INNOSPEC INC. (IOSP)

Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations for the Three and Six Months Ended June 30, 2026

This discussion should be read in conjunction with our unaudited interim condensed consolidated financial statements and the notes thereto.

CRITICAL ACCOUNTING ESTIMATES

The policies and estimates that the Company considers the most critical in terms of complexity and subjectivity of assessment are those related to plant closure provisions, goodwill, other intangible assets and property, plant and equipment. These policies have been discussed in the Company’s 2025 Form 10-K.

RESULTS OF OPERATIONS

The Company reports its financial performance based on three reportable segments, which are Performance Chemicals, Fuel Specialties and Oilfield Services.

The following table provides sales, gross profit and operating income by reporting segment:

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Three Months Ended June 30, 2026

The following table shows the changes in sales, gross profit and operating expenses by reporting segment for the three months ended June 30, 2026, and the three months ended June 30, 2025:

Performance Chemicals

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

The Americas volumes were lower due to some supply constraints and reduced demand for our personal care products, offset by a favorable price and product mix due to pricing improvements. Volumes in EMEA were higher due to increased demand for our personal care products, combined with a favorable price and product mix, driven by higher demand for our higher priced products. ASPAC volumes were lower due to some supply constraints and decreased demand for certain products, being offset by a favorable price and product mix, driven by higher demand for our higher priced products. EMEA and ASPAC benefited from favorable foreign currency exchange rate movements.

Gross margin: the year over year decrease of 0.2 percentage points was primarily due to negative manufacturing variances due to lower production volumes in North America, as we continue to advance our plant repairs, process

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improvements and upgrades following severe weather conditions in the first quarter.

Operating expenses: the year over year increase of $0.4 million was primarily due to higher provisions for performance-related remuneration accruals.

Fuel Specialties

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

Sales volumes in the Americas increased year over year due to increased demand from customers, being partly offset by an adverse price and product mix. Sales volumes in EMEA increased year over year due to increased demand from customers, combining with a favorable price and product mix. Sales volumes in ASPAC decreased year over year due to decreased demand from customers, being offset by a favorable price and product mix. AvGas volumes were lower than the prior year due to variations in the demand from customers, combined with an adverse customer mix. All our regions benefited from favorable foreign currency exchange rate movements.

Gross margin: the year over year decrease of 1.5 percentage points was due to an adverse sales mix in the Americas from increased sales of lower margin products, being partly offset by sales in EMEA of higher margin products.

Operating expenses: the year over year increase of $4.2 million was primarily due to adverse movements to the provisions for doubtful debts, together with increased employee-related costs, including higher provisions for performance-related remuneration accruals.

Oilfield Services

Net sales: have increased year over year by $14.6 million, driven by our DRA plant expansion and associated demand. The majority of the segment's sales are concentrated in the Americas region.

Gross margin: the year over year increase of 2.7 percentage points was due to a favorable sales mix.

Operating expenses: the year over year increase of $5.0 million was primarily due to adverse movements to the provisions for doubtful debts, together with increased operating expenses and increased employee-related costs, including higher provisions for performance-related remuneration accruals.

Other Income Statement Captions

Corporate costs: the year over year increase of $0.7 million was primarily due to higher legal and compliance expenses, together with higher information technology costs including additional amortization for our new ERP system, and higher provisions for performance-related remuneration accruals, being partly offset by lower legacy costs of closed operations and a favorable revaluation for our U.K. emissions trading scheme credits.

Adjustment to fair value of contingent consideration: is an expense in the current year of $0.1 million compared to an expense in the prior year of $0.8 million. The adjustment relates to the acquisition of QGP within our Performance Chemicals segment. The year over year decrease relates to reduced accretion, due to the reduction

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in the overall expected payable compared to the prior year. See Note 10 of the Notes to the Condensed Consolidated Financial Statements for additional information.

Other net income/(expense): for the three months ended June 30, 2026 was $1.1 million income compared to a $4.7 million expense in the three months ended June 30, 2025, primarily driven by the revaluation of foreign currency forward contracts, and the foreign currency translation of non-USD balances in the group.

Interest income/(expense), net: in the three months ended June 30, 2026 was $0.8 million of income compared to $2.7 million of income in the three months ended June 30, 2025, driven by lower interest rates and lower cash balances in the current year.

Income taxes: the effective tax rate was 25.0% and 26.0% in the second quarter of 2026 and 2025, respectively. The adjusted effective tax rate, once adjusted for the items set out in the following table, was 23.1% in 2026 compared with 23.3% in 2025. The 0.2% decrease in the adjusted effective rate was primarily due to the fact that a higher proportion of the Company’s profits are being generated in lower tax jurisdictions. The Company believes that this adjusted effective tax rate, a non-GAAP financial measure, provides useful information to investors and may assist them in evaluating the Company’s underlying performance and identifying operating trends. In addition, management uses this non-GAAP financial measure internally to evaluate the performance of the Company’s operations and for planning and forecasting in subsequent periods.

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

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Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations

This discussion should be read in conjunction with our Consolidated Financial Statements and the Notes thereto.

EXECUTIVE OVERVIEW

In 2025, Innospec delivered a mixed set of results with continued strong operating income growth and margin expansion in Fuel Specialties offsetting lower results in Performance Chemicals and Oilfield Services.

In Performance Chemicals, full year revenues were up 4 percent on the prior year; however, margins declined on higher costs, price management and weaker product mix. While these results were below our expectations, margin actions began to take effect in the third quarter, and together with lower overheads drove sequential improvement in the fourth quarter. Delivering sustainable margin improvement remains the primary focus of the business team. We continue to execute on a range of price/cost management, productivity and new product commercialization actions over the short-to-medium term. New products include the continued expansion of our industry-leading sulfate and 1,4-dioxane free personal and home care portfolio and growth in our technologies for agriculture, mining, construction and other diversified industrial markets. We expect these combined efforts to drive further growth in 2026.

In Fuel Specialties, full year revenues were unchanged on the prior year and operating income increased 12 percent benefiting from a stronger sales mix and disciplined pricing. The business has continued to deliver consistently strong results and has a diverse pipeline of fuel and non-fuel growth opportunities across all regions. With our industry-leading innovation and customer service capabilities, we are well positioned to continue advancing our global customers’ initiatives. Our technology will continue to focus on cleaner fuels, lowering emissions and improving efficiency in traditional, renewable and non-fuel applications.

In Oilfield Services, full year revenues were down 19 percent on the prior year, and operating income decreased 40 percent driven by no recovery in our Latin American business and lower than expected Middle East and US completion activity in the second half of 2025. We remain focused on delivering operating income growth in 2026 as Middle East activity returns, sales from our recent DRA expansion take effect, and our focus on margin improvement continues. We currently do not expect Latin America production activity to resume in 2026.

For the full year, cash from operations after capital expenditures remained strong at $63.9 million. As of December 31, 2025, Innospec had $292.5 million in cash and cash equivalents and no debt. Full year dividend payments increased by 10 percent over the prior year to $1.71 per share and we bought back 264 thousand shares at a cost of $23.9 million. We continue to have significant balance sheet flexibility for M&A, dividend growth, organic investment and buybacks.

CRITICAL ACCOUNTING ESTIMATES

Note 2 of the Notes to the Consolidated Financial Statements includes a summary of the significant accounting policies and methods used in the preparation of the Consolidated Financial Statements.

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Plant Closure Provisions

We are subject to environmental laws in the countries in which we conduct business. Ellesmere Port in the U.K. is our principal site giving rise to asset retirement obligations, primarily connected to the production of tetra ethyl lead. There are also asset retirement obligations and environmental remediation liabilities on a much smaller scale in respect of other sites. At Ellesmere Port there is a continuing asset retirement program related to certain manufacturing units that have been closed.

