IOSP

• Overall Quarter Performance • All three business segments delivered double-digit total sales growth and operating income growth, marking a strong quarter for the company. • Adjusted EBITDA was $50.1 million (vs. $49.1 million YoY), net income attributable to Innospec was $30.8 million (vs. $23.5 million YoY), and adjusted EPS was $1.27 (vs. $1.26 YoY). • The company holds a debt-free balance sheet with $250.2 million in cash and cash equivalents as of June 30, 2026.

• Operational Updates by Segment • Performance Chemicals: Repairs and process optimization work is ongoing at the North Carolina facility following earlier unplanned outages from winter storm damage; the project is currently 60% complete and on track to finish by the end of Q4 2026. New technologies are being commercialized across all end markets to target margin improvements. • Fuel Specialties: Delivered consistent strong results through ongoing economic cycles, with volume and price mix improvement and margins within management's target range. • Oilfield Services: The recently completed DRA (drag reducing agent) plant expansion drove sequential and YoY operating income growth, with almost all new capacity already sold. The completions and production business is underperforming expectations, with room for growth and margin improvement. The Middle East business is positioned for growth as onshore completion activity recovers.

• Capital Return and Cash Position • The company returned value to shareholders via a $0.92 per share semi-annual dividend and $6.4 million in share repurchases (buying back just over 87,000 shares) in Q2. • The strong net cash position provides flexibility for organic investment, mergers and acquisitions, dividend growth, and future share buybacks.

• Overall: Management expects further sequential operating income improvements across the business in the second half of 2026.
• Performance Chemicals: Additional capacity and operating improvements from the North Carolina facility upgrades are expected to come online starting in Q4 2026, with most incremental volume growth expected in Q1 2027; upgrades are expected to increase plant capacity by at least 10% in 2027. Management expects operating income growth in the second half of 2026.
• Fuel Specialties: Management expects moderate sequential margin headwinds in Q3 2026 due to lag between raw material cost changes and contractual pricing adjustments, with margin stabilization expected as raw material prices stabilize in late 2026. The segment is positioned for a strong second half and is on track to potentially deliver record full-year revenue and performance.
• Oilfield Services: Management expects further sequential operating income growth in the second half of 2026, driven by DRA growth in the Middle East and recovery in completions activity. A second DRA capacity expansion is currently under discussion to meet growing demand. New completion technologies are expected to launch within six months to support growth in North America, South America, and Mexico.
• Cash Flow: Working capital improvement initiatives are expected to support higher operating cash flow in the second half of 2026.

Total company revenue for Q2 2026 was $491.4 million, a 12% increase year-over-year (YoY).

1. Performance Chemicals: Revenue was $190.3 million, up 9% YoY, accounting for 38.7% of total Q2 revenue. Volume fell 2% YoY, which was offset by 8% positive price mix and 3% favorable currency impact. Gross margin was 17.3%, a 0.2 percentage point decrease YoY. Operating income hit $16.4 million, a 15% increase YoY.

2. Fuel Specialties: Revenue was $185.7 million, up 12% YoY, accounting for 37.8% of total Q2 revenue. Volume rose 7% YoY, with 3% positive price mix and 2% favorable currency impact. Gross margin was 36.6%, a 1.5 percentage point decrease YoY driven by weaker sales mix. Operating income reached $36.3 million, a 3% increase YoY.

3. Oilfield Services: Revenue was $115.4 million, up 14% YoY, accounting for 23.5% of total Q2 revenue. Gross margin was 32.3%, a 2.7 percentage point increase YoY driven by improved sales mix. Operating income was $8.7 million, a 40% increase YoY.

Corporate costs for the quarter were $21.6 million, up from $20.9 million YoY.

• Raw material price volatility: Rapidly fluctuating crude-based raw material prices create temporary margin pressure for Fuel Specialties due to inherent contractual pricing lags.
• Supply constraints: The ongoing North Carolina facility upgrade has left Performance Chemicals operating at near-maximum capacity in Q2 and Q3 2026, limiting near-term volume growth and leaving some incremental sales unrealized in the near term.
• Geopolitical disruption: Ongoing geopolitical volatility creates supply chain challenges, though the company's diversified global manufacturing footprint helps mitigate this risk.
• Oilfield industry capex discipline: Persistent disciplined capital spending by E&P companies limits near-term volume growth in the Oilfield Services completions business, even as longer-term opportunity exists.
• Counterparty risk in Mexico: Slow regulatory and payment reform in Mexico means near-term volume growth from the region is uncertain, even as business development activity increases.

Q: What is the current progress of the North Carolina performance chemicals facility repairs and upgrades, and what benefits will be delivered once complete? / A: The project is approximately 60% complete, with full completion and optimization expected by the end of Q4 2026. The primary benefits will be increased production capacity, improved product yield, better process safety, and operational efficiency. Management expects the upgrades to increase plant capacity by at least 10% heading into 2027, with no additional major CapEx required beyond the current planned spend.

Q: How is the drag reducing agent (DRA) business performing post-expansion, especially in the Middle East? / A: Almost all of the newly added DRA capacity is already sold out. While the company has gained new North American customers, a large share of new demand is coming from Middle East pipelines, particularly the key East-West corridor, amid regional logistics disruptions. Management views this as a long-term structural opportunity rather than a one-time gain, and a second DRA capacity expansion is currently under active discussion.

Q: What is the near-term volume impact of ongoing facility upgrades, and when will full capacity be available? / A: Performance chemicals was supply constrained in Q2 2026, with the business operating at maximum available capacity during repairs. Q3 2026 volume is expected to remain largely similar to Q2 levels, with meaningful incremental capacity only coming online in Q4 2026 at the earliest, and most volume increases arriving in Q1 2027. Some near-term sales have been missed, though most of the lost volume will be recovered in Q4 2026 or Q1 2027 rather than being permanently lost.

Q: What opportunity exists in Mexico for Oilfield Services, and when might growth materialize? / A: The Mexican government has announced new capital spending for oil and petrochemical development, which has led to increased customer inquiries and business development activity. Management will only pursue new business on acceptable payment terms, so growth will be gradual. No meaningful contribution is expected in 2026, and the company is not counting on material contributions even in 2027, but is positioning itself to be a preferred supplier as the market opens up.