Innospec Inc (IOSP) 2020 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by and welcome to the Innospec's Third Quarter 2020 Earnings Conference Call. (Operator Instructions) I must advise you that this conference is being recorded today.

I would now like to hand the conference over to the speaker today, Mr. David Jones, General Counsel. Please go ahead, sir.

Thank you. Welcome to Innospec's third quarter earnings call. Today's call is being recorded. Yesterday, we reported our financial results for the quarter. Earnings release and this presentation are posted on the company's site and will be available on the site for at least 6 months.

During this call, we will make forward-looking statements, which are predictions, projections and other statements about future events. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. These statements involve a number of risks, uncertainties and assumptions, including the effects of the COVID-19 pandemic, its duration, its long-term economic impact, measures taken by government authorities to address it in the manner in which the pandemic may precipitate or exacerbate other risks and uncertainty that could cause actual results to differ materially from the anticipated results implied by forward-looking statements. These risk and uncertainties are detailed in Innospec's 10-K, 10-Qs and other filings with the SEC. Please see the SEC's site or Innospec's site for these and other documents.

In our discussion today, we've also included non-GAAP financial measures. A reconciliation to the most directly comparable GAAP financial measures is contained in our earnings release, a copy of which is available on the Innospec site. They are included as additional clarifying items to aid investors in further understanding the company's performance, in addition to the impact these items and events have on the financial results.

Also with us today from Innospec are Patrick Williams, President and Chief Executive Officer; and Ian Cleminson, Executive Vice President and Chief Financial Officer.

And with that, I'll turn it over to you, Patrick.

Thank you, David, and welcome, everyone, to Innospec's Third Quarter 2020 Conference Call. As we remain focused on returning all our businesses to pre-COVID growth and profitability, I am pleased to report a solid improvement in our results over the second quarter 2020. Operating cash flow was very strong and allowed us to repay all our external bank debt in the quarter. I'm also pleased that the board has decided to maintain our dividend for the second half of this year at $0.52, bringing our dividend to $1.04 for the full year.

Performance Chemicals delivered another very strong set of results with operating income up 33% over the same period 2019. Our positive outlook for the Performance Chemicals is supported by a pipeline of new technology, driven by increasing consumer preferences for products which are more natural, mild and environmentally sustainable. We also continue to support our customers in meeting new regulatory requirements, such as limitations on 1,4-dioxane.

As projected, global fuel demand began to recover in the third quarter, which drove increased sales in Fuel Specialties, although this recovery has been slower than anticipated. Gross margins returned to our expected range and operating income grew $17.5 million over the second quarter of 2020. Barring a second wave of COVID-induced economic shutdowns, we expect that demand for fuel additives will continue to move towards 2019 levels throughout Q4 and into 2021.

In Oilfield Services, we remain focused on our strategy to reduce cyclicality by growing our DRA and production chemical sales and by expanding in the Middle East. In Q3, U.S. completion activity remained low, but was somewhat offset by increased drag-reducing agent and production chemical sales as previously shut-in wells came back online in the quarter. Our oilfield team have done a good job in restructuring their base cost. And our expectation is they will retain a significant portion of these savings as activity levels recover.

Now I'll turn the call over to Ian Cleminson, who will review our financial results in more detail. Then I will return with some concluding comments. After that, we will take your questions.

Thanks, Patrick. Turning to Slide 8 in the presentation. The company's total revenues for the third quarter were $265.1 million, a 29% decrease from $371.9 million a year ago. The overall gross margin decreased 2.3 percentage points from last year to 29.7% due to a strong prior-year comparative in Fuel Specialties. EBITDA for the quarter was $31.5 million compared to $51.1 million last year. Our GAAP earnings per share was $0.51, including special items, the net effect of which decreased our third quarter earnings by $0.20.

A year ago, we reported GAAP earnings per share of $1.22, which included an adverse impact from special items of $0.18. Excluding special items in both years, our adjusted EPS for the quarter was $0.71 compared to $1.40 a year ago, but was a significant improvement over the loss of $0.18 in the second quarter of 2020.

