10-Q

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 September 30, 2018

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

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 October 31, 2018
Common Stock, par value $0.01		24,424,321

TABLE OF CONTENTS

PART I	FINANCIAL INFORMATION	2
Item 1	Condensed Consolidated Financial Statements	2
	Condensed Consolidated Statements of Income	2
	Condensed Consolidated Statements of Comprehensive Income	3
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Balance Sheets (continued)	5
	Condensed Consolidated Statements of Cash Flows	6
	Condensed Consolidated Statement of Equity	7
	Notes To The Unaudited Interim Condensed Consolidated Financial Statements	8
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations for the Three and Nine Months Ended September 30, 2018	22
	Critical Accounting Estimates	22
	Results of Operations	22
	Liquidity and Financial Condition	31
Item 3	Quantitative and Qualitative Disclosures about Market Risk	32
Item 4	Controls and Procedures	33
PART II	OTHER INFORMATION	34
Item 1	Legal Proceedings	34
Item 1A	Risk Factors	34
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 3	Defaults Upon Senior Securities	34
Item 4	Mine Safety Disclosures	34
Item 5	Other Information	34
Item 6	Exhibits	35
SIGNATURES		36

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,” “believes,” “feels” 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, 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, 2017 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 September 30						Nine Months Ended September 30
(in millions, except share and per share data)	2018			2017			2018			2017
Net sales	$	363.1		$	332.4		$	1,081.9		$	953.0
Cost of goods sold		(252.1	)		(233.6	)		(763.6	)		(658.2	)
Gross profit		111.0			98.8			318.3			294.8
Operating expenses:
Selling, general and administrative		(64.7	)		(61.9	)		(197.8	)		(180.4	)
Research and development		(8.1	)		(7.9	)		(25.1	)		(23.8	)
Restructuring charge		(4.8	)		0.0			(4.8	)		0.0
Loss on disposal of subsidiary		0.0			0.0			0.0			(1.0	)
Foreign exchange loss on liquidation of subsidiary		0.0			0.0			0.0			(1.8	)
Total operating expenses		(77.6	)		(69.8	)		(227.7	)		(207.0	)
Operating income		33.4			29.0			90.6			87.8
Other (expense)/income, net		(1.2	)		3.0			4.3			6.4
Interest expense, net		(1.8	)		(2.1	)		(5.3	)		(6.3	)
Income before income taxes		30.4			29.9			89.6			87.9
Income taxes		(9.8	)		(6.6	)		(25.0	)		(21.3	)
Net income	$	20.6		$	23.3		$	64.6		$	66.6
Earnings per share:
Basic	$	0.84		$	0.97		$	2.65		$	2.76
Diluted	$	0.84		$	0.95		$	2.63		$	2.71
Weighted average shares outstanding (in thousands):
Basic		24,419			24,137			24,399			24,119
Diluted		24,597			24,565			24,580			24,569

We have recast certain prior period amounts to conform to new accounting standards.

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 September 30						Nine Months Ended September 30
(in millions)	2018			2017			2018			2017
Net income	$	20.6		$	23.3		$	64.6		$	66.6
Other comprehensive income:
Changes in cumulative translation adjustment, net of tax of $0.2 million, $(0.4) million, $1.2 million and $(1.3) million respectively		(1.5	)		18.1			(12.4	)		30.7
Changes in unrealized gains on derivative instruments, net of tax of $0.0 million, $0.0 million, $(0.2) million and $0.0 million respectively		(0.1	)		0.2			1.0			0.2
Amortization of prior service credit, net of tax of $0.0 million, $0.0 million, $0.1 million and $0.1 million respectively		(0.2	)		(0.2	)		(0.7	)		(0.6	)
Amortization of actuarial net losses, net of tax of $(0.1) million, $(0.1) million, $(0.2) million and $(0.6) million respectively		0.4			1.1			1.3			3.1
Total other comprehensive (loss)/income		(1.4	)		19.2			(10.8	)		33.4
Total comprehensive income	$	19.2		$	42.5		$	53.8		$	100.0

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)	September 30, 2018		December 31, 2017
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	91.4	$	90.2
Trade and other accounts receivable (less allowances of $4.4 million and $4.1 million respectively)		287.8		244.5
Inventories (less allowances of $12.2 million and $12.6 million respectively):
Finished goods		189.5		145.9
Raw materials		72.4		63.9
Total inventories		261.9		209.8
Prepaid expenses		8.4		13.1
Prepaid income taxes		9.8		2.8
Other current assets		0.0		1.1
Total current assets		659.3		561.5
Net property, plant and equipment		194.7		196.0
Goodwill		366.3		361.8
Other intangible assets		142.3		163.3
Deferred tax assets		6.2		6.5
Pension asset		121.4		116.0
Other non-current assets		6.9		5.1
Total assets	$	1,497.1	$	1,410.2

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)	September 30, 2018			December 31, 2017
	(Unaudited)
Liabilities and Equity
Current liabilities:
Bank overdraft	$	0.5		$	0.0
Accounts payable		127.4			117.9
Accrued liabilities		122.9			104.1
Current portion of long-term debt		15.8			15.8
Current portion of finance leases		2.0			2.7
Current portion of plant closure provisions		4.0			5.2
Current portion of accrued income taxes		17.9			15.8
Total current liabilities		290.5			261.5
Long-term debt, net of current portion		208.1			202.6
Finance leases, net of current portion		1.8			3.2
Plant closure provisions, net of current portion		44.9			40.9
Accrued income taxes, net of current portion		39.7			41.7
Unrecognized tax benefits, net of current portion		3.2			2.5
Deferred tax liabilities		46.7			45.0
Pension liabilities and post-employment benefits		16.6			16.5
Other non-current liabilities		5.3			2.0
Total liabilities		656.8			615.9
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		322.9			320.4
Treasury stock (5,130,179 and 5,204,181 shares at cost, respectively)		(92.9	)		(93.3	)
Retained earnings		658.9			605.0
Accumulated other comprehensive loss		(49.3	)		(38.5	)
Total Innospec stockholders’ equity		839.9			793.9
Non-controlling interest		0.4			0.4
Total equity		840.3			794.3
Total liabilities and equity	$	1,497.1		$	1,410.2

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)

	Nine Months Ended September 30
(in millions)	2018			2017
Cash Flows from Operating Activities
Net income	$	64.6		$	66.6
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		37.9			37.2
Deferred taxes		2.4			3.7
Loss on disposal of subsidiary		0.0			1.0
Foreign exchange loss on liquidation of subsidiary		0.0			1.8
Cash contributions to defined benefit pension plans		(0.8	)		(0.8	)
Non-cash movements on defined benefit pension plans		(3.2	)		(2.7	)
Stock option compensation		3.0			3.4
Changes in assets and liabilities, net of effects of acquired and divested companies:
Trade and other accounts receivable		(47.0	)		(83.0	)
Inventories		(55.5	)		(31.5	)
Prepaid expenses		3.6			2.2
Accounts payable and accrued liabilities		32.2			42.4
Accrued income taxes		(6.4	)		(2.7	)
Plant closure provisions		3.0			2.9
Unrecognized tax benefits		0.7			(0.5	)
Other assets and liabilities		0.6			(4.8	)
Net cash provided by operating activities		35.1			35.2
Cash Flows from Investing Activities
Capital expenditures		(20.0	)		(16.4	)
Business combinations, net of cash acquired		(5.4	)		2.6
Acquisition of intangible asset		0.0			(4.2	)
Internally developed software		(0.8	)		(4.1	)
Net cash used in investing activities		(26.2	)		(22.1	)
Cash Flows from Financing Activities
Receipt of short-term borrowing		0.5			0.0
Proceeds from revolving credit facility		10.0			10.0
Repayments of revolving credit facility		(5.0	)		(50.0	)
Repayments of finance leases		(2.1	)		(1.7	)
Dividend paid		(10.7	)		(9.2	)
Issue of treasury stock		1.1			1.0
Repurchase of common stock		(1.2	)		(1.0	)
Net cash used in financing activities		(7.4	)		(50.9	)
Effect of foreign currency exchange rate changes on cash		(0.3	)		1.4
Net change in cash and cash equivalents		1.2			(36.4	)
Cash and cash equivalents at beginning of period		90.2			101.9
Cash and cash equivalents at end of period	$	91.4		$	65.5

Amortization of deferred finance costs of $0.5 million (2017 – $0.5 million) are included in depreciation and amortization in the condensed consolidated statement of cash flow but in interest expense in the condensed consolidated statement of income.

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

6

INNOSPEC INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT 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, 2017	$	0.3	$	320.4		$	(93.3	)	$	605.0		$	(38.5	)	$	0.4	$	794.3
Net income										64.6								64.6
Dividend paid										(10.7	)							(10.7	)
Changes in cumulative translation adjustment, net of tax													(12.4	)				(12.4	)
Changes in unrealized gains on derivative instruments, net of tax													1.0					1.0
Treasury stock reissued				(0.5	)		1.6											1.1
Treasury stock repurchased							(1.2	)										(1.2	)
Stock option compensation				3.0														3.0
Amortization of prior service credit, net of tax													(0.7	)				(0.7	)
Amortization of actuarial net losses, net of tax													1.3					1.3
Balance at September 30, 2018	$	0.3	$	322.9		$	(92.9	)	$	658.9		$	(49.3	)	$	0.4	$	840.3

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

7

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, 2017 filed on February 15, 2018.

The results for the interim period covered by this report are not necessarily indicative of the results to be expected for the full year.

We have reclassified certain prior period amounts to conform to the current period presentation. See Note 16 of the Notes to the Condensed Consolidated Financial Statements for additional information.

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.

8

NOTE 2 – NET SALES

On January 1, 2018 we adopted Accounting Standard Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606) using the modified retrospective method. The impact of adopting ASC 606 did not result in a change to income, and therefore we are not reflecting a cumulative effect to the opening balance of retained earnings due to the adoption of ASC 606. The comparative period has not been adjusted and continues to be reported under the accounting standards in effect for this period.

Our revenues are primarily derived from the manufacture and sale of specialty chemicals. We recognize revenue when control of the product is transferred to our customer and for an amount that reflects the consideration we expect to collect from the customer. Control is generally transferred to the customer when title transfers (which may include physical possession by the customer), we have a right to payment from the customer, the customer has accepted the product, and the customer has assumed the risks and rewards of ownership. We have supplier managed inventory arrangements with some of our customers to facilitate on-demand product availability. In some cases, the inventory resides at a customer site, although title has not transferred, we are not entitled to payment, and we have not invoiced for the product. We have evaluated the contract terms under these arrangements and have determined that control transfers when the customer uses the product, at which time revenue is recognized. Our contracts generally include one performance obligation, which is providing speciality chemicals. The performance obligation is satisfied at a point in time when products are shipped, delivered, or consumed by the customer, depending on the underlying contracts.

While some of our customers have payment terms beyond 30 days, we do not provide extended payment terms of a year or more, nor do our contracts include a financing component. Some of our contracts include variable consideration in the form of rebates. We record rebates at the point of sale as a reduction in sales when we can reasonably estimate the amount of the rebate. The estimates are based on our best judgment at the time of sale, which includes anticipated as well as historical performance.

Taxes assessed by a governmental authority which are concurrent with sales to our customers, including sales, use, value-added, and revenue-related excise taxes, are collected by us from the customer and are not included in net sales, but are reflected in accrued expenses until remitted to the appropriate governmental authority. When we are responsible for shipping and handling costs after title has transferred, we account for those as fulfilment costs and include them in cost of goods sold.

9

NOTE 3 – SEGMENT REPORTING

The Company reports its financial performance based on the four reportable segments Fuel Specialties, Performance Chemicals, Oilfield Services and Octane Additives.

The Fuel Specialties, Performance Chemicals and Oilfield Services segments operate in markets where we actively seek growth opportunities although their ultimate customers are different. The Octane Additives segment is expected to decline in the near future as our one remaining refinery customer transitions to unleaded fuel.

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 September 30						Nine Months Ended September 30
(in millions)	2018			2017			2018			2017
Net Sales:
Refinery and Performance	$	97.8		$	97.4		$	306.9		$	286.5
Other		37.1			32.7			105.6			91.3
Fuel Specialties		134.9			130.1			412.5			377.8
Personal Care		60.6			52.2			183.6			148.4
Home Care		28.2			32.7			84.5			89.0
Other		26.0			25.4			89.6			72.3
Performance Chemicals		114.8			110.3			357.7			309.7
Oilfield Services		104.2			81.9			292.1			224.5
Octane Additives		9.2			10.1			19.6			41.0
	$	363.1		$	332.4		$	1,081.9		$	953.0
	Three Months Ended September 30						Nine Months Ended September 30
(in millions)	2018			2017			2018			2017
Net sales:
Fuel Specialties	$	134.9		$	130.1		$	412.5		$	377.8
Performance Chemicals		114.8			110.3			357.7			309.7
Oilfield Services		104.2			81.9			292.1			224.5
Octane Additives		9.2			10.1			19.6			41.0
	$	363.1		$	332.4		$	1,081.9		$	953.0
Gross profit:
Fuel Specialties	$	48.8		$	44.6		$	141.8		$	135.9
Performance Chemicals		25.3			20.7			74.5			54.8
Oilfield Services		33.5			28.5			93.5			82.9
Octane Additives		3.4			5.0			8.5			21.2
	$	111.0		$	98.8		$	318.3		$	294.8
Operating income/(loss):
Fuel Specialties	$	28.8		$	25.1		$	80.7		$	76.0
Performance Chemicals		12.4			9.7			34.2			22.2
Oilfield Services		7.0			1.8			14.1			8.5
Octane Additives		2.7			4.4			6.5			19.2
Corporate costs		(12.7	)		(12.0	)		(40.1	)		(35.3	)
Restructuring charge		(4.8	)		0.0			(4.8	)		0.0
Loss on disposal of subsidiary		0.0			0.0			0.0			(1.0	)
Foreign exchange loss on liquidation of subsidiary		0.0			0.0			0.0			(1.8	)
Total operating income	$	33.4		$	29.0		$	90.6		$	87.8

10

The following table presents a summary of the depreciation and amortization charges incurred by the Company’s reportable segments:

	Three Months Ended September 30				Nine Months Ended September 30
(in millions)	2018		2017		2018		2017
Depreciation:
Fuel Specialties	$	1.0	$	1.0	$	2.9	$	3.0
Performance Chemicals		2.6		2.5		7.8		7.0
Oilfield Services		1.5		1.6		4.6		4.8
Octane Additives		0.3		0.2		0.9		0.6
Corporate		0.3		0.3		0.8		0.7
	$	5.7	$	5.6	$	17.0	$	16.1
Amortization:
Fuel Specialties	$	0.0	$	0.2	$	0.0	$	0.6
Performance Chemicals		2.3		1.9		6.8		5.6
Oilfield Services		2.7		2.9		8.1		8.9
Corporate		1.8		1.9		5.5		5.5
	$	6.8	$	6.9	$	20.4	$	20.6

11

NOTE 4 – 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. Per share amounts are computed as follows:

	Three Months Ended September 30				Nine Months Ended September 30
	2018		2017		2018		2017
Numerator (in millions):
Net income available to common stockholders	$	20.6	$	23.3	$	64.6	$	66.6
Denominator (in thousands):
Weighted average common shares outstanding		24,419		24,137		24,399		24,119
Dilutive effect of stock options and awards		178		428		181		450
Denominator for diluted earnings per share		24,597		24,565		24,580		24,569
Net income per share, basic:	$	0.84	$	0.97	$	2.65	$	2.76
Net income per share, diluted:	$	0.84	$	0.95	$	2.63	$	2.71

In the three and nine months ended September 30, 2018, the average number of anti-dilutive options excluded from the calculation of diluted earnings per share were 0 and 0, respectively (three and nine months ended September 30, 2017 – 18,843 and 18,843, respectively).

