Quarter 1
Q1 2026 Earnings Call — May 8, 2026
Analyst Mike Harrison (Seaport Research Partners): I wanted to just start with the performance chemicals business. Maybe help us understand how much of that volume decline was related to the weather or outage impact. I guess what you're seeing in terms of underlying market dynamics there, given the consumer sentiment, remains a little bit weak. And really just trying to get a sense of, you know, should we see volume start to recover in the second quarter? Is that more of a second half type of dynamic?
Executive Name: Yeah, Mike, I'll kind of go in reverse of the question. I think you'll start seeing it in the second half of the year. It's not necessarily orders that we're seeing a negative impact. Our order pattern is very strong right now. The issue we're still having is the plant and that effect from the winter storm that we had early on or late in the season. So it's an issue of getting product out and manufactured and out the door. It's not an issue of orders. I think what you'll see probably is a similar pattern maybe an ink a little better quarter in Q2 with a significant better increase in Q3 that's where we sit right now and we could give you obviously more color as we go along.
Oh yeah, just to kind of follow up on that can you maybe walk us through the repairs and upgrades or optimizations that you're making at the high point and Salisbury plants in North Carolina? What's happening at each plant? What's the timeline for each plant, I guess, to get fully back up and running? And can you help us understand what the potential benefits are of the optimizations that you're working on?
Executive Name: Yeah, number one was to get the plant up and running so we could at least, you know, meet most of the orders that we have in place today. So the number one priority was to get the plant up and running, and we've gotten the majority of that right now. Along the way, we've decided that let's start to optimize to where we get better yields, better efficiencies, automation, et cetera, along the way. But the number one critical part was to get product to customers. So that's been the primary focus. As we move through the stage of that, then we're moving back into the stage of automation, et cetera, that we just talked about. It's a process. It takes time. You know, you had frozen pipes. We've had to replace a lot of pipes, boilers, et cetera. There is a timeline on everything that we've done. We have a plan in place. And Mike, as you know, when plans go down, it just takes time to get some of these things fixed. As you fix one thing, another thing pops up. And so it's just taking some time. It's a little frustrating by us. But we are starting to see a light at the end of the tunnel. And the good thing is, again, the order pattern is extremely strong. And I think when we come out of this, you know, priority number one is to get product to customers. Priority number two is let's make sure we don't have the problems again. And, of course, better efficiency, better yield, better quality, et cetera, which should come along with it in the latter part of the year.
All right, very helpful. And then I wanted to move on to just understanding some of the impacts of the Iran war on your business. I think, first of all, just from a raw material perspective, I'm a little concerned about the fuel specialties business. That business tends to pass through raw material costs on an index, and sometimes there's a lag, I guess. What are you anticipating in terms of some potential margin pressure impacting the fuel specialties business? And I guess with pricing negative in the quarter, should we assume that that price mix number turns positive again in the second quarter? Or is that maybe we see that remain negative and not turn positive until the second half?
Executive Name: Yeah, let me set the first part of that, Mike. Fuel Specialties is a business that operates through or has operated through many different economic cycles. And this, in many ways, is similar to what we've been through before. We've seen some really serious spikes in raw material costs and crude derivatives. And you're absolutely spot on that we have a pass-through mechanism for most of our business. And that does have a time lag. So our expectation is that we'll see some gross margin compression in the second quarter, and that's not to be unexpected. Now, depending on how long some of this continues for, we may well be chasing some of those price increases for a quarter or two. If prices stabilize or drop, we'll obviously see the benefits of that in the fullness of time. So again, little bit like performance chemicals demand is really good the business is operating at the real top end of where we expect it to be with the seasonal impact of fuel specialties in Q2 dropping off a little bit in some timing of gross margins we expect operating income to be in that sort of low 32 to 33 million dollars in the second quarter so a little bit lighter than Q1 but margins potentially a little bit tighter as well.
