INNOSPEC INC., 10-Q filed on 09 Aug 17
v3.7.0.1
Document and Entity Information - shares
6 Months Ended
Jun. 30, 2017
Jul. 31, 2017
Document And Entity Information [Abstract]    
Document Type 10-Q  
Amendment Flag false  
Document Period End Date Jun. 30, 2017  
Document Fiscal Year Focus 2017  
Document Fiscal Period Focus Q2  
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 Common Stock, Shares Outstanding   24,136,643
v3.7.0.1
Consolidated Statements of Income - USD ($)
shares in Thousands, $ in Millions
3 Months Ended 6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Income Statement [Abstract]        
Net sales $ 326.3 $ 228.0 $ 620.6 $ 440.1
Cost of goods sold (221.2) (142.5) (424.6) (278.4)
Gross profit 105.1 85.5 196.0 161.7
Operating expenses:        
Selling, general and administrative (60.9) (53.1) (116.2) (97.0)
Research and development (8.5) (6.2) (15.9) (13.1)
Adjustment to fair value of contingent consideration 0.0 2.4 0.0 4.0
Loss on disposal of subsidiary (1.0) 0.0 (1.0) (1.4)
Foreign exchange loss on liquidation of subsidiary 0.0 0.0 (1.8) 0.0
Total operating expenses (70.4) (56.9) (134.9) (107.5)
Operating income 34.7 28.6 61.1 54.2
Other net income 2.1 8.5 1.1 8.2
Interest expense, net (2.0) (0.7) (4.2) (1.5)
Income before income taxes 34.8 36.4 58.0 60.9
Income taxes (8.7) (7.5) (14.7) (13.1)
Net income $ 26.1 $ 28.9 $ 43.3 $ 47.8
Earnings per share:        
Basic $ 1.08 $ 1.21 $ 1.80 $ 1.99
Diluted $ 1.06 $ 1.18 $ 1.76 $ 1.95
Weighted average shares outstanding (in thousands):        
Basic 24,133 23,973 24,110 23,996
Diluted 24,555 24,443 24,558 24,462
v3.7.0.1
Consolidated Statements of Comprehensive Income - USD ($)
$ in Millions
3 Months Ended 6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Statement of Comprehensive Income [Abstract]        
Net income $ 26.1 $ 28.9 $ 43.3 $ 47.8
Other comprehensive income:        
Changes in cumulative translation adjustment, net of tax of $(0.7) million, $(1.2) million, $(0.8) million and $(0.8) million, respectively 9.1 (1.8) 12.6 (0.2)
Changes in unrealized gains on derivative instruments, net of tax of $0.1 million, $0.0 million, $0.0 million and $0.0 million, respectively (0.2) 0.0 0.0 0.0
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) (0.3) (0.4) (0.5)
Amortization of actuarial net losses, net of tax of $(0.3) million, $(0.1) million, $(0.5) million and $(0.3) million, respectively 1.0 0.6 2.0 1.1
Total other comprehensive income/(loss) 9.7 (1.5) 14.2 0.4
Total comprehensive income $ 35.8 $ 27.4 $ 57.5 $ 48.2
v3.7.0.1
Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($)
$ in Millions
3 Months Ended 6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Statement of Comprehensive Income [Abstract]        
Changes in cumulative translation adjustment, tax $ (0.7) $ (1.2) $ (0.8) $ (0.8)
Changes in unrealized gains on derivative instrument, tax 0.1 0.0 0.0 0.0
Amortization of prior service credit, tax 0.0 0.0 0.1 0.1
Amortization of actuarial net losses, tax $ (0.3) $ (0.1) $ (0.5) $ (0.3)
v3.7.0.1
Consolidated Balance Sheets - USD ($)
$ in Millions
Jun. 30, 2017
Dec. 31, 2016
Current assets:    
Cash and cash equivalents $ 48.8 $ 101.9
Trade and other accounts receivable (less allowances of $4.3 million and $4.7 million respectively) 241.6 154.4
Inventories (less allowances of $9.7 million and $8.6 million respectively):    
Finished goods 149.6 118.1
Raw materials 68.0 55.7
Total inventories 217.6 173.8
Prepaid expenses 5.0 6.2
Prepaid income taxes 6.9 4.8
Total current assets 519.9 441.1
Property, plant and equipment:    
Gross cost 300.7 251.8
Less accumulated depreciation (113.8) (94.4)
Net property, plant and equipment 186.9 157.4
Goodwill 335.5 374.8
Other intangible assets 164.1 144.4
Deferred tax assets 15.5 14.9
Pension asset 52.6 48.0
Other non-current assets 2.4 0.8
Total assets 1,276.9 1,181.4
Current liabilities:    
Accounts payable 108.0 59.6
Accrued liabilities 91.4 94.3
Current portion of long term debt 10.3 10.3
Current portion of finance leases 2.4 1.6
Current portion of plant closure provisions 6.1 6.7
Current portion of accrued income taxes 9.0 9.4
Current portion of acquisition-related contingent consideration 1.1 1.1
Current portion of deferred income 0.1 0.1
Total current liabilities 228.4 183.1
Long-term debt, net of current portion 238.8 258.5
Finance leases, net of current portion 3.4 2.9
Plant closure provisions, net of current portion 35.6 32.8
Unrecognized tax benefits 2.3 2.3
Deferred tax liabilities 47.3 32.3
Pension liabilities 15.7 14.2
Deferred income, net of current portion 0.5 0.5
Other non-current liabilities 0.5 1.0
Total liabilities 572.5 527.6
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 316.9 315.1
Treasury stock (5,417,857 and 5,483,341 shares at cost, respectively) (97.1) (97.5)
Retained earnings 595.9 561.8
Accumulated other comprehensive loss (112.0) (126.2)
Total Innospec stockholders' equity 704.0 653.5
Non-controlling interest 0.4 0.3
Total equity 704.4 653.8
Total liabilities and equity $ 1,276.9 $ 1,181.4
v3.7.0.1
Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Millions
Jun. 30, 2017
Dec. 31, 2016
Statement of Financial Position [Abstract]    
Allowances for doubtful accounts $ 4.3 $ 4.7
Inventory allowances $ 9.7 $ 8.6
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 5,417,857 5,483,341
v3.7.0.1
Consolidated Statements of Cash Flows - USD ($)
$ in Millions
6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Cash Flows from Operating Activities    
Net income $ 43.3 $ 47.8
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization [1] 24.5 18.9
Adjustment to fair value of contingent consideration 0.0 (4.0)
Deferred taxes 3.5 1.1
Loss on disposal of subsidiary 1.0 1.4
Foreign exchange loss on liquidation of subsidiary 1.8 0.0
Cash contributions to defined benefit pension plans (0.5) (0.6)
Non-cash movements on defined benefit pension plans (1.8) (3.2)
Stock option compensation 2.2 1.9
Changes in assets and liabilities, net of effects of acquired and divested companies:    
Trade and other accounts receivable (82.1) 0.9
Inventories (39.3) 5.7
Prepaid expenses 1.2 0.9
Accounts payable and accrued liabilities 39.8 (14.1)
Accrued income taxes (4.3) 1.6
Plant closure provisions 2.0 0.9
Unrecognized tax benefits 0.0 (0.4)
Other non-current assets and liabilities (2.2) (1.7)
Net cash (used in)/provided by operating activities (10.9) 57.1
Cash Flows from Investing Activities    
Capital expenditures (13.1) (7.5)
Business combinations, net of cash acquired 0.0 1.8
Sale of short-term investments 0.0 4.7
Net cash used in investing activities (13.1) (1.0)
Cash Flows from Financing Activities    
Proceeds from revolving credit facility 10.0 28.0
Repayments of revolving credit facility (30.0) (7.0)
Repayments of finance leases (1.1) (0.4)
Payment for acquisition-related contingent consideration 0.0 (44.0)
Dividend paid (9.2) (8.1)
Issue of treasury stock 1.0 0.3
Repurchase of common stock (1.0) (8.2)
Net cash used in financing activities (30.3) (39.4)
Effect of foreign currency exchange rate changes on cash 1.2 (0.4)
Net change in cash and cash equivalents (53.1) 16.3
Cash and cash equivalents at beginning of period 101.9 136.9
Cash and cash equivalents at end of period $ 48.8 $ 153.2
[1] Amortization of deferred finance costs of $0.3 million (2016 - $0.2 million) are included in depreciation and amortization in the consolidated statement of cash flow but in interest expense in the consolidated statement of income.
v3.7.0.1
Consolidated Statements of Cash Flows (Parenthetical) - USD ($)
$ in Millions
6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Statement of Cash Flows [Abstract]    
Amortization of deferred finance costs $ 0.3 $ 0.2
v3.7.0.1
Consolidated Statement of Equity - 6 months ended Jun. 30, 2017 - 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, 2016 $ 653.8 $ 0.3 $ 315.1 $ (97.5) $ 561.8 $ (126.2) $ 0.3
Net income 43.3       43.3    
Dividend paid (9.2)       (9.2)    
Non-controlling interest 0.1           0.1
Changes in cumulative translation adjustment, net of tax 12.6         12.6  
Treasury stock reissued 1.0   (0.4) 1.4      
Treasury stock repurchased (1.0)     (1.0)      
Stock option compensation 2.2   2.2        
Amortization of prior service credit, net of tax (0.4)         (0.4)  
Amortization of actuarial net losses, net of tax 2.0         2.0  
Ending Balance at Jun. 30, 2017 $ 704.4 $ 0.3 $ 316.9 $ (97.1) $ 595.9 $ (112.0) $ 0.4
v3.7.0.1
Basis of Presentation
6 Months Ended
Jun. 30, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Basis of Presentation