NOTE 5 – GOODWILL

The following table summarizes goodwill at the balance sheet dates:

(in millions)	Total
At December 31, 2017
Gross cost(1)	$	598.3
Accumulated impairment losses		(236.5	)
Net book amount	$	361.8
Acquisition		7.5
Exchange effect		(3.0	)
At September 30, 2018
Gross cost(1)	$	602.8
Accumulated impairment losses		(236.5	)
Net book amount	$	366.3

⁽¹⁾  Gross cost for 2018 and 2017 is net of $298.5 million of historical accumulated amortization.

12

Acquisition of BioSuite, LLC

On May 31, 2018, the Company acquired BioSuite, LLC (“BioSuite”), a specialized formulator of biocide and biostat solutions for the oil and gas industry. We purchased BioSuite for total consideration of $8.6 million, with an initial payment at closing of $5.8 million funded from existing cash and debt facilities followed by a reduction for working capital adjustments of $0.4 million in the third quarter. The remaining payment is performance related and contingently payable over the next eighteen months based on a multiple of BioSuite’s earnings before interest, taxes, depreciation and amortization. Based on the current forecast we anticipate a further payment of $3.2 million payable on November 30, 2019.

The following table summarizes the calculations of the total purchase price and the estimated allocation of the purchase price to the assets acquired and liabilities assumed for the business:

(in millions)	BioSuite
Goodwill	$	7.5
Receivables		0.4
Inventory		0.5
Payables		(1.9	)
Extinguishment of existing liabilities		2.1
Purchase price, net of cash acquired	$	8.6

The measurement period for the valuation of assets acquired and liabilities assumed ends as soon as information on the facts and circumstances that existed as of the acquisition date becomes available, but does not exceed twelve months. Adjustment to the purchase price allocation may require a recasting of the amounts allocated to goodwill retroactive to the period in which the acquisition occurred.

NOTE 6 – OTHER INTANGIBLE ASSETS

The following table summarizes the other intangible assets movement year on year:

	Nine Months Ended September 30
(in millions)	2018			2017
Gross cost at January 1	$	295.8		$	248.6
Acquisitions		0.0			37.7
Internally developed software		0.8			4.1
Exchange effect		(1.6	)		4.1
Gross cost at September 30		295.0			294.5
Accumulated amortization at January 1		(132.5	)		(104.2	)
Amortization expense		(20.4	)		(20.6	)
Exchange effect		0.2			(0.1	)
Accumulated amortization at September 30		(152.7	)		(124.9	)
Net book amount at September 30	$	142.3		$	169.6

Internally developed software has been capitalized in relation to the information system platform for our Performance Chemicals segment’s European businesses.

Amortization expense

	Nine Months Ended September 30
(in millions)	2018			2017
Product rights	$	(2.8	)	$	(2.8	)
Brand names		(0.9	)		(0.9	)
Technology		(2.5	)		(2.5	)
Customer relationships		(8.0	)		(7.6	)
Non-compete agreements		0.0			(0.6	)
Marketing related		0.0			(0.7	)
Internally developed software		(6.2	)		(5.5	)
Total	$	(20.4	)	$	(20.6	)

13

NOTE 7 – PENSION AND POST EMPLOYMENT BENEFITS

The Company maintains a defined benefit pension plan (the “Plan”) covering a number of its current and former employees in the United Kingdom, although it does also have other much smaller pension arrangements in the U.S. and overseas. 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 nine months ended September 30, 2018 was $0.3 million and $0.9 million, respectively (three and nine months ended September 30, 2017 – $0.2 million and $0.7 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 September 30						Nine Months Ended September 30
(in millions)	2018			2017			2018			2017
Plan net pension credit/(charge):
Interest cost on projected benefit obligation	$	(3.7	)	$	(3.9	)	$	(11.4	)	$	(11.3	)
Expected return on plan assets		5.5			6.2			16.9			18.2
Amortization of prior service credit		0.2			0.3			0.8			0.8
Amortization of actuarial net losses		(0.5	)		(1.2	)		(1.5	)		(3.7	)
	$	1.5		$	1.4		$	4.8		$	4.0

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 a number of its 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 nine months ended September 30, 2018 was $0.0 million and $0.1 million, respectively (three and nine months ended September 30, 2017 – $0.0 million and $0.1 million, respectively). The following table shows the income statement effect recognized within other income and expense:

	Three Months Ended September 30						Nine Months Ended September 30
(in millions)	2018			2017			2018			2017
Plan net pension charge:
Interest cost on projected benefit obligation	$	(0.1	)	$	(0.1	)	$	(0.2	)	$	(0.2	)
Amortization of actuarial net losses		(0.1	)		(0.1	)		(0.3	)		(0.3	)
	$	(0.2	)	$	(0.2	)	$	(0.5	)	$	(0.5	)

As at September 30, 2018, our Performance Chemicals segment has obligations for post-employment benefits in its European businesses with a liability of $4.6 million (December 31, 2017 – $4.7 million).

14

NOTE 8 – INCOME TAXES

A roll-forward of unrecognized tax benefits is as follows:

(in millions)	September 30, 2018			December 31, 2017
.
Opening balance at January 1	$	2.2		$	2.2
Additions for tax positions of prior periods		0.9			0.5
Reductions due to lapsed statute of limitations		(0.5	)		(0.5	)
Closing balance	$	2.6		$	2.2

We recognize accrued interest and penalties associated with unrecognized tax benefits as part of income taxes in our condensed consolidated statements of income. Related to the unrecognized tax benefits noted above, we have also accrued a net increase in interest and penalties of $0.3 million during the first nine months of 2018, and a net increase in interest and penalties of $0.2 million in 2017. Total accrued interest and penalties at September 30, 2018 on all remaining unrecognized tax benefits amounted to $0.6 million (December 31, 2017 – $0.3 million).

All of the $3.2 million of unrecognized tax benefits, interest and penalties, would impact our effective tax rate if recognized.

The Company or one of its subsidiaries files income tax returns with the U.S. federal government, and various state and foreign jurisdictions. As previously disclosed, tax audits have been opened by the Italian tax authorities in respect of Innospec Performance Chemicals Italia Srl, acquired by the Company as part of the Huntsman business acquisition in 2016 and relating to the period 2011 to 2013 inclusive. In the fourth quarter of 2017, the Company recorded an unrecognized tax benefit of $0.5 million, together with associated interest of $0.2 million in relation to the 2011 tax audit. In the first quarter of 2018, the Company recorded an unrecognized tax benefit of $0.4 million, together with associated interest of $0.1 million in relation to the 2012 tax audit. In the third quarter of 2018, the Company recorded an unrecognized tax benefit of $0.5 million, together with associated interest of $0.2 million in relation to the 2013 tax audit. 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, the Company has recorded an indemnification non-current asset of the same amount as the unrecognized tax benefit and associated interest to reflect the fact that the final liability would be reimbursed by the previous owner.

The Company and its U.S. subsidiaries remain open to examination by the IRS for years 2015 onwards under the statute of limitations. The Company’s subsidiaries in foreign tax jurisdictions are open to examination including France (2014 onwards), Germany (2015 onwards), Switzerland (2015 onwards) and the United Kingdom (2016 onwards).

15

NOTE 9 – LONG-TERM DEBT

Long-term debt consists of the following:

(in millions)	September 30, 2018			December 31, 2017
Revolving credit facility	$	126.0		$	121.0
Term loan		99.0			99.0
Deferred finance costs		(1.1	)		(1.6	)
	$	223.9		$	218.4
Due within one year		(15.8	)		(15.8	)
Due after one year	$	208.1		$	202.6

NOTE 10 – PLANT CLOSURE PROVISIONS

The liability for estimated closure costs of Innospec’s manufacturing facilities includes costs for decontamination and environmental remediation activities (“remediation”). The principal site giving rise to remediation liabilities is the manufacturing site at Ellesmere Port in the United Kingdom. There are also remediation liabilities on a smaller scale in respect of our other manufacturing sites in the U.S. and the rest of Europe.

Movements in the provisions are summarized as follows:

	Nine Months Ended September 30
(in millions)	2018			2017
Total at January 1	$	46.1		$	39.5
Charge for the period		5.1			4.4
Utilized in the period		(2.1	)		(1.7	)
Exchange effect		(0.2	)		0.5
Total at September 30		48.9			42.7
Due within one year		(4.0	)		(5.9	)
Due after one year	$	44.9		$	36.8

Amounts due within one year refer to provisions where expenditure is expected to arise within one year of the balance sheet date.

16

NOTE 11 – 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:

	September 30, 2018				December 31, 2017
(in millions)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets
Non-derivatives:
Cash and cash equivalents	$	91.4	$	91.4	$	90.2	$	90.2
Derivatives (Level 1 measurement):
Other current and non-current assets:
Foreign currency forward exchange contracts		0.0		0.0		1.1		1.1
Interest rate swaps		2.7		2.7		1.5		1.5
Liabilities
Non-derivatives:
Bank overdraft	$	0.5	$	0.5	$	0.0	$	0.0
Long-term debt (including current portion)		223.9		223.9		218.4		218.4
Finance leases (including current portion)		3.8		3.8		5.9		5.9
Derivatives (Level 1 measurement):
Other current and non-current liabilities:
Foreign currency forward exchange contracts		0.5		0.5		0.0		0.0
Non-financial liabilities (Level 3 measurement):
Stock equivalent units		17.6		17.6		13.6		13.6

The following methods and assumptions were used to estimate the fair values of financial instruments:

Cash and cash equivalents and bank overdraft: 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 and interest rate swaps 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. Interest rate swaps relate to contracts taken out to hedge interest rate risk on a portion of our credit facilities borrowing.

Long-term debt and finance leases: Long-term debt principally comprises the term loan and revolving credit facility, which are shown net of deferred finance costs that have been capitalized. The fair value of long-term debt approximates to the carrying value, as the discounting to its present value is offset by the interest rate swaps. Finance leases relate to certain fixed assets in our Fuel Specialties and Oilfield Services segments. The carrying amount of long-term debt and 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.

17

NOTE 12 – 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 September 30, 2018 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 nine months of 2018 was a loss of $1.6 million (first nine months of 2017: loss of $0.6 million).

The Company enters into interest rate swaps to minimize interest rate exposure related to a part of our borrowing requirements. These interest rate swaps have been designated as hedging instruments, and their impact on accumulated other comprehensive loss for the first nine months of 2018 was a gain of $1.2 million (first nine months of 2017: gain of $0.2 million).

NOTE 13 – COMMITMENTS AND 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 September 30, 2018, such guarantees which are not recognized as liabilities in the condensed consolidated financial statements amounted to $5.3 million.

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.

NOTE 14 – 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.

18

Stock option plans

The following table summarizes the transactions of the Company’s stock option plans for the nine months ended September 30, 2018:

	Number of Options			Weighted Average Exercise Price		Weighted Average Grant-Date Fair Value
Outstanding at December 31, 2017		357,666		$	13.74	$	35.69
Granted - at discount		280,466		$	46.42	$	34.54
- at market value		18,850		$	68.20	$	16.23
Exercised		(91,362	)	$	12.47	$	27.04
Forfeited		(14,443	)	$	21.05	$	25.34
Outstanding at September 30, 2018		551,177		$	32.25	$	36.14

At September 30, 2018, there were 40,614 stock options that were exercisable, of which 600 had performance conditions attached.

The stock option compensation cost for the first nine months of 2018 was $3.0 million (first nine months of 2017 – $3.4 million). The total intrinsic value of options exercised in the first nine months of 2018 was $2.6 million (first nine months of 2017 – $2.0 million).

The total compensation cost related to non-vested stock options not yet recognized at September 30, 2018 was $12.2 million and this cost is expected to be recognized over the weighted-average period of 2.38 years.

Stock equivalent units

The following table summarizes the transactions of the Company’s SEUs for the nine months ended September 30, 2018:

	Number of SEUs			Weighted Average Exercise Price		Weighted Average Grant-Date Fair Value
Outstanding at December 31, 2017		400,342		$	3.10	$	46.65
Granted - at discount		115,229		$	2.36	$	57.16
- at market value		5,658		$	68.20	$	16.23
Exercised		(72,689	)	$	5.81	$	29.27
Forfeited		(16,554	)	$	1.40	$	37.14
Outstanding at September 30, 2018		431,986		$	3.36	$	52.35

At September 30, 2018 there were 30,360 SEUs that are exercisable, of which 27,655 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.

19

The SEU compensation cost for the first nine months of 2018 was $7.9 million (first nine months of 2017 – $3.6 million). The total intrinsic value of SEUs exercised in the first nine months of 2018 was $2.4 million (first nine months of 2017 – $1.1 million).

The weighted-average remaining vesting period of non-vested SEUs is 1.86 years.

NOTE 15 – RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE LOSS

Reclassifications out of accumulated other comprehensive loss for the first nine months of 2018 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	$	(0.8	)		See (1) below
Amortization of actuarial net losses		1.5			See (1) below
		0.7			Total before tax
		(0.1	)		Income tax expense
Total reclassifications	$	0.6			Net of tax

⁽¹⁾ These items are included in other income and expense. See Note 7 of the Notes to the Condensed Consolidated Financial Statements for additional information.

Changes in accumulated other comprehensive loss for the first nine months of 2018, net of tax, were:

(in millions)	Derivative instruments		Defined Benefit Pension Plan Items			Cumulative Translation Adjustments			Total
Balance at December 31, 2017	$	1.2	$	(3.2	)	$	(36.5	)	$	(38.5	)
Other comprehensive income before reclassifications		1.0		0.0			(12.4	)		(11.4	)
Amounts reclassified from AOCL		0.0		0.6			0.0			0.6
Total other comprehensive income		1.0		0.6			(12.4	)		(10.8	)
Balance at September 30, 2018	$	2.2	$	(2.6	)	$	(48.9	)	$	(49.3	)

NOTE 16 – RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

From January 1, 2018 we have applied Accounting Standards Update (ASU) 2017-07, Compensation-Retirement Benefits, ASC Topic 715: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. ASU 2017-07 requires companies to present the service cost component of net benefit cost in the same line items in which they report compensation cost. Companies are now required to present all other components of net benefit cost

20

outside operating income, if this subtotal is presented. The new standard is effective for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. Adopting the new standard on January 1, 2018 has resulted in a restatement of the prior period comparatives with a reduction to operating income for the three and nine months ending September 30, 2017 of $1.2 million and $3.5 million, respectively and a corresponding increase in other non-operating income.

In February 2016, the FASB issued Accounting Standards Update (ASU) 2016-02, Revision to Lease Accounting, ASC Topic 842 which amends ASC Topic 840, Leases. The ASU requires lessees to recognize a right-of-use asset and a lease liability for virtually all of their leases (other than leases that meet the definition of a short-term lease). The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. In July 2018, the FASB issued ASU 2018-11: Leases – Targeted Improvements, to provide entities with relief from the costs of implementing certain aspects of the new leasing standard, ASU 2016-02. We are currently evaluating the new standard, including which transitional method to adopt and to determine how it will affect our financial reporting. Due to the number of leases the Company has, we believe the standard will increase our assets and liabilities by a material amount on its consolidated balance sheet. The Company does not believe adoption of the standard will have a significant impact on its consolidated statements of income, equity and cash flows.

NOTE 17 – RELATED PARTY TRANSACTIONS

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 nine months of 2018 the Company incurred fees from SGR of $0.2 million (first nine months of 2017 – $0.3 million). As at September 30, 2018, the amount due to SGR from the Company was $0.0 million (December 31, 2017 – $0.0 million).