Yeah, Mike, you know, it's interesting. As Ian said, we've been through these cycles before in this business and we've managed it extremely well. And what you always look for is, is there demand destruction, right? You see high food prices, high jet prices, you know, high diesel, gasoline moving up in the marketplace. Will that have demand destruction? We're not seeing it quite yet. You know, it could happen, but typically what you see is a slight demand destruction, but yet the margin profile still stays pretty steady, and this business just kind of marches along. And I think as Ian and I look at this and ascertain the situation and all the market information that we're getting, we still feel very confident that fuel specialties will continue on this path. No, we're, I mean, the market is surprisingly resilient here. I was surprised to see the unemployment numbers that came out today. So we'll see what happens with demand.
I guess the last question that I had is just maybe tying it all together. You mentioned the sequential decline in fuel specialties and sequential growth expectations for performance chems and for oil field. So net is Q2 earnings pretty similar to Q1, a little bit lower than Q1. Maybe just any additional color you can provide there would be helpful.
Executive Name: Yeah, I'll let Ian take the first part, and I'll add some clarity to it as well.
Executive Name: Yeah, you called it pretty right there, Mike. We're expecting a small drop-off in fuels compared to Q1, seasonally driven. We expect a small increase sequentially in performance chemicals and the same in oilfield. So net-net, you're going to come out with a very similar quarter in terms of EPS, maybe a penny or two higher. We do need to see the impacts of the war coming through. But right now, that's how we see it. Very much like it's modeled in your numbers as well, Mike.
Executive Name: Yeah, I think, Mike, we looked at your model and your numbers on, let's talk about oilfields. We haven't touched much on oilfields. You know, where there's chaos, there's opportunities, right? And I think if you look at the expansion that we did in DRA, this chaos has created a lot of opportunities in DRA. And as Ian said, that will help boost oil field in Q2 and Q3 moving forward. And so, we're seeing more opportunities with higher crude prices. Even if crude prices come down, we still feel like we're in a better position than we have been in the past. And I think, as Ian said, you'll see a similar type, little bit of improvement in Q2, and then you'll see the bigger improvements in Q3, Q4.
All right. Very helpful. I'll turn it back. Thanks.
Analyst John Tangwantang (CJS Securities): Hey, good morning, and thank you for taking my questions. Patrick, I just want to drill down on the oil field business, pun intended there. You mentioned you're obviously seeing more opportunities there, even with the delays, you know, in the expansion to the Middle East. Are those net positive opportunities as you look at the full year, or is it a net negative just with the disruptions that you're seeing, you know, compared to what you thought maybe two or three months ago?
Executive Name: Yeah, it's definitely, John, net positive. And I think that what we're seeing, the position that we put our product lines in with specific customers, either A, in the Middle East and even a little bit now, potentially in Argentina or Venezuela and Mexico as well, where there's heavy crude, we think these are potentially long-term opportunities. As I said earlier, there's opportunity and chaos, and because of our technologies, it's provided us a lot of opportunity, and now it's up for us to capture that. Even as the Straits over Muth open up, you have the east-west pipeline that we're looking at helping out right now with DRA. Once the Straits open up, you'll see fracking pick up again, which will obviously help our business again. And then you're seeing Vidsweiler coming in with heavy crude that we're looking to trade on their heavy crude. So a lot of this chaos has created a lot of opportunities. And I think if we positioned ourselves properly, we have great technology, now it's a matter for our group to go ahead and execute it. And we're starting to see that happening. That's why we're telling you we'll see a sequential improvement over Q1 in oil field, and we should see that throughout the rest of the year.
Got it. Thank you. And if I could just ask two more on the same topic. Are you seeing any DRA opportunities pushed out of this year as a result of the delays and the conflict, number one? And number two, is there any update on your, you know, prior large Latin American client and if the higher prices today might spur them to do something sooner rather than later?
Executive Name: Yeah, so on DRA, we've seen all opportunities. Matter of fact, the plant expansion that we put together is pretty much going to be maxed out in Q2 and Q4. So pure opportunities there. If you look at the Latin America opportunities, and we mentioned a couple. We mentioned Venezuela. I know your specific question is to Mexico. There is activity going in Mexico right now, and obviously with their heavy crude and where the crude prices are right now and the need for the Gulf Coast refineries to have access to heavy crude, there is a lot of activity. Now, until PEMEX decides how they're going to fix paying vendors, there's going to be that lag still. But we are starting to see increased activity, and the hope is that we'll start seeing something out of there. It will never be the magnitude that we had. The hope is we'll see something coming out of there. But again, there are some opportunities in Venezuela, too, that we're going to start pursuing that hopefully will benefit as well.
Got it. Thank you. And then one last question just on capital allocation priorities. I see that you bought back a lot of shares. You authorized a new $75 million buyback, which is great. I think in the prior quarter, you had talked about increasing M&A opportunities this year, and I'm wondering if that's changed in your outlook, just given the higher degree of share buyback. So can you do both with the cash flow and the cash pile that you have?
Executive Name: Yeah, I think we can do both. And, you know, we tapped the brakes a little bit, John, until we get performance chemicals righted. And we're starting to see a light at the end of that tunnel. And the hope is that after we get through Q2, where we'll see a similar quarter as we saw in Q1, that we start seeing those big improvements that we've anticipated in Q3 and Q4. Once we see that turnaround, and it's in actual numbers, not in just talk, but in actual numbers, I think you'll see us aggressively going after M&A. But we haven't stopped. We just haven't found the right thing. But we are continuously looking. But the hope is the right deal doesn't come around until Q3 when we see those numbers improve.
Is it fair to say that that deal will be dependent on that facility getting fixed, or is that just something you're hoping to have as a bogey in terms of operations?
Executive Name: Yeah, it's open. I have it as a bogey.
Analyst David Silver (Freedom Capital Markets): Yeah, hi. Good morning. Thank you. I would like to maybe kind of drill down just a little bit on fuel specialties. So, you know, according to my records, you know, both the revenues and especially operating income were kind of at, you know, all-time highs. And more to the point, you know, rather than just isolating one period, I mean, you know, maybe three out of the last four quarters have really been, you know, exceptionally strong from a historical perspective. And I know you kind of talk about this as being a very steady business, but, you know, 10% volume growth this quarter and just the overall trend kind of points to maybe, I don't know, some share gains or some new products making an impact. But, you know, maybe if you could just comment not just on good results, but on, you know, record results and kind of consecutive periods of kind of above normal or above trend, I would say, growth and margin performance. So underneath, I mean, underlying this, what might be moving more positively than the historical trends that, you know, might indicate?
Executive Name: Yeah, good question, David. I'll take that. You know, some of it has been market changes, market improvements, volume gains, price mix. There's been a little bit of variable in your question. The other that we've seen is that we've started to grow a lot of business in adjacent markets that are outside of fuels. And so when you look at polyethylene plants, polypropylene, et cetera, so we've moved into other market segments that are an offshoot of field specialty. So that's been a beneficial gain and nice margins in that area. So they've done a really good job of putting together a strategy and a plan in place and sticking to it. And as you know, that business is always extremely steady. I've been involved in that business from day one. It was my business prior to being CEO of this company. So I know this business extremely well. They've done a really good job running this business. They've created themselves opportunities. We've got a good product pipeline. And that's why we feel confident that we can continue to either, A, grow or sustain moving forward this year and beyond. So it's a little bit of everything, which you'd like to see.
You don't want to see one thing create all the positive. It's a little bit of everything that's created the positive. Now, you are going into a second quarter. You always see a drop-off because of seasonality. And so you just have to remember that. But, you know, again, I think the sequential improvement has been very impressive, as you said.
Analyst: And if you don't mind, I'm just going to follow up. But, you know, again, you know, from the perspective of, you know, very strong results, I mean, near term, I guess, you know, the diesel markets have been, you know, rattled a bit on the cost and maybe availability side. And, you know, various airlines are, you know, balking, I guess, or having trouble operating in the current environment. So, I mean, just from your perspective, I know diesel and jet are important to your fuel specialties, but, you know, how would you say, you know, what has been the strategy or the plan to kind of, you know, continue to operate or perform so well despite, you know, kind of objectively some meaningful near-term disruptions?
Executive Name: Yeah, Dave, I think it's diversification of portfolio within fuel specialties. Again, you know, we treat marine, bunker, jet, gasoline, diesel. We've gone to adjacent markets outside of core fuels and heavy fuels. So it's the creativity within the organization and the diversification of the portfolio which will help us sustain kind of where we are today. Now, we are watching heavily what's going on with fuels. And as you said, you see Spirit Airlines go down and others blaming it on fuel costs. Why they weren't hedging fuel costs is beyond me. But my only point there is we are watching demand destruction and see if it hits us. It has not as of yet. You know, the consumer is extremely strong still. You know, usage is still strong, but we are watching it closely. But again, the diversification within the portfolio has always helped us overcome these chaotic markets.
Analyst: Okay, and then just one more kind of maybe bigger picture question, but when I think of the disruptions from the Persian Gulf and one or two other areas, I mean, I do think, and you touched on this earlier, but I do think, you know, oil field in particular, but probably, you know, multiple areas do have, you know, objectively, they're going to have greater opportunities regardless of when and how the Persian Gulf situation plays out. I mean, people are just going to want to source differently. And from your perspective, I mean, you know, I think you have multiple areas that could benefit, which you did discuss. But I'd like to maybe ask you about the resourcing. In other words, you know, what would you have to do in oil field, for example, to take advantage of what we're seeing, you know, on a daily basis, which is a much greater interest in, you know, U.S. petroleum and petroleum products exports. And, you know, there probably are some other, you know, businesses. I'm just wondering, you know, do you have bare capacity now or do you need to really, you know, increase maybe either investments in capacity or investments in talent to kind of, you know, take full advantage?
Executive Name: You know, I think we're properly positioned and, you know, I think security supply is big on everybody's mind and we're well positioned for security supply. You know, I think during chaotic times like this, innovation is going to be on the forefront of everybody. If you're looking at, you know, similar technologies that come out of the Gulf based off of raw material, can you do something different in other markets that are sustainable long term with technology? Those are things that we're looking at and consistently and constantly bringing to the market. So I think, you know, if you really look at when these market dynamics change like they are today, innovation, security, supply is on everybody's mind. And that's going to be our focus during these times, but as well as sustainability when things come back to normal if and when they do. And that's the key for our group is to make sure that what we do today brings us sustainability in the following years moving forward.
Analyst: Okay, great. I appreciate all the color. Thanks very much.
Executive Name: Thank you.
Executive Name: Thank you. Now we're going to take our next question. And
the question comes from David Silver from Freedom Capital Markets. Your line is open. Please ask your question.
Executive Name: Thank you all for joining us today, and thanks to all our shareholders, customers, and InnoSpec employees for your interest and support. In the first If you have any further questions about InSpec on matters discussed today, please give us a call. We look forward to meeting up with you again to discuss the second quarter, 2026 results in August. Have a great day. This concludes today's conference call. Thank you for participating. You may now disconnect. Have a nice day.
Quarter 2
Q4 2025 Earnings Call — February 18, 2026
Analyst John Tanuantang (CJS Securities): Hi, guys. Good morning, and thank you for taking my questions and really nice job on the mix and margin there. I was wondering if you'd go a little bit into the oil field business and how you see the mix evolving there, especially in the coming quarters as you continue to diversify that business.