NOTE 1 – BASIS OF PRESENTATION

The accompanying unaudited interim 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 financial statements to be fairly stated. These 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 filed on February 15, 2017.

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

When we use the terms “Innospec,” “the Corporation,” “the Company,” “Registrant,” “we,” “us” and “our,” we are referring to Innospec Inc. and its consolidated subsidiaries unless otherwise indicated or the context otherwise requires.

v3.7.0.1
Segment Reporting
6 Months Ended
Jun. 30, 2017
Segment Reporting [Abstract]  
Segment Reporting

NOTE 2 – 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
June 30
     Six Months Ended
June 30
 

(in millions)

   2017      2016      2017      2016  

Net Sales:

           

Refinery and Performance

   $ 88.7      $ 93.7      $ 189.1      $ 192.0  

Other

     32.6        35.6        58.6        60.7  
  

 

 

    

 

 

    

 

 

    

 

 

 

Fuel Specialties

     121.3        129.3        247.7        252.7  
  

 

 

    

 

 

    

 

 

    

 

 

 

Personal Care

     48.6        31.8        96.1        64.0  

Home Care

     29.4        0.6        56.3        0.9  

Other

     26.9        2.9        47.0        5.1  
  

 

 

    

 

 

    

 

 

    

 

 

 

Performance Chemicals

     104.9        35.3        199.4        70.0  

Oilfield Services

     76.1        46.5        142.6        82.7  

Octane Additives

     24.0        16.9        30.9        34.7  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 326.3      $ 228.0      $ 620.6      $ 440.1  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

     Three Months Ended
June 30
     Six Months Ended
June 30
 

(in millions)

   2017      2016      2017      2016  

Net sales:

           

Fuel Specialties

   $ 121.3      $ 129.3      $ 247.7      $ 252.7  

Performance Chemicals

     104.9        35.3        199.4        70.0  

Oilfield Services

     76.1        46.5        142.6        82.7  

Octane Additives

     24.0        16.9        30.9        34.7  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 326.3      $ 228.0      $ 620.6      $ 440.1  
  

 

 

    

 

 

    

 

 

    

 

 

 

Gross profit:

           

Fuel Specialties

   $ 45.2      $ 43.7      $ 91.3      $ 85.7  

Performance Chemicals

     17.4        11.3        34.1        22.1  

Oilfield Services

     29.0        19.9        54.4        31.5  

Octane Additives

     13.5        10.6        16.2        22.4  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 105.1      $ 85.5      $ 196.0      $ 161.7  
  

 

 

    

 

 

    

 

 

    

 

 

 

Operating income:

           

Fuel Specialties

   $ 23.8      $ 24.2      $ 50.6      $ 48.1  

Performance Chemicals

     6.5        4.7        12.5        9.1  

Oilfield Services

     3.7        (1.6      6.7        (7.1

Octane Additives

     12.8        9.6        14.8        20.6  

Pension credit

     1.0        1.7        2.1        3.5  

Corporate costs

     (12.1      (12.4      (22.8      (22.6

Adjustment to fair value of contingent consideration

     0.0        2.4        0.0        4.0  

Loss on disposal of subsidiary

     (1.0      0.0        (1.0      (1.4

Foreign exchange loss on liquidation of subsidiary

     0.0        0.0        (1.8      0.0  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total operating income

   $ 34.7      $ 28.6      $ 61.1      $ 54.2  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

The pension credit relates to the United Kingdom defined benefit pension plan which is closed to future service accrual. The charges related to our other much smaller pension arrangements in the U.S. and overseas are included in the segment and income statement captions consistent with the related employees’ costs.