21

Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations for the Three and Nine Months Ended September 30, 2018

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 business combinations, environmental liabilities, pensions, income taxes, goodwill and property, plant and equipment and other intangible assets (net of depreciation and amortization). These policies have been discussed in the Company’s 2017 Annual Report on Form 10-K.

RESULTS OF OPERATIONS

The Company reports its financial performance based on the four reportable segments Fuel Specialties, Performance Chemicals, Oilfield Services and Octane Additives.

The following table provides operating income by reporting segment:

	Three Months Ended September 30						Nine Months Ended September 30
(in millions)	2018			2017			2018			2017
Net sales:
Fuel Specialties	$	134.9		$	130.1		$	412.5		$	377.8
Performance Chemicals		114.8			110.3			357.7			309.7
Oilfield Services		104.2			81.9			292.1			224.5
Octane Additives		9.2			10.1			19.6			41.0
	$	363.1		$	332.4		$	1,081.9		$	953.0
Gross profit:
Fuel Specialties	$	48.8		$	44.6		$	141.8		$	135.9
Performance Chemicals		25.3			20.7			74.5			54.8
Oilfield Services		33.5			28.5			93.5			82.9
Octane Additives		3.4			5.0			8.5			21.2
	$	111.0		$	98.8		$	318.3		$	294.8
Operating income/(loss):
Fuel Specialties	$	28.8		$	25.1		$	80.7		$	76.0
Performance Chemicals		12.4			9.7			34.2			22.2
Oilfield Services		7.0			1.8			14.1			8.5
Octane Additives		2.7			4.4			6.5			19.2
Corporate costs		(12.7	)		(12.0	)		(40.1	)		(35.3	)
Restructuring charge		(4.8	)		0.0			(4.8	)		0.0
Loss on disposal of subsidiary		0.0			0.0			0.0			(1.0	)
Foreign exchange loss on liquidation of subsidiary		0.0			0.0			0.0			(1.8	)
Total operating income	$	33.4		$	29.0		$	90.6		$	87.8

22

Three Months Ended September 30, 2018

The following table shows the change in components of operating income by reporting segment for the three months ended September 30, 2018 and the three months ended September 30, 2017:

	Three Months Ended September 30
(in millions, except ratios)	2018			2017			Change
Net sales:
Fuel Specialties	$	134.9		$	130.1		$	4.8		+4	%
Performance Chemicals		114.8			110.3			4.5		+4	%
Oilfield Services		104.2			81.9			22.3		+27	%
Octane Additives		9.2			10.1			(0.9	)	-9	%
	$	363.1		$	332.4		$	30.7		+9	%
Gross profit:
Fuel Specialties	$	48.8		$	44.6		$	4.2		+9	%
Performance Chemicals		25.3			20.7			4.6		+22	%
Oilfield Services		33.5			28.5			5.0		+18	%
Octane Additives		3.4			5.0			(1.6	)	-32	%
	$	111.0		$	98.8		$	12.2		+12	%
Gross margin (%):
Fuel Specialties		36.2			34.3			+1.9
Performance Chemicals		22.0			18.8			+3.2
Oilfield Services		32.1			34.8			-2.7
Octane Additives		37.0			49.5			-12.5
Aggregate		30.6			29.7			+0.9
Operating expenses:
Fuel Specialties	$	(20.0	)	$	(19.5	)	$	(0.5	)	+3	%
Performance Chemicals		(12.9	)		(11.0	)		(1.9	)	+17	%
Oilfield Services		(26.5	)		(26.7	)		0.2		-1	%
Octane Additives		(0.7	)		(0.6	)		(0.1	)	+17	%
Corporate costs		(12.7	)		(12.0	)		(0.7	)	+6	%
Restructuring charge		(4.8	)		0.0			(4.8	)	n/a
	$	(77.6	)	$	(69.8	)	$	(7.8	)	+11	%

23

Fuel Specialties

Net sales: the table below details the components which comprise the year on year change in net sales spread across the markets in which we operate:

	Three Months Ended September 30, 2018
Change (%)	Americas		EMEA		ASPAC		AvTel		Total
Volume		+20		-4		-1		-21		+3
Price and product mix		-4		+2		0		+20		+1
Exchange rates		0		0		0		0		0
		+16		-2		-1		-1		+4

Volumes in the Americas were higher driven by increased demand for our technology and service. Price and product mix in the Americas was adversely impacted by increased sales of lower margin products. Volumes in EMEA and ASPAC were lower due to reduced customer activity. Price and product mix in EMEA benefited from increased sales of higher margin products. AvTel volumes were lower than the prior year due to variations in the timing and level of demand from customers, which was equally offset by a positive price mix.

Gross margin: the year on year increase of 1.9 percentage points was driven by increased sales of higher margin products together with favorable manufacturing variances.

Operating expenses: the year on year increase of $0.5 million was primarily due to additional research and development expenses and increased compensation accruals due to the relative rise in the Innospec share price compared to the prior year. 

Performance Chemicals

Net sales: the table below details the components which comprise the year on year change in net sales spread across the markets in which we operate:

	Three Months Ended September 30, 2018
Change (%)	Americas		EMEA		ASPAC		Total
Volume		+7		+1		+17		+3
Price and product mix		+8		-2		0		+1
Exchange rates		0		0		0		0
		+15		-1		+17		+4

Increased demand for Personal Care led to higher volumes in the Americas, together with a favorable price and product mix from increased sales of higher margin products. EMEA benefited from higher volumes primarily in Home Care, being offset by adverse price and product mix due to higher sales of lower margin products. ASPAC volumes were higher due to increased demand for Personal Care.

Gross margin: the year on year increase of 3.2 percentage points was driven by the benefit of several improvement projects and favorable manufacturing variances due to increased volumes.

Operating expenses: the year on year increase of $1.9 million was due to additional personnel-related costs to support the business growth, including increased compensation accruals due to the relative rise in the Innospec share price compared to the prior year; together with additional amortization for our new information system platform.

24

Oilfield Services

Net sales: the year on year increase of $22.3 million was due to increased customer activity, especially in stimulation and completion. Overall volumes increased by 24 percent year on year, together with a favorable price and product mix of 3 percent.

Gross margin: the year on year decrease of 2.7 percentage points, was due to the mix of customer activity together with adverse raw material pricing and higher transportation costs.

Operating expenses: the year on year decrease of $0.2 million was due to continued effective management of the cost base.

Octane Additives

Net sales: decreased by $0.9 million compared to the prior year, due to the timing and volume of orders with our one remaining refinery customer.

Gross margin: the year on year decrease of 12.5 percentage points was due to higher manufacturing costs as a result of lower production volumes to align with reduced customer demand.

Operating expenses: increased by $0.1 million due to costs related to the disposal of obsolete product.

Other Income Statement Captions

Corporate costs: the year on year increase of $0.7 million primarily related to higher share-based compensation including a new long-term incentive plan.

Restructuring charge: a charge of $4.8 million primarily relates to the planned closure of our operation in Belgium.

Other net (loss)/income: for the third quarter of 2018 and 2017, includes the following:

(in millions)	2018			2017			Change
United Kingdom pension credit	$	1.5		$	1.4		$	0.1
German pension charge		(0.2	)		(0.2	)		0.0
Foreign exchange (losses)/gains on translation		(3.3	)		1.3			(4.6	)
Foreign currency forward contracts gains		0.8			0.5			0.3
	$	(1.2	)	$	3.0		$	(4.2	)

Interest expense, net: was $1.8 million in 2018 compared to $2.1 million in 2017 driven by lower average net debt and a reduction in our borrowing margin under the terms of our financing agreements.

Income taxes: The effective tax rate was 32.2% and 22.1% in the third quarter of 2018 and 2017, respectively. The adjusted effective tax rate, once adjusted for the items set out in the following table was 29.7% in 2018 compared with 23.8% in 2017. The 5.9% increase in the adjusted effective tax reflects the negative impact in the third quarter of 2018 of a smaller proportion of profits being generated in low tax jurisdictions coupled with an increase in the profits generated in high 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 to evaluate the performance of the Company’s operations and for planning and forecasting in subsequent periods.

25

The following table shows a reconciliation of the GAAP effective tax rate to the adjusted effective tax rate:

	Three Months Ended September 30
(in millions)	2018			2017
Income before income taxes	$	30.4		$	29.9
Adjustment for stock compensation		1.1			1.2
Indemnification asset regarding tax audit		(0.7	)		0.0
Site closure provision		4.5			0.0
	$	35.3		$	31.1
Income taxes	$	9.8		$	6.6
Tax on stock compensation		0.0			0.3
Adjustment of income tax provision		(0.1	)		0.5
Tax on site closure provision		0.8			0.0
	$	10.5		$	7.4
GAAP effective tax rate		32.2	%		22.1	%
Adjusted effective tax rate		29.7	%		23.8	%

Nine Months Ended September 30, 2018

The following table shows the change in components of operating income by reporting segment for the nine months ended September 30, 2018 and the nine months ended September 30, 2017:

	Nine Months Ended September 30
(in millions, except ratios)	2018			2017			Change
Net sales:
Fuel Specialties	$	412.5		$	377.8		$	34.7		+9	%
Performance Chemicals		357.7			309.7			48.0		+15	%
Oilfield Services		292.1			224.5			67.6		+30	%
Octane Additives		19.6			41.0			(21.4	)	-52	%
	$	1,081.9		$	953.0		$	128.9		+14	%
Gross profit:
Fuel Specialties	$	141.8		$	135.9		$	5.9		+4	%
Performance Chemicals		74.5			54.8			19.7		+36	%
Oilfield Services		93.5			82.9			10.6		+13	%
Octane Additives		8.5			21.2			(12.7	)	-60	%
	$	318.3		$	294.8		$	23.5		+8	%
Gross margin (%):
Fuel Specialties		34.4			36.0			-1.6
Performance Chemicals		20.8			17.7			+3.1
Oilfield Services		32.0			36.9			-4.9
Octane Additives		43.4			51.7			-8.3
Aggregate		29.4			30.9			-1.5
Operating expenses:
Fuel Specialties	$	(61.1	)	$	(59.9	)	$	(1.2	)	+2	%
Performance Chemicals		(40.3	)		(32.6	)		(7.7	)	+24	%
Oilfield Services		(79.4	)		(74.4	)		(5.0	)	+7	%
Octane Additives		(2.0	)		(2.0	)		0.0		0	%
Corporate costs		(40.1	)		(35.3	)		(4.8	)	+14	%
Restructuring charge		(4.8	)		0.0			(4.8	)	n/a
Loss on disposal of subsidiary		0.0			(1.0	)		1.0		-100	%
Foreign exchange loss on liquidation of subsidiary		0.0			(1.8	)		1.8		-100	%
	$	(227.7	)	$	(207.0	)	$	(20.7	)	+10	%

26

Fuel Specialties

Net sales: the table below details the components which comprise the year on year change in net sales spread across the markets in which we operate:

	Nine Months Ended September 30, 2018
Change (%)	Americas		EMEA		ASPAC		AvTel		Total
Volume		+18		-1		-3		-9		+4
Price and product mix		-2		-1		+4		+12		0
Exchange rates		0		+10		+1		0		+5
		+16		+8		+2		+3		+9

Volumes in the Americas were higher driven by increased demand for our technology and service. Volumes in EMEA and ASPAC were lower due to reduced customer activity. Price and product mix in the Americas and EMEA were adversely impacted by increased sales of lower margin products. Price and product mix in ASPAC benefited from increased sales of higher margin products. AvTel volumes were lower than the prior year due to variations in the timing and level of demand from customers, which was favorably offset by a positive price mix. EMEA and ASPAC benefited from favorable exchange rate movements year over year, driven by a strengthening of the British pound sterling and the European Union euro against the U.S. dollar.

Gross margin: the year on year decrease of 1.6 percentage points was adversely affected by the mix of product sales when compared to a strong prior year comparative.

Operating expenses: the year on year increase of $1.2 million was due to higher compensation accruals driven by the relative increase in the Innospec share price compared to the prior year, together with increased research and development expenses and increased provisions for doubtful debts; partly offset by lower accruals for agents’ commissions.

Performance Chemicals

Net sales: the table below details the components which comprise the year on year change in net sales spread across the markets in which we operate:

	Nine Months Ended September 30, 2018
Change (%)	Americas		EMEA		ASPAC		Total
Volume		+16		+6		-2		+8
Price and product mix		+3		+1		+5		+2
Exchange rates		0		+8		+4		+6
		+19		+15		+7		+16

27

Increased demand for Personal Care led to significantly higher volumes in the Americas, together with a favorable price and product mix from increased sales of higher margin products. EMEA benefited from higher volumes in both Personal Care and Home Care. ASPAC volumes were lower primarily in Home Care being partly offset by increases for Personal Care. EMEA and ASPAC benefited from favorable price and product mix due to increased sales of higher margin products. EMEA and ASPAC also benefited from favorable exchange rate movements year over year, driven by a strengthening of the British pound sterling and the European Union euro against the U.S. dollar.

Gross margin: the year on year increase of 3.1 percentage points was driven by the benefit of several improvement projects and favorable manufacturing variances due to higher volumes.

Operating expenses: the year on year increase of $7.7 million is due to additional personnel-related costs to support the business growth, including increased compensation accruals due to the relative rise in the Innospec share price compared to the prior year; together with additional amortization for our new information system platform and adverse exchange rate movements year over year.

Oilfield Services

Net sales: the year on year increase of $67.6 million was due to the continued strength of crude oil prices leading to increased customer activity, especially in stimulation and completion. Overall volumes increased by 24 percent year on year, together with a favorable price and product mix of 6 percent.

Gross margin: the year on year decrease of 4.9 percentage points, was due to the mix of customer activity, together with adverse raw material pricing and higher transportation and labor costs.

Operating expenses: the year on year increase of $5.0 million was due to $8.5 million higher selling and technical support expenses required to deliver the increase in customer demand, partly offset by a $3.5 million reduction in expenses due to lower general and administration costs and lower amortization of acquisition related intangible assets.

Octane Additives

Net sales: decreased by $21.4 million compared to the prior year, due to the expected reduction in the demand from our one remaining refinery customer.

Gross margin: the year on year decrease of 8.3 percentage points was due to higher manufacturing costs as a result of lower production volumes to align with reduced customer demand.

Operating expenses: were in line with the prior year.

Other Income Statement Captions

Corporate costs: the year on year increase of $4.8 million relates to higher compensation accruals due to the relative rise in the Innospec share price compared to the prior year including a new long-term incentive plan and higher costs for the additional corporate services required to support our enlarged group. There has also been the adverse effect of a stronger British pound sterling against the U.S. dollar for our United Kingdom cost base.

Restructuring charge: a charge of $4.8 million primarily relates to the planned closure of our operation in Belgium.

28

Loss on disposal of subsidiary: there was a loss in the prior year of $1.0 million for an indemnity claim in relation to residual testing in the Aroma Chemicals business which was sold in 2015.

Foreign exchange loss on liquidation of subsidiary: the $1.8 million loss in the prior year related to the reclassification of historic foreign exchange translations of net assets from accumulated other comprehensive losses, for our captive insurance company which was liquidated. There has been no corresponding charge in the current year.

Other net income: for the first nine months of 2018 and 2017, includes the following:

(in millions)	2018			2017			Change
United Kingdom pension credit	$	4.8		$	4.0		$	0.8
German pension charge		(0.5	)		(0.5	)		0.0
Foreign exchange (losses)/gains on translation		(3.9	)		3.5			(7.4	)
Foreign currency forward contracts gains/(losses)		3.9			(0.6	)		4.5
	$	4.3		$	6.4		$	(2.1	)

Interest expense, net: was $5.3 million in 2018 compared to $6.3 million in 2017 driven by lower average net debt and a reduction in our borrowing margin under the terms of our financing agreements.