Executive Name (Title): Yeah, John, let me start with that one. We're really pleased with the progress that we've seen in the oilfield business in Q4. We were with the team yesterday, and I've got to say we're really encouraged by the activity levels that are going on, the creativity, the focus on technology. As we head into 2026, we're going to take a little tap on the brakes because of the weather impacts in Q1. But beyond that, our DRA expansion is coming online and we're starting to ramp up volumes there, spreading the customer base and improving the profitability. And the gross margins in that business is critical for us. Also, the Middle East remains a real hot spot for us. We can see lots of opportunities there, advancing technologies and a real nice opportunity for us to grow the business above average rates in the region. Outside of that, we've had a tough time in the US, but we've got lots of opportunities with new technologies and new ways of going to market starting to happen. So when we wrap all that together, we do feel confident that we'll be able to outpace what we did in 2025. The mix will be a little bit more towards the Middle East and DRA, and we feel that we can improve the profitability of those other core businesses in production and STEM as well.
Analyst: Okay, great. You mentioned the impact of weather a couple times. I guess that, you know, less people driving, maybe there's some snarls with production, but I would also expect probably maybe an offsetting impact on cold flow. Could you just quantify what you think the impact is going to be this quarter from cold weather and winter storms?
Executive Name (Title): Yeah, I'll let Ian take the financial portion of the negative effects, but you know, in oil field, it was production activity. You know, people couldn't get to the well sites, couldn't deliver product. There was a multitude of issues. If you look at North Carolina, I mean, it was an extreme snow and ice event where our plants are located. Probably the biggest ice event in a century in that area. So we did have a lot of plant downtime, couldn't get raw materials in. And then obviously, John, when you start the plant back up, you're going to have a lot of issues, and that's what we've done. In conjunction with that, though, being that we've had these issues with cold weather and hit us, we've also decided at the same time to really work on the plant's inefficiencies to make the plant more efficient, get better yields, better product quality, work on some of the manufacturing processes that we probably would have had done at some point in time. So we're going to go ahead and do it all since we had the plant issue and had the cold weather issue, just knock it all out at once.
So, you know, I think it's – I wouldn't say it's a blessing in disguise by any means because I think we would have had a really strong first quarter. So we would have backed up the fourth quarter with another strong quarter. But it is something that has to be done. It's an event that was unexpected. We'll get it fixed. It won't happen again because we will prepare for it. But we'll also make that plant in much better condition to move forward for growth.
Executive Name (Title): Yeah, just to add to that, John, when you roll that into our expectations for Q1, within the oil field business, we're probably going to be posting operating income around about $5 million to $6 million. That's probably a couple of million below where we would like to have been. And that's for the reasons Patrick explained. In performance chemicals, it's a bigger impact because we've obviously got quite a large manufacturing footprint down there, which was closed for an extended period. And there's been some damage to the site as well. So it's going to take a little while for us to build that back up. So we're expecting the performance chemicals Q1 operating income to be close to $10 to $11 million. Again, that's probably $5 to $6 million below where we would have liked to have been. So it's quite a significant impact from the weather in Q1 in both of those businesses.
Analyst: Got it. And just to follow up on that, do you expect to make that up in the following quarters for the whole year, or is that something that gets lost as you look at the whole 26th?
Executive Name (Title): It's slightly different in both businesses. The oil field business potentially could make up some of that, John, but it's going to be a tough ask for them because their customers have closed down. And if they come back and come back strong, we may make up some of it. Performance chemicals, because it's production-based, we've lost that production time. We will not be able to make that back up. And it's going to take us a quarter or two for the reasons Patrick was explaining, some of the additional efficiencies that we're going to be looking for on that site. We won't be able to make up that volume of production. So with those sales... and those costs will be lost to us. What we do expect is as we exit Q2 is that the Q3 numbers will be shown much stronger benefits of the changes that we're making and a much stronger benefit from the direction and the discipline the business is driving into customer contracts, pricing, and general efficiencies.
