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1. Company Snapshot

1.a. Company Description

Innospec Inc.develops, manufactures, blends, markets, and supplies specialty chemicals in the United States, rest of North America, the United Kingdom, rest of Europe, and internationally.The company's Fuel Specialties segment offers a range of specialty chemical products that are used as additives in various fuels.


This segment's products are used in the operation of automotive, marine, and aviation engines; power station generators; and heating oil.Its Performance Chemicals segment provides technology-based solutions for its customers' processes or products that focuses on the personal care, home care, agrochemical, and metal extraction markets.The company's Oilfield Services segment develops and markets chemical solutions for fracturing, stimulation, and completion operations; and products for oil and gas production, as well as products to prevent loss of mud in drilling operations.


It sells its products primarily to oil and gas exploration and production companies, oil refineries, fuel manufacturers and users, personal care and home care companies, formulators of agrochemical and metal extraction formulations, and other chemical and industrial companies.The company was formerly known as Octel Corp.and changed its name to Innospec Inc.


in January 2006.Innospec Inc.was founded in 1938 and is headquartered in Englewood, Colorado.

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1.b. Last Insights on IOSP

Innospec Inc.'s recent performance was negatively impacted by lower results in its non-Fuel Specialties businesses. Although the company's Fuel Specialties segment saw strong growth in operating income, it was not enough to offset weaknesses elsewhere. The company's debt-free balance sheet and $266 million in net cash are positives, as are $8.2 million in share repurchases, which demonstrate its financial flexibility. Innospec's Q2 earnings beat estimates, with adjusted EPS of $1.26, exceeding the Zacks Consensus Estimate of $1.17. Its focus on sequential gross margin and operating income improvement in the second half of the year is a positive outlook.

1.c. Company Highlights

2. Innospec's Q3 2025 Earnings: Mixed Results with Segment Variance

Innospec reported a stable revenue of $441.9 million for Q3 2025, almost identical to the $443.4 million reported in the same quarter last year. However, the company's gross margin declined by 1.6 percentage points to 26.4%. Adjusted EBITDA for the quarter was $44.2 million, down from $50.5 million last year, and net income decreased to $12.9 million from $33.4 million a year ago. Earnings per share (EPS) came in at $1.12, beating analyst estimates of $1.03. The company's adjusted effective tax rate for the quarter was 22.5%, with expectations of a full-year adjusted tax rate around 25%.

Publication Date: Nov -09

📋 Highlights
  • Flat Revenue:: Q3 2025 revenue remained stable at $441.9M vs. $443.4M in Q3 2024.
  • Gross Margin Decline:: Overall margin fell 1.6 ppts to 26.4%, driven by higher costs and weaker product mix in Performance Chemicals.
  • Net Income Drop:: Net income decreased 61% to $12.9M from $33.4M due to margin pressures and lower operating profits.
  • Fuel Specialties Growth:: Segment revenue rose 4% to $172M, with gross margin up 2 ppts to 35.6% and operating income up 14% to $35.3M.
  • Dividend Increase:: Board approved a 10% semiannual dividend hike to $0.87/share, supported by $270.8M in cash and no debt.

Segment Performance

The Performance Chemicals segment saw revenues increase by 4% to $170.8 million, driven by a positive price/mix and favorable currency impact, despite a 2% decline in volumes. However, gross margin decreased to 15.1% from 22.1% in the same quarter last year due to higher costs and weaker product mix, resulting in a 54% decrease in operating income to $9.2 million. In contrast, the Fuel Specialties segment reported a 4% revenue increase to $172 million, with a gross margin of 35.6%, up 2 percentage points from last year, and operating income rose 14% to $35.3 million. The Oilfield Services segment experienced a 13% decline in revenues to $99.1 million but saw an improvement in gross margin to 30%.

Outlook and Financial Position

Innospec expects sequential operating income and margin improvement in the fourth quarter, driven by actions taken in Performance Chemicals and Oilfield Services. The company is in a strong financial position with $270.8 million in cash and cash equivalents and no debt as of September 30. The board approved a 10% increase in the semiannual dividend to $0.87 per share. Innospec repurchased almost 123,000 shares at a cost of $10.7 million during the quarter. Analysts estimate revenue growth of 5.8% for next year.

Valuation

With a P/E Ratio of -1582.34 and an EV/EBITDA of 105.48, the company's valuation appears challenging, reflecting potential concerns about its earnings stability. However, the Dividend Yield stands at 2.13%, which might be attractive to income-focused investors. The P/S Ratio is 1.06, indicating that revenue growth expectations are somewhat factored into the current stock price. Given the expected revenue growth of 5.8% next year, it's essential to monitor if the company can achieve this growth trajectory and improve its profitability.