Income taxes: The effective tax rate was 27.9% and 24.2% in the first nine months of 2018 and 2017, respectively. The adjusted effective tax rate, once adjusted for the items set out in the following table, was 26.6% in the first nine months of 2018 compared with 24.8% in the first nine months of 2017. The adjusted effective tax rate has been affected primarily by a larger proportion of overall taxes being incurred in high tax jurisdictions in the first nine months of 2018 when compared to the same period in the prior year. 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 rate to the adjusted effective tax rate:

	Nine Months Ended September 30
(in millions)	2018			2017
Income before income taxes	$	89.6		$	87.9
Indemnification asset regarding tax audit		(1.2	)		0.0
Adjustment to fair value acquisition accounting		0.0			1.7
Loss on disposal of subsidiary		0.0			1.0
Foreign exchange loss on liquidation of subsidiary		0.0			1.8
Adjustment for stock compensation		3.0			3.0
Site closure provision		4.5			0.0
	$	95.9		$	95.4
Income taxes	$	25.0		$	21.3
Tax on adjustment to fair value acquisition accounting		0.0			0.3
Tax on stock compensation		0.4			1.6
Adjustment of income tax provision		(0.7	)		0.5
Tax on site closure provision		0.8			0.0
	$	25.5		$	23.7
GAAP effective tax rate		27.9	%		24.2	%
Adjusted effective tax rate		26.6	%		24.8	%

29

On December 22, 2017, the U.S. Tax Cuts and Jobs Act (the “Tax Reform Act”) was enacted and significantly revised the U.S. corporate income tax regime. The new legislation contained several key tax provisions that affect the Company, including a one-time mandatory transition tax on accumulated foreign earnings and a reduction in the U.S. corporate income tax rate from 35% to 21%, effective January 1, 2018, amongst others.

On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”), which provides guidance on accounting for the tax effects of the Tax Reform Act. SAB 118 provides a measurement period that cannot extend beyond one year from the Tax Reform Act enactment date for companies to complete their accounting under ASC 740, Income Taxes. Until accounting is complete, companies may record provisional estimates. As a result of the Tax Reform Act, the Company recorded a provisional amount of $47.7 million in relation to the accounting of the transitional tax at December 31, 2017. In addition, the Company’s U.S. deferred tax assets and liabilities were re-measured using a tax rate reduced from 35% to 21% at the same date, which resulted in $7.1 million of deferred income tax benefit.

On account of the complexity of the new Global Intangible Low-Taxed Income (“GILTI”) tax rules, the Company continues to evaluate this provision of the Tax Reform Act and the application of ASC 740, Income Taxes. Under U.S. GAAP, the Company is allowed to make an accounting policy choice of either treating taxes due on future U.S. inclusions in taxable income as a current period expense when incurred (the “period cost” method) or factoring such amounts into the Company’s recognition and measurement of its deferred taxes (the “Deferred method”). The Company has not yet made an accounting policy decision in respect of GILTI.

The Company considers the accounting of the transitional tax, GILTI provisions and other items to be incomplete due to forthcoming guidance and the Company’s on-going analysis of final data and tax positions which may impact on these calculations.

The Company expects to complete its analysis within the measurement period in accordance with SAB 118.

30

LIQUIDITY AND FINANCIAL CONDITION

Working Capital

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)	September 30, 2018			December 31, 2017
Total current assets	$	659.3		$	561.5
Total current liabilities		(290.5	)		(261.5	)
Working capital		368.8			300.0
Less cash and cash equivalents		(91.4	)		(90.2	)
Less prepaid income taxes		(9.8	)		(2.8	)
Less other current assets		0.0			(1.1	)
Add back overdraft		0.5			0.0
Add back current portion of accrued income taxes		17.9			15.8
Add back current portion of long-term debt		15.8			15.8
Add back current portion of finance leases		2.0			2.7
Add back current portion of plant closure provisions		4.0			5.2
Adjusted working capital	$	307.8		$	245.4

In the first nine months of 2018 our working capital increased by $68.8 million, while our adjusted working capital has increased by $62.4 million. The difference is primarily due to the exclusion of income taxes from the adjusted working capital measure.

We had a $43.3 million increase in trade and other accounts receivable. Increased sales in our Oilfield Services segments have increased receivables balances together with higher indirect taxes receivable in our European businesses. Days’ sales outstanding in our Fuel Specialties segment increased from 51 days to 58 days; decreased in our Performance Chemicals segment from 68 days to 66 days; and increased from 58 days to 71 days in our Oilfield Services segment.

We had a $52.1 million increase in inventories, which is related to the expected increases in sales for the final quarter of the year across all our segments. Days’ sales in inventory in our Fuel Specialties segment increased from 100 days to 123 days; increased in our Performance Chemicals segment from 51 days to 60 days; and increased from 63 days to 75 days in our Oilfield Services segment.

Prepaid expenses decreased $4.7 million, from $13.1 million to $8.4 million due to reduced payments in advance, the normal expensing of prepaid costs and the timing of invoices received.

We had a $28.3 million increase in accounts payable and accrued liabilities driven by increases in our Oilfield Services segment in line with customer demand. Creditor days in our Fuel Specialties segment increased from 32 days to 33 days; decreased in our Performance Chemicals segment from 50 days to 48 days; and increased from 51 days to 56 days in our Oilfield Services segment.

31

Operating Cash Flows

We generated a cash inflow from operating activities of $35.1 million in 2018 compared to an inflow of $35.2 million in 2017. Year over year cash from operating activities has normalized following the acquisition in our Performance Chemicals segment at the end of 2016.

Cash

At September 30, 2018 and December 31, 2017, we had cash and cash equivalents of $91.4 million and $90.2 million, respectively, of which $73.4 million and $74.1 million, respectively, were held by non-U.S. subsidiaries principally in the United Kingdom. The Company is in a position to control whether or not to repatriate foreign earnings and we currently do not expect to make a repatriation in the foreseeable future.

As disclosed in Innospec’s 2017 Annual Report on Form 10-K, the Tax Reform Act requires, amongst other provisions, a one-time mandatory transition tax on accumulated foreign earnings, for which we have recorded a provisional estimated tax liability at December 31, 2017 of $47.7 million. We intend to pay the tax liability over an eight-year payment schedule as prescribed by the Tax Reform Act. During 2018 we have made our first payment of $3.8 million.

Debt

At September 30, 2018, we had $126.0 million of debt outstanding under the revolving credit facility, $99.0 million of debt outstanding on our term loan and $3.8 million of obligations under finance leases relating to certain fixed assets within our Fuel Specialties and Oilfield Services segments.

At December 31, 2017, we had $121.0 million of debt outstanding under the revolving credit facility, $99.0 million of debt outstanding on our term loan and $5.9 million of obligations under finance leases relating to certain fixed assets within our Fuel Specialties and Oilfield Services segment.

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.

32

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 2017 Annual Report on Form 10-K and there have been no significant changes since that time.

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 September 30, 2018.

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, have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

33

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 1 of our 2017 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.

On November 3, 2015 the Company announced that its board of directors has authorized a share repurchase program which targets to repurchase up to $90 million of common stock over a three year period which has now ended. During the nine months ended September 30, 2018, no shares of our common stock were repurchased by the Company under this share repurchase program.

On November 6, 2018 the Company announced that its board of directors had approved the repurchase of up to $100 million of Innospec’s common stock over the following three years.

During the quarter ended September 30, 2018 the company has not purchased any of its common stock in connection with the exercising of stock options by employees to satisfy tax withholding obligations.

Repurchases of common stock are held as treasury shares unless reissued under equity compensation plans.

Item 3 Defaults Upon Senior Securities

None.

Item 4 Mine Safety Disclosures

Not applicable.

Item 5 Other Information

None.

34

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 Items.

35

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: November 7, 2018	By	/s/    PATRICK S. WILLIAMS
		Patrick S. Williams
		President and Chief Executive Officer
Date: November 7, 2018	By	/s/    IAN P. CLEMINSON
		Ian P. Cleminson
		Executive Vice President and Chief Financial Officer

36

EX-31.1

Exhibit 31.1

CERTIFICATION BY PATRICK S. WILLIAMS PURSUANT TO

SECURITIES EXCHANGE ACT 1934 RULE 13a-14 and 15d-14

I, Patrick S. Williams, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Innospec Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ PATRICK S. WILLIAMS

Patrick S. Williams

President and Chief Executive Officer

November 7, 2018

EX-31.2

Exhibit 31.2

CERTIFICATION BY IAN P. CLEMINSON PURSUANT TO

SECURITIES EXCHANGE ACT 1934 RULE 13a-14 and 15d-14

I, Ian P. Cleminson, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Innospec Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ IAN P. CLEMINSON

Ian P. Cleminson

Executive Vice President and Chief Financial Officer

November 7, 2018

EX-32.1

Exhibit 32.1

Section 1350 Certification

by Patrick S. Williams

In connection with the Quarterly Report on Form 10-Q of Innospec Inc. (the “Company”) for the period ended September 30, 2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Patrick S. Williams, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ PATRICK S. WILLIAMS

Patrick S. Williams

President and Chief Executive Officer

November 7, 2018

The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of this Report or as a separate disclosure document.

A signed original of this written statement required by 18 U.S.C. § 1350 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission upon request.

EX-32.2

Exhibit 32.2

Section 1350 Certification

by Ian P. Cleminson

In connection with the Quarterly Report on Form 10-Q of Innospec Inc. (the “Company”) for the period ended September 30, 2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Ian P. Cleminson, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ IAN P. CLEMINSON

Ian P. Cleminson

Executive Vice President and Chief Financial Officer

November 7, 2018

The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of this Report or as a separate disclosure document.

A signed original of this written statement required by 18 U.S.C. § 1350 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission upon request.

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2018	Oct. 31, 2018
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q3
Trading Symbol	IOSP
Entity Registrant Name	INNOSPEC INC.
Entity Central Index Key	0001054905
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		24,424,321

XML

Condensed Consolidated Statements of Income - USD ($) shares in Thousands, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Income Statement [Abstract]
Net sales	$ 363.1	$ 332.4	$ 1,081.9	$ 953.0
Cost of goods sold	(252.1)	(233.6)	(763.6)	(658.2)
Gross profit	111.0	98.8	318.3	294.8
Operating expenses:
Selling, general and administrative	(64.7)	(61.9)	(197.8)	(180.4)
Research and development	(8.1)	(7.9)	(25.1)	(23.8)
Restructuring charge	(4.8)	0.0	(4.8)	0.0
Loss on disposal of subsidiary	0.0	0.0	0.0	(1.0)
Foreign exchange loss on liquidation of subsidiary	0.0	0.0	0.0	(1.8)
Total operating expenses	(77.6)	(69.8)	(227.7)	(207.0)
Operating income	33.4	29.0	90.6	87.8
Other (expense)/income, net	(1.2)	3.0	4.3	6.4
Interest expense, net	(1.8)	(2.1)	(5.3)	(6.3)
Income before income taxes	30.4	29.9	89.6	87.9
Income taxes	(9.8)	(6.6)	(25.0)	(21.3)
Net income	$ 20.6	$ 23.3	$ 64.6	$ 66.6
Earnings per share:
Basic	$ 0.84	$ 0.97	$ 2.65	$ 2.76
Diluted	$ 0.84	$ 0.95	$ 2.63	$ 2.71
Weighted average shares outstanding (in thousands):
Basic	24,419	24,137	24,399	24,119
Diluted	24,597	24,565	24,580	24,569

XML

Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Statement of Comprehensive Income [Abstract]
Net income	$ 20.6	$ 23.3	$ 64.6	$ 66.6
Changes in cumulative translation adjustment, net of tax of $0.2 million, $(0.4) million, $1.2 million and $(1.3) million respectively	(1.5)	18.1	(12.4)	30.7
Changes in unrealized gains on derivative instruments, net of tax of $0.0 million, $0.0 million, $(0.2) million and $0.0 million respectively	(0.1)	0.2	1.0	0.2
Amortization of prior service credit, net of tax of $0.0 million, $0.0 million, $0.1 million and $0.1 million respectively	(0.2)	(0.2)	(0.7)	(0.6)
Amortization of actuarial net losses, net of tax of $(0.1) million, $(0.1) million, $(0.2) million and $(0.6) million respectively	0.4	1.1	1.3	3.1
Total other comprehensive (loss)/income	(1.4)	19.2	(10.8)	33.4
Total comprehensive income	$ 19.2	$ 42.5	$ 53.8	$ 100.0

XML

Condensed Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Statement of Comprehensive Income [Abstract]
Changes in cumulative translation adjustment, tax	$ 0.2	$ (0.4)	$ 1.2	$ (1.3)
Unrealized gains on derivative instruments, tax	0.0	0.0	(0.2)	0.0
Amortization of prior service credit, tax	0.0	0.0	0.1	0.1
Amortization of actuarial net losses, tax	$ (0.1)	$ (0.1)	$ (0.2)	$ (0.6)

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Millions	Sep. 30, 2018	Dec. 31, 2017
Current assets:
Cash and cash equivalents	$ 91.4	$ 90.2
Trade and other accounts receivable (less allowances of $4.4 million and $4.1 million respectively)	287.8	244.5
Inventories (less allowances of $12.2 million and $12.6 million respectively):
Finished goods	189.5	145.9
Raw materials	72.4	63.9
Total inventories	261.9	209.8
Prepaid expenses	8.4	13.1
Prepaid income taxes	9.8	2.8
Other current assets	0.0	1.1
Total current assets	659.3	561.5
Net property, plant and equipment	194.7	196.0
Goodwill	366.3	361.8
Other intangible assets	142.3	163.3
Deferred tax assets	6.2	6.5
Pension asset	121.4	116.0
Other non-current assets	6.9	5.1
Total assets	1,497.1	1,410.2
Current liabilities:
Bank overdraft	0.5	0.0
Accounts payable	127.4	117.9
Accrued liabilities	122.9	104.1
Current portion of long-term debt	15.8	15.8
Current portion of finance leases	2.0	2.7
Current portion of plant closure provisions	4.0	5.2
Current portion of accrued income taxes	17.9	15.8
Total current liabilities	290.5	261.5
Long-term debt, net of current portion	208.1	202.6
Finance leases, net of current portion	1.8	3.2
Plant closure provisions, net of current portion	44.9	40.9
Accrued income taxes, net of current portion	39.7	41.7
Unrecognized tax benefits, net of current portion	3.2	2.5
Deferred tax liabilities	46.7	45.0
Pension liabilities and post-employment benefits	16.6	16.5
Other non-current liabilities	5.3	2.0
Total liabilities	656.8	615.9
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	322.9	320.4
Treasury stock (5,130,179 and 5,204,181 shares at cost, respectively)	(92.9)	(93.3)
Retained earnings	658.9	605.0
Accumulated other comprehensive loss	(49.3)	(38.5)
Total Innospec stockholders' equity	839.9	793.9
Non-controlling interest	0.4	0.4
Total equity	840.3	794.3
Total liabilities and equity	$ 1,497.1	$ 1,410.2

XML

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions	Sep. 30, 2018	Dec. 31, 2017
Statement of Financial Position [Abstract]
Allowances for doubtful accounts	$ 4.4	$ 4.1
Inventory allowances	$ 12.2	$ 12.6
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	40,000,000	40,000,000
Common stock, shares issued	29,554,500	29,554,500
Treasury stock, shares	5,130,179	5,204,181

XML

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions		9 Months Ended
		Sep. 30, 2018	Sep. 30, 2017
Cash Flows from Operating Activities
Net income		$ 64.6	$ 66.6
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	[1]	37.9	37.2
Deferred taxes		2.4	3.7
Loss on disposal of subsidiary		0.0	1.0
Foreign exchange loss on liquidation of subsidiary		0.0	1.8
Cash contributions to defined benefit pension plans		(0.8)	(0.8)
Non-cash movements on defined benefit pension plans		(3.2)	(2.7)
Stock option compensation		3.0	3.4
Changes in assets and liabilities, net of effects of acquired and divested companies:
Trade and other accounts receivable		(47.0)	(83.0)
Inventories		(55.5)	(31.5)
Prepaid expenses		3.6	2.2
Accounts payable and accrued liabilities		32.2	42.4
Accrued income taxes		(6.4)	(2.7)
Plant closure provisions		3.0	2.9
Unrecognized tax benefits		0.7	(0.5)
Other assets and liabilities		0.6	(4.8)
Net cash provided by operating activities		35.1	35.2
Cash Flows from Investing Activities
Capital expenditures		(20.0)	(16.4)
Business combinations, net of cash acquired		(5.4)	2.6
Acquisition of intangible asset		0.0	(4.2)
Internally developed software		(0.8)	(4.1)
Net cash used in investing activities		(26.2)	(22.1)
Cash Flows from Financing Activities
Receipt of short-term borrowing		0.5	0.0
Proceeds from revolving credit facility		10.0	10.0
Repayments of revolving credit facility		(5.0)	(50.0)
Repayments of finance leases		(2.1)	(1.7)
Dividend paid		(10.7)	(9.2)
Issue of treasury stock		1.1	1.0
Repurchase of common stock		(1.2)	(1.0)
Net cash used in financing activities		(7.4)	(50.9)
Effect of foreign currency exchange rate changes on cash		(0.3)	1.4
Net change in cash and cash equivalents		1.2	(36.4)
Cash and cash equivalents at beginning of period		90.2	101.9
Cash and cash equivalents at end of period		$ 91.4	$ 65.5

[1] Amortization of deferred finance costs of $0.5 million (2017 - $0.5 million) are included in depreciation and amortization in the condensed consolidated statement of cash flow but in interest expense in the condensed consolidated statement of income.

XML

Condensed Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Statement of Cash Flows [Abstract]
Amortization of deferred finance costs	$ 0.5	$ 0.5

XML

Condensed Consolidated Statements of Equity - 9 months ended Sep. 30, 2018 - USD ($) $ in Millions	Total	Common Stock [Member]	Additional Paid-In Capital [Member]	Treasury Stock [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Loss [Member]	Non-Controlling Interest [Member]
Beginning Balance at Dec. 31, 2017	$ 794.3	$ 0.3	$ 320.4	$ (93.3)	$ 605.0	$ (38.5)	$ 0.4
Net income	64.6				64.6
Dividend paid	(10.7)				(10.7)
Changes in cumulative translation adjustment, net of tax	(12.4)					(12.4)
Changes in unrealized gains on derivative instruments, net of tax	1.0					1.0
Treasury stock reissued	1.1		(0.5)	1.6
Treasury stock repurchased	(1.2)			(1.2)
Stock option compensation	3.0		3.0
Amortization of prior service credit, net of tax	(0.7)					(0.7)
Amortization of actuarial net losses, net of tax	1.3					1.3
Ending Balance at Sep. 30, 2018	$ 840.3	$ 0.3	$ 322.9	$ (92.9)	$ 658.9	$ (49.3)	$ 0.4

XML

Basis of Presentation

9 Months Ended

Sep. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

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, 2017 filed on February 15, 2018.

The results for the interim period covered by this report are not necessarily indicative of the results to be expected for the full year.

We have reclassified certain prior period amounts to conform to the current period presentation. See Note 16 of the Notes to the Condensed Consolidated Financial Statements for additional information.

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.

XML

Net Sales

9 Months Ended

Sep. 30, 2018

Revenue from Contract with Customer [Abstract]

Net Sales

NOTE 2 – NET SALES

On January 1, 2018 we adopted Accounting Standard Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606) using the modified retrospective method. The impact of adopting ASC 606 did not result in a change to income, and therefore we are not reflecting a cumulative effect to the opening balance of retained earnings due to the adoption of ASC 606. The comparative period has not been adjusted and continues to be reported under the accounting standards in effect for this period.

Our revenues are primarily derived from the manufacture and sale of specialty chemicals. We recognize revenue when control of the product is transferred to our customer and for an amount that reflects the consideration we expect to collect from the customer. Control is generally transferred to the customer when title transfers (which may include physical possession by the customer), we have a right to payment from the customer, the customer has accepted the product, and the customer has assumed the risks and rewards of ownership. We have supplier managed inventory arrangements with some of our customers to facilitate on-demand product availability. In some cases, the inventory resides at a customer site, although title has not transferred, we are not entitled to payment, and we have not invoiced for the product. We have evaluated the contract terms under these arrangements and have determined that control transfers when the customer uses the product, at which time revenue is recognized. Our contracts generally include one performance obligation, which is providing speciality chemicals. The performance obligation is satisfied at a point in time when products are shipped, delivered, or consumed by the customer, depending on the underlying contracts.

While some of our customers have payment terms beyond 30 days, we do not provide extended payment terms of a year or more, nor do our contracts include a financing component. Some of our contracts include variable consideration in the form of rebates. We record rebates at the point of sale as a reduction in sales when we can reasonably estimate the amount of the rebate. The estimates are based on our best judgment at the time of sale, which includes anticipated as well as historical performance.

Taxes assessed by a governmental authority which are concurrent with sales to our customers, including sales, use, value-added, and revenue-related excise taxes, are collected by us from the customer and are not included in net sales, but are reflected in accrued expenses until remitted to the appropriate governmental authority. When we are responsible for shipping and handling costs after title has transferred, we account for those as fulfilment costs and include them in cost of goods sold.

XML

Segment Reporting

9 Months Ended

Sep. 30, 2018

Segment Reporting [Abstract]

Segment Reporting

NOTE 3 – SEGMENT REPORTING

The Company reports its financial performance based on the four reportable segments Fuel Specialties, Performance Chemicals, Oilfield Services and Octane Additives.

The Fuel Specialties, Performance Chemicals and Oilfield Services segments operate in markets where we actively seek growth opportunities although their ultimate customers are different. The Octane Additives segment is expected to decline in the near future as our one remaining refinery customer transitions to unleaded fuel.

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 September 30						Nine Months Ended September 30
(in millions)	2018			2017			2018			2017
Net Sales:
Refinery and Performance	$	97.8		$	97.4		$	306.9		$	286.5
Other		37.1			32.7			105.6			91.3
Fuel Specialties		134.9			130.1			412.5			377.8
Personal Care		60.6			52.2			183.6			148.4
Home Care		28.2			32.7			84.5			89.0
Other		26.0			25.4			89.6			72.3
Performance Chemicals		114.8			110.3			357.7			309.7
Oilfield Services		104.2			81.9			292.1			224.5
Octane Additives		9.2			10.1			19.6			41.0
	$	363.1		$	332.4		$	1,081.9		$	953.0
	Three Months Ended September 30						Nine Months Ended September 30
(in millions)	2018			2017			2018			2017
Net sales:
Fuel Specialties	$	134.9		$	130.1		$	412.5		$	377.8
Performance Chemicals		114.8			110.3			357.7			309.7
Oilfield Services		104.2			81.9			292.1			224.5
Octane Additives		9.2			10.1			19.6			41.0
	$	363.1		$	332.4		$	1,081.9		$	953.0
Gross profit:
Fuel Specialties	$	48.8		$	44.6		$	141.8		$	135.9
Performance Chemicals		25.3			20.7			74.5			54.8
Oilfield Services		33.5			28.5			93.5			82.9
Octane Additives		3.4			5.0			8.5			21.2
	$	111.0		$	98.8		$	318.3		$	294.8
Operating income/(loss):
Fuel Specialties	$	28.8		$	25.1		$	80.7		$	76.0
Performance Chemicals		12.4			9.7			34.2			22.2
Oilfield Services		7.0			1.8			14.1			8.5
Octane Additives		2.7			4.4			6.5			19.2
Corporate costs		(12.7	)		(12.0	)		(40.1	)		(35.3	)
Restructuring charge		(4.8	)		0.0			(4.8	)		0.0
Loss on disposal of subsidiary		0.0			0.0			0.0			(1.0	)
Foreign exchange loss on liquidation of subsidiary		0.0			0.0			0.0			(1.8	)
Total operating income	$	33.4		$	29.0		$	90.6		$	87.8

The following table presents a summary of the depreciation and amortization charges incurred by the Company’s reportable segments:

	Three Months Ended September 30				Nine Months Ended September 30
(in millions)	2018		2017		2018		2017
Depreciation:
Fuel Specialties	$	1.0	$	1.0	$	2.9	$	3.0
Performance Chemicals		2.6		2.5		7.8		7.0
Oilfield Services		1.5		1.6		4.6		4.8
Octane Additives		0.3		0.2		0.9		0.6
Corporate		0.3		0.3		0.8		0.7
	$	5.7	$	5.6	$	17.0	$	16.1
Amortization:
Fuel Specialties	$	0.0	$	0.2	$	0.0	$	0.6
Performance Chemicals		2.3		1.9		6.8		5.6
Oilfield Services		2.7		2.9		8.1		8.9
Corporate		1.8		1.9		5.5		5.5
	$	6.8	$	6.9	$	20.4	$	20.6

XML

Earnings per Share

9 Months Ended

Sep. 30, 2018

Earnings Per Share [Abstract]

Earnings per Share

NOTE 4 – 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. Per share amounts are computed as follows:

	Three Months Ended September 30				Nine Months Ended September 30
	2018		2017		2018		2017
Numerator (in millions):
Net income available to common stockholders	$	20.6	$	23.3	$	64.6	$	66.6
Denominator (in thousands):
Weighted average common shares outstanding		24,419		24,137		24,399		24,119
Dilutive effect of stock options and awards		178		428		181		450
Denominator for diluted earnings per share		24,597		24,565		24,580		24,569
Net income per share, basic:	$	0.84	$	0.97	$	2.65	$	2.76
Net income per share, diluted:	$	0.84	$	0.95	$	2.63	$	2.71

In the three and nine months ended September 30, 2018, the average number of anti-dilutive options excluded from the calculation of diluted earnings per share were 0 and 0, respectively (three and nine months ended September 30, 2017 – 18,843 and 18,843, respectively).

XML

Goodwill

9 Months Ended

Sep. 30, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

NOTE 5 – GOODWILL

The following table summarizes goodwill at the balance sheet dates:

(in millions)	Total
At December 31, 2017
Gross cost(1)	$	598.3
Accumulated impairment losses		(236.5	)
Net book amount	$	361.8
Acquisition		7.5
Exchange effect		(3.0	)
At September 30, 2018
Gross cost(1)	$	602.8
Accumulated impairment losses		(236.5	)
Net book amount	$	366.3

⁽¹⁾  Gross cost for 2018 and 2017 is net of $298.5 million of historical accumulated amortization.

Acquisition of BioSuite, LLC

On May 31, 2018, the Company acquired BioSuite, LLC (“BioSuite”), a specialized formulator of biocide and biostat solutions for the oil and gas industry. We purchased BioSuite for total consideration of $8.6 million, with an initial payment at closing of $5.8 million funded from existing cash and debt facilities followed by a reduction for working capital adjustments of $0.4 million in the third quarter. The remaining payment is performance related and contingently payable over the next eighteen months based on a multiple of BioSuite’s earnings before interest, taxes, depreciation and amortization. Based on the current forecast we anticipate a further payment of $3.2 million payable on November 30, 2019.

The following table summarizes the calculations of the total purchase price and the estimated allocation of the purchase price to the assets acquired and liabilities assumed for the business:

(in millions)	BioSuite
Goodwill	$	7.5
Receivables		0.4
Inventory		0.5
Payables		(1.9	)
Extinguishment of existing liabilities		2.1
Purchase price, net of cash acquired	$	8.6

The measurement period for the valuation of assets acquired and liabilities assumed ends as soon as information on the facts and circumstances that existed as of the acquisition date becomes available, but does not exceed twelve months. Adjustment to the purchase price allocation may require a recasting of the amounts allocated to goodwill retroactive to the period in which the acquisition occurred.

XML

Other Intangible Assets

9 Months Ended

Sep. 30, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Other Intangible Assets

NOTE 6 – OTHER INTANGIBLE ASSETS

The following table summarizes the other intangible assets movement year on year:

	Nine Months Ended September 30
(in millions)	2018			2017
Gross cost at January 1	$	295.8		$	248.6
Acquisitions		0.0			37.7
Internally developed software		0.8			4.1
Exchange effect		(1.6	)		4.1
Gross cost at September 30		295.0			294.5
Accumulated amortization at January 1		(132.5	)		(104.2	)
Amortization expense		(20.4	)		(20.6	)
Exchange effect		0.2			(0.1	)
Accumulated amortization at September 30		(152.7	)		(124.9	)
Net book amount at September 30	$	142.3		$	169.6

Internally developed software has been capitalized in relation to the information system platform for our Performance Chemicals segment’s European businesses.

Amortization expense

	Nine Months Ended September 30
(in millions)	2018			2017
Product rights	$	(2.8	)	$	(2.8	)
Brand names		(0.9	)		(0.9	)
Technology		(2.5	)		(2.5	)
Customer relationships		(8.0	)		(7.6	)
Non-compete agreements		0.0			(0.6	)
Marketing related		0.0			(0.7	)
Internally developed software		(6.2	)		(5.5	)
Total	$	(20.4	)	$	(20.6	)

XML

Pension and Post Employment Benefits

9 Months Ended

Sep. 30, 2018

Retirement Benefits [Abstract]

Pension and Post Employment Benefits

NOTE 7 – PENSION AND POST EMPLOYMENT BENEFITS

The Company maintains a defined benefit pension plan (the “Plan”) covering a number of its current and former employees in the United Kingdom, although it does also have other much smaller pension arrangements in the U.S. and overseas. 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 nine months ended September 30, 2018 was $0.3 million and $0.9 million, respectively (three and nine months ended September 30, 2017 – $0.2 million and $0.7 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 September 30						Nine Months Ended September 30
(in millions)	2018			2017			2018			2017
Plan net pension credit/(charge):
Interest cost on projected benefit obligation	$	(3.7	)	$	(3.9	)	$	(11.4	)	$	(11.3	)
Expected return on plan assets		5.5			6.2			16.9			18.2
Amortization of prior service credit		0.2			0.3			0.8			0.8
Amortization of actuarial net losses		(0.5	)		(1.2	)		(1.5	)		(3.7	)
	$	1.5		$	1.4		$	4.8		$	4.0

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 a number of its 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 nine months ended September 30, 2018 was $0.0 million and $0.1 million, respectively (three and nine months ended September 30, 2017 – $0.0 million and $0.1 million, respectively). The following table shows the income statement effect recognized within other income and expense:

	Three Months Ended September 30						Nine Months Ended September 30
(in millions)	2018			2017			2018			2017
Plan net pension charge:
Interest cost on projected benefit obligation	$	(0.1	)	$	(0.1	)	$	(0.2	)	$	(0.2	)
Amortization of actuarial net losses		(0.1	)		(0.1	)		(0.3	)		(0.3	)
	$	(0.2	)	$	(0.2	)	$	(0.5	)	$	(0.5	)

As at September 30, 2018, our Performance Chemicals segment has obligations for post-employment benefits in its European businesses with a liability of $4.6 million (December 31, 2017 – $4.7 million).

XML

Income Taxes

9 Months Ended

Sep. 30, 2018

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 8 – INCOME TAXES

A roll-forward of unrecognized tax benefits is as follows:

(in millions)	September 30, 2018			December 31, 2017
.
Opening balance at January 1	$	2.2		$	2.2
Additions for tax positions of prior periods		0.9			0.5
Reductions due to lapsed statute of limitations		(0.5	)		(0.5	)
Closing balance	$	2.6		$	2.2

We recognize accrued interest and penalties associated with unrecognized tax benefits as part of income taxes in our condensed consolidated statements of income. Related to the unrecognized tax benefits noted above, we have also accrued a net increase in interest and penalties of $0.3 million during the first nine months of 2018, and a net increase in interest and penalties of $0.2 million in 2017. Total accrued interest and penalties at September 30, 2018 on all remaining unrecognized tax benefits amounted to $0.6 million (December 31, 2017 – $0.3 million).

All of the $3.2 million of unrecognized tax benefits, interest and penalties, would impact our effective tax rate if recognized.

The Company or one of its subsidiaries files income tax returns with the U.S. federal government, and various state and foreign jurisdictions. As previously disclosed, tax audits have been opened by the Italian tax authorities in respect of Innospec Performance Chemicals Italia Srl, acquired by the Company as part of the Huntsman business acquisition in 2016 and relating to the period 2011 to 2013 inclusive. In the fourth quarter of 2017, the Company recorded an unrecognized tax benefit of $0.5 million, together with associated interest of $0.2 million in relation to the 2011 tax audit. In the first quarter of 2018, the Company recorded an unrecognized tax benefit of $0.4 million, together with associated interest of $0.1 million in relation to the 2012 tax audit. In the third quarter of 2018, the Company recorded an unrecognized tax benefit of $0.5 million, together with associated interest of $0.2 million in relation to the 2013 tax audit. 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, the Company has recorded an indemnification non-current asset of the same amount as the unrecognized tax benefit and associated interest to reflect the fact that the final liability would be reimbursed by the previous owner.

The Company and its U.S. subsidiaries remain open to examination by the IRS for years 2015 onwards under the statute of limitations. The Company’s subsidiaries in foreign tax jurisdictions are open to examination including France (2014 onwards), Germany (2015 onwards), Switzerland (2015 onwards) and the United Kingdom (2016 onwards).

XML

Long-Term Debt

9 Months Ended

Sep. 30, 2018

Debt Disclosure [Abstract]

Long-Term Debt

NOTE 9 – LONG-TERM DEBT

Long-term debt consists of the following:

(in millions)	September 30, 2018			December 31, 2017
Revolving credit facility	$	126.0		$	121.0
Term loan		99.0			99.0
Deferred finance costs		(1.1	)		(1.6	)
	$	223.9		$	218.4
Due within one year		(15.8	)		(15.8	)
Due after one year	$	208.1		$	202.6

XML

Plant Closure Provisions

9 Months Ended

Sep. 30, 2018

Restructuring and Related Activities [Abstract]

Plant Closure Provisions

NOTE 10 – PLANT CLOSURE PROVISIONS

The liability for estimated closure costs of Innospec’s manufacturing facilities includes costs for decontamination and environmental remediation activities (“remediation”). The principal site giving rise to remediation liabilities is the manufacturing site at Ellesmere Port in the United Kingdom. There are also remediation liabilities on a smaller scale in respect of our other manufacturing sites in the U.S. and the rest of Europe.

Movements in the provisions are summarized as follows:

	Nine Months Ended September 30
(in millions)	2018			2017
Total at January 1	$	46.1		$	39.5
Charge for the period		5.1			4.4
Utilized in the period		(2.1	)		(1.7	)
Exchange effect		(0.2	)		0.5
Total at September 30		48.9			42.7
Due within one year		(4.0	)		(5.9	)
Due after one year	$	44.9		$	36.8

Amounts due within one year refer to provisions where expenditure is expected to arise within one year of the balance sheet date.

XML

Fair Value Measurements

9 Months Ended

Sep. 30, 2018

Fair Value Disclosures [Abstract]

Fair Value Measurements

NOTE 11 – 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:

	September 30, 2018				December 31, 2017
(in millions)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets
Non-derivatives:
Cash and cash equivalents	$	91.4	$	91.4	$	90.2	$	90.2
Derivatives (Level 1 measurement):
Other current and non-current assets:
Foreign currency forward exchange contracts		0.0		0.0		1.1		1.1
Interest rate swaps		2.7		2.7		1.5		1.5
Liabilities
Non-derivatives:
Bank overdraft	$	0.5	$	0.5	$	0.0	$	0.0
Long-term debt (including current portion)		223.9		223.9		218.4		218.4
Finance leases (including current portion)		3.8		3.8		5.9		5.9
Derivatives (Level 1 measurement):
Other current and non-current liabilities:
Foreign currency forward exchange contracts		0.5		0.5		0.0		0.0
Non-financial liabilities (Level 3 measurement):
Stock equivalent units		17.6		17.6		13.6		13.6

The following methods and assumptions were used to estimate the fair values of financial instruments:

Cash and cash equivalents and bank overdraft: 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 and interest rate swaps 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. Interest rate swaps relate to contracts taken out to hedge interest rate risk on a portion of our credit facilities borrowing.

Long-term debt and finance leases: Long-term debt principally comprises the term loan and revolving credit facility, which are shown net of deferred finance costs that have been capitalized. The fair value of long-term debt approximates to the carrying value, as the discounting to its present value is offset by the interest rate swaps. Finance leases relate to certain fixed assets in our Fuel Specialties and Oilfield Services segments. The carrying amount of long-term debt and 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.

XML

Derivative Instruments and Risk Management

9 Months Ended

Sep. 30, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Risk Management

NOTE 12 – 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 September 30, 2018 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 nine months of 2018 was a loss of $1.6 million (first nine months of 2017: loss of $0.6 million).

The Company enters into interest rate swaps to minimize interest rate exposure related to a part of our borrowing requirements. These interest rate swaps have been designated as hedging instruments, and their impact on accumulated other comprehensive loss for the first nine months of 2018 was a gain of $1.2 million (first nine months of 2017: gain of $0.2 million).

XML

Commitments and Contingencies

9 Months Ended

Sep. 30, 2018

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

NOTE 13 – COMMITMENTS AND 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 September 30, 2018, such guarantees which are not recognized as liabilities in the condensed consolidated financial statements amounted to $5.3 million.

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.

XML

Stock-Based Compensation Plans

9 Months Ended

Sep. 30, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation Plans

NOTE 14 – 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 nine months ended September 30, 2018:

	Number of Options			Weighted Average Exercise Price		Weighted Average Grant-Date Fair Value
Outstanding at December 31, 2017		357,666		$	13.74	$	35.69
Granted - at discount		280,466		$	46.42	$	34.54
- at market value		18,850		$	68.20	$	16.23
Exercised		(91,362	)	$	12.47	$	27.04
Forfeited		(14,443	)	$	21.05	$	25.34
Outstanding at September 30, 2018		551,177		$	32.25	$	36.14

At September 30, 2018, there were 40,614 stock options that were exercisable, of which 600 had performance conditions attached.

The stock option compensation cost for the first nine months of 2018 was $3.0 million (first nine months of 2017 – $3.4 million). The total intrinsic value of options exercised in the first nine months of 2018 was $2.6 million (first nine months of 2017 – $2.0 million).

The total compensation cost related to non-vested stock options not yet recognized at September 30, 2018 was $12.2 million and this cost is expected to be recognized over the weighted-average period of 2.38 years.

Stock equivalent units

The following table summarizes the transactions of the Company’s SEUs for the nine months ended September 30, 2018:

	Number of SEUs			Weighted Average Exercise Price		Weighted Average Grant-Date Fair Value
Outstanding at December 31, 2017		400,342		$	3.10	$	46.65
Granted - at discount		115,229		$	2.36	$	57.16
- at market value		5,658		$	68.20	$	16.23
Exercised		(72,689	)	$	5.81	$	29.27
Forfeited		(16,554	)	$	1.40	$	37.14
Outstanding at September 30, 2018		431,986		$	3.36	$	52.35

At September 30, 2018 there were 30,360 SEUs that are exercisable, of which 27,655 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 cost for the first nine months of 2018 was $7.9 million (first nine months of 2017 – $3.6 million). The total intrinsic value of SEUs exercised in the first nine months of 2018 was $2.4 million (first nine months of 2017 – $1.1 million).

The weighted-average remaining vesting period of non-vested SEUs is 1.86 years.

XML

Reclassifications out of Accumulated Other Comprehensive Loss

9 Months Ended

Sep. 30, 2018

Equity [Abstract]

Reclassifications out of Accumulated Other Comprehensive Loss

NOTE 15 – RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE LOSS

Reclassifications out of accumulated other comprehensive loss for the first nine months of 2018 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	$	(0.8	)		See (1) below
Amortization of actuarial net losses		1.5			See (1) below
		0.7			Total before tax
		(0.1	)		Income tax expense
Total reclassifications	$	0.6			Net of tax

⁽¹⁾ These items are included in other income and expense. See Note 7 of the Notes to the Condensed Consolidated Financial Statements for additional information.

Changes in accumulated other comprehensive loss for the first nine months of 2018, net of tax, were:

(in millions)	Derivative instruments		Defined Benefit Pension Plan Items			Cumulative Translation Adjustments			Total
Balance at December 31, 2017	$	1.2	$	(3.2	)	$	(36.5	)	$	(38.5	)
Other comprehensive income before reclassifications		1.0		0.0			(12.4	)		(11.4	)
Amounts reclassified from AOCL		0.0		0.6			0.0			0.6
Total other comprehensive income		1.0		0.6			(12.4	)		(10.8	)
Balance at September 30, 2018	$	2.2	$	(2.6	)	$	(48.9	)	$	(49.3	)

XML

Recently Issued Accounting Pronouncements

9 Months Ended

Sep. 30, 2018

Accounting Changes and Error Corrections [Abstract]

Recently Issued Accounting Pronouncements

NOTE 16 – RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

From January 1, 2018 we have applied Accounting Standards Update (ASU) 2017-07, Compensation-Retirement Benefits, ASC Topic 715: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. ASU 2017-07 requires companies to present the service cost component of net benefit cost in the same line items in which they report compensation cost. Companies are now required to present all other components of net benefit cost outside operating income, if this subtotal is presented. The new standard is effective for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. Adopting the new standard on January 1, 2018 has resulted in a restatement of the prior period comparatives with a reduction to operating income for the three and nine months ending September 30, 2017 of $1.2 million and $3.5 million, respectively and a corresponding increase in other non-operating income.

In February 2016, the FASB issued Accounting Standards Update (ASU) 2016-02, Revision to Lease Accounting, ASC Topic 842 which amends ASC Topic 840, Leases. The ASU requires lessees to recognize a right-of-use asset and a lease liability for virtually all of their leases (other than leases that meet the definition of a short-term lease). The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. In July 2018, the FASB issued ASU 2018-11: Leases – Targeted Improvements, to provide entities with relief from the costs of implementing certain aspects of the new leasing standard, ASU 2016-02. We are currently evaluating the new standard, including which transitional method to adopt and to determine how it will affect our financial reporting. Due to the number of leases the Company has, we believe the standard will increase our assets and liabilities by a material amount on its consolidated balance sheet. The Company does not believe adoption of the standard will have a significant impact on its consolidated statements of income, equity and cash flows.

XML

Related Party Transactions

9 Months Ended

Sep. 30, 2018

Related Party Transactions [Abstract]

Related Party Transactions

NOTE 17 – RELATED PARTY TRANSACTIONS

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 nine months of 2018 the Company incurred fees from SGR of $0.2 million (first nine months of 2017 – $0.3 million). As at September 30, 2018, the amount due to SGR from the Company was $0.0 million (December 31, 2017 – $0.0 million).

XML

Segment Reporting (Tables)

9 Months Ended

Sep. 30, 2018

Segment Reporting [Abstract]

Segment Reporting

The following tables analyze sales and other financial information by the Company’s reportable segments:

	Three Months Ended September 30						Nine Months Ended September 30
(in millions)	2018			2017			2018			2017
Net Sales:
Refinery and Performance	$	97.8		$	97.4		$	306.9		$	286.5
Other		37.1			32.7			105.6			91.3
Fuel Specialties		134.9			130.1			412.5			377.8
Personal Care		60.6			52.2			183.6			148.4
Home Care		28.2			32.7			84.5			89.0
Other		26.0			25.4			89.6			72.3
Performance Chemicals		114.8			110.3			357.7			309.7
Oilfield Services		104.2			81.9			292.1			224.5
Octane Additives		9.2			10.1			19.6			41.0
	$	363.1		$	332.4		$	1,081.9		$	953.0
	Three Months Ended September 30						Nine Months Ended September 30
(in millions)	2018			2017			2018			2017
Net sales:
Fuel Specialties	$	134.9		$	130.1		$	412.5		$	377.8
Performance Chemicals		114.8			110.3			357.7			309.7
Oilfield Services		104.2			81.9			292.1			224.5
Octane Additives		9.2			10.1			19.6			41.0
	$	363.1		$	332.4		$	1,081.9		$	953.0
Gross profit:
Fuel Specialties	$	48.8		$	44.6		$	141.8		$	135.9
Performance Chemicals		25.3			20.7			74.5			54.8
Oilfield Services		33.5			28.5			93.5			82.9
Octane Additives		3.4			5.0			8.5			21.2
	$	111.0		$	98.8		$	318.3		$	294.8
Operating income/(loss):
Fuel Specialties	$	28.8		$	25.1		$	80.7		$	76.0
Performance Chemicals		12.4			9.7			34.2			22.2
Oilfield Services		7.0			1.8			14.1			8.5
Octane Additives		2.7			4.4			6.5			19.2
Corporate costs		(12.7	)		(12.0	)		(40.1	)		(35.3	)
Restructuring charge		(4.8	)		0.0			(4.8	)		0.0
Loss on disposal of subsidiary		0.0			0.0			0.0			(1.0	)
Foreign exchange loss on liquidation of subsidiary		0.0			0.0			0.0			(1.8	)
Total operating income	$	33.4		$	29.0		$	90.6		$	87.8

Summary of Segment Depreciation and Amortization

The following table presents a summary of the depreciation and amortization charges incurred by the Company’s reportable segments:

	Three Months Ended September 30				Nine Months Ended September 30
(in millions)	2018		2017		2018		2017
Depreciation:
Fuel Specialties	$	1.0	$	1.0	$	2.9	$	3.0
Performance Chemicals		2.6		2.5		7.8		7.0
Oilfield Services		1.5		1.6		4.6		4.8
Octane Additives		0.3		0.2		0.9		0.6
Corporate		0.3		0.3		0.8		0.7
	$	5.7	$	5.6	$	17.0	$	16.1
Amortization:
Fuel Specialties	$	0.0	$	0.2	$	0.0	$	0.6
Performance Chemicals		2.3		1.9		6.8		5.6
Oilfield Services		2.7		2.9		8.1		8.9
Corporate		1.8		1.9		5.5		5.5
	$	6.8	$	6.9	$	20.4	$	20.6

XML

Earnings per Share (Tables)

9 Months Ended

Sep. 30, 2018

Earnings Per Share [Abstract]

Summary of Earnings Per Share

Per share amounts are computed as follows:

	Three Months Ended September 30				Nine Months Ended September 30
	2018		2017		2018		2017
Numerator (in millions):
Net income available to common stockholders	$	20.6	$	23.3	$	64.6	$	66.6
Denominator (in thousands):
Weighted average common shares outstanding		24,419		24,137		24,399		24,119
Dilutive effect of stock options and awards		178		428		181		450
Denominator for diluted earnings per share		24,597		24,565		24,580		24,569
Net income per share, basic:	$	0.84	$	0.97	$	2.65	$	2.76
Net income per share, diluted:	$	0.84	$	0.95	$	2.63	$	2.71

XML

Goodwill (Tables)

9 Months Ended

Sep. 30, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Summary of Goodwill

The following table summarizes goodwill at the balance sheet dates:

(in millions)	Total
At December 31, 2017
Gross cost(1)	$	598.3
Accumulated impairment losses		(236.5	)
Net book amount	$	361.8
Acquisition		7.5
Exchange effect		(3.0	)
At September 30, 2018
Gross cost(1)	$	602.8
Accumulated impairment losses		(236.5	)
Net book amount	$	366.3

⁽¹⁾  Gross cost for 2018 and 2017 is net of $298.5 million of historical accumulated amortization.