Moving on to Slide 9. Revenues for Fuel Specialties in the third quarter were $120 million, down 17% from last year driven by a 12% reduction in volumes combined with an adverse price/mix of 5%. Gross margins were within our expected range at 33.6%, although they were down 3.9 percentage points versus a strong comparative quarter. This resulted in operating income of $22.3 million compared to $31.1 million a year ago. Fuel demand began to improve in the third quarter from its second quarter low points. On a sequential quarter basis, operating income improved by $17.5 million over the second quarter of this year.

Turning to Slide 10. Revenues in Performance Chemicals for the third quarter were $102 million, up 2% from $99.9 million a year ago, with 5% higher volumes and adverse price/mix of 6% and a positive currency impact of 3%. Gross margins of 23.5% were up 0.9 percentage points and operating income was up an impressive 33% in the third quarter of 2019 to $12.4 million.

Moving on to Slide 11. Oilfield Services revenues of $43.1 million were down by 64% on the same period last year, reflecting the reduction in customer activity in the U.S. onshore market. Gross margins were down slightly by 0.5 percentage points to 33.4%. Operating losses of $4.5 million for the quarter compared to an operating income of $10 million a year ago. On a sequential quarter basis, operating results improved by $7.9 million over the second quarter of this year, benefiting from cost reduction initiatives, and the business remains on track to achieve breakeven EBITDA in quarter 4.

Turning to Slide 12. Corporate costs for the quarter were $13.3 million and within our expected range, broadly similar to the $13 million recorded a year ago. The adjusted effective tax rate for the quarter was 23.3% compared to 21.8% last year and increased slightly as a greater proportion of our profits are now being earned in higher tax jurisdictions.

Moving on to Slide 13. Net cash provided by operating activities in the quarter was once again excellent at $55.5 million compared to $40 million a year ago. In the quarter, we repaid all external bank debt. And as of September 30, 2020, Innospec had $66.6 million in cash and cash equivalents, and finance lease debt of $0.6 million, resulting in a net cash position of $66 million. As a result, we continue to have substantial liquidity headroom.

And now I'll turn the call back over to Patrick for some final comments.

Thanks, Ian. Our results show that Innospec has started the recovery from the COVID-impacted second quarter. We are mindful that economic uncertainty lingers and that a second wave pandemic could delay a global recovery. The prospects for continued strong growth in Performance Chemicals are supported by secular consumer and regulatory trends, which are driving demand for our technologically advanced products, such as sulfate-free product lines. We are cautiously optimistic that demand in activity levels in our Fuel Specialties and Oilfield Services businesses will continue to improve through Q4 and into 2021.

We exit the third quarter with a very strong net cash position, which enables us to fund key organic growth projects and potential strategic acquisition opportunities that complement our business. Again, I am pleased the board has decided to maintain our semi-annual dividend at $0.52 per share, which brings our full year dividend to $1.04.

Now I'll turn the call over to the operator, and Ian and I will take your questions.

(Operator Instructions) Our first question comes from the line of Jon Tanwanteng from CJS Securities.

Really nice job on the margin there. I was wondering if you could give us a kind of a picture of how you expect that OpEx to trend into Q4. There was a pretty big sequential decline. Patrick, you mentioned a lot of that holding, but I was just wondering what percentage of that actually comes back as your business maybe starts to trend back towards normal.

Sure. Why don't you pick this up and then I'll add to it.

Sure. Jon, are you talking any business in particular? Or do you want to focus on Oilfield or which segment you want to go through?

We can do Oilfield first and then maybe on consolidated basis after that.

Sure. So in the Oilfield business, as you're aware, we took some cost initiatives in the second quarter. That's taken out round about $12 million of overhead costs. We expect that to -- that gain will stabilize in Q4 and into 2021. So we don't expect to actually have to add any more overhead in. So any leverage we get off the top line will drop straight through. So our expectation is to...

That's quarterly, right?