Executive Name (Title): Yeah, it's just unfortunate timing, John. Our expectations were rolling into a nice Q4 to roll into a really strong And we're just going to take advantage of it now that it did happen. We're going to make it even better coming out of Q2.
Analyst: Got it. Thank you. I'll jump back in queue. Thanks, Jim. We are now going to proceed with our next question. The next questions come from the line of Mark Harrison from Seaport Research Partners. Please ask your question.
Analyst Mark Harrison (Seaport Research Partners): Hi, good morning. Had just a couple questions on the performance chemicals business. Can you talk a little bit about what drove the volume decline that you saw in Q4? I assume that was not weather related. Was that customers taking inventory down or what else was going on there? And then I guess just in terms of the price, specific to the pricing actions you need to take in order to cover the higher cost of oleochemicals and maybe other raw material inputs, are those prices in place and where you need them to be? Or are there going to be some additional actions that may contribute to better price versus raw material cost margin contribution as we get into 26th?
Executive Name (Title): Yeah, we'll hit your questions by both of us. I think to start with Q4 volumes, Mike, a lot of it was just uncertainty in the marketplace. You know, I think tariffs in general just have put a downturn on any kind of inventory build. I think that was part of it. Typically, Q4 is a little slower in the business by nature. You know, but I think overall, if you look at the quality of business that we have, moving into the year, we felt very strong. I think for us, we've done a lot of price action around margins and around raw materials. A lot of our national contracts and international contracts and multinationals has price mechanisms built into the contract. So we had to go back and just make sure we're following those guidelines that have set forth in the contracts. In other areas where we saw price spikes around oleos, etc., we have finally gotten out in front of those, and therefore you saw the margin increase. I do think over time, probably more towards the middle of this year, you'll start to see us even get ahead of that.
But, you know, because of the weather event that we had, I think first quarter is going to affect us a little bit and a little bit into Q2. But overall, you know, I think we're heading in the right direction with margins. The volume is there. The sales are there. The revenue is there. The business is there. We're increasing our output on new products in the portfolio, which is going to build upon throughout the year as well. And those are higher margin products too. So if you look at the overall business, I would say it's not a negative, it's a positive. I think it's the weather event that's going to affect us up front. But we're starting to really manage these processes the way they should have been. But additionally to that, the pipeline is full of new products, which will benefit us moving forward.
Analyst: All right, thanks for that. And then a couple on oil fields. I'm just curious, you know, this was a year, 2025 was a year when you guys, again, saw some further declines in revenue. Obviously, you didn't see any recovery from the Latin American customer, but I'm just curious, as you're starting to think about what top line growth could look like next year, it sounds like you're really encouraged by what you're seeing in the Middle East, some contribution from DRAs. Is it your view that as we think about the entire year, we could see some maybe mid to high single digit type of top line growth? And then the second piece of that question is, you know, as we're talking about Latin America, is it possible that we see any business opportunities start to show up in Venezuela?
Executive Name (Title): Yes, good questions. I do think you're going to start seeing that probably between five to seven percent revenue growth in that oil field. You know, oilfield needs consolidation in the marketplace, at least in North America. And there's also a need for technology. And as Ian alluded to earlier in the conversation, there's been a big emphasis and a big push to bring new technologies to the marketplace that really this market hasn't seen in quite some time. And I do think that we're on the edge of that happening. As you said, I think Middle East will start to really pull its weight in Q2, Q3, Q4. And it's not just with Saudi Aramco. It's in the general market area, the regional area of the Middle East. In regards to Latin America, you know, I do think we're going to start seeing sales in Mexico again. I think it's a function of how we're going to get paid. You know, we're not going to sell products for free, but I do think that they, well, we do know they need the technology. We know our technology works. It's proven. So I do think Mexico at some point in time, we will see something, not to the magnitude we've had in the past.