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

 

     Three Months Ended
June 30
     Six Months Ended
June 30
 

(in millions)

   2017      2016      2017      2016  

Depreciation:

           

Fuel Specialties

   $ 1.0      $ 1.0      $ 2.0      $ 1.9  

Performance Chemicals

     2.3        0.6        4.5        1.1  

Oilfield Services

     1.6        1.5        3.2        2.9  

Octane Additives

     0.2        0.2        0.4        0.3  

Corporate

     0.2        0.2        0.4        0.4  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 5.3      $ 3.5      $ 10.5      $ 6.6  
  

 

 

    

 

 

    

 

 

    

 

 

 

Amortization:

           

Fuel Specialties

   $ 0.2      $ 0.3      $ 0.4      $ 0.5  

Performance Chemicals

     1.8        1.0        3.7        2.0  

Oilfield Services

     3.0        3.0        6.0        6.0  

Corporate

     1.8        1.8        3.6        3.6  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 6.8      $ 6.1      $ 13.7      $ 12.1  
  

 

 

    

 

 

    

 

 

    

 

 

 
v3.7.0.1
Earnings Per Share
6 Months Ended
Jun. 30, 2017
Earnings Per Share [Abstract]  
Earnings Per Share

NOTE 3 – EARNINGS PER SHARE

Basic earnings per share is based on the weighted average number of common shares outstanding during the period. Diluted earnings per share includes the effect of options that are dilutive and outstanding during the period. Per share amounts are computed as follows:

 

     Three Months Ended
June 30
     Six Months Ended
June 30
 
     2017      2016      2017      2016  

Numerator (in millions):

           

Net income available to common stockholders

   $ 26.1      $ 28.9      $ 43.3      $ 47.8  
  

 

 

    

 

 

    

 

 

    

 

 

 

Denominator (in thousands):

           

Weighted average common shares outstanding

     24,133        23,973        24,110        23,996  

Dilutive effect of stock options and awards

     422        470        448        466  
  

 

 

    

 

 

    

 

 

    

 

 

 

Denominator for diluted earnings per share

     24,555        24,443        24,558        24,462  
  

 

 

    

 

 

    

 

 

    

 

 

 

Net income per share, basic:

   $ 1.08      $ 1.21      $ 1.80      $ 1.99  
  

 

 

    

 

 

    

 

 

    

 

 

 

Net income per share, diluted:

   $ 1.06      $ 1.18      $ 1.76      $ 1.95  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

In the three and six months ended June 30, 2017, the average number of anti-dilutive options excluded from the calculation of diluted earnings per share were 18,843 and 18,843, respectively (three and six months ended June 30, 2016 – 471 and 471 respectively).

v3.7.0.1
Goodwill
6 Months Ended
Jun. 30, 2017
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill

NOTE 4 – GOODWILL

The following table summarizes goodwill at the balance sheet dates:

 

(in millions)

   December 31,
2016
     Movement
in the
period
     June 30,
2017
 

Gross cost (1)

   $ 611.3      $ (39.3    $ 572.0  

Accumulated impairment losses

     (236.5      0.0        (236.5
  

 

 

    

 

 

    

 

 

 

Net book amount

   $ 374.8      $ (39.3    $ 335.5  
  

 

 

    

 

 

    

 

 

 

 

(1)  Gross cost for 2017 and 2016 is net of $298.5 million of historical accumulated amortization.

Acquisition of Huntsman European Differentiated Surfactants Business

On December 30, 2016 the Company acquired the European Differentiated Surfactants business (“Huntsman”) from Huntsman Investments (Netherlands) B.V.. We purchased the business for total consideration of $199.2 million subject to working capital adjustments.

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 dates become available but does not exceed twelve months. During the three months ended March 31, 2017, we have reviewed the fair values of assets acquired and liabilities assumed in the acquisition of Huntsman, resulting in a $39.3 million increase in assets acquired and a corresponding decrease in goodwill. The following table summarizes the calculations of the total purchase price and the provisional allocation of the purchase price to assets and liabilities assumed for the business:

 

(in millions)

   Huntsman  

Goodwill

   $ 68.1  

Other intangible assets

     33.5  

Fixed assets

     92.7  

Other net assets acquired

     4.9  
  

 

 

 

Purchase price, net of cash acquired

   $ 199.2  
  

 

 

 

The final purchase price, including working capital adjustments, and fair value review of assets and liabilities acquired has not been finalized as at June 30, 2017.

Huntsman, and the associated goodwill and other intangible assets, are included within our Performance Chemicals segment for management and reporting purposes. There is currently no goodwill amortizable for tax purposes.

v3.7.0.1
Other Intangible Assets
6 Months Ended
Jun. 30, 2017
Goodwill and Intangible Assets Disclosure [Abstract]  
Other Intangible Assets

NOTE 5 – OTHER INTANGIBLE ASSETS

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

 

     Six Months Ended
June 30
 

(in millions)

   2017      2016  

Gross cost at January 1

   $ 248.6      $ 248.6  

Acquisitions

     33.5        0.0  

Exchange effect

     (0.1      0.0  
  

 

 

    

 

 

 

Gross cost at June 30

     282.0        248.6  
  

 

 

    

 

 

 

Accumulated amortization at January 1

     (104.2      (79.9

Amortization expense

     (13.7      (12.1

Exchange effect

     0.0        0.0  
  

 

 

    

 

 

 

Accumulated amortization at June 30

     (117.9      (92.0
  

 

 

    

 

 

 

Net book amount at June 30

   $ 164.1      $ 156.6  
  

 

 

    

 

 

 

Acquisitions in the year relate to the allocation of goodwill from the Huntsman acquisition based on our provisional assessment of the fair value of the other intangible assets acquired. These intangible assets relate to customer relationships.

Amortization expense

 

     Six Months Ended
June 30
 

(in millions)

   2017      2016  

Product rights

   $ (1.9    $ (1.9

Brand names

     (0.6      (0.6

Technology

     (1.7      (1.7

Customer relationships

     (5.1      (3.4

Non-compete agreements

     (0.4      (0.5

Marketing related

     (0.4      (0.4

Internally developed software

     (3.6      (3.6
  

 

 

    

 

 

 

Total

   $ (13.7    $ (12.1
  

 

 

    

 

 

 
v3.7.0.1
Pension Plans
6 Months Ended
Jun. 30, 2017
Retirement Benefits [Abstract]  
Pension Plans

NOTE 6 – PENSION PLANS

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.

 

     Three Months Ended
June 30
     Six Months Ended
June 30
 

(in millions)

   2017      2016      2017      2016  

Plan net pension credit/(charge):

           

Service cost

   $ (0.3    $ (0.3    $ (0.5    $ (0.5

Interest cost on projected benefit obligation

     (3.7      (5.6      (7.4      (11.0

Expected return on plan assets

     6.1        8.0        12.0        15.8  

Amortization of prior service credit

     0.2        0.3        0.5        0.6  

Amortization of actuarial net losses

     (1.3      (0.7      (2.5      (1.4
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 1.0      $ 1.7      $ 2.1      $ 3.5  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

The amortization of prior service credit and actuarial net losses is a reclassification out of accumulated other comprehensive loss into selling, general and administrative expenses.