That's quarterly, yes. So we expect that Q4 will improve over Q3. The aim in Oilfield is to head for EBITDA neutral. We think we can get there. We may even, with the following wind, maybe even get to operating income breakeven as well. But that's the next target on the list. So we are hopeful that our business will see some growth in Oilfield, and we're hopeful that we can get to that breakeven EBITDA and maybe breakeven operating income position as well.

Okay. And then on the consolidated operating expenses?

Yes. In terms of the OpEx, I would be saying that you are broadly going to be in that similar range to where we were in Q4 last year, probably in that sort of high 60s to low 70s number. I'm giving you a range there, Jon, just because it's the final quarter and we've got some truing up to do. So I think anything from sort of 60, probably about 68% to 72% is a broad range, and I think we can hope to come in at the lower end of that range.

Okay. Great. That's helpful. And then just on the top line as you head into Q4. Maybe actually going back to Q3, can you give us a progression of how demand trended through the third quarter and then into October and kind of maybe aided by business where you saw the most improvement or the, I guess, maybe some weakness?

Yes. I think if you look at -- we'll take it by business segment. If you look at Oilfield Services, we have definitely seen demand starting to improve in Q4. And now that's off a very low -- sorry, over Q2, it's off a very low obviously. But it's going to be interesting, Jon. We'll see how oil prices pan out. We'll see what COVID does because obviously, it will be -- it will cause a supply demand issue. If demand is not there, you could have an overabundance of supply again and go right back into where we were in Q2. But everything that we're seeing in how we've kind of taken cyclicality out of the Oilfield Services businesses with DRA in the Middle East, we have definitely started to see demand increase for us in that business segment.

In Fuel Specialties, you saw demand come back. It's come back quite quickly, but we want to see it a lot faster than it is right now. And that's strictly due to some of the countries that were going back to work. And now we obviously see a pandemic coming back in a second wave. So that gives us a little bit of concern. But overall, because we have our cost base set really well in Fuel Specialties and demand has come back, we've seen a pretty nice increase in Q4 as well carrying over from Q3. So positive there.

In Performance Chemicals, it's just been strong throughout. Our guys have done a great job in that business. We've got great technology. We're well placed and we're seeing a very good demand in Performance Chemicals going into Q4 as well.

Great. Thank you. Last one from me. Just you did a great job with the cash flow. You paid down debt. I assume you're going to keep putting it on the balance sheet. Are there plans to deploy that in the near term? Or you're going to hold on to that and let it build?

I think through some of these unknown times, we're going to hold on to it. Obviously, what we want to do is take care of organic growth first because we're not paying a multiple on it. It's our best, fastest and most conservative growth. So we'll keep it for organic growth. We'll continue to pay the dividend. We hope to start increasing the dividend again going into next year and that's a likelihood because of our strong balance sheet. And then we'll look at buybacks when appropriate and if appropriate.

But more importantly, I think it's a good time for us to build upon our strategy in looking at acquisitions that complement our business. And they're out there and we're looking, and multiples are starting to come down into a territory that makes a lot of sense for us. So we are on the look. But I think if you look at it, it's a pretty much a carryover that we tell you guys every quarter. It's -- let's start with organic growth first and then acquisition growth. And then we'll put -- obviously increase our dividend as I said and potentially look at buybacks.

Our next question comes from the line of David Silver from C.L. King.

I had a couple of questions. I think I want to kind of maybe go into the segment results for the quarter. And let me just see. But let's start with -- if you don't mind, let's start with Performance Chemicals. So I guess I was wondering, usually when you discuss the revenue trends in the segment, you make a reference to maybe cost pass-throughs that affected the year-over-year revenue comparison. Am I -- could you maybe just discuss that and maybe just discuss the source of the price/mix effect in Performance Chemicals that you cited?

Sure. So what we said, David, on the call was that we saw a 5% increase in volume. That's probably the mid-range of what we would expect. We also saw a negative 6 percentage points price and product mix. Now I think it's important that most of that is due to raw materials. And what we're seeing at the moment is that we got lower raw material prices than we had last year. So that's actually putting pressure on our revenues. So we're not passing through a higher amount of raw materials. And then we had a positive 3% uplift from exchange rates.