Schedule of Total Purchase Price and Estimated Allocation of Purchase Price to Assets Acquired and Liabilities Assumed

The following table summarizes the calculations of the total purchase price and the estimated allocation of the purchase price to the assets acquired and liabilities assumed for the business:

(in millions)	BioSuite
Goodwill	$	7.5
Receivables		0.4
Inventory		0.5
Payables		(1.9	)
Extinguishment of existing liabilities		2.1
Purchase price, net of cash acquired	$	8.6

XML

Other Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Summary of Other Intangible Assets

The following table summarizes the other intangible assets movement year on year:

	Nine Months Ended September 30
(in millions)	2018			2017
Gross cost at January 1	$	295.8		$	248.6
Acquisitions		0.0			37.7
Internally developed software		0.8			4.1
Exchange effect		(1.6	)		4.1
Gross cost at September 30		295.0			294.5
Accumulated amortization at January 1		(132.5	)		(104.2	)
Amortization expense		(20.4	)		(20.6	)
Exchange effect		0.2			(0.1	)
Accumulated amortization at September 30		(152.7	)		(124.9	)
Net book amount at September 30	$	142.3		$	169.6

Schedule of Amortization Expense

Amortization expense

	Nine Months Ended September 30
(in millions)	2018			2017
Product rights	$	(2.8	)	$	(2.8	)
Brand names		(0.9	)		(0.9	)
Technology		(2.5	)		(2.5	)
Customer relationships		(8.0	)		(7.6	)
Non-compete agreements		0.0			(0.6	)
Marketing related		0.0			(0.7	)
Internally developed software		(6.2	)		(5.5	)
Total	$	(20.4	)	$	(20.6	)

XML

Pension and Post Employment Benefits (Tables)

9 Months Ended

Sep. 30, 2018

United Kingdom Plan [Member]

Plan Net Pension Credit

The following table shows the income statement effect recognized within other income, net:

	Three Months Ended September 30						Nine Months Ended September 30
(in millions)	2018			2017			2018			2017
Plan net pension credit/(charge):
Interest cost on projected benefit obligation	$	(3.7	)	$	(3.9	)	$	(11.4	)	$	(11.3	)
Expected return on plan assets		5.5			6.2			16.9			18.2
Amortization of prior service credit		0.2			0.3			0.8			0.8
Amortization of actuarial net losses		(0.5	)		(1.2	)		(1.5	)		(3.7	)
	$	1.5		$	1.4		$	4.8		$	4.0

German Plan [Member]

Plan Net Pension Credit

The following table shows the income statement effect recognized within other income and expense:

	Three Months Ended September 30						Nine Months Ended September 30
(in millions)	2018			2017			2018			2017
Plan net pension charge:
Interest cost on projected benefit obligation	$	(0.1	)	$	(0.1	)	$	(0.2	)	$	(0.2	)
Amortization of actuarial net losses		(0.1	)		(0.1	)		(0.3	)		(0.3	)
	$	(0.2	)	$	(0.2	)	$	(0.5	)	$	(0.5	)

XML

Income Taxes (Tables)

9 Months Ended

Sep. 30, 2018

Income Tax Disclosure [Abstract]

Roll-Forward of Unrecognized Tax Benefits

A roll-forward of unrecognized tax benefits is as follows:

(in millions)	September 30, 2018			December 31, 2017
.
Opening balance at January 1	$	2.2		$	2.2
Additions for tax positions of prior periods		0.9			0.5
Reductions due to lapsed statute of limitations		(0.5	)		(0.5	)
Closing balance	$	2.6		$	2.2

XML

Long-Term Debt (Tables)

9 Months Ended

Sep. 30, 2018

Debt Disclosure [Abstract]

Schedule of Long-Term Debt

Long-term debt consists of the following:

(in millions)	September 30, 2018			December 31, 2017
Revolving credit facility	$	126.0		$	121.0
Term loan		99.0			99.0
Deferred finance costs		(1.1	)		(1.6	)
	$	223.9		$	218.4
Due within one year		(15.8	)		(15.8	)
Due after one year	$	208.1		$	202.6

XML

Plant Closure Provisions (Tables)

9 Months Ended

Sep. 30, 2018

Restructuring and Related Activities [Abstract]

Movements in Plant Closure and Restructuring Provisions

Movements in the provisions are summarized as follows:

	Nine Months Ended September 30
(in millions)	2018			2017
Total at January 1	$	46.1		$	39.5
Charge for the period		5.1			4.4
Utilized in the period		(2.1	)		(1.7	)
Exchange effect		(0.2	)		0.5
Total at September 30		48.9			42.7
Due within one year		(4.0	)		(5.9	)
Due after one year	$	44.9		$	36.8

XML

Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2018

Fair Value Disclosures [Abstract]

Carrying Amount and Fair Values of the Company's Financial Assets and Liabilities Measured on a Recurring Basis

The following table presents the carrying amount and fair values of the Company’s financial assets and liabilities measured on a recurring basis:

	September 30, 2018				December 31, 2017
(in millions)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets
Non-derivatives:
Cash and cash equivalents	$	91.4	$	91.4	$	90.2	$	90.2
Derivatives (Level 1 measurement):
Other current and non-current assets:
Foreign currency forward exchange contracts		0.0		0.0		1.1		1.1
Interest rate swaps		2.7		2.7		1.5		1.5
Liabilities
Non-derivatives:
Bank overdraft	$	0.5	$	0.5	$	0.0	$	0.0
Long-term debt (including current portion)		223.9		223.9		218.4		218.4
Finance leases (including current portion)		3.8		3.8		5.9		5.9
Derivatives (Level 1 measurement):
Other current and non-current liabilities:
Foreign currency forward exchange contracts		0.5		0.5		0.0		0.0
Non-financial liabilities (Level 3 measurement):
Stock equivalent units		17.6		17.6		13.6		13.6

XML

Stock-Based Compensation Plans (Tables)

9 Months Ended

Sep. 30, 2018

Stock Options Plan [Member]

Summary of Transactions of Company's Stock Option Plans

The following table summarizes the transactions of the Company’s stock option plans for the nine months ended September 30, 2018:

	Number of Options			Weighted Average Exercise Price		Weighted Average Grant-Date Fair Value
Outstanding at December 31, 2017		357,666		$	13.74	$	35.69
Granted - at discount		280,466		$	46.42	$	34.54
- at market value		18,850		$	68.20	$	16.23
Exercised		(91,362	)	$	12.47	$	27.04
Forfeited		(14,443	)	$	21.05	$	25.34
Outstanding at September 30, 2018		551,177		$	32.25	$	36.14

Stock Equivalent Units [Member]

Summarizes Transactions of SEUs

The following table summarizes the transactions of the Company’s SEUs for the nine months ended September 30, 2018:

	Number of SEUs			Weighted Average Exercise Price		Weighted Average Grant-Date Fair Value
Outstanding at December 31, 2017		400,342		$	3.10	$	46.65
Granted - at discount		115,229		$	2.36	$	57.16
- at market value		5,658		$	68.20	$	16.23
Exercised		(72,689	)	$	5.81	$	29.27
Forfeited		(16,554	)	$	1.40	$	37.14
Outstanding at September 30, 2018		431,986		$	3.36	$	52.35

XML

Reclassifications out of Accumulated Other Comprehensive Loss (Tables)

9 Months Ended

Sep. 30, 2018

Equity [Abstract]

Summary of Reclassifications Out of Accumulated Other Comprehensive Loss

Reclassifications out of accumulated other comprehensive loss for the first nine months of 2018 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	$	(0.8	)		See (1) below
Amortization of actuarial net losses		1.5			See (1) below
		0.7			Total before tax
		(0.1	)		Income tax expense
Total reclassifications	$	0.6			Net of tax

⁽¹⁾ These items are included in other income and expense. See Note 7 of the Notes to the Condensed Consolidated Financial Statements for additional information.

Changes in Accumulated Other Comprehensive Loss

Changes in accumulated other comprehensive loss for the first nine months of 2018, net of tax, were:

(in millions)	Derivative instruments		Defined Benefit Pension Plan Items			Cumulative Translation Adjustments			Total
Balance at December 31, 2017	$	1.2	$	(3.2	)	$	(36.5	)	$	(38.5	)
Other comprehensive income before reclassifications		1.0		0.0			(12.4	)		(11.4	)
Amounts reclassified from AOCL		0.0		0.6			0.0			0.6
Total other comprehensive income		1.0		0.6			(12.4	)		(10.8	)
Balance at September 30, 2018	$	2.2	$	(2.6	)	$	(48.9	)	$	(49.3	)

XML

Segment Reporting - Additional Information (Detail)	9 Months Ended
	Sep. 30, 2018 Segment
Segment Reporting [Abstract]
Number of reportable segments	4

XML

Segment Reporting - Segment Reporting (Detail) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Segment Reporting Information [Line Items]
Net sales	$ 363.1	$ 332.4	$ 1,081.9	$ 953.0
Gross profit	111.0	98.8	318.3	294.8
Restructuring charge	(4.8)	0.0	(4.8)	0.0
Loss on disposal of subsidiary	0.0	0.0	0.0	(1.0)
Foreign exchange loss on liquidation of subsidiary	0.0	0.0	0.0	(1.8)
Operating income/(loss)	33.4	29.0	90.6	87.8
Operating Segments [Member] | Fuel Specialties [Member]
Segment Reporting Information [Line Items]
Net sales	134.9	130.1	412.5	377.8
Gross profit	48.8	44.6	141.8	135.9
Operating income/(loss)	28.8	25.1	80.7	76.0
Operating Segments [Member] | Fuel Specialties [Member] | Refinery and Performance [Member]
Segment Reporting Information [Line Items]
Net sales	97.8	97.4	306.9	286.5
Operating Segments [Member] | Fuel Specialties [Member] | Other [Member]
Segment Reporting Information [Line Items]
Net sales	37.1	32.7	105.6	91.3
Operating Segments [Member] | Performance Chemicals [Member]
Segment Reporting Information [Line Items]
Net sales	114.8	110.3	357.7	309.7
Gross profit	25.3	20.7	74.5	54.8
Operating income/(loss)	12.4	9.7	34.2	22.2
Operating Segments [Member] | Performance Chemicals [Member] | Personal Care [Member]
Segment Reporting Information [Line Items]
Net sales	60.6	52.2	183.6	148.4
Operating Segments [Member] | Performance Chemicals [Member] | Home Care [Member]
Segment Reporting Information [Line Items]
Net sales	28.2	32.7	84.5	89.0
Operating Segments [Member] | Performance Chemicals [Member] | Other [Member]
Segment Reporting Information [Line Items]
Net sales	26.0	25.4	89.6	72.3
Operating Segments [Member] | Oilfield Services [Member]
Segment Reporting Information [Line Items]
Net sales	104.2	81.9	292.1	224.5
Gross profit	33.5	28.5	93.5	82.9
Operating income/(loss)	7.0	1.8	14.1	8.5
Operating Segments [Member] | Octane Additives [Member]
Segment Reporting Information [Line Items]
Net sales	9.2	10.1	19.6	41.0
Gross profit	3.4	5.0	8.5	21.2
Operating income/(loss)	2.7	4.4	6.5	19.2
Corporate, Non-Segment [Member]
Segment Reporting Information [Line Items]
Corporate costs	$ (12.7)	$ (12.0)	$ (40.1)	$ (35.3)

XML

Segment Reporting - Summary of Segment Depreciation and Amortization (Detail) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Summary of segment depreciation and amortization
Depreciation	$ 5.7	$ 5.6	$ 17.0	$ 16.1
Amortization	6.8	6.9	20.4	20.6
Operating Segments [Member] | Fuel Specialties [Member]
Summary of segment depreciation and amortization
Depreciation	1.0	1.0	2.9	3.0
Amortization	0.0	0.2	0.0	0.6
Operating Segments [Member] | Performance Chemicals [Member]
Summary of segment depreciation and amortization
Depreciation	2.6	2.5	7.8	7.0
Amortization	2.3	1.9	6.8	5.6
Operating Segments [Member] | Oilfield Services [Member]
Summary of segment depreciation and amortization
Depreciation	1.5	1.6	4.6	4.8
Amortization	2.7	2.9	8.1	8.9
Operating Segments [Member] | Octane Additives [Member]
Summary of segment depreciation and amortization
Depreciation	0.3	0.2	0.9	0.6
Corporate, Non-Segment [Member]
Summary of segment depreciation and amortization
Depreciation	0.3	0.3	0.8	0.7
Amortization	$ 1.8	$ 1.9	$ 5.5	$ 5.5

XML

Earnings Per Share - Summary of Earnings Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Numerator (in millions):
Net income available to common stockholders	$ 20.6	$ 23.3	$ 64.6	$ 66.6
Denominator (in thousands):
Weighted average common shares outstanding	24,419	24,137	24,399	24,119
Dilutive effect of stock options and awards	178	428	181	450
Denominator for diluted earnings per share	24,597	24,565	24,580	24,569
Net income per share, basic:	$ 0.84	$ 0.97	$ 2.65	$ 2.76
Net income per share, diluted:	$ 0.84	$ 0.95	$ 2.63	$ 2.71

XML

Earnings Per Share - Additional Information (Detail) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Earnings Per Share [Abstract]
Average number of anti-dilutive options excluded from the calculation of diluted earnings per share	0	18,843	0	18,843

XML

Goodwill - Summary of Goodwill (Detail) $ in Millions	9 Months Ended
	Sep. 30, 2018 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
Gross cost, beginning balance	$ 598.3
Accumulated impairment losses, beginning balance	(236.5)
Net book amount, beginning balance	361.8
Acquisition	7.5
Exchange effect	(3.0)
Gross cost, ending balance	602.8
Accumulated impairment losses, ending balance	(236.5)
Net book amount, ending balance	$ 366.3

XML

Goodwill - Summary of Goodwill (Parenthetical) (Detail) - USD ($) $ in Millions	Sep. 30, 2018	Sep. 30, 2017
Goodwill and Intangible Assets Disclosure [Abstract]
Historical accumulated amortization	$ 298.5	$ 298.5

XML

Goodwill - Additional Information (Detail) - BioSuite LLC [Member] - USD ($) $ in Millions	1 Months Ended	3 Months Ended
	May 31, 2018	Sep. 30, 2018
Acquisition Date [Line Items]
Purchase price, net of cash acquired	$ 8.6
Business combination, initial payment at closing	5.8
Business Combination, Reduction for working capital adjustment		$ (0.4)
Business combination, consideration payable	$ 3.2
Business combination, consideration payable date	Nov. 30, 2019

XML

Goodwill - Schedule of Total Purchase Price and Estimated Allocation of Purchase Price to Assets Acquired and Liabilities Assumed (Detail) - USD ($) $ in Millions	1 Months Ended	9 Months Ended
	May 31, 2018	Sep. 30, 2018
Business Acquisition [Line Items]
Goodwill		$ 7.5
BioSuite LLC [Member]
Business Acquisition [Line Items]
Goodwill	$ 7.5
Receivables	0.4
Inventory	0.5
Payables	(1.9)
Extinguishment of existing liabilities	2.1
Purchase price, net of cash acquired	$ 8.6