The Company also maintains an unfunded defined benefit pension plan covering a number of its current and former employees in Germany (the “German plan”). The German plan is closed to new entrants and has no assets. The net pension charge for the German plan for the three and six months ended June 30, 2017 was $0.2 million and $0.4 million, respectively (three and six months ended June 30, 2016—$0.2 million and $0.4 million, respectively).

As at June 30, 2017, our Performance Chemicals segment has pension obligations in its European businesses with a liability of $4.5 million (December 31, 2016—$4.1 million).

 

v3.7.0.1
Income Taxes
6 Months Ended
Jun. 30, 2017
Income Tax Disclosure [Abstract]  
Income Taxes

NOTE 7 – INCOME TAXES

A roll-forward of unrecognized tax benefits and associated accrued interest and penalties is as follows:

 

(in millions)

   Unrecognized
Tax Benefits
     Interest and
Penalties
     Total  

Opening balance at January 1, 2017

   $ 2.2      $ 0.1      $ 2.3  

Adjustment for prior period tax positions

     0.0        0.0        0.0  
  

 

 

    

 

 

    

 

 

 

Closing balance at June 30, 2017

     2.2        0.1        2.3  

Current

     0.0        0.0        0.0  
  

 

 

    

 

 

    

 

 

 

Non-current

   $ 2.2      $ 0.1      $ 2.3  
  

 

 

    

 

 

    

 

 

 

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

We recognize accrued interest and penalties associated with uncertain tax positions as part of income taxes in our consolidated statements of income.

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, one of the Company’s U.S. subsidiaries is currently subject to a state tax examination in respect of 2012 through to 2014 inclusive. The Company and its U.S. subsidiaries received notification in May 2017, of a federal income tax examination by the IRS for 2015. The Company currently anticipates that adjustments, if any, arising out of these tax audits would not result in a material change to the Company’s financial position as at June 30, 2017.

The Company and its U.S. subsidiaries remain open to examination by the IRS for years 2013 onwards. The Company’s subsidiaries in foreign tax jurisdictions are open to examination including France (2013 onwards), Germany (2015 onwards), Switzerland (2015 onwards) and the United Kingdom (2015 onwards).

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. No taxes have been provided for on the unremitted earnings of our overseas subsidiaries as any tax basis differences relating to investments in these overseas subsidiaries are considered to be indefinite in duration. The amount of unremitted earnings at December 31, 2016 was approximately $788 million. If these earnings are remitted, additional taxes could result after offsetting foreign income taxes paid although the calculation of the additional taxes is not practicable to compute at this time.

v3.7.0.1
Long-Term Debt
6 Months Ended
Jun. 30, 2017
Debt Disclosure [Abstract]  
Long-Term Debt

NOTE 8 – LONG-TERM DEBT

Long-term debt consists of the following:

 

(in millions)

   June 30,
2017
     December 31,
2016
 

Revolving credit facility

   $ 141.0      $ 161.0  

Term loan

     110.0        110.0  

Deferred finance costs

     (1.9      (2.2
  

 

 

    

 

 

 
   $ 249.1      $ 268.8  

Due within one year

     (10.3      (10.3
  

 

 

    

 

 

 

Due after one year

   $ 238.8      $ 258.5  
  

 

 

    

 

 

 
v3.7.0.1
Plant Closure Provisions
6 Months Ended
Jun. 30, 2017
Restructuring and Related Activities [Abstract]  
Plant Closure Provisions

NOTE 9 – 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 much smaller scale in respect of our other manufacturing sites in the U.S. and Europe.

Movements in the provisions are summarized as follows:

 

     Six Months Ended
June 30
 

(in millions)

   2017      2016  

Total at January 1

   $ 39.5      $ 37.7  

Charge for the period

     2.9        2.4  

Utilized in the period

     (1.0      (1.5

Exchange effect

     0.3        0.0  
  

 

 

    

 

 

 

Total at June 30

     41.7        38.6  

Due within one year

     (6.1      (5.7
  

 

 

    

 

 

 

Due after one year

   $ 35.6      $ 32.9  
  

 

 

    

 

 

 

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

v3.7.0.1
Fair Value Measurements
6 Months Ended
Jun. 30, 2017
Fair Value Disclosures [Abstract]  
Fair Value Measurements

NOTE 10 – FAIR VALUE MEASUREMENTS

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

 

     June 30, 2017      December 31, 2016  

(in millions)

   Carrying
Amount
     Fair
Value
     Carrying
Amount
     Fair
Value
 

Assets

           

Non-derivatives:

           

Cash and cash equivalents

   $ 48.8      $ 48.8      $ 101.9      $ 101.9  

Derivatives (Level 1 measurement):

           

Other non-current assets:

           

Interest rate swaps

     0.4        0.4        0.4        0.4  

Liabilities

           

Non-derivatives:

           

Long-term debt (including current portion)

   $ 249.1      $ 249.1      $ 268.8      $ 268.8  

Finance leases (including current portion)

     5.8        5.8        4.5        4.5  

Derivatives (Level 1 measurement):

           

Other non-current liabilities:

           

Foreign currency forward exchange contracts

     0.0        0.0        0.6        0.6  

Non-financial liabilities (Level 3 measurement):

           

Stock equivalent units

     10.6        10.6        9.8        9.8  

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

Cash and cash equivalents: The carrying amount approximates fair value because of the short-term maturities of such instruments.

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 payments under the interest rate swaps. Finance leases relate to certain fixed assets in our oilfield services business. The carrying amount of finance leases approximates to the fair value.

Derivatives: The fair value of derivatives relating to interest rate swaps and foreign currency forward exchange contracts are derived from current settlement prices and comparable contracts using current assumptions. Interest rate swaps relate to contracts taken out to hedge interest rate risk on a portion of our long-term debt. 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 and changes in U.S. LIBOR.

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.

v3.7.0.1
Derivative Instruments and Risk Management
6 Months Ended
Jun. 30, 2017
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments and Risk Management

NOTE 11 – DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT

The Company enters into various foreign currency forward exchange contracts to minimize currency exchange rate exposure from expected future cash flows. As at June 30, 2017 the contracts have maturity dates of up to eighteen months at the date of inception. These foreign currency forward exchange contracts have not been designated as hedging instruments, and their impact on the income statement for the first six months of 2017 was a loss of $0.6 million (first six months of 2016: gain of $3.0 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 six months of 2017 was a gain of $0.0 million (first six months of 2016: $0.0 million).

v3.7.0.1
Commitments and Contingencies
6 Months Ended
Jun. 30, 2017
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

NOTE 12 – 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 June 30, 2017, such guarantees which are not recognized as liabilities in the consolidated financial statements amounted to $5.7 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.

v3.7.0.1
Stock-Based Compensation Plans
6 Months Ended
Jun. 30, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock-Based Compensation Plans

NOTE 13 – STOCK-BASED COMPENSATION PLANS

The Company grants stock options and stock equivalent units (“SEUs”) from time to time as a long-term performance incentive. In certain cases the grants are subject to performance conditions such as the Company’s stock price. Where performance conditions apply the Monte Carlo simulation model is used to determine the fair values. Otherwise the Black-Scholes model is used to determine the fair values.

 

Stock option plans

The following table summarizes the transactions of the Company’s stock option plans for the six months ended June 30, 2017:

 

     Number of
Options
     Weighted
Average
Exercise
Price
     Weighted
Average
Grant-Date
Fair Value
 

Outstanding at December 31, 2016

     570,994      $ 20.38      $ 21.68  

Granted - at discount

     79,664      $ 0.00      $ 61.39  

- at market value

     18,843      $ 70.60      $ 16.84  

Exercised

     (82,323    $ 12.36      $ 24.01  

Forfeited

     (3,427    $ 14.91      $ 22.84  
  

 

 

       

Outstanding at June 30, 2017

     583,751      $ 20.65      $ 26.65  
  

 

 

       

At June 30, 2017, there were 44,543 stock options that were exercisable, of which 9,421 had performance conditions attached.

The stock option compensation cost for the first six months of 2017 was $2.2 million (2016 – $1.9 million). The total intrinsic value of options exercised in the first six months of 2017 was $2.0 million (2016 – $1.6 million).

The total compensation cost related to non-vested stock options not yet recognized at June 30, 2017 was $7.9 million and this cost is expected to be recognized over the weighted-average period of 2.21 years.

Stock equivalent units

The following table summarizes the transactions of the Company’s SEUs for the six months ended June 30, 2017:

 

     Number
of SEUs
     Weighted
Average
Exercise
Price
     Weighted
Average
Grant-Date
Fair Value
 

Outstanding at December 31, 2016

     279,815      $ 3.77      $ 33.40  

Granted - at discount

     180,249      $ 0.00      $ 62.76  

- at market value

     5,530      $ 70.60      $ 16.84  

Exercised

     (33,104    $ 5.63      $ 26.94  

Forfeited

     (12,775    $ 0.00      $ 32.94  
  

 

 

       

Outstanding at June 30, 2017

     419,715      $ 3.00      $ 46.31  
  

 

 

       

At June 30, 2017 there were 54,509 SEUs that are exercisable, of which 49,141 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 six months of 2017 was $2.5 million (2016 – $0.0 million). The total intrinsic value of SEUs exercised in the first six months of 2017 was $1.1 million (2016 - $1.2 million).

The weighted-average remaining vesting period of non-vested SEUs is 2.14 years.

 

v3.7.0.1
Reclassifications out of Accumulated Other Comprehensive Loss
6 Months Ended
Jun. 30, 2017
Equity [Abstract]  
Reclassifications out of Accumulated Other Comprehensive Loss

NOTE 14 – RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE LOSS

Reclassifications out of accumulated other comprehensive loss for the first six months of 2017 were:

 

(in millions)

Details about AOCL Components

   Amount
Reclassified
from
AOCL
   

Affected Line Item in the

Statement where

Net Income is Presented

Foreign currency translation items:

    

Liquidation of subsidiary

   $ 1.8     Loss on liquidation of subsidiary

Defined benefit pension plan items:

    

Amortization of prior service credit

   $ (0.5   See (1) below

Amortization of actuarial net losses

     2.5     See (1) below
  

 

 

   
     3.8     Total before tax
     (0.4   Income tax expense
  

 

 

   

Total reclassifications

   $ 3.4     Net of tax
  

 

 

   

(1)      These items are included in the computation of net periodic pension cost. See Note 6 of the Notes to the Consolidated Financial Statements for additional information.

Changes in accumulated other comprehensive loss for the first six months of 2017, net of tax, were:

 

(in millions)

   Derivative
instruments
     Defined
Benefit
Pension
Plan
Items
     Cumulative
Translation
Adjustments
     Total  

Balance at December 31, 2016

   $ 0.3      $ (46.0    $ (80.5    $ (126.2
  

 

 

    

 

 

    

 

 

    

 

 

 

Other comprehensive income before reclassifications

     0.0        0.0        12.6        12.6  

Amounts reclassified from AOCL

     0.0        1.6        0.0        1.6  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total other comprehensive income

     0.0        1.6        12.6        14.2  
  

 

 

    

 

 

    

 

 

    

 

 

 

Balance at June 30, 2017

   $ 0.3      $ (44.4    $ (67.9    $ (112.0
  

 

 

    

 

 

    

 

 

    

 

 

 

 

v3.7.0.1
Recently Issued Accounting Pronouncements
6 Months Ended
Jun. 30, 2017
Accounting Changes and Error Corrections [Abstract]  
Recently Issued Accounting Pronouncements

NOTE 15 – RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In March 2017, the FASB issued ASU 2017-07, Compensation—Retirement Benefits (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 will 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. The Company has not yet determined the effect of the standard on its ongoing financial reporting.

In February 2016, the FASB issued Accounting Standards Update (ASU) 2016-02, Revision to Lease Accounting, which amends ASC Topic 842, 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. Early adoption is permitted. The new standard must be adopted using a modified retrospective transition, and provides for certain practical expedients. Transition will require application of the new guidance at the beginning of the earliest comparative period presented. The Company has not yet determined the effect of the standard on its ongoing financial reporting.

In May 2014, the FASB issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers ASC Topic 606, which amends the existing accounting standards for revenue recognition. ASU 2014-09 is based on principles that govern the recognition of revenue at an amount an entity expects to be entitled when products are transferred to customers. The original effective date for ASU 2014-09 was for annual and interim periods within those years beginning after December 15, 2016. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers – Deferral of the Effective Date, which defers the effective date of ASU 2014-09 for one year and permits early adoption as early as the original effective date of ASU 2014-09. The new revenue standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. We expect to adopt the new revenue standard on January 1, 2018 and continue to evaluate whether we will adopt the standard retrospectively or as a cumulative effect adjustment. We expect to continue the evaluation, analysis and documentation of ASU 2014-09 (including those subsequently issued updates that clarify its positions) throughout most of this year as we work towards the implementation and finalize the impact the adoption will have on our consolidated financial statements.

v3.7.0.1
Related Party Transactions
6 Months Ended
Jun. 30, 2017
Related Party Transactions [Abstract]  
Related Party Transactions

NOTE 16 – 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 six months of 2017 the Company incurred fees from SGR of $0.2 million (2016 – $0.4 million). As at June 30, 2017, the amount due to SGR from the Company was $0.0 million (December 31, 2016 – $0.0 million).

v3.7.0.1
Segment Reporting (Tables)
6 Months Ended
Jun. 30, 2017
Segment Reporting [Abstract]  
Segment Reporting

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

 

     Three Months Ended
June 30
     Six Months Ended
June 30
 

(in millions)

   2017      2016      2017      2016  

Net Sales:

           

Refinery and Performance

   $ 88.7      $ 93.7      $ 189.1      $ 192.0  

Other

     32.6        35.6        58.6        60.7  
  

 

 

    

 

 

    

 

 

    

 

 

 

Fuel Specialties

     121.3        129.3        247.7        252.7  
  

 

 

    

 

 

    

 

 

    

 

 

 

Personal Care

     48.6        31.8        96.1        64.0  

Home Care

     29.4        0.6        56.3        0.9  

Other

     26.9        2.9        47.0        5.1  
  

 

 

    

 

 

    

 

 

    

 

 

 

Performance Chemicals

     104.9        35.3        199.4        70.0  

Oilfield Services

     76.1        46.5        142.6        82.7  

Octane Additives

     24.0        16.9        30.9        34.7  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 326.3      $ 228.0      $ 620.6      $ 440.1  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

     Three Months Ended
June 30
     Six Months Ended
June 30
 

(in millions)

   2017      2016      2017      2016  

Net sales:

           

Fuel Specialties

   $ 121.3      $ 129.3      $ 247.7      $ 252.7  

Performance Chemicals

     104.9        35.3        199.4        70.0  

Oilfield Services

     76.1        46.5        142.6        82.7  

Octane Additives

     24.0        16.9        30.9        34.7  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 326.3      $ 228.0      $ 620.6      $ 440.1  
  

 

 

    

 

 

    

 

 

    

 

 

 

Gross profit:

           

Fuel Specialties

   $ 45.2      $ 43.7      $ 91.3      $ 85.7  

Performance Chemicals

     17.4        11.3        34.1        22.1  

Oilfield Services

     29.0        19.9        54.4        31.5  

Octane Additives

     13.5        10.6        16.2        22.4  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 105.1      $ 85.5      $ 196.0      $ 161.7  
  

 

 

    

 

 

    

 

 

    

 

 

 

Operating income:

           

Fuel Specialties

   $ 23.8      $ 24.2      $ 50.6      $ 48.1  

Performance Chemicals

     6.5        4.7        12.5        9.1  

Oilfield Services

     3.7        (1.6      6.7        (7.1

Octane Additives

     12.8        9.6        14.8        20.6  

Pension credit

     1.0        1.7        2.1        3.5  

Corporate costs

     (12.1      (12.4      (22.8      (22.6

Adjustment to fair value of contingent consideration

     0.0        2.4        0.0        4.0  

Loss on disposal of subsidiary

     (1.0      0.0        (1.0      (1.4

Foreign exchange loss on liquidation of subsidiary

     0.0        0.0        (1.8      0.0  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total operating income

   $ 34.7      $ 28.6      $ 61.1      $ 54.2  
  

 

 

    

 

 

    

 

 

    

 

 

 
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
June 30
     Six Months Ended
June 30
 

(in millions)

   2017      2016      2017      2016  

Depreciation:

           

Fuel Specialties

   $ 1.0      $ 1.0      $ 2.0      $ 1.9  

Performance Chemicals

     2.3        0.6        4.5        1.1  

Oilfield Services

     1.6        1.5        3.2        2.9  

Octane Additives

     0.2        0.2        0.4        0.3  

Corporate

     0.2        0.2        0.4        0.4  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 5.3      $ 3.5      $ 10.5      $ 6.6  
  

 

 

    

 

 

    

 

 

    

 

 

 

Amortization:

           

Fuel Specialties

   $ 0.2      $ 0.3      $ 0.4      $ 0.5  

Performance Chemicals

     1.8        1.0        3.7        2.0  

Oilfield Services

     3.0        3.0        6.0        6.0  

Corporate

     1.8        1.8        3.6        3.6  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 6.8      $ 6.1      $ 13.7      $ 12.1  
  

 

 

    

 

 

    

 

 

    

 

 

 
v3.7.0.1
Earnings Per Share (Tables)
6 Months Ended
Jun. 30, 2017
Earnings Per Share [Abstract]  
Summary of Earnings Per Share

Per share amounts are computed as follows:

 

     Three Months Ended
June 30
     Six Months Ended
June 30
 
     2017      2016      2017      2016  

Numerator (in millions):

           

Net income available to common stockholders

   $ 26.1      $ 28.9      $ 43.3      $ 47.8  
  

 

 

    

 

 

    

 

 

    

 

 

 

Denominator (in thousands):

           

Weighted average common shares outstanding

     24,133        23,973        24,110        23,996  

Dilutive effect of stock options and awards

     422        470        448        466  
  

 

 

    

 

 

    

 

 

    

 

 

 

Denominator for diluted earnings per share

     24,555        24,443        24,558        24,462  
  

 

 

    

 

 

    

 

 

    

 

 

 

Net income per share, basic:

   $ 1.08      $ 1.21      $ 1.80      $ 1.99  
  

 

 

    

 

 

    

 

 

    

 

 

 

Net income per share, diluted:

   $ 1.06      $ 1.18      $ 1.76      $ 1.95  
  

 

 

    

 

 

    

 

 

    

 

 

 
v3.7.0.1
Goodwill (Tables)
6 Months Ended
Jun. 30, 2017
Goodwill and Intangible Assets Disclosure [Abstract]  
Summary of Goodwill

The following table summarizes goodwill at the balance sheet dates:

 

(in millions)

   December 31,
2016
     Movement
in the period
     June 30,
2017
 

Gross cost (1)

   $ 611.3      $ (39.3    $ 572.0  

Accumulated impairment losses

     (236.5      0.0        (236.5
  

 

 

    

 

 

    

 

 

 

Net book amount

   $ 374.8      $ (39.3    $ 335.5  
  

 

 

    

 

 

    

 

 

 

 

(1) Gross cost for 2017 and 2016 is net of $298.5 million of historical accumulated amortization.
Schedule of Total Purchase Price and Provisional Allocation of Purchase Price to Assets and Liabilities Assumed

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

 

(in millions)

   Huntsman  

Goodwill

   $ 68.1  

Other intangible assets

     33.5  

Fixed assets

     92.7  

Other net assets acquired

     4.9  
  

 

 

 

Purchase price, net of cash acquired

   $ 199.2  
  

 

 

 
v3.7.0.1
Other Intangible Assets (Tables)
6 Months Ended
Jun. 30, 2017
Goodwill and Intangible Assets Disclosure [Abstract]  
Summary of Other Intangible Assets

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

 

     Six Months Ended
June 30
 

(in millions)

   2017      2016  

Gross cost at January 1

   $ 248.6      $ 248.6  

Acquisitions

     33.5        0.0  

Exchange effect

     (0.1      0.0  
  

 

 

    

 

 

 

Gross cost at June 30

     282.0        248.6  
  

 

 

    

 

 