And in regards to Venezuela, it's a very heavy crude. We know that crude up there very well. You know, Chevron's operated in that region for quite some time. So as soon as you start getting some stability, political stability in that area, and you start seeing international investment primarily from the U.S., that is definitely an open market for oil field where I think we can make a big difference. So there's a lot of positives there. We've got to extract those, and the market's got to come our way. And I think it's up for our guys to really push the envelope and make it happen.
Analyst: All right, one of the special items that you guys called out in the quarter referred to the tax impact from an internal reorganization. I was wondering if you could explain what that reorganization entails and what impacts that could have on the P&L going forward.
Executive Name (Title): Yeah, I'll take that one, Mike. It was a reorganization we did over a year ago at the top end of the organization just to simplify the structure and allow us to move cash overseas into the us in a much more tax efficient way. There was a deferred tax impact to that reorganization that has a I think it's a 15-year benefit to tax. It'll be about $600,000 a year for the next 15 years in cash taxes, Mike. So it's all below operating income. There's no business benefit but it does simplify our operations that the way we are able to move cash around the way we are able to file tax returns in the us and it gives us a little bit of benefit to the tax line as well.
Analyst: All right. Last one for me is just on corporate costs. They were quite a bit lower in Q4. I was just curious, was that some incentive comp that was lower or what drove that? And if you can give any kind of an outlook or guidance for corporate costs in the first quarter and for 2026, that would be very helpful. Thank you.
Executive Name (Title): Yeah, you're spot on, Mike. It was personnel-related costs. As we look forward into 26, that's sort of $20 million per quarter, $80 million for the full year. That's the level that we're expecting for 2026.
Analyst: Thanks very much.
Analyst: Thank you. We are now going to proceed with our next question. And the questions come from the line of David Silva from Freedom Capital Markets. Please ask your question.
Analyst David Silva (Freedom Capital Markets): Yeah. Hi. Good morning. Thank you.
Executive Name (Title): Good morning, David.
Analyst David Silva (Freedom Capital Markets): So I would like to start with maybe just a question or two on fuel specialties. And firstly, on the quarter, you know, if I'm not mistaken, my model goes back about, I don't know, 10 years or so. I believe the revenues in the quarter were your highest ever. And your operating profit, $37 million, was, I think, your second highest ever. So, you know, obviously the business is functioning pretty well. And I know that your view is that it's a very stable business, low single-digit, you know, grower from year to year. But it does seem like, you know, you're shaking things up a little bit or operating the business a little bit differently. So, you know, what maybe led to the record revenue near record operating profit this quarter? In other words, did you have some incremental success with new products or just a richer mix overall. But, you know, just maybe some thoughts about that and then why that strength, you know, on an annual basis, let's say, couldn't continue on into 2026.
Executive Name (Title): Yeah, David, they've really done a really good job in that business. I think you're spot on. It was a record revenue. It was very close to a record. I think a lot of it was product mix, but a lot of it is outside of even fuels. I think they've done a really good job of expanding their portfolio, getting out there with new technologies, making sure that we've got the right costing in place, making sure that we're staying up on innovation. And it was a good overall effort globally by all parts. It is a business that's typically a 2% to 3% growth business and occasionally we see those spikes like when you went to ulsd we had the big spike you're starting to see some regulatory movement you're starting to see gdi take effect in some after markets and europe. Our marine business, all the businesses that we've been talking about for quite some time are starting to come along and as expected. And, you know, the group who manages that division really stepped it up. And you got to give them credit. I think that it's always been our stable business. It's a light on CapEx. It's got great free cash flow. And we'll continue to push it there.
I think it's also an area, you know, just to expand a little bit off your question, it's an area we'd love to acquire into if we found something that was worth purchasing. The team deserves it. They've built it. They're ready for it. We've just got to find the right thing to buy. But overall, great job. I do expect them to have another strong, consistent year.