So overall, we saw a 2% increase in revenues. But the important thing here is, Dave, is that we are absolutely hitting that mid-single digits volume. And without the pressure on raw material prices, that would have pushed the revenue line up a lot more.

Okay. So the bulk of that 6% is raw material pass-through?

Pretty much raw material [over the gap].

Yes. And would that be -- so if I was to kind of like take that item or take that element and apply it to Fuel Specialties where I think you cited negative price/mix effects of 5%, would that be a similar behavior there or similar causation?

It's slightly different in Fuel Specialties, David. One of the things we highlighted earlier was that it was a very strong comparative quarter this time last year and that was from our aviation products. So there is a stronger mix element to that. But there is some raw materials, but not as pronounced as Performance Chemicals.

Yes. And just building on that, within Fuel Specialties, I was positively surprised by the performance in that segment. And quite frankly, it's just what you referenced. My understanding is the portion that goes into aviation markets is significant. And in my estimation, I mean that should -- that element within Fuel Specialties should be significantly down. So maybe if we could just talk about the volume decline of 12%. I mean, how much of that was allocated to, let's say, the aviation side? And how would you say the other key end markets within Fuel Specialties did volume wise relative to aviation. I guess, the diesel truck business and any other elements you might call out would be great.

Let me take that and then I'm sure Patrick will add some comments from over the top. So I'll come off the aviation piece at first. So as you said, jet fuel additives are a relatively small portion of our sales mix, but they have been impacted due to the drop in global jet fuel demand. Our AvTel sales, however, have been more resilient because they go into avgas 100LL. And that's into the general aviation market and that includes personal aircraft, the crop dusting and sort of end markets that have been less impacted. So although we've seen a drop-off in the jet fuel piece, we've not seen that as much drop-off in the AvTel fee. So that's that side of it.

I would say on the diesel additives demand, that is probably anywhere between 85% to 90% of what we would normally expect at this time of the year. We have seen an improvement over Q2, no doubt, when we actually -- almost demand actually stopped. So we're not back to where we would like to be, David, but we are sort of getting close to that. So if you think that these are the [fuels] around about 85% to 90%, but the jet fuel is through the floor right now.

Yes, certainly. Okay. Thank you for the additional color there. I wanted to maybe shift over to a strategic question for Patrick. But you've talked consistently about opportunities for bolt-on M&A or something a little bigger. And then I think the new element this quarter, Patrick, might be your comment on the potential for a second wave. So this is more like a question of the practicalities of trying to get M&A done. So sometimes when markets get unsettled, companies look at their asset base differently and what's strategic and what they want to prioritize and hence, the opportunities for some M&A. But then when there is maybe a disruption to the market like a potential second wave, it may induce some potential targets to kind of pull in their reins a little bit, not wanting to sell at the bottom or not want to be viewed as a motivated seller.

So from your perspective, from your experience, the potential for a second wave of the pandemic, does that loosen up or does that make targets more willing to kind of meet you halfway as far as valuation or other deal aspects concerned? Or is this the kind of market where they -- it tends to dry up opportunities because people don't want to put themselves in a position where they might be -- you viewed as motivated sellers or selling at the bottom? So you've talked about M&A. Just the practicalities of getting across the finish line in the current environment would be great.

Sure. I think, as you know, we're very conservative in our approach with M&A and we remain that way. And I think as you go through the first wave of COVID that hit and you would have watched a lot of companies really buckle up their belts a little tighter, start looking at their assets a little harder. And really, a lot of companies started buckling up against bank covenants too. And so for us, it was -- we've always had such a strong balance sheet that we had the ability to weather storms like this. And I've always said in the past that in down markets is when you need to start looking to acquire. And we consider this a down market, obviously, for different reasons, not driven by financially down markets, but by a pandemic. But the pandemic flows back into financial balance sheets. And for us, we're going to be opportunistic.

And I think if you look at a second wave, which has hit some of the European countries as well as some of the U.S. states and other parts of the world, it hasn't changed from the aspect of a lot of companies looking at their business base and saying, what do we want to keep? Are we bucking up against bank covenants? What do we need to sell to get cash on the balance sheet? And for us, it really hasn't changed. We still look at things the way we should look at them. We run all the models that we should look at. But for us, it's been very, very stubborn on how we acquire and will remain that way. And I think on what the market has done though is it's made a lot of companies look inside and say what really fits our portfolio? And what could we send out to the market? What kind of multiple could we get on that?

I think you have seen some multiple compression. I think that we've seen more businesses that we've had interest in than we ever have before. I would probably say there's a lot of deals out there right now up for sale that have some complementary businesses to ours that we're looking at. But there's nothing yet that we're ready to pull the trigger on, but we will be very opportunistic when the time comes. And we have a great balance sheet to do that, along with still paying our dividend, increasing our dividend. And more importantly, as I said earlier in my comments is that funding our organic growth because that's your cheapest -- that's your most secure and your cheapest growth. And so we're going to stay disciplined. We've got opportunities.

Even though you have a second wave, it really hasn't changed that much from what we've seen yet. Now we're cautious, but we haven't seen anything changed from the first wave.

Okay. Thank you for that. I do have one other question, but I think I should get back in queue. I just want to make sure that there is at least one other questioner behind me. Otherwise, the call may end. So any ideas is there another caller? And then I'm happy to get back in queue.

Yes, sir. We have another question queuing after you.

Okay. Thank you. I'll get in queue.

Your next question comes from the line of Chris Shaw from Monness, Crespi.

My first question. Maybe you mentioned it, but what happened to the cost for the Octane Additives business? Did they get folded into Fuel Specialty this quarter?

Yes. So and as you know, Chris, in the second quarter, we have the cessation of the Octane Additives business. We took a restructuring charge. So all future operating costs of that business are now wrapped up in that provision. So we don't expect any future income statement impacts. There is a small accretion charge, which is basically the depreciation charge on the environmental provision. That still comes through our income statement. And that's now shown in the corporate cost centers. That's about -- that's $4 million per year. But outside of that, there's no other costs associated with Octane Additives that will hit the income statement.

Right. But the business cost is still running -- the asset got folded into Fuel Specialties in, is that right?

Yes. We still produce [softel] for the aviation sector. That's now part of Fuel Specialties as it always has been.

So yes, so that makes -- yes, the margins were pretty good then for Fuel Specialties. Good job there. Oilfield -- could you just remind me in Oilfield how much of the business approximately is now outside of North America? I know you're making progress in the Middle East and all, but how much total is it?

Yes, it's still pretty small. We have business in South America. We've got business in Middle East and some other areas of the world, China. But it's -- I would probably say it's 10%.

Okay. Great. And then this is more of a broader or long term kind of question. I mean when businesses are sort of on their -- on getting hit and things are down already, people like to make up obviously or pile on sometimes with the longer term negative stories. And so you're obviously exposed to transportation fuel demand and Fuel Specialties and also so in Oilfield Services. I mean, you guys -- how do you think -- I mean, if transportation fuel demand is going to run lower than GDP growth over the longer term as some people think, I mean, I guess oilfields has a lot of, I guess, geographic expansion and product expansion, but it's not like Fuel Specialties. It's a little more mature. How do you see that growing at even GDP rates or above?

I mean you -- I'm not saying that that's exactly what's going to happen. I know a lot people are trying to say that we're going to be moving on electric cars very shortly or on an aggressive -- more aggressive basis than perhaps previously thought. So that would obviously impact demand. So I mean, how are you guys thinking about that? I know, obviously, the Performance Chemical business is a bit of a response to all that longer term. So just tell me what you can, I guess, or what your thoughts are.

Yes. I think if you look at Fuel Specialties, EVs are not going to affect demand whatsoever for the short period of time. That's a little longer route. What's affecting demand is strictly COVID right now. And so we've seen demand increase from Q2 to Q3. We're starting to see the increase -- we were starting to see the increase going to Q4. Who knows what's going to happen now. But I do think over time, as we get control over this pandemic that you'll see demand levels come back like they were in 2019. So it still for us remains as a GDP plus. And I think the one good thing about that business is [the asset light] so -- and it's got great margins and the conversion rate is very good into op Inc. So great business to be in.

Again, it's strictly a supply demand issue and it's based off what's going on with the markets with the pandemic. So I think they'll come back to '19 levels. It's going to take some time. But again, it's just a strong business and it will remain that way. I think if you look at Performance Chemicals, we have a big runway of growth there because of all the technology we have based off all the organic technology that we have right now in place. And that's obviously an area that we're looking at from an acquisitive standpoint. So strong base there in Performance Chemicals.

If you look at Oilfield, it's basically DRA and Middle East. And you'll see things come back. We're starting to see wells come back online in the U.S. markets. We're starting to see drilling come back a little bit, the rigs increased a little bit as well. So we're starting to see demand come back in the U.S., but a lot of our growth to take out cyclicality in that Oilfield business like we've stated before is going to be the expansion in DRA, which we're doing and we're adding more volume to the markets as we speak, as well as the Middle East. And we've done both of those. And I think as you see over the next 3 or 4 quarters, you're going to see that being more a bigger improvement, I should say, in the overall portfolio for Oilfield Chemicals.

Your next question comes from the line of Jon Tanwanteng from CJS Securities.

Just a couple of quick follow-ups. Patrick, you mentioned twice returning to 2019 levels. I was wondering when do you expect that to be hit. And I understand that more things are murky right now, number one. And number two, how much of that is actually new stuff that's coming on as opposed to just reengaging old volumes and old demand, whether that's GDI or IMO or DRAs? And maybe crack us what would your expectations are?

Sure. GDI and IMO have kind of been out of standstill just due to the fact of the pandemic as well and it's not really been anybody's focus. I think you will see it come back to the '19 levels. But again, Jon, all depends on the second wave. When is it going to -- when are we going to get control of it? And when are we going to start letting up again and getting people out in travel? But I think sometime in 2021, you should start -- it's going back to some type of 2019 levels. And again, that's when you'll start seeing GDI and IMO pick back up. So it's going to be interesting to watch. But we suspect and we expect that we'll get to 2019 levels.

And structurally, will your earnings at that -- at those levels be the same as they were in 2019? Or are there puts and takes to that given your cost savings, mix changes and all these other stuff going on [that work]?

I think that remains to be seen. Again, if we get back to 2019 levels, I would say yes, that's correct. And the other thing that we're looking at, which we haven't talked about, is that we have a -- we're looking at a big technology right now with DRA for fuels. Right now, we're just in light crude. We are looking to get into heavy crude and in fuels. And hopefully, we'll have something commercial here in the near term for the fuels business.

(Operator Instructions) Your next question comes from the line of David Silver from C.L. King.

Okay. I'll just warn you in advance, I have kind of a couple of big picture questions for you. So just as a preface, I mean the only prediction that was worse than my -- than the accuracy of my earnings estimate was probably the posters for the current presidential election. And it's -- thanks for laughing. But it's the morning after. And my thinking now is that is that this election and the next 4 years leadership might turn on how people feel about one of the candidates -- while the both candidates differing opinions on the future of fracking, okay? So from your perspective, Patrick, there is 2 candidates. It's a very tight race. Who knows what's going to happen in the back rooms here?

But you might have -- depending on who emerges, you might have two very different approaches to oil exploration in the United States. So from your perspective, I mean, how are you thinking about that? And how might that affect your Oilfield Services activities going forward? I mean, I know it's very early, but you get paid to kind of look over the horizon a bit or look around the corners. I mean, what do you -- in practical terms, I mean, what do you think the range of possibilities are for domestic drilling activity and whatnot based on how the next couple of days turn out politically?

Yes. Good question. When you look at this business, and we've always said that you've got to take cyclicality out of it. And the only way to do that is to expand outside the U.S. And so whether it was politically driven or strategically driven, which was for us, that's why we went into South America, that's why we're into Mexico, that's why we went into the Middle East, and that's why we developed our own DRA. So for us, that's a way to strategically take it out and it's also a way to fight off whichever president comes into the office, if Biden gets in and starts cutting back on fