operating activities:
         
Depreciation and amortization
   20.6   24.2 
Impairment of intangible assets
   0.0   19.8 
Impairment of tangible assets
   0.0   2.0 
Deferred tax expense
   7.8   (5.6
Non-cash
movements on defined benefit pension plans
   (1.6  (2.2
Stock option compensation
   2.9   2.8 
Changes in assets and liabilities, net of effects of acquired and divested companies:
         
Trade and other accounts receivable
   (64.3  76.2 
Inventories
   (31.3  (2.1
Prepaid expenses
   3.5   3.9 
Accounts payable and accrued liabilities
   39.3   (79.6
Accrued income taxes
   (1.7  (9.5
Plant closure provisions
   (0.6  8.5 
Unrecognized tax benefits
   0.3   (1.3
Other assets and liabilities
   0.9   1.7 
   
 
 
  
 
 
 
Net cash provided by operating activities
   21.6   32.2 
   
Cash Flows from Investing Activities
         
Capital expenditures
   (19.5  (14.6
Proceeds on disposal of property, plant and equipment
   0.3   0.0 
   
 
 
  
 
 
 
Net cash used in investing activities
   (19.2  (14.6
   
Cash Flows from Financing Activities
         
Non-controlling
interest
   0.1   0.1 
Proceeds from revolving credit facility
   0.0   15.0 
Repayments of revolving credit facility
   0.0   (35.0
Repayments of finance leases
   (0.3  (0.6
Dividend paid
   (14.0  (12.8
Issue of treasury stock
   1.7   0.8 
Repurchase of common stock
   (0.8  (2.1
   
 
 
  
 
 
 
Net cash used in financing activities
   (13.3  (34.6
Effect of foreign currency exchange rate changes on cash
   0.0   (0.5
   
 
 
  
 
 
 
Net change in cash and cash equivalents
   (10.9  (17.5
Cash and cash equivalents at beginning of period
   105.3   75.7 
   
 
 
  
 
 
 
Cash and cash equivalents at end of period
  $94.4  $58.2 
   
 
 
  
 
 
 
The accompanying notes are an integral part of these un
a
udited interim condensed consolidated financial statements.
 
6

INNOSPEC INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
 
(in millions)
  
Common

Stock
   
Additional
Paid-In

Capital
   
Treasury

Stock
  
Retained

Earnings
  
Accumulated
Other

Comprehensive
Loss
  
Non-

Controlling
Interest
   
Total

Equity
 
Balance at December 31, 2020
  $0.3   $336.1   $(93.3 $758.6  $(57.3 $0.5   $944.9 
Net income
                 45.8            45.8 
Dividend paid ($0.57 per share)
                 (14.0           (14.0
Changes in cumulative translation adjustment, net of tax
                     (7.5       (7.5
Share of net income
                         0.1    0.1 
Treasury stock reissued
        0.5    1.0                1.5 
Treasury stock repurchased
             (0.8               (0.8
Stock option compensation
        2.9                     2.9 
Amortization of prior service cost, net of tax
                     0.1        0.1 
Amortization of actuarial net losses, net of tax
                     1.2        1.2 
   
 
 
   
 
 
   
 
 
  
 
 
  
 
 
  
 
 
   
 
 
 
Balance at June 30, 2021
  $0.3   $339.5   $(93.1 $790.4  $(63.5 $0.6   $974.2 
   
 
 
   
 
 
   
 
 
  
 
 
  
 
 
  
 
 
   
 
 
 
 
(in millions)
  
Common

Stock
   
Additional
Paid-In

Capital
  
Treasury

Stock
  
Retained

Earnings
  
Accumulated
Other

Comprehensive
Loss
  
Non-

Controlling
Interest
   
Total

Equity
 
Balance at December 31, 2019
  $0.3   $330.4  $(93.3 $755.5  $(74.4 $0.4   $918.9 
Net income
                (6.6           (6.6
Dividend paid ($0.52 per share)
                (12.8           (12.8
Changes in cumulative translation adjustment, net of tax
                    (2.4       (2.4
Share of net income
                        0.1    0.1 
Treasury stock reissued
        (0.2  1.6                1.4 
Treasury stock repurchased
            (2.1               (2.1
Stock option compensation
        2.8                    2.8 
Amortization of prior service credit, net of tax
                    (0.4       (0.4
Amortization of actuarial net losses, net of tax
                    0.8        0.8 
   
 
 
   
 
 
  
 
 
  
 
 
  
 
 
  
 
 
   
 
 
 
Balance at June 30, 2020
  $0.3   $333.0  $(93.8 $736.1  $(76.4 $0.5   $899.7 
   
 
 
   
 
 
  
 
 
  
 
 
  
 
 
  
 
 
   
 
 
 
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements
 
7

INNOSPEC INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
 
(in millions)
  
Common

Stock
   
Additional
Paid-In

Capital
   
Treasury

Stock
  
Retained

Earnings
  
Accumulated
Other

Comprehensive
Loss
  
Non-

Controlling
Interest
   
Total

Equity
 
Balance at March 31, 2021
  $0.3   $337.8   $(93.6 $782.0  $(67.9 $0.5   $959.1 
Net income
                 22.4            22.4 
Dividend paid ($0.57 per share)
                 (14.0           (14.0
Changes in cumulative translation adjustment, net of tax
                     3.8        3.8 
Share of net income
                         0.1    0.1 
Treasury stock reissued
        0.4    0.7                1.1 
Treasury stock repurchased
             (0.2               (0.2
Stock option compensation
        1.3                     1.3 
Amortization of prior service cost, net of tax
                     0.0        0.0 
Amortization of actuarial net losses, net of tax
                     0.6        0.6 
   
 
 
   
 
 
   
 
 
  
 
 
  
 
 
  
 
 
   
 
 
 
Balance at June 30, 2021
  $0.3   $339.5   $(93.1 $790.4  $(63.5 $0.6   $974.2 
   
 
 
   
 
 
   
 
 
  
 
 
  
 
 
  
 
 
   
 
 
 
 
(in millions)
  
Common

Stock
   
Additional
Paid-In

Capital
   
Treasury

Stock
  
Retained

Earnings
  
Accumulated
Other

Comprehensive
Loss
  
Non-

Controlling
Interest
   
Total

Equity
 
Balance at March 31, 2020
  $0.3   $331.2   $(94.0 $788.6  $(82.3 $0.5   $944.3 
Net income
                 (39.7           (39.7
Dividend paid ($0.52 per share)
                 (12.8           (12.8
Changes in cumulative translation adjustment, net of tax
                     5.5        5.5 
Treasury stock reissued
        0.2    0.2                0.4 
Stock option compensation
        1.6                     1.6 
Amortization of prior service credit, net of tax
                     (0.2       (0.2
Amortization of actuarial net losses, net of tax
                     0.6        0.6 
   
 
 
   
 
 
   
 
 
  
 
 
  
 
 
  
 
 
   
 
 
 
Balance at June 30, 2020
  $0.3   $333.0   $(93.8 $736.1  $(76.4 $0.5   $899.7 
   
 
 
   
 
 
   
 
 
  
 
 
  
 
 
  
 
 
   
 
 
 
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements
 
8

INNOSPEC INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – BASIS OF PRESENTATION
The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America for interim financial information and with the instructions to Form
10-Q
and Article 10 of Regulation
S-X
under the Securities Exchange Act of 1934. Accordingly, they do not include all the information and notes necessary for a comprehensive presentation of financial position, results of operations and cash flows.
It is our opinion, however, that all adjustments (consisting of normal, recurring adjustments, unless otherwise disclosed) have been made which are necessary for the condensed consolidated financial statements to be fairly stated. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form
10-K
for the year ended December 31, 2020 filed on February 17, 2021 (the “2020 Form
10-K”).
The results for the interim period covered by this report are not necessarily indicative of the results to be expected for the full year.
When we use the terms “Innospec,” “the Corporation,” “the Company,” “Registrant,” “we,” “us” and “our,” we are referring to Innospec Inc. and its consolidated subsidiaries unless otherwise indicated or the context otherwise requires.
 
9

NOTE 2 – SEGMENT REPORTING
The Company reports its financial performance based on the following three reportable segments: Fuel Specialties, Performance Chemicals and Oilfield Services.
The Fuel Specialties, Performance Chemicals and Oilfield Services segments operate in markets where we actively seek growth opportunities although their ultimate customers are different. Our previously reported Octane Additives segment ceased trading in the second quarter of 2020.
The Company evaluates the performance of its segments based on operating income. The following tables analyze sales and other financial information by the Company’s reportable segments:
 
   
Three Months Ended

June 30
   
Six Months Ended
June 30
 
(in millions)
  
2021
   
2020
   
2021
   
2020
 
Net Sales:
                    
Refinery and Performance
  $94.8   $74.9   $194.1    183.5 
Other
   48.3    32.5    88.3    70.9 
   
 
 
   
 
 
   
 
 
   
 
 
 
Fuel Specialties
   143.1    107.4    282.4    254.4 
   
 
 
   
 
 
   
 
 
   
 
 
 
Personal Care
   73.8    49.8    142.0    112.8 
Home Care
   21.3    21.3    44.3    42.9 
Other
   33.1    24.6    67.8    53.1 
   
 
 
   
 
 
   
 
 
   
 
 
 
Performance Chemicals
   128.2    95.7    254.1    208.8 
   
 
 
   
 
 
   
 
 
   
 
 
 
Oilfield Services
   83.2    41.8    157.6    154.0 
   
 
 
   
 
 
   
 
 
   
 
 
 
   $354.5   $244.9   $694.1    617.2 
   
 
 
   
 
 
   
 
 
   
 
 
 
Gross profit/(loss):
                    
Fuel Specialties
  $50.1   $25.4   $95.0    76.6 
Performance Chemicals
   31.6    24.9    63.0    52.5 
Oilfield Services
   26.6    9.9    51.1    46.1 
Octane Additives
   0.0    (1.1   0.0    (2.2
   
 
 
   
 
 
   
 
 
   
 
 
 
   $108.3   $59.1   $209.1    173.0 
   
 
 
   
 
 
   
 
 
   
 
 
 
Operating income/(loss):
                    
Fuel Specialties
  $28.5   $4.7   $52.3    36.8 
Performance Chemicals
   17.9    12.2    36.2    27.8 
Oilfield Services
   2.2    (12.4   3.4    (5.2
Octane Additives
   0.0    (1.6   0.0    (2.8
Corporate costs
   (11.6   (15.4   (26.7   (28.2
Restructuring charge
   0.0    (21.1   0.0    (21.1
Impairment of intangible assets
   0.0    (19.8   0.0    (19.8
   
 
 
   
 
 
   
 
 
   
 
 
 
Total operating income
  $37.0   $(53.4  $65.2    (12.5
   
 
 
   
 
 
   
 
 
   
 
 
 
 
10

NOTE 3 – EARNINGS PER SHARE
Basic earnings per share is based on the weighted average number of common shares outstanding during the period. Diluted earnings per share includes the effect of options that are dilutive and outstanding during the period under the treasury stock method. Per share amounts are computed as follows:
 
   
Three Months Ended
June 30
   
Six Months Ended
June 30
 
   
2021
   
2020
   
2021
   
2020
 
Numerator (in millions):
                    
Net income/(loss) available to common stockholders
  $22.4   $(39.7  $45.8   $(6.6
   
 
 
   
 
 
   
 
 
   
 
 
 
Denominator (in thousands):
                    
Weighted average common shares outstanding
   24,628    24,564    24,615    24,547 
Dilutive effect of stock options and awards
   241    0    241    0 
   
 
 
   
 
 
   
 
 
   
 
 
 
Denominator for diluted earnings per share
   24,869    24,564    24,856    24,547 
   
 
 
   
 
 
   
 
 
   
 
 
 
Net income/(loss) per share, basic:
  $0.91   $(1.62  $1.86   $(0.27
   
 
 
   
 
 
   
 
 
   
 
 
 
Net income/(loss) per share, diluted:
  $0.90   $(1.62  $1.84   $(0.27
   
 
 
   
 
 
   
 
 
   
 
 
 
In the three and six months ended June 30, 2021, the average number of anti-dilutive options excluded from the calculation of diluted earnings per share were 19,836 and 14,649, respectively (three and six months ended June 30, 2020 – 0 and 0, respectively).
NOTE 4 – GOODWILL
The following table summarizes the goodwill movements:
 
(in millions)
  
Gross Cost
 
Opening balance at January 1, 2021
  $371.2 
Exchange effect
   (3.0
   
 
 
 
Closing balance at June 30, 2021
  $368.2 
   
 
 
 
 
11

NOTE 5 – OTHER INTANGIBLE ASSETS
The following table summarizes the other intangible assets movements:
 
(in millions)
  
2021
 
Gross cost at January 1
  $298.9 
Exchange effect
   (1.5
   
 
 
 
Gross cost at June 30
   297.4 
   
 
 
 
Accumulated amortization at January 1
   (223.6
Amortization expense
   (8.0
Exchange effect
   0.6 
   
 
 
 
Accumulated
amortization
at June 30
   (231.0
   
 
 
 
Net book amount at June 30
  $66.4 
   
 
 
 
 
The amortization expense for the six months ended June 30, 2021 was $8.0 million (six months ended June 30, 2020 – $11.5 million).
The net book amount by category of other intangible assets is shown in the following table:
 
(in millions)
  
June 30

2021
   
December 31

2020
 
Product rights
  $4.4   $6.3 
Brand names
   2.0    2.3 
Technology
   18.6    19.8 
Customer relationships
   39.4    44.2 
Internally developed software
   2.0    2.7 
   
 
 
   
 
 
 
   $66.4   $75.3 
   
 
 
   
 
 
 
 
12

NOTE 6 – PENSION AND POST EMPLOYMENT BENEFITS
The Company maintains a defined benefit pension plan covering certain current and former employees in the United Kingdom (the “Plan”). The Plan is closed to future service accrual but has a large number of deferred and current pensioners.
The net service cost for the three and six months ended June 30, 2021 was $0.4 million and $0.8 million, respectively (three and six months ended June 30, 2020 – $0.3 million and
$
0.6 million respectively) and has been recognized in selling, general and administrative expenses within corporate costs. The following table shows the income statement effect recognized within other income, net:
 
   
Three Months Ended
June 30
   
Six Months Ended
June 30
 
(in millions)
  
2021
   
2020
   
2021
   
2020
 
Plan net pension credit/(charge):
                    
Interest cost on projected benefit obligation
  $(1.9  $(2.7  $(3.8  $(5.5
Expected return on plan assets
   3.9    4.3    7.8    8.8 
Amortization of prior service (cost)/credit
   0.0    0.2    (0.1   0.4 
Amortization of actuarial net losses
   (0.4   (0.2   (0.8   (0.4
   
 
 
   
 
 
   
 
 
   
 
 
 
   $1.6   $1.6   $3.1   $3.3 
   
 
 
   
 
 
   
 
 
   
 
 
 
The amortization of prior service credit and actuarial net losses is a reclassification out of accumulated other comprehensive loss into other income and expense.
The Company also maintains an unfunded defined benefit pension plan covering certain current and former employees in Germany (the “German plan”) within our Fuel Specialties segment.
The German plan is closed to new entrants and has no assets. The net service cost for the German plan for the three and six months ended June 30, 2021 was $0.1 million and $0.1 million, respectively (three and six months ended June 30, 2020 – $0.1 million and $0.1 million, respectively) and has been recognized in selling, general and administrative expenses. The following table shows the income statement effect recognized within other income and expense:
 
   
Three Months Ended
June 30
   
Six Months Ended
June 30
 
(in millions)
  
2021
   
2020
   
2021
   
2020
 
Plan net pension charge:
                    
Interest cost on projected benefit obligation
  $0.0   $0.0   $0.0   $(0.1
Amortization of actuarial net losses
   (0.2   (0.3   (0.5   (0.4
   
 
 
   
 
 
   
 
 
   
 
 
 
   $(0.2  $(0.3  $(0.5  $(0.5
   
 
 
   
 
 
   
 
 
   
 
 
 
As at June 30, 2021, our Performance Chemicals segment has obligations for post-employment benefits in its European businesses with a liability of $4.8 million (December 31, 2020 – $5.3 million).
 