Analyst: You poached with that M&A comment. You poached one of my questions for the follow-up discussion. Next question, I wanted to maybe switch over to performance chemicals and maybe I don't know, come at it just a little bit different. But revenue-wise, I mean, I think it was a record or near record year. And there's a number of issues involving kind of the lower operating profit year over year. But in general, there's a lot of chatter about the strained kind of middle income or consumer and things like that. And I did note, I believe it's like two or three quarters in a row where you cited kind of a weaker mix within performance chemicals. And I'm just wondering, is trading down kind of an issue that you're seeing, you know, are your customers kind of indicating that that's, you know, a bigger part of their business with you? And then more to the point, I mean, I guess this business has been a mid to high single digit, you know, grower over the longer term. Is that still kind of your thinking for next year or whether it's due to mix or other factors, you know, that maybe the growth potential might be a little slower over the medium term?
Executive Name (Title): Yeah, I mean, if you... consumer trends right now, they are trading down to a lower price commoditized type products. So we have definitely seen that. Now that moves in, that ebb and flows. Once you take up market uncertainty out and people see more spending capabilities in their pockets, they'll go out and start spending more on high-end products. So we have seen that push down to more commoditized products. But again, David, you'll see that. That's very typical in markets like this where there's uncertainty or coming out of inflationary markets. You know, for us, it's the continuance on innovation, right, and to get better manufacturing processes and efficiencies so that we can better prepare for that commoditized market where we're making better margins than we have to date is something we're doing at some of our plants right now, which will benefit us towards the latter part of the year. But, you know, yeah, consumer trends have sent us that way. The way I look at growth in that area is I think you're probably looking at it a little bit flat this year. And then I think you'll start seeing it spike back up probably towards the latter part of this year. But I would probably hold it flat.
Analyst: Okay. Last one for me, I did want to go to your concluding remarks in your earnings release. And in particular, you know, you cited in performance chemicals in the oil field, you said new technology commercializations and other opportunities for 2026. In particular, on the new technology commercialization, I mean, you focused on kind of some of your functional surfactant products for mining and agrochemical and whatnot. But I was just wondering, are those the recent commercializations? Are those the products you're talking about, maybe expanding the role out there? Or you haven't been shy about rolling out new products over a longer period of time. Is there another new crop of products product introductions we should be thinking about and you know qualitatively maybe could you point us to where those might be?
Executive Name (Title): Yeah, these are a series of products and let's talk performance chemicals specifically there are a series of products that go in multiple applications. You know, they're not mass markets where you're going into a multibillion-dollar industry and capturing $200 to $300 million of business. They're more specialized. So we will typically launch two, three, or four of these throughout the year, which is just a nice build-on upon our business in which over time we'll start increasing that margin. And as I said earlier, I think that you'll start seeing the impact of those probably more in the Q3, Q4 range. So there was a nice pipeline of portfolio of products that will be hitting the market throughout the year. But I think it's a buildup over time where you start seeing the big changes in margin profile and in revenue. And it's the same in oil field. You know, we've got a lot of creativity in the group. They're finally starting to come together and bring new ideas and creativity market. Sometimes it's not necessarily just products. It could be market approach. And so there's a lot of different reality going.
We have to be different than other people, whether it's technology or whether it's service or whether it's any kind of innovation that's attached to both. And that's really where we're pushing our group. And that's why we feel pretty confident that we'll overcome the barriers that we have in Q1 and Q2 manufacturing barriers. We'll overcome those in Q3, Q4 by all the things that we have going on internally with the organizations.
Analyst: Okay, great. Thank you very much.
Executive Name (Title): Thank you. We have no further questions
at this time, so I'll hand back to the President and CEO, Patrick Williams, for closing remarks.
Executive Name (Title): Thank you for joining us today, and thanks to all our shareholders, customers, and InnoSpec employees for your interest and support. If you have any further questions about InnoSpec or matters discussed today, please give us a call. We look forward to meeting up with you again to discuss our first quarter 2026 results in May. Have a great day. This concludes today's conference call. Thank you all for participating. You may now disconnect your lines. Thank you and have a great day.