XML

Other Intangible Assets - Summary of Other Intangible Assets (Detail) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Goodwill and Intangible Assets Disclosure [Abstract]
Gross cost at January 1			$ 295.8	$ 248.6
Acquisitions			0.0	37.7
Internally developed software			0.8	4.1
Exchange effect			(1.6)	4.1
Gross cost at September 30	$ 295.0	$ 294.5	295.0	294.5
Accumulated amortization at January 1			(132.5)	(104.2)
Amortization expense	(6.8)	(6.9)	(20.4)	(20.6)
Exchange effect			0.2	(0.1)
Accumulated amortization at September 30	(152.7)	(124.9)	(152.7)	(124.9)
Net book amount at September 30	$ 142.3	$ 169.6	$ 142.3	$ 169.6	$ 163.3

XML

Other Intangible Assets - Schedule of Amortization Expense (Detail) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Finite-Lived Intangible Assets [Line Items]
Amortization expense	$ (6.8)	$ (6.9)	$ (20.4)	$ (20.6)
Product Rights [Member]
Finite-Lived Intangible Assets [Line Items]
Amortization expense			(2.8)	(2.8)
Brand Names [Member]
Finite-Lived Intangible Assets [Line Items]
Amortization expense			(0.9)	(0.9)
Technology [Member]
Finite-Lived Intangible Assets [Line Items]
Amortization expense			(2.5)	(2.5)
Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Amortization expense			(8.0)	(7.6)
Non-Compete Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Amortization expense			0.0	(0.6)
Marketing Related [Member]
Finite-Lived Intangible Assets [Line Items]
Amortization expense			0.0	(0.7)
Internally Developed Software [Member]
Finite-Lived Intangible Assets [Line Items]
Amortization expense			$ (6.2)	$ (5.5)

XML

Pension and Post Employment Benefits - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Selling, General and Administrative Expenses [Member]
Defined Benefit Plan Disclosure [Line Items]
Net service cost, total	$ 0.3	$ 0.2	$ 0.9	$ 0.7
Germany [Member] | Fuel Specialties [Member]
Defined Benefit Plan Disclosure [Line Items]
Net service cost, total	0.0	$ 0.0	0.1	$ 0.1
Europe [Member] | Performance Chemicals [Member]
Defined Benefit Plan Disclosure [Line Items]
Post-employment obligations European businesses	$ 4.6		$ 4.6		$ 4.7

XML

Pension and Post Employment Benefits - Plan Net Pension Credit (Detail) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Germany [Member]
Plan net pension credit/(charge):
Interest cost on projected benefit obligation	$ (0.1)	$ (0.1)	$ (0.2)	$ (0.2)
Amortization of actuarial net losses	(0.1)	(0.1)	(0.3)	(0.3)
Net pension credit total	(0.2)	(0.2)	(0.5)	(0.5)
United Kingdom [Member]
Plan net pension credit/(charge):
Interest cost on projected benefit obligation	(3.7)	(3.9)	(11.4)	(11.3)
Expected return on plan assets	5.5	6.2	16.9	18.2
Amortization of prior service credit	0.2	0.3	0.8	0.8
Amortization of actuarial net losses	(0.5)	(1.2)	(1.5)	(3.7)
Net pension credit total	$ 1.5	$ 1.4	$ 4.8	$ 4.0

XML

Income Taxes - Roll-Forward of Unrecognized Tax Benefits (Detail) - USD ($) $ in Millions	9 Months Ended	12 Months Ended
	Sep. 30, 2018	Dec. 31, 2017
Income Tax Disclosure [Abstract]
Opening balance at January 1	$ 2.2	$ 2.2
Additions for tax positions of prior periods	0.9	0.5
Reductions due to lapsed statute of limitations	(0.5)	(0.5)
Closing balance	$ 2.6	$ 2.2

XML

Income Taxes - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended			9 Months Ended
	Sep. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2016
Income Tax Contingency [Line Items]
Accrued net interest and penalties	$ 0.3			$ 0.3	$ 0.2
Unrecognized tax benefits, income tax interest and penalties accrued	0.6		$ 0.3	0.6
Unrecognized tax benefits, interest and penalties	3.2		2.5	3.2
Unrecognized tax benefit	2.6		2.2	$ 2.6		$ 2.2
Income tax examination, description				The Company and its U.S. subsidiaries remain open to examination by the IRS for years 2015 onwards under the statute of limitations. The Company’s subsidiaries in foreign tax jurisdictions are open to examination including France (2014 onwards), Germany (2015 onwards), Switzerland (2015 onwards) and the United Kingdom (2016 onwards).
Italian Tax Authorities [Member]
Income Tax Contingency [Line Items]
Unrecognized tax benefit	0.5	$ 0.4	0.5	$ 0.5
Income tax interest expense	$ 0.2	$ 0.1	$ 0.2
Italy [Member] | Earliest Tax Year [Member]
Income Tax Contingency [Line Items]
Open tax year				2011
Italy [Member] | Latest Tax Year [Member]
Income Tax Contingency [Line Items]
Open tax year				2013
France [Member] | Earliest Tax Year [Member]
Income Tax Contingency [Line Items]
Open tax year				2014
Germany [Member] | Earliest Tax Year [Member]
Income Tax Contingency [Line Items]
Open tax year				2015
Switzerland [Member] | Earliest Tax Year [Member]
Income Tax Contingency [Line Items]
Open tax year				2015
United Kingdom [Member] | Earliest Tax Year [Member]
Income Tax Contingency [Line Items]
Open tax year				2016
United States [Member] | Earliest Tax Year [Member]
Income Tax Contingency [Line Items]
Open tax year				2015

XML

Long-Term Debt - Schedule of Long-Term Debt (Detail) - USD ($) $ in Millions	Sep. 30, 2018	Dec. 31, 2017
Debt Instrument [Line Items]
Deferred finance costs	$ (1.1)	$ (1.6)
Long-term debt	223.9	218.4
Due within one year	(15.8)	(15.8)
Due after one year	208.1	202.6
Term Loan [Member]
Debt Instrument [Line Items]
Long-term debt	99.0	99.0
Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Long-term debt	$ 126.0	$ 121.0

XML

Plant Closure Provisions - Movements in Plant Closure and Restructuring Provisions (Detail) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Restructuring and Related Activities [Abstract]
Beginning Balance	$ 46.1	$ 39.5
Charge for the period	5.1	4.4
Utilized in the period	(2.1)	(1.7)
Exchange effect	(0.2)	0.5
Ending Balance	48.9	42.7
Due within one year	(4.0)	(5.9)	$ (5.2)
Due after one year	$ 44.9	$ 36.8	$ 40.9

XML

Fair Value Measurements - Carrying Amount and Fair Values of the Company's Financial Assets and Liabilities Measured on a Recurring Basis (Detail) - Recurring [Member] - USD ($) $ in Millions	Sep. 30, 2018	Dec. 31, 2017
Carrying Amount [Member]
Non-derivatives:
Cash and cash equivalents	$ 91.4	$ 90.2
Non-derivatives:
Long-term debt (including current portion)	223.9	218.4
Finance leases (including current portion)	3.8	5.9
Carrying Amount [Member] | Bank Overdrafts [Member]
Non-derivatives:
Bank overdraft	0.5	0.0
Carrying Amount [Member] | Derivatives (Level 1 Measurement) [Member] | Foreign Currency Forward Exchange Contracts [Member]
Derivatives (Level 1 measurement):
Derivative asset	0.0	1.1
Derivatives (Level 1 measurement):
Foreign currency forward exchange contracts	0.5	0.0
Carrying Amount [Member] | Derivatives (Level 1 Measurement) [Member] | Interest Rate Swaps [Member]
Derivatives (Level 1 measurement):
Derivative asset	2.7	1.5
Carrying Amount [Member] | Non-financial Assets and Liabilities (Level 3 Measurement) [Member]
Non-financial liabilities (Level 3 measurement):
Stock equivalent units	17.6	13.6
Fair Value [Member]
Non-derivatives:
Cash and cash equivalents	91.4	90.2
Non-derivatives:
Long-term debt (including current portion)	223.9	218.4
Finance leases (including current portion)	3.8	5.9
Fair Value [Member] | Bank Overdrafts [Member]
Non-derivatives:
Bank overdraft	0.5	0.0
Fair Value [Member] | Derivatives (Level 1 Measurement) [Member] | Foreign Currency Forward Exchange Contracts [Member]
Derivatives (Level 1 measurement):
Derivative asset	0.0	1.1
Derivatives (Level 1 measurement):
Foreign currency forward exchange contracts	0.5	0.0
Fair Value [Member] | Derivatives (Level 1 Measurement) [Member] | Interest Rate Swaps [Member]
Derivatives (Level 1 measurement):
Derivative asset	2.7	1.5
Fair Value [Member] | Non-financial Assets and Liabilities (Level 3 Measurement) [Member]
Non-financial liabilities (Level 3 measurement):
Stock equivalent units	$ 17.6	$ 13.6

XML

Derivative Instruments and Risk Management - Additional Information (Detail) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Maximum [Member]
Derivative [Line Items]
Maturity period of foreign currency forward exchange contracts	12 months
Not Designated as Hedging Instrument [Member] | Foreign Currency Forward Exchange Contracts [Member] | Other net income/(expense) [Member]
Derivative [Line Items]
Amount of gain/(loss) recognized in income	$ (1.6)	$ (0.6)
Designated as Hedging Instrument [Member] | Interest Rate Swaps [Member] | Accumulated Other Comprehensive Loss [Member]
Derivative [Line Items]
Amount of gain/(loss) recognized in income	$ 1.2	$ 0.2

XML

Commitments and Contingencies - Additional Information (Detail) $ in Millions	Sep. 30, 2018 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Guarantees	$ 5.3

XML

Stock-Based Compensation Plans - Summary of Transactions of the Company's Stock Option Plans (Detail) - Stock Options Plan [Member]	9 Months Ended
	Sep. 30, 2018 $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Outstanding, Number of Options, Beginning balance | shares	357,666
Exercised, Number of Options | shares	(91,362)
Forfeited, Number of Options | shares	(14,443)
Outstanding, Number of Options, Ending balance | shares	551,177
Outstanding, Weighted Average Exercise Price, Beginning balance	$ 13.74
Exercised, Weighted Average Exercise Price	12.47
Forfeited, Weighted Average Exercise Price	21.05
Outstanding, Weighted Average Exercise Price, Ending balance	32.25
Outstanding, Weighted Average Grant-Date Fair Value	35.69
Exercised	27.04
Forfeited, Weighted Average Grant-Date Fair Value	25.34
Outstanding, Weighted Average Grant-Date Fair Value	$ 36.14
Discount [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted, Number of Options | shares	280,466
Granted, Weighted Average Exercise Price	$ 46.42
Granted, Weighted Average Grant-Date Fair Value	$ 34.54
Market Value [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted, Number of Options | shares	18,850
Granted, Weighted Average Exercise Price	$ 68.20
Granted, Weighted Average Grant-Date Fair Value	$ 16.23

XML

Stock-Based Compensation Plans - Additional Information (Detail) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock option compensation	$ 3.0	$ 3.4
Stock Options Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number exercisable and fully vested	40,614
Fully vested stock options with performance conditions attached	600
Stock option compensation	$ 3.0	3.4
Total intrinsic value exercised	2.6	2.0
Total compensation cost related to non-vested stock options not yet recognized	$ 12.2
Expected compensation cost recognized over the weighted-average period	2 years 4 months 17 days
Stock Equivalent Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Fully vested stock options with performance conditions attached	27,655
Total intrinsic value exercised	$ 2.4	1.1
Expected compensation cost recognized over the weighted-average period	1 year 10 months 9 days
Number of exercisable SEUs	30,360
Compensation cost	$ 7.9	$ 3.6

XML

Stock-Based Compensation Plans - Summarizes Transactions of SEUs (Detail) - Stock Equivalent Units [Member]	9 Months Ended
	Sep. 30, 2018 $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Outstanding, Weighted Average Exercise Price, Beginning balance	$ 3.10
Granted at discount, Weighted Average Exercise Price	2.36
Granted at market value, Weighted Average Exercise Price	68.20
Exercised, Weighted Average Exercise Price	5.81
Forfeited, Weighted Average Exercise Price	1.40
Outstanding, Weighted Average Exercise Price, Ending balance	$ 3.36
Outstanding, Number of SEUs, Beginning balance | shares	400,342
Granted at discount, Number of SEUs | shares	115,229
Granted at market value, Number of SEUs | shares	5,658
Exercised, Number of SEUs | shares	(72,689)
Forfeited, Number of SEUs | shares	(16,554)
Outstanding, Number of SEUs, Ending balance | shares	431,986
Outstanding, Weighted Average Grant-Date Fair Value	$ 46.65
Granted at discount, Weighted Average Grant-Date Fair Value	57.16
Granted at market value, Weighted Average Grant-Date Fair Value	16.23
Exercised, Weighted Average Grant-Date Fair Value	29.27
Forfeited, Weighted Average Grant-Date Fair Value	37.14
Outstanding, Weighted Average Grant-Date Fair Value	$ 52.35

XML

Reclassifications out of Accumulated Other Comprehensive Loss - Summary of Reclassifications out of Accumulated Other Comprehensive Loss (Detail) $ in Millions	9 Months Ended
	Sep. 30, 2018 USD ($)
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Total reclassifications	$ (0.6)
Defined Benefit Pension Plan Items [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Total reclassifications	(0.6)
Reclassification Out of Accumulated Other Comprehensive Income/(Loss) [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Total before tax	0.7
Income tax expense	(0.1)
Total reclassifications	0.6
Reclassification Out of Accumulated Other Comprehensive Income/(Loss) [Member] | Defined Benefit Pension Plan Items [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Amortization of prior service credit	(0.8)
Amortization of actuarial net losses	$ 1.5

XML

Reclassifications out of Accumulated Other Comprehensive Loss - Changes in Accumulated Other Comprehensive Loss (Detail) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance			$ 793.9
Other comprehensive income before reclassifications			(11.4)
Amounts reclassified from AOCL			0.6
Total other comprehensive (loss)/income	$ (1.4)	$ 19.2	(10.8)	$ 33.4
Ending Balance	839.9		839.9
Accumulated Other Comprehensive Loss [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance			(38.5)
Ending Balance	(49.3)		(49.3)
Derivative Instruments [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance			1.2
Other comprehensive income before reclassifications			1.0
Amounts reclassified from AOCL			0.0
Total other comprehensive (loss)/income			1.0
Ending Balance	2.2		2.2
Defined Benefit Pension Plan Items [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance			(3.2)
Other comprehensive income before reclassifications			0.0
Amounts reclassified from AOCL			0.6
Total other comprehensive (loss)/income			0.6
Ending Balance	(2.6)		(2.6)
Foreign Currency Translation Items [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance			(36.5)
Other comprehensive income before reclassifications			(12.4)
Amounts reclassified from AOCL			0.0
Total other comprehensive (loss)/income			(12.4)
Ending Balance	$ (48.9)		$ (48.9)

XML

Recently Issued Accounting Pronouncements - Additional Information (Detail) - Accounting Standards Update 2017-07 [Member] - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2017
Operating Income (Loss) [Member]
Change in Accounting Estimate [Line Items]
Impact on operating results	$ (1.2)	$ (3.5)
Other Nonoperating Income (Expense) [Member]
Change in Accounting Estimate [Line Items]
Impact on operating results	$ 1.2	$ 3.5

XML

Related Party Transactions - Additional Information (Detail) - Smith, Gambrell & Russell, LLP [Member] - USD ($) $ in Millions	Sep. 30, 2018	Dec. 31, 2017	Sep. 30, 2017
Related Party Transaction [Line Items]
Fees payable to Smith, Gambrell & Russell	$ 0.2		$ 0.3
Amount due to Smith, Gambrell & Russell	$ 0.0	$ 0.0