13

NOTE 7 – INCOME TAXES
A roll-forward of unrecognized tax benefits and associated accrued interest and penalties is as follows:
 
(in millions)
  
Unrecognized
Tax Benefits
   
Interest and
Penalties
   
Total
 
Opening balance at January 1, 2021
  $13.6   $2.4   $16.0 
Net change for tax positions of prior periods
   (0.1   0.4    0.3 
   
 
 
   
 
 
   
 
 
 
Closing balance at June 30, 2021
   13.5    2.8    16.3 
Current
   0.0    0.0    0.0 
   
 
 
   
 
 
   
 
 
 
Non-current
  $13.5   $2.8   $16.3 
   
 
 
   
 
 
   
 
 
 
All of the $16.3 million of unrecognized tax benefits, interest and penalties would impact our effective tax rate if recognized.
Innospec Performance Chemicals Italia Srl, is subject to an ongoing tax audit in relation to the period 2011 to 2014 inclusive. The Company has determined that additional tax, interest and penalties totaling $3.4 million may arise as a consequence of the tax audit. This includes an increase in interest accrued of $0.1 million and a reduction for foreign exchange movements of $0.1 million recorded in the six months to June 30, 2021. As any additional tax arising as a consequence of the tax audit would be reimbursed by the previous owner under the terms of the sale and purchase agreement, an indemnification asset of the same amount is recorded in the financial statements to reflect this arrangement.
In 2018 the Company recorded an unrecognized tax benefit in relation to a potential adjustment that could arise as a consequence of the Tax Cuts and Jobs Act. The Company has determined that additional tax, interest and penalties totaling $12.7 million may arise in relation to this item. This includes an increase in interest accrued of $0.3 million in the six months to June 30, 2021.
Other non-significant items,
inclusive of interest and penalties, total $0.2 million.
The Company and its U.S. subsidiaries remain open to examination by the IRS for years 2017 onwards under the statute of limitations. The Company’s subsidiaries in foreign tax jurisdictions are open to examination including Germany (2016 onwards), Switzerland (2016 onwards), Spain (2016 onwards), France (2018 onwards) and the United Kingdom (2018 onwards).
 
14

NOTE 8 – LONG-TERM DEBT
As at June 30, 2021, and December 31, 2020, the Company had repaid all of its borrowings under its revolving credit facility.
The Company continues to have available a $250.0 million revolving credit facility until September 25, 2024. The facility contains an accordion feature whereby the Company may elect to increase the total available borrowings by an aggregate amount of up to $125.0 million.
The deferred finance costs of $1.2 
million (December 31, 2020 - $1.3 million) related to the arrangement of the credit facility, are included within other current and non-current assets at the balance sheet dates. 
NOTE 9 – PLANT CLOSURE PROVISIONS
The Company has continuing plans to remediate some of its manufacturing facilities at sites around the world as and when those operations are expected to cease or we are required to decommission the sites according to local laws and regulations. The liability for estimated closure costs includes costs for decontamination and environmental remediation activities (“remediation”).
As a result, the principal site giving rise to remediation liabilities is the manufacturing site at Ellesmere Port in the United Kingdom. There are also provisions on a much smaller scale in respect of some of our other manufacturing sites in the U.S. and Europe. We recognize environmental remediation liabilities when they are probable and costs can be reasonably estimated, and asset retirement obligations when there is a legal obligation and costs can be reasonably estimated.
 
Movements in the provisions are summarized as follows:
 
(in millions)
  
2021
 
Total at January 1
  $58.5 
Charge for the period
   1.9 
Utilized in the period
   (2.5
Exchange effect
   (0.3
   
 
 
 
Total at June 30
   57.6 
Due within one year
   (6.6
   
 
 
 
Due after one year
  $51.0 
   
 
 
 
The charge for the six months ended June 30, 2021 was $1.9 million (six months ended June 30, 2020 – $9.8 million). The current year charge represents the accounting accretion only, with no changes for the expected cost and scope of future remediation activities. In the prior year, the charge includes an additional $7.5 million provision as a result of the restructuring activities following the closure of our Octane Additives business and the cessation of sales of TEL for use in motor gasoline.
Amounts due within one year refer to provisions where expenditure is expected to arise within one year of the balance sheet date.
 
15

NOTE 10 – FAIR VALUE MEASUREMENTS
The following table presents the carrying amount and fair values of the Company’s financial assets and liabilities measured on a recurring basis:
 
   
June 30, 2021
   
December 31, 2020
 
(in millions)
  
Carrying

Amount
   
Fair

Value
   
Carrying

Amount
   
Fair

Value
 
Assets
                    
Non-derivatives:
                    
Cash and cash equivalents
  $94.4   $94.4   $105.3   $105.3 
Derivatives (Level 1 measurement):
                    
Other current and
non-current
assets:
                    
Foreign currency forward exchange contracts
   1.1    1.1    0.0    0.0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
                    
Non-derivatives:
                    
Finance leases (including current portion)
   0.2    0.2    0.6    0.6 
Derivatives (Level 1 measurement):
                    
Other current and
non-current
liabilities:
                    
Foreign currency forward exchange contracts
   0.0    0.0    0.5    0.5 
Non-financial
liabilities (Level 3 measurement):
                    
Other current and
non-current
liabilities:
                    
Stock equivalent units
   17.8    17.8    17.2    17.2 
The following methods and assumptions were used to estimate the fair values:
Cash and cash equivalents:
The carrying amount approximates fair value because of the short-term maturities of such instruments.
Derivatives:
The fair value of derivatives relating to foreign currency forward exchange contracts are derived from current settlement prices and comparable contracts using current assumptions. Foreign currency forward exchange contracts primarily relate to contracts entered into to hedge future known transactions or hedge balance sheet net cash positions. The movements in the carrying amounts and fair values of these contracts are largely due to changes in exchange rates against the U.S. dollar.
Finance leases:
Finance leases relate to certain fixed assets in our Fuel Specialties and Oilfield Services segments. The carrying amount of finance leases approximates to the fair value.
Stock equivalent units:
The fair values of stock equivalent units are calculated at each balance sheet date using either the Black-Scholes or Monte Carlo method depending on the terms of each grant.
 