3. NewsRoom

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Bahl & Gaynor Inc. Decreases Holdings in Innospec Inc. $IOSP

Nov -23

Source: defenseworld.net

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Market Today: Tech Slide, Meta Win, AI Deals, WBD Bids

Nov -18

Source: gurufocus.com

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Innospec Inc. (IOSP) Q3 2025 Earnings Call Transcript

Nov -05

Source: seekingalpha.com

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New Strong Sell Stocks for Nov. 5

Nov -05

Source: zacks.com

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Innospec (IOSP) Tops Q3 Earnings and Revenue Estimates

Nov -05

Source: zacks.com

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State of New Jersey Common Pension Fund D Increases Stake in Innospec Inc. $IOSP

Nov -02

Source: defenseworld.net

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Innospec Schedules Third Quarter 2025 Earnings Release and Conference Call

Oct -01

Source: globenewswire.com

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Innospec and International Justice Mission (IJM) Enter Second Year of Partnership to Protect Palm Oil Workers in Indonesia

Aug -26

Source: globenewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.81%)

6. Segments

Fuel Specialties

Expected Growth: 3.5%

Innospec's Fuel Specialties segment growth of 3.5% is driven by increasing demand for cleaner fuels, stringent environmental regulations, and rising adoption of fuel additives in emerging markets. Additionally, the company's focus on innovation and R&D investments in fuel efficiency and emission reduction technologies also contribute to the growth.

Oilfield Services

Expected Growth: 3.8%

Innospec's Oilfield Services segment growth of 3.8% is driven by increasing demand for specialty chemicals in hydraulic fracturing, enhanced oil recovery, and drilling operations. Rising oil prices, growing shale gas production, and increasing investment in exploration and production activities also contribute to the growth. Additionally, the company's strategic expansion into new markets and product offerings has helped to boost revenue.

Performance Chemicals

Expected Growth: 4.2%

Innospec's Performance Chemicals segment growth of 4.2% is driven by increasing demand for fuel additives, particularly in the Asia-Pacific region, coupled with the company's strategic expansion into new markets and product lines, such as its recent entry into the lubricants market.

7. Detailed Products

Fuel Specialties

Innospec's Fuel Specialties segment provides a range of fuel additives and specialty chemicals to the fuel industry, including gasoline, diesel, and alternative fuels.

Performance Chemicals

Innospec's Performance Chemicals segment offers a variety of specialty chemicals used in personal care, cleaning, and industrial applications.

Octane Additives

Innospec's Octane Additives segment provides methylcyclopentadienyl manganese tricarbonyl (MMT) and other octane additives to the fuel industry.

Tertiary Butylamine (TBA)

Innospec's TBA segment produces tertiary butylamine, a chemical intermediate used in the production of fuel additives, pharmaceuticals, and other specialty chemicals.

8. Innospec Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Innospec Inc. operates in a niche market with few substitutes, but the threat of substitutes is still present due to the availability of alternative fuel additives.

Bargaining Power Of Customers

Innospec Inc. has a diverse customer base, which reduces the bargaining power of individual customers. Additionally, the company's products are specialized, making it difficult for customers to switch to alternative suppliers.

Bargaining Power Of Suppliers

Innospec Inc. relies on a few key suppliers for raw materials, which gives them some bargaining power. However, the company's large scale of operations and diversified supply chain mitigate this risk.

Threat Of New Entrants

The fuel additives market has high barriers to entry, including significant capital expenditures and regulatory hurdles. This makes it difficult for new entrants to join the market.

Intensity Of Rivalry

The fuel additives market is highly competitive, with several established players competing for market share. Innospec Inc. must continually innovate and improve its products to maintain its market position.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 3.79%
Debt Cost 6.38%
Equity Weight 96.21%
Equity Cost 9.48%
WACC 9.36%
Leverage 3.94%

11. Quality Control: Innospec Inc. passed 7 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
NewMarket

A-Score: 6.7/10

Value: 4.5

Growth: 7.2

Quality: 7.2

Yield: 3.0

Momentum: 9.5

Volatility: 8.7

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Cabot

A-Score: 5.5/10

Value: 7.1

Growth: 6.4

Quality: 6.0

Yield: 5.0

Momentum: 1.0

Volatility: 7.7

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RPM International

A-Score: 5.2/10

Value: 3.6

Growth: 6.6

Quality: 5.7

Yield: 4.0

Momentum: 3.0

Volatility: 8.7

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Balchem

A-Score: 4.7/10

Value: 1.9

Growth: 5.6

Quality: 7.5

Yield: 1.0

Momentum: 2.5

Volatility: 9.7

1-Year Total Return ->

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Innospec

A-Score: 4.3/10

Value: 3.4

Growth: 4.1

Quality: 5.4

Yield: 3.0

Momentum: 1.0

Volatility: 9.0

1-Year Total Return ->

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Olin

A-Score: 3.7/10

Value: 5.5

Growth: 4.4

Quality: 2.0

Yield: 6.0

Momentum: 0.5

Volatility: 3.7

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

74.84$

Current Price

74.84$

Potential

-0.00%

Expected Cash-Flows