 

Accumulated amortization at January 1

     (104.2      (79.9

Amortization expense

     (13.7      (12.1

Exchange effect

     0.0        0.0  
  

 

 

    

 

 

 

Accumulated amortization at June 30

     (117.9      (92.0
  

 

 

    

 

 

 

Net book amount at June 30

   $ 164.1      $ 156.6  
  

 

 

    

 

 

 
Schedule of Amortization Expense

Amortization expense

 

     Six Months Ended
June 30
 

(in millions)

   2017      2016  

Product rights

   $ (1.9    $ (1.9

Brand names

     (0.6      (0.6

Technology

     (1.7      (1.7

Customer relationships

     (5.1      (3.4

Non-compete agreements

     (0.4      (0.5

Marketing related

     (0.4      (0.4

Internally developed software

     (3.6      (3.6
  

 

 

    

 

 

 

Total

   $ (13.7    $ (12.1
  

 

 

    

 

 

 
v3.7.0.1
Pension Plans (Tables)
6 Months Ended
Jun. 30, 2017
Retirement Benefits [Abstract]  
Defined Benefit Pension Plan


     Three Months Ended
June 30
     Six Months Ended
June 30
 

(in millions)

   2017      2016      2017      2016  

Plan net pension credit/(charge):

           

Service cost

   $ (0.3    $ (0.3    $ (0.5    $ (0.5

Interest cost on projected benefit obligation

     (3.7      (5.6      (7.4      (11.0

Expected return on plan assets

     6.1        8.0        12.0        15.8  

Amortization of prior service credit

     0.2        0.3        0.5        0.6  

Amortization of actuarial net losses

     (1.3      (0.7      (2.5      (1.4
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 1.0      $ 1.7      $ 2.1      $ 3.5  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

 

v3.7.0.1
Income Taxes (Tables)
6 Months Ended
Jun. 30, 2017
Income Tax Disclosure [Abstract]  
Roll-Forward of Unrecognized Tax Benefits and Associated Accrued Interest and Penalties

A roll-forward of unrecognized tax benefits and associated accrued interest and penalties is as follows:

 

(in millions)

   Unrecognized
Tax Benefits
     Interest and
Penalties
     Total  

Opening balance at January 1, 2017

   $ 2.2      $ 0.1      $ 2.3  

Adjustment for prior period tax positions

     0.0        0.0        0.0  
  

 

 

    

 

 

    

 

 

 

Closing balance at June 30, 2017

     2.2        0.1        2.3  

Current

     0.0        0.0        0.0  
  

 

 

    

 

 

    

 

 

 

Non-current

   $ 2.2      $ 0.1      $ 2.3  
  

 

 

    

 

 

    

 

 

 
v3.7.0.1
Long-Term Debt (Tables)
6 Months Ended
Jun. 30, 2017
Debt Disclosure [Abstract]  
Schedule of Long-Term Debt

Long-term debt consists of the following:

 

(in millions)

   June 30,
2017
     December 31,
2016
 

Revolving credit facility

   $ 141.0      $ 161.0  

Term loan

     110.0        110.0  

Deferred finance costs

     (1.9      (2.2
  

 

 

    

 

 

 
   $ 249.1      $ 268.8  

Due within one year

     (10.3      (10.3
  

 

 

    

 

 

 

Due after one year

   $ 238.8      $ 258.5  
  

 

 

    

 

 

 
v3.7.0.1
Plant Closure Provisions (Tables)
6 Months Ended
Jun. 30, 2017
Restructuring and Related Activities [Abstract]  
Movements in Plant Closure and Restructuring Provisions

Movements in the provisions are summarized as follows:

 

     Six Months Ended
June 30
 

(in millions)

   2017      2016  

Total at January 1

   $ 39.5      $ 37.7  

Charge for the period

     2.9        2.4  

Utilized in the period

     (1.0      (1.5

Exchange effect

     0.3        0.0  
  

 

 

    

 

 

 

Total at June 30

     41.7        38.6  

Due within one year

     (6.1      (5.7
  

 

 

    

 

 

 

Due after one year

   $ 35.6      $ 32.9  
  

 

 

    

 

 

 
v3.7.0.1
Fair Value Measurements (Tables)
6 Months Ended
Jun. 30, 2017
Fair Value Disclosures [Abstract]  
Carrying Amount and Fair Values of the Company's Assets and Liabilities Measured on a Recurring Basis

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

 

     June 30, 2017      December 31, 2016  

(in millions)

   Carrying
Amount
     Fair
Value
     Carrying
Amount
     Fair
Value
 

Assets

           

Non-derivatives:

           

Cash and cash equivalents

   $ 48.8      $ 48.8      $ 101.9      $ 101.9  

Derivatives (Level 1 measurement):

           

Other non-current assets:

           

Interest rate swaps

     0.4        0.4        0.4        0.4  

Liabilities

           

Non-derivatives:

           

Long-term debt (including current portion)

   $ 249.1      $ 249.1      $ 268.8      $ 268.8  

Finance leases (including current portion)

     5.8        5.8        4.5        4.5  

Derivatives (Level 1 measurement):

           

Other non-current liabilities:

           

Foreign currency forward exchange contracts

     0.0        0.0        0.6        0.6  

Non-financial liabilities (Level 3 measurement):

           

Stock equivalent units

     10.6        10.6        9.8        9.8  
v3.7.0.1
Stock-Based Compensation Plans (Tables)
6 Months Ended
Jun. 30, 2017
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 six months ended June 30, 2017:

 

     Number of
Options
     Weighted
Average
Exercise
Price
     Weighted
Average
Grant-Date
Fair Value
 

Outstanding at December 31, 2016

     570,994      $ 20.38      $ 21.68  

Granted - at discount

     79,664      $ 0.00      $ 61.39  

- at market value

     18,843      $ 70.60      $ 16.84  

Exercised

     (82,323    $ 12.36      $ 24.01  

Forfeited

     (3,427    $ 14.91      $ 22.84  
  

 

 

       

Outstanding at June 30, 2017

     583,751      $ 20.65      $ 26.65  
  

 

 

       

 

Stock Equivalent Units [Member]  
Summarizes Transactions of SEUs

The following table summarizes the transactions of the Company’s SEUs for the six months ended June 30, 2017:

 

     Number
of SEUs
     Weighted
Average
Exercise
Price
     Weighted
Average
Grant-Date
Fair Value
 

Outstanding at December 31, 2016

     279,815      $ 3.77      $ 33.40  

Granted - at discount

     180,249      $ 0.00      $ 62.76  

- at market value

     5,530      $ 70.60      $ 16.84  

Exercised

     (33,104    $ 5.63      $ 26.94  

Forfeited

     (12,775    $ 0.00      $ 32.94  
  

 

 

       

Outstanding at June 30, 2017

     419,715      $ 3.00      $ 46.31  
  

 

 

       

v3.7.0.1
Reclassifications out of Accumulated Other Comprehensive Loss (Tables)
6 Months Ended
Jun. 30, 2017
Equity [Abstract]  
Summary of Reclassifications Out of Accumulated Other Comprehensive Loss

Reclassifications out of accumulated other comprehensive loss for the first six months of 2017 were:

 

(in millions)

Details about AOCL Components

   Amount
Reclassified
from
AOCL
   

Affected Line Item in the

Statement where

Net Income is Presented

Foreign currency translation items:

    

Liquidation of subsidiary

   $ 1.8     Loss on liquidation of subsidiary

Defined benefit pension plan items:

    

Amortization of prior service credit

   $ (0.5   See (1) below

Amortization of actuarial net losses

     2.5     See (1) below
  

 

 

   
     3.8     Total before tax
     (0.4   Income tax expense
  

 

 

   

Total reclassifications

   $ 3.4     Net of tax
  

 

 

   

(1)      These items are included in the computation of net periodic pension cost. See Note 6 of the Notes to the Consolidated Financial Statements for additional information.

Changes in Accumulated Other Comprehensive Loss

Changes in accumulated other comprehensive loss for the first six months of 2017, net of tax, were:

 

(in millions)

   Derivative
instruments
     Defined
Benefit
Pension
Plan
Items
     Cumulative
Translation
Adjustments
     Total  

Balance at December 31, 2016

   $ 0.3      $ (46.0    $ (80.5    $ (126.2
  

 

 

    

 

 

    

 

 

    

 

 

 

Other comprehensive income before reclassifications

     0.0        0.0        12.6        12.6  

Amounts reclassified from AOCL

     0.0        1.6        0.0        1.6  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total other comprehensive income

     0.0        1.6        12.6        14.2  
  

 

 

    

 

 

    

 

 

    

 

 

 

Balance at June 30, 2017

   $ 0.3      $ (44.4    $ (67.9    $ (112.0
  

 

 

    

 

 

    

 

 

    

 

 

 

 

v3.7.0.1
Segment Reporting - Additional Information (Detail)
6 Months Ended
Jun. 30, 2017
Segment
Segment Reporting [Abstract]  
Number of reportable segments 4
v3.7.0.1
Segment Reporting - Segment Reporting (Detail) - USD ($)
$ in Millions
3 Months Ended 6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Segment Reporting Information [Line Items]        
Net sales $ 326.3 $ 228.0 $ 620.6 $ 440.1
Gross profit 105.1 85.5 196.0 161.7
Adjustment to fair value of contingent consideration 0.0 2.4 0.0 4.0
Loss on disposal of subsidiary (1.0) 0.0 (1.0) (1.4)
Foreign exchange loss on liquidation of subsidiary 0.0 0.0 (1.8) 0.0
Operating income 34.7 28.6 61.1 54.2
Operating Segments [Member] | Fuel Specialties [Member]        
Segment Reporting Information [Line Items]        
Net sales 121.3 129.3 247.7 252.7
Gross profit 45.2 43.7 91.3 85.7
Operating income 23.8 24.2 50.6 48.1
Operating Segments [Member] | Fuel Specialties [Member] | Refinery and Performance [Member]        
Segment Reporting Information [Line Items]        
Net sales 88.7 93.7 189.1 192.0
Operating Segments [Member] | Fuel Specialties [Member] | Other [Member]        
Segment Reporting Information [Line Items]        
Net sales 32.6 35.6 58.6 60.7
Operating Segments [Member] | Performance Chemicals [Member]        
Segment Reporting Information [Line Items]        
Net sales 104.9 35.3 199.4 70.0
Gross profit 17.4 11.3 34.1 22.1
Operating income 6.5 4.7 12.5 9.1
Operating Segments [Member] | Performance Chemicals [Member] | Personal Care [Member]        
Segment Reporting Information [Line Items]        
Net sales 48.6 31.8 96.1 64.0
Operating Segments [Member] | Performance Chemicals [Member] | Home Care [Member]        
Segment Reporting Information [Line Items]        
Net sales 29.4 0.6 56.3 0.9
Operating Segments [Member] | Performance Chemicals [Member] | Other [Member]        
Segment Reporting Information [Line Items]        
Net sales 26.9 2.9 47.0 5.1
Operating Segments [Member] | Oilfield Services [Member]        
Segment Reporting Information [Line Items]        
Net sales 76.1 46.5 142.6 82.7
Gross profit 29.0 19.9 54.4 31.5
Operating income 3.7 (1.6) 6.7 (7.1)
Operating Segments [Member] | Octane Additives [Member]        
Segment Reporting Information [Line Items]        
Net sales 24.0 16.9 30.9 34.7
Gross profit 13.5 10.6 16.2 22.4
Operating income 12.8 9.6 14.8 20.6
Corporate, Non-Segment [Member]        
Segment Reporting Information [Line Items]        
Pension credit 1.0 1.7 2.1 3.5
Corporate costs (12.1) (12.4) (22.8) (22.6)
Segment Reconciling Items [Member]        
Segment Reporting Information [Line Items]        
Loss on disposal of subsidiary $ (1.0) $ 0.0 $ (1.0) $ (1.4)
v3.7.0.1
Segment Reporting - Summary of Segment Depreciation and Amortization (Detail) - USD ($)
$ in Millions
3 Months Ended 6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Summary of segment depreciation and amortization        
Depreciation $ 5.3 $ 3.5 $ 10.5 $ 6.6
Amortization 6.8 6.1 13.7 12.1
Operating Segments [Member] | Fuel Specialties [Member]        
Summary of segment depreciation and amortization        
Depreciation 1.0 1.0 2.0 1.9
Amortization 0.2 0.3 0.4 0.5
Operating Segments [Member] | Performance Chemicals [Member]        
Summary of segment depreciation and amortization        
Depreciation 2.3 0.6 4.5 1.1
Amortization 1.8 1.0 3.7 2.0
Operating Segments [Member] | Oilfield Services [Member]        
Summary of segment depreciation and amortization        
Depreciation 1.6 1.5 3.2 2.9
Amortization 3.0 3.0 6.0 6.0
Operating Segments [Member] | Octane Additives [Member]        
Summary of segment depreciation and amortization        
Depreciation 0.2 0.2 0.4 0.3
Corporate, Non-Segment [Member]        
Summary of segment depreciation and amortization        
Depreciation 0.2 0.2 0.4 0.4
Amortization $ 1.8 $ 1.8 $ 3.6 $ 3.6
v3.7.0.1
Earnings Per Share - Summary of Earnings Per Share (Detail) - USD ($)
$ / shares in Units, shares in Thousands, $ in Millions
3 Months Ended 6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Numerator (in millions):        
Net income available to common stockholders $ 26.1 $ 28.9 $ 43.3 $ 47.8
Denominator (in thousands):