16

NOTE 11 – DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT
The Company enters into various foreign currency forward exchange contracts to minimize currency exchange rate exposure from expected future cash flows. As at June 30, 2021 the contracts have maturity dates of up to twelve months at the date of inception. These foreign currency forward exchange contracts have not been designated as hedging instruments, and their impact on the income statement for the first six months of 2021 was a gain of $0.2 million (first six months of 2020 – a gain of $1.8 million).
NOTE 12 – CONTINGENCIES
Legal matters
While we are involved from time to time in claims and legal proceedings that result from, and are incidental to, the conduct of our business including business and commercial litigation, employee and product liability claims, there are no material pending legal proceedings to which the Company or any of its subsidiaries is a party, or of which any of their property is subject. It is possible, however, that an adverse resolution of an unexpectedly large number of such individual claims or proceedings could in the aggregate have a material adverse effect on the results of operations for a particular year or quarter.
Guarantees
The Company and certain of the Company’s consolidated subsidiaries are contingently liable for certain obligations of affiliated companies primarily in the form of guarantees of debt and performance under contracts entered into as a normal business practice. This includes guarantees of
non-U.S.
excise taxes and customs duties. As at June 30, 2021, such guarantees which are not recognized as liabilities in the condensed consolidated financial statements amounted to $8.4 million (December 31, 2020 - $9.9 million). The remaining terms of the fixed maturity guarantees are up to
 
3 years, with some further guarantees having no fixed expiry date.
Under the terms of the guarantee arrangements, generally the Company would be required to perform should the affiliated company fail to fulfil its obligations under the arrangements. In some cases, the guarantee arrangements have recourse provisions that would enable the Company to recover any payments made under the terms of the guarantees from securities held of the guaranteed parties’ assets.
The Company and its affiliates have numerous long-term sales and purchase commitments in their various business activities, which are expected to be fulfilled with no adverse consequences material to the Company.
 
17

NOTE 13 – STOCK-BASED COMPENSATION PLANS
The Company grants stock options and stock equivalent units (“SEUs”) from time to time as a long-term performance incentive. In certain cases the grants are subject to performance conditions such as the Company’s stock price. Where performance conditions apply the Monte Carlo simulation model is used to determine the fair values. Otherwise the Black-Scholes model is used to determine the fair values.
Stock option plans
The following table summarizes the transactions of the Company’s stock option plans for the six months ended June 30, 2021.
 
   
Number of
Options
   
Weighted
Average
Exercise
Price
   
Weighted
Average
Grant-Date

Fair Value
 
Outstanding at December 31, 2020
   442,893   $32.49   $45.31 
Granted - at discount
   81,596   $0.00   $92.37 
- at market value
   10,688   $99.85   $32.73 
Exercised
   (52,870  $32.93   $38.15 
Forfeited
   (17,806  $17.98   $65.96 
Outstanding at June 30, 2021
   464,501   $28.75   $53.57 
At June 30, 2021, there were 87,136 stock options that were exercisable, of which 65,176 had performance conditions attached.
The stock option compensation cost for the first six months of 2021 was $2.9 million (first six months of 2020 – $2.8 million). The total intrinsic value of options exercised in the first six months of 2021 was $1.7 million (first six months of 2020 – $4.6 million).
The total compensation cost related to
non-vested
stock options not yet recognized at June 30, 2021 was $10.5 million and this cost is expected to be recognized over the weighted-average period of 2.15 years.
Stock equivalent units
The following table summarizes the transactions of the Company’s SEUs for the six months ended June 30, 2021:
 
   
Number
of SEUs
   
Weighted
Average
Exercise
Price
   
Weighted
Average
Grant-Date

Fair Value
 
Outstanding at December 31, 2020
   390,164   $4.35   $63.96 
Granted - at discount
   91,451   $0.00   $92.01 
- at market value
   3,803   $99.85   $32.71 
Exercised
   (29,573  $16.67   $43.05 
Forfeited
   (21,940  $2.76   $67.01 
   
 
 
   
 
 
   
 
 
 
Outstanding at June 30, 2021
   433,905   $3.51   $70.87 
   
 
 
   
 
 
   
 
 
 
 
18

At June 30, 2021 there were 32,132 SEUs that are exercisable, of which 27,935 had performance conditions attached.
The charges for SEUs are spread over the life of the award subject to a revaluation to fair value each quarter. The revaluation may result in a charge or a credit to the income statement in the quarter dependent upon our share price and other performance criteria.
The SEU compensation for the first six months of 2021 was a $2.9 million charge (first six months of 2020 – $3.0 million credit). The total intrinsic value of SEUs exercised in the first six months of 2021 was $1.3 million (first six months of 2020 – $6.1 million).
The weighted-average remaining vesting period of
non-vested
SEUs is 2.08 years.
 
19

NOTE 14 – RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE LOSS
Reclassifications out of accumulated other comprehensive loss for the first six months of 2021 were:
 
(in millions)
Details about AOCL Components
  
Amount
Reclassified
from AOCL
   
Affected Line Item in
 
the
Statement where
Net Income is
 
Presented
Defined benefit pension plan items:
        
Amortization of prior service cost
  $0.1   See
(1)
below
Amortization of actuarial net losses
   1.3   See
(1)
below
   
 
 
    
    1.4   Total before tax
    (0.1  Income tax expense
   
 
 
    
Total reclassifications
  $1.3   Net of tax
   
 
 
    
 
(1)  
These items are included in other income and expense. See Note 6 of the Notes to the Condensed Consolidated Financial Statements for additional information.
Changes in accumulated other comprehensive loss for the first six months of 2021, ne
t
 of tax, were:
 
(in millions)
  
Defined

Benefit

Pension

Plan Items
   
Cumulative
Translation
Adjustments
   
Total
 
Balance at December 31, 2020
  $(15.9  $(41.4  $(57.3
   
 
 
   
 
 
   
 
 
 
Other comprehensive income before reclassifications
   0.0    (7.5   (7.5
Amounts reclassified from AOCL
   1.3    0.0    1.3 
   
 
 
   
 
 
   
 
 
 
Total other comprehensive income
   1.3    (7.5   (6.2
   
 
 
   
 
 
   
 
 
 
Balance at June 30, 2021
  $(14.6  $(48.9  $(63.5
   
 
 
   
 
 
   
 
 
 
 
20

Reclassifications out of accumulated other comprehensive loss for the first six months of 2020 were:
 
(in millions)
Details about AOCL Components
  
Amount
Reclassified
from AOCL
   
Affected Line Item in the
Statement where
Net Income is Presented
Defined benefit pension plan items:
        
Amortization of prior service credit
  $(0.4  See
(1)
below
Amortization of actuarial net losses
   0.8   See
(1)
below
   
 
 
    
    0.4   Total before tax
    0.0   Income tax expense
   
 
 
    
Total reclassifications
  $0.4   Net of tax
   
 
 
    
 
(1)
These items are included in other income and expense. See Note 6 of the Notes to the Condensed Consolidated Financial Statements for additional information.
Changes in accumulated other comprehensive loss for the first six months of 2020, ne
t
 of tax, were:
 
(in millions)
  
Defined
Benefit
Pension
Plan Items
   
Cumulative
Translation
Adjustments
   
Total
 
Balance at December 31, 2019
  $(9.3  $(65.1  $(74.4
   
 
 
   
 
 
   
 
 
 
Other comprehensive income before reclassifications
   0.0    (2.4   (2.4
Amounts reclassified from AOCL
   0.4    0.0    0.4 
   
 
 
   
 
 
   
 
 
 
Total other comprehensive income
   0.4    (2.4   (2.0
   
 
 
   
 
 
   
 
 
 
Balance at June30, 2020
  $(8.9  $(67.5  $(76.4
   
 
 
   
 
 
   
 
 
 
 
21

NOTE 15 – RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
The Company has reviewed recently issued accounting pronouncements and concluded that the following matters are relevant to the Company’s financial statements.
In March 2021, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”)
No. 2021-03,
Intangibles—Goodwill
 and Other (Topic 350): Accounting Alternative for Evaluating Triggering Events. The amendments in this ASU are effective on a prospective basis for fiscal years beginning after December 15, 2019. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. The optional election in this ASU, to evaluate goodwill impairment triggering events only as of the end of each reporting period, has not been adopted by the Company.
NOTE 16 – RELATED PARTY TRANSACTIONS
Mr. Patrick S. Williams has been an executive director of the Company since April 2009 and has been a
non-executive
director of AdvanSix, a chemicals manufacturer, since February 2020. In the first six months of 2021 the Company purchased product from AdvanSix for $0.1 million (first six months of 2020 – $0.2 million). As at June 30, 2021, the Company owed $0.1 million to AdvanSix (December 31, 2020 – $0.0 million).
Mr. Robert I. Paller has been a
non-executive
director of the Company since November 1, 2009. The Company has retained and continues to retain Smith, Gambrell & Russell, LLP (“SGR”), a law firm with which Mr. Paller holds a position. In the first six months of 2021 the Company incurred fees from SGR of $0.1 million (first six months of 2020 – $0.2 million). As at June 30, 2021, the Company owed $0.0 million to SGR (December 31, 2020 – $0.1 million).
Mr. David F. Landless has been a
non-executive
director of the Company since January 1, 2016 and is a
non-executive
director of Ausurus Group Limited which owns European Metal Recycling Limited (“EMR”). The Company has sold scrap metal to EMR in the first six months of 2021 for a value of $0.4 million (first six months of 2020 – $0.0 million). A tendering process is operated periodically to select the best buyer for the sale of scrap metal by the Company. As at June 30, 2021 EMR owed $0.1 million for scrap metal purchased from the Company (December 31, 2020 – $0.0 million).
 
22

Item 2    Management’s Discussion and Analysis of Financial Condition and Results of Operations for the Three and Six Months Ended June 30, 2021
This discussion should be read in conjunction with our unaudited interim condensed consolidated financial statements and the notes thereto.
CRITICAL ACCOUNTING ESTIMATES
The policies and estimates that the Company considers the most critical in terms of complexity and subjectivity of assessment are those related to environmental liabilities, pensions, income taxes, goodwill, property, plant and equipment and other intangible assets (net of depreciation and amortization) and the impact of the
COVID-19
pandemic (“the pandemic”) and the current economic environment. These policies have been discussed in the Company’s 2020 Form
10-K.
RESULTS OF OPERATIONS
The Company reports its financial performance based on the following three reportable segments: Fuel Specialties, Performance Chemicals and Oilfield Services. Our previously reported Octane Additives segment ceased trading in the second quarter of 2020.
The following table provides operating income by reporting segment:
 
   
Three Months Ended
June 30
   
Six Months Ended
June 30
 
(in millions)
  
2021
   
2020
   
2021
   
2020
 
Net sales:
        
Fuel Specialties
  $143.1   $107.4    282.4    254.4 
Performance Chemicals
   128.2    95.7    254.1    208.8 
Oilfield Services
   83.2    41.8    157.6    154.0 
  
 
 
   
 
 
   
 
 
   
 
 
 
  $354.5   $244.9    694.1    617.2 
  
 
 
   
 
 
   
 
 
   
 
 
 
Gross profit/(loss):
        
Fuel Specialties
  $50.1   $25.4    95.0    76.6 
Performance Chemicals
   31.6    24.9    63.0    52.5 
Oilfield Services
   26.6    9.9    51.1    46.1 
Octane Additives
   0.0    (1.1   0.0    (2.2
  
 
 
   
 
 
   
 
 
   
 
 
 
  $108.3   $59.1    209.1    173.0 
  
 
 
   
 
 
   
 
 
   
 
 
 
Operating income/(loss):
        
Fuel Specialties
  $28.5   $4.7    52.3    36.8 
Performance Chemicals
   17.9    12.2    36.2    27.8 
Oilfield Services
   2.2    (12.4   3.4    (5.2
Octane Additives
   0.0    (1.6   0.0    (2.8
Corporate costs
   (11.6   (15.4   (26.7   (28.2
Restructuring Charge
   0.0    (21.1   0.0    (21.1
Impairment of intangible assets
   0.0    (19.8   0.0    (19.8
  
 
 
   
 
 
   
 
 
   
 
 
 
Total operating income
  $37.0   $(53.4   65.2    (12.5
  
 
 
   
 
 
   
 
 
   
 
 
 
 
23

Three Months Ended June 30 , 2021
The following table shows the change in components of operating income by reporting segment for the three months ended June 30, 2021 and the three months ended June 30, 2020:
 
   
Three Months Ended
June 30
        
(in millions, except ratios)
  
2021
   
2020
   
Change
    
Net sales:
       
Fuel Specialties
  $143.1   $107.4   $35.7   +33
Performance Chemicals
   128.2    95.7    32.5   +34
Oilfield Services
   83.2    41.8    41.4   +99
  
 
 
   
 
 
   
 
 
  
  $354.5   $244.9   $109.6   +45
  
 
 
   
 
 
   
 
 
  
Gross profit:
 
Fuel Specialties
  $50.1   $25.4   $24.7   +97
Performance Chemicals
   31.6    24.9    6.7   +27
Oilfield Services
   26.6    9.9    16.7   +169
Octane Additives
   0.0    (1.1   1.1   -100
  
 
 
   
 
 
   
 
 
  
  $108.3   $59.1   $49.2   +83
  
 
 
   
 
 
   
 
 
  
Gross margin (%):
 
  
Fuel Specialties
  
 
35.0
 
  
 
23.6
 
  
 
+11.4
 
 
Performance Chemicals
  
 
24.6
 
  
 
26.0
 
  
 
-1.4
 
 
Oilfield Services
  
 
32.0
 
  
 
23.7
 
  
 
+8.3
 
 
Aggregate
  
 
30.6
 
  
 
24.1
 
  
 
+6.5
 
 
Operating expenses:
       
Fuel Specialties
  $(21.6  $(20.7  $(0.9  +4
Performance Chemicals
   (13.7   (12.7   (1.0  +8
Oilfield Services
   (24.4   (22.3   (2.1  +9
Octane Additives
   0.0    (0.5   0.5   -100
Corporate costs
   (11.6   (15.4   3.8   -25
Restructuring charge
   0.0    (21.1   21.1   -100
Impairment of intangible assets
   0.0    (19.8   19.8   -100
  
 
 
   
 
 
   
 
 
  
  $(71.3  $(112.5  $41.2   -37
  
 
 
   
 
 
   
 
 
  
 
24

Fuel Specialties
Net sales:
the table below details the components which comprise the year over year change in net sales spread across the markets in which we operate:
 
   
Three Months Ended June 30, 2021
 
Change (%)
  
Americas
   
EMEA
   
ASPAC
   
AvGas
   
Total
 
Volume
   +39    +11    +28    -11    +20 
Price and product mix
   -3    +1    -3    +88    +6 
Exchange rates
   0    +13    +3    0    +7 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
   +36    +25    +28    +77    +33 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Volumes in all our regions have increased year over year, as the global demand for refined fuel products is returning to the
pre-pandemic
levels. Price and product mix was slightly improved in EMEA, while the Americas and ASPAC were adverse due to higher sales of lower margin products. AvGas volumes were lower than the prior year due to variations in the demand from customers, being offset by a favorable price and product mix with a higher proportion of sales to high margin customers. EMEA and ASPAC benefitted from favorable exchange rate movements year over year, due to a strengthening of the British pound sterling and the European Union euro against the U.S. dollar.
Gross margin
: the year over year increase of 11.4 percentage points was driven by favourable pricing and sales mix when compared to the prior year, which was adversely impacted by the pandemic.
Operating expenses:
the year over year increase of $0.9 million was due to higher personnel-related expenses and an increase in the allowance for doubtful debts.
Performance Chemicals
Net sales:
the table below details the components which comprise the year over year change in net sales spread across the markets in which we operate:
 
   
Three Months Ended June 30, 2021
 
Change (%)
  
Americas
   
EMEA
   
ASPAC
   
Total
 
Volume
   +52    +3    +20    +18 
Price and product mix
   +15    +9    -14    +9 
Exchange rates
   0    +9    +4    +7 
  
 
 
   
 
 
   
 
 
   
 
 
 
   +67    +21    +10    +34 
  
 
 
   
 
 
   
 
 
   
 
 
 
Higher volumes in all our regions was driven by increased demand for our Personal Care products, together with the recovery of demand in some of our other markets which have been adversely impacted by the pandemic. The Americas and EMEA benefitted from a favorable price and product mix due to increased sales of higher priced products. ASPAC suffered an adverse price and product mix due to increased sales of lower priced products. EMEA and ASPAC benefitted from favorable exchange rate movements year over year, due to a strengthening of the British pound sterling and the European Union euro against the U.S. dollar.
Gross margin:
the year over year decrease of 1.4 percentage points was primarily due to a weaker sales mix and the timing of planned plant shutdowns.
 
25

Operating expenses:
the year over year increase of $1.0 million was due to higher personnel-related expenses and increased spending on research and development.
Oilfield Services
Net sales:
have increased year over year by $41.4 million, or 99 percent. Customer demand grew sequentially quarter on quarter as the pandemic recovery gathered pace. We expect the growth in customer demand will continue into the third quarter.
Gross margin:
the year over year increase of 8.3 percentage points was primarily due to a favorable sales mix compared to a prior year comparative which was adversely impacted by the pandemic, together with the benefit of management cost control initiatives being realized.
Operating expenses:
the year over year increase of $2.1 million was driven by our flexible customer service response to the increase in demand as the pandemic recovery continues.
Octane Additives
The Octane Additives business ceased trading and is no longer a reporting segment from July 1, 2020 as the production of TEL for use in motor gasoline has finished. Legacy costs related to these operations have now been recorded as operating expenses within corporate costs.
In the second quarter of 2020, there was a gross loss of $1.1 million, together with operating expenses of $0.5 million.
Other Income Statement Captions
Corporate costs:
the year over year decrease of $3.8 million was driven by lower personnel-related expenses, including lower share-based compensation accruals linked to the Innospec share price decrease in the quarter.
 
26

Other net income:
for the second quarter of 2021 and 2020, included the following:
 
(in millions)
  
2021
   
2020
   
Change
 
United Kingdom pension credit
  $1.6   $1.6    0.0 
German pension charge
   (0.2   (0.3   0.1 
Profit on disposal of assets
   0.2    0.0    0.2 
Foreign exchange gain on translation
   2.9    (1.1   4.0 
Foreign currency forward contracts losses
   (1.1   (0.1   (1.0
  
 
 
   
 
 
   
 
 
 
  $3.4   $0.1   $3.3 
  
 
 
   
 
 
   
 
 
 
Interest expense, net:
was $0.3 million for the second quarter of 2021 compared to $0.5 million in the second quarter of 2020, driven by the repayment in full of our revolving credit facility in the second half of 2020. Interest expense includes a commitment fee to retain the Company’s revolving credit facility for the term of the agreement.
Income taxes:
the effective tax rate was 44.1% and 26.2% in the second quarter of 2021 and 2020, respectively. The adjusted effective tax rate, once adjusted for the items set out in the following table, was 24.2% in 2021 compared with 23.6% in 2020. The 0.6% percentage point increase in the adjusted effective rate was primarily due to the fact that a higher proportion of the Company’s profits are being generated in higher 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.
The following table shows a reconciliation of the GAAP effective tax charge to the adjusted effective tax charge:
 
   
Three Months Ended
June 30
 
(in millions)
  
2021
  
2020
 
Income before income taxes
  $40.1  $(53.8
Indemnification asset regarding tax audit
   (0.1  (0.5
Adjustment for stock compensation
   1.2   (1.4
Legacy costs of closed operations
   0.9   0.0 
Restructuring charge
   0.0   21.1 
Impairment of acquired intangible assets
   0.0   19.8 
  
 
 
  
 
 
 
Adjusted income before income taxes
  $42.1  $(14.8
  
 
 
  
 
 
 
Income taxes
  $17.7  $(14.1
Tax on stock compensation
   0.2   0.1 
Adjustment of income tax provision
   (0.3  1.2 
Tax on legacy cost of closed operations
   0.2   0.0 
Tax on restructuring charge
   0.0   4.3 
Tax on impairment of acquired intangible assets
   0.0   4.6 
Tax on foreign exchange on distribution
   (0.2  0.4 
Change in UK statutory tax rate
   (7.4  0.0 
  
 
 
  
 
 
 
Adjusted income taxes
  $10.2  $(3.5
  
 
 
  
 
 
 
GAAP effective tax rate
   44.1  26.2
Adjusted effective tax rate
   24.2  23.6
 
27

In March 2021 it was announced that the UK rate of corporation tax would increase from 19% to 25% from April 1, 2023. The legislation accompanying this announcement was enacted on June 10, 2021. As this legislation was enacted in the three months ended June 30, 2021, the effect of this change was recognized in our financial results for this period. This has resulted in a charge of $7.4 million in the three months ended June 30, 2021, reflecting the impact of the increase in the UK corporation tax rate on our UK deferred tax balances.
 
28

Six Months Ended , June 30 2021
The following table shows the change in components of operating income by reporting segment for the six months ended June 30, 2021 and the six months ended June 30, 2020:
 
   
Six Months Ended
June 30
         
(in millions, except ratios)
  
2021
   
2020
   
Change
     
Net sales:
        
Fuel Specialties
  $282.4   $254.4   $28.0    +11
Performance Chemicals
   254.1    208.8    45.3    +22
Oilfield Services
   157.6    154.0    3.6    +2
  
 
 
   
 
 
   
 
 
   
  $694.1   $617.2   $76.9    +12
  
 
 
   
 
 
   
 
 
   
Gross profit:
        
Fuel Specialties
  $95.0   $76.6   $18.4    +24
Performance Chemicals
   63.0    52.5    10.5    +20
Oilfield Services
   51.1    46.1    5.0    +11
Octane Additives
   0.0    (2.2   2.2    -100
  
 
 
   
 
 
   
 
 
   
  $209.1   $173.0   $36.1    +21
  
 
 
   
 
 
   
 
 
   
Gross margin (%):
        
Fuel Specialties
  
 
33.6
 
  
 
30.1
 
  
 
+3.5
 
  
Performance Chemicals
  
 
24.8
 
  
 
25.1
 
  
 
-0.3
 
  
Oilfield Services
  
 
32.4
 
  
 
29.9
 
  
 
+2.5
 
  
Aggregate
  
 
30.1
 
  
 
28.0
 
  
 
+2.1
 
  
Operating expenses:
      
Fuel Specialties
  $(42.7  $(39.8  $(2.9   +7
Performance Chemicals
   (26.8   (24.7   (2.1   +9
Oilfield Services
   (47.7   (51.3   3.6    -7
Octane Additives
   0.0    (0.6   0.6    -100
Corporate costs
   (26.7   (28.2   1.5    -5
Restructuring charge
   0.0    (21.1   21.1    -100
Impairment of intangible assets
   0.0    (19.8   19.8    -100
  
 
 
   
 
 
   
 
 
   
  $(143.9  $(185.5  $41.6    -22
  
 
 
   
 
 
   
 
 
   
 
29

Fuel Specialties
Net sales:
the table below details the components which comprise the year over year change in net sales spread across the markets in which we operate:
 
   
Six Months Ended June 30, 2021
 
Change (%)
  
Americas
   
EMEA
   
ASPAC
   
AvGas
   
Total
 
Volume
   +14    +4    +11    -38    +5 
Price and product mix
   -4    -3    -3    +46    0 
Exchange rates
   0    +12    +2    0    +6 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
   +10    +13    +10    +8    +11 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Volumes in all our regions have increased year over year, as the global demand for refined fuel products is returning to
pre-pandemic
levels. Price and product mix was adverse in all our regions due to higher sales of lower margin products. AvGas volumes were lower than the prior year due to variations in the demand from customers, being offset by a favorable price and product mix with a higher proportion of sales to higher margin customers. EMEA and ASPAC benefitted from favorable exchange rate movements year over year, due to a strengthening of the British pound sterling and the European Union euro against the U.S. dollar.
Gross margin
: the year over year increase of 3.5 percentage points was driven by a favorable sales mix in comparison to the prior year which was adversely impacted by the pandemic.
Operating expenses:
the year over year increase of $2.9 million was primarily due to higher personnel-related expenses, together with an increase in the allowance for doubtful debts.
Performance Chemicals
Net sales:
the table below details the components which comprise the year over year change in net sales spread across the markets in which we operate:
 
   
Six Months Ended June 30, 2021
 
Change (%)
  
Americas
   
EMEA
   
ASPAC
   
Total
 
Volume
   +32    +5    +3    +13 
Price and product mix
   +7    +2    -8    +3 
Exchange rates
   0    +9    +4    +6 
  
 
 
   
 
 
   
 
 
   
 
 
 
   +39    +16    -1    +22 
  
 
 
   
 
 
   
 
 
   
 
 
 
Higher volumes in all our regions was driven by increased demand for our Personal Care products, together with the recovery of demand in some of our other markets which have been adversely impacted by the pandemic. The Americas and EMEA benefitted from a favorable price and product mix due to increased sales of higher priced products. ASPAC suffered an adverse price and product mix due to increased sales of lower priced products. EMEA and ASPAC benefitted from favorable exchange rate movements year over year, due to a strengthening of the British pound sterling and the European Union euro against the U.S. dollar.
Gross margin:
the year over year decrease of 0.3 percentage points was primarily due to sales mix.
Operating expenses:
the year over year increase of $2.1 million was due to higher personnel-related expenses and increased spending on research and development.
 
30

Oilfield Services
Net sales:
have increased year over year by $3.6 million, or 2 percent. Customer demand has grown during 2021 as the pandemic recovery gathered pace. We expect the growth in customer demand will continue into the third quarter.
Gross margin:
the year over year increase of 2.5 percentage points was primarily due to a favorable sales mix compared to a prior year comparative which was adversely impacted by the pandemic, together with the benefit of management cost control initiatives being realized.
Operating expenses:
the year over year decrease of $3.6 million was driven by the
right-sizing
of the operations to adjust for the reduction in demand caused by the pandemic, together with lower amortization for acquired intangible assets.
Octane Additives
The Octane Additives business ceased trading and is no longer a reporting segment from July 1, 2020 as the production of TEL for use in motor gasoline has finished. Legacy costs related to these operations have now been recorded as operating expenses within corporate costs.
In the first six months of 2020, there was a gross loss of $2.2 million, together with operating expenses of $0.6 million.
Other Income Statement Captions
Corporate costs:
the year over year decrease of $1.5 million was driven by lower personnel-related expenses.
 
31

Other net income:
for the first six months of 2021 and 2020, included the following:
 
(in millions)
  
2021
   
2020
   
Change
 
United Kingdom pension credit
  $3.1   $3.3    (0.2
German pension charge
   (0.5   (0.5   0.0 
Profit on disposal of assets
   0.2    0.0    0.2 
Foreign exchange gain on translation
   3.4    (0.6   4.0 
Foreign currency forward contracts gain
   0.2    1.8    (1.6
  
 
 
   
 
 
   
 
 
 
  $6.4   $4.0   $2.4 
  
 
 
   
 
 
   
 
 
 
Interest expense, net:
was $0.7 million for the first six months of 2021 compared to $1.1 million in the first six months of 2020, driven by the repayment in full of our revolving credit facility in the second half of 2020. Interest expense includes a commitment fee to retain the Company’s revolving credit facility for the term of the agreement.
Income taxes:
the effective tax rate was 35.4% and 31.3% in the first six months of 2021 and 2020, respectively. The adjusted effective tax rate, once adjusted for the items set out in the following table, was 23.8% in the first six months of 2021 compared with 25.8% in the first six months of 2020. The 2.0% percentage point decrease in the adjusted effective rate was primarily due to the fact that a lower proportion of the Company’s profits are being generated in higher 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.
The following table shows a reconciliation of the GAAP effective tax charge to the adjusted effective tax charge:
 
   
Six Months Ended

June 30
 
(in millions)
  
2021
  
2020
 
Income before income taxes
  $70.9  $(9.6
Indemnification asset regarding tax audit
   0.0   (0.3
Adjustment for stock compensation
   2.6   0.0 
Acquisition costs
   0.8   0.0 
Legacy cost of closed operations
   1.8   0.0 
Restructuring charge
   0.0   21.1 
Impairment of acquired intangible assets
   0.0   19.8 
  
 
 
  
 
 
 
Adjusted income before income taxes
  $76.1  $31.0 
  
 
 
  
 
 
 
Income taxes
  $25.1  $(3.0
Tax on stock compensation
   0.3   0.5 
Adjustment of income tax provision
   (0.3  1.2 
Tax on acquisition costs
   0.2   0.0 
Tax on legacy cost of closed operations
   0.4   0.0 
Tax on restructuring charge
   0.0   4.3 
Tax on impairment of acquired intangible assets
   0.0   4.6 
Tax on foreign exchange on distribution
   (0.2  0.4 
Change in UK statutory tax rate
   (7.4  0.0 
  
 
 
  
 
 
 
Adjusted income taxes
  $18.1  $8.0 
  
 
 
  
 
 
 
GAAP effective tax rate
   35.4  31.3
Adjusted effective tax rate
   23.8  25.8
 
32

In March 2021 it was announced that the UK rate of corporation tax would increase from 19% to 25% from April 1, 2023. The legislation accompanying this announcement was enacted on June 10, 2021. As this legislation was enacted in the three months ended June 30, 2021, the effect of this change was recognized in our financial results for this period. This has resulted in a charge of $7.4 million in the three months ended June 30, 2021, reflecting the impact of the increase in the UK corporation tax rate on our UK deferred tax balances.
 
33

LIQUIDITY AND FINANCIAL CONDITION
Working Capital
In the first six months of 2021 our working capital increased by $38.3 million, while our adjusted working capital increased by $50.1 million. The difference is primarily due to the exclusion of the increase in our cash and cash equivalents.
The Company believes that adjusted working capital, a
non-GAAP
financial measure, (defined by the Company as trade and other accounts receivable, inventories, prepaid expenses, accounts payable and accrued liabilities rather than total current assets less total current liabilities) provides useful information to investors in evaluating the Company’s underlying performance and identifying operating trends. Management uses this
non-GAAP
financial measure internally to allocate resources and evaluate the performance of the Company’s operations. Items excluded from working capital in the adjusted working capital calculation are listed in the table below and represent factors which do not fluctuate in line with the day to day working capital needs of the business.
 
(in millions)
  
June 30,

2021
   
December 31,
2020
 
Total current assets
  $643.1   $566.2 
Total current liabilities
   (291.0   (252.4
  
 
 
   
 
 
 
Working capital
   352.1    313.8 
Less cash and cash equivalents
   (94.4   (105.3
Less prepaid income taxes
   (3.5   (4.2
Less other current assets
   (1.5   (0.4
Add back current portion of accrued income taxes
   6.3    5.5 
Add back current portion of finance leases
   0.2    0.5 
Add back current portion of plant closure provisions
   6.6    6.6 
Add back current portion of operating lease liabilities
   12.1    11.3 
  
 
 
   
 
 
 
Adjusted working capital
  $277.9   $227.8 
  
 
 
   
 
 
 
We had a $60.2 million increase in trade and other accounts receivable, driven by the recovery of sales in all our segments due to the easing of the pandemic restrictions. Days’ sales outstanding in our Fuel Specialties segment has increased from 52 days to 55 days; increased in our Performance Chemicals segment from 60 days to 64 days; and increased from 64 days to 78 days in our Oilfield Services segment.
We had a $30.5 million increase in inventories as we manage inventory levels in anticipation of the continued recovery in demand. Days’ sales in inventory in our Fuel Specialties segment increased from 116 days to 131 days; increased in our Performance Chemicals segment from 58 days to 62 days; and decreased from 95 days to 76 days in our Oilfield Services segment.
Prepaid expenses decreased $3.3 million, from $14.9 million to $11.6 million due to the normal expensing of prepaid costs.
We had a $37.3 million increase in accounts payable and accrued liabilities primarily due to higher production activity resulting from the recovery of customer demand. Creditor days (including goods received not invoiced) in our Fuel Specialties segment increased from 34 days to 48 days; increased in our Performance Chemicals segment from 48 days to 49 days; and decreased from 53 days to 52 days in our Oilfield Services segment.
 
34

Operating Cash Flows
We generated cash from operating activities of $21.6 million in the first six months of 2021 compared to cash inflows of $32.2 million in the first six months of 2020. The year over year decrease in the cash generated from our operating activities was primarily related to increases in our working capital. As the pandemic recovery has accelerated during the second quarter, the increased demand led to higher accounts receivable together with higher inventory levels in anticipation of what we believe will be strong customer demand in the third quarter.
Cash
At June 30, 2021 and December 31, 2020, we had cash and cash equivalents of $94.4 million and $105.3 million, respectively, of which $32.0 million and $52.5 million, respectively, were held by
non-U.S.
subsidiaries principally in the United Kingdom.
The $10.9 million decrease in cash and cash equivalents for the first six months of 2021, is primarily due to the increases in our working capital as customer demand has been recovering from the pandemic decline, our continued investment in capital projects and the payment of our semi-annual dividend of $14.0 million.
Debt
At June 30, 2021, we had no debt outstanding under the revolving credit facility and $0.2 million of obligations under finance leases relating to certain fixed assets within our Fuel Specialties and Oilfield Services segments.
At December 31, 2020, we had no debt outstanding under the revolving credit facility and $0.6 million of obligations under finance leases relating to certain fixed assets within our Fuel Specialties and Oilfield Services segments.
 
35

Item 3    Quantitative and Qualitative Disclosures about Market Risk
The Company uses floating rate debt to finance its global operations. The Company is subject to business risks inherent in
non-U.S.
activities, including political and economic uncertainty, import and export limitations, and market risk related to changes in interest rates and foreign currency exchange rates. The political and economic risks are mitigated by the stability of the major countries in which the Company’s largest operations are located. Credit limits, ongoing credit evaluation and account monitoring procedures are used to minimize bad debt risk. Collateral is not generally required.
From time to time, the Company uses derivatives, including interest rate swaps, commodity swaps and foreign currency forward exchange contracts, in the normal course of business to manage market risks. The derivatives used in hedging activities are considered risk management tools and are not used for trading purposes. In addition, the Company enters into derivative instruments with a diversified group of major financial institutions in order to manage the exposure to
non-performance
of such instruments. The Company’s objective in managing the exposure to changes in interest rates is to limit the impact of such changes on earnings and cash flows and to lower overall borrowing costs. The Company’s objective in managing the exposure to changes in foreign currency exchange rates is to reduce volatility on earnings and cash flows associated with such changes.
The Company offers fixed prices for some long-term sales contracts. As manufacturing and raw material costs are subject to variability the Company, from time to time, uses commodity swaps to hedge the cost of some raw materials thus reducing volatility on earnings and cash flows. The derivatives are considered risk management tools and are not used for trading purposes. The Company’s objective is to manage its exposure to fluctuating costs of raw materials.
The Company’s exposure to market risk has been discussed in the Company’s 2020 Annual Report on Form
10-K
and there have been no significant changes since that time.
 
36

Item 4    Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Based on an evaluation carried out as of the end of the period covered by this report, under the supervision and with the participation of our management, our Chief Executive Officer and our Chief Financial Officer concluded that the Company’s “disclosure controls and procedures” (as defined in Rules
13a-15(e)
and
15d-15(e)
of the Securities Exchange Act of 1934) were effective as of June 30, 2021.
Changes in Internal Control over Financial Reporting
The Company is continuously seeking to improve the efficiency and effectiveness of its operations and of its internal control over financial reporting. This is intended to result in refinements to processes throughout the Company.
There were no changes to our internal control over financial reporting which were identified in connection with the evaluation required by paragraph (d) of Rules
13a-15
and
15d-15
under the Securities Exchange Act of 1934, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
 
37

PART II    OTHER INFORMATION
Item 1    Legal Proceedings
Legal matters
While we are involved from time to time in claims and legal proceedings that result from, and are incidental to, the conduct of our business including business and commercial litigation, employee and product liability claims, there are no material pending legal proceedings to which the Company or any of its subsidiaries is a party, or of which any of their property is subject. It is possible, however, that an adverse resolution of an unexpectedly large number of such individual claims or proceedings could, in the aggregate, have a material adverse effect on results of operations for a particular year or quarter.
Item 1A    Risk Factors
Information regarding risk factors that could have a material impact on our results of operations or financial condition are described under “Risk Factors” in Item 1A of Part I of our 2020 Form
10-K.
In management’s view, there have been no material changes in the risk factors facing the Company since that time.
Item 2    Unregistered Sales of Equity Securities and Use of Proceeds
There have been no unregistered sales of equity securities.
During the quarter ended June 30, 2021 the Company made no open market repurchases of its common stock.
During the quarter ended June 30, 2021, the Company purchased its common stock in connection with the exercising of stock options by employees. The following table provides information about our repurchases of equity securities in the period.
Issuer Purchases of Equity Securities
 
Period
  
Total number

of shares

purchased
   
Average price

paid per share
 
May 1, 2021 through May 31, 2021
   1,247   $101.3 
  
 
 
   
 
 
 
Total
   1,247   $101.3 
  
 
 
   
 
 
 
Item 3    Defaults Upon Senior Securities
None.
Item 4    Mine Safety Disclosures
Not applicable.
 
Item 5    Other
Information
None.
 
38

Item 6    Exhibits
 
31.1  Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2  Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1  Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2  Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101  XBRL Instance Document and Related Item - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.
104  Cover Page Interactive Data File – The cover page XBRL tags are embedded within the inline XBRL document.
 
39

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
   
INNOSPEC INC.
   
Registrant
Date: August 4, 2021  By 
/s/                             PATRICK S. WILLIAMS
   
Patrick S. Williams
   
President and Chief Executive Officer
Date: August 4, 2021  By 
/s/                             IAN P. CLEMINSON
   
Ian P. Cleminson
   
Executive Vice President and Chief Financial Officer