Plant closure provisions at December 31, 2025 amounted to $65.1 million and relate principally to asset retirement obligations at our Ellesmere Port site in the U.K.. We recognize environmental remediation liabilities when they are probable and costs can be reasonably estimated, and asset retirement obligations when there is a legal requirement, including those arising from a Company promise, and the costs can be reasonably estimated. The Company must make significant judgments when anticipating the program of work required and the associated future expected costs, and comply with environmental legislation in the countries in which it operates or has operated in. We develop these assumptions utilizing the latest information available together with recent costs. While we believe our assumptions for plant closure provisions are reasonable, they are subjective good faith estimates and it is possible that variations in any of the assumptions will result in materially different calculations to the liabilities we have reported.

Goodwill

The Company’s reporting units, the level at which goodwill is assessed for potential impairment, are consistent with the reportable segments. The components in each segment (including products, markets and competitors) have similar economic characteristics and the segments, therefore, reflect the lowest level at which operations and cash flows can be sufficiently distinguished, operationally and for financial reporting purposes, from the rest of the Company.

To test for impairment the Company performs a qualitative step zero assessment to determine whether it is more likely than not (that is, a likelihood of more than 50%) that the fair value of a segment is less than the carrying amount prior to performing the quantitative goodwill impairment test. Factors utilized in the qualitative assessment process include macroeconomic conditions; industry and market considerations; cost factors; overall financial performance; and Company specific events.

If a quantitative test is required, we assess the fair value based on projected post-tax cash flows discounted at the Company’s weighted average cost of capital. These fair value techniques require management judgment and estimates including revenue growth rates, projected operating margins, changes in working capital and discount rates. We would develop these assumptions by considering recent financial performance and trends and industry growth estimates. While we believe our assumptions for impairment assessments are reasonable, they are subjective judgments, and it is possible that variations in any of the assumptions will result in materially different calculations of any potential impairment charges.

At December 31, 2025 we had $399.0 million of goodwill relating to our Performance Chemicals, Fuel Specialties and Oilfield Services segments. Our step zero impairment review at December 31, 2025 indicated the fair value of each segment is, more likely than not, higher than the carrying value, meaning no step one impairment review was required to be performed.

Other intangible assets and property, plant and equipment (net of amortization and depreciation, respectively)

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Other intangible assets and property, plant and equipment are tested for impairment at the lowest possible level for which cash flows can be sufficiently distinguished, operationally and for financial reporting purposes.

To test for impairment the Company reviews whether there have been any changes or indicators of potential impairment. Factors utilized in the qualitative assessment process include macroeconomic conditions; industry and market considerations; cost factors; overall financial performance; and Company specific events.

If a quantitative test is required, undiscounted future cash flows expected to result from the asset groups are compared with the carrying value of the assets and, if such cash flows are lower, an impairment loss may be recognized. The amount of the impairment loss is the difference between the fair value and the carrying value of the assets. Fair values are determined using post-tax cash flows discounted at the Company’s weighted average cost of capital. These fair value techniques require management judgment and estimates including revenue growth rates, projected operating margins, changes in working capital and discount rates. We would develop these assumptions by considering recent financial performance and trends and industry growth estimates. While we believe our assumptions for impairment assessments are reasonable, they are subjective judgments, and it is possible that variations in any of the assumptions will result in materially different calculations of any potential impairment charges.

For the quarter ended September 30, 2025, we recorded impairment charges relating to our Performance Chemicals and Oilfield Services segments. See Note 6 and Note 9 of the Notes to the Consolidated Financial Statements for additional information.

At December 31, 2025 we had $67.7 million of intangible assets, included in Corporate costs and our Performance Chemicals segment, and we had $286.1 million of net property, plant and equipment for the Group in total. Our review at December 31, 2025 highlighted no indicators of potential impairment and the amortization and depreciation periods remain appropriate.

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RESULTS OF OPERATIONS

The following table provides sales, gross profit and operating income by reporting segment:

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Results of Operations – Fiscal 2025 compared to Fiscal 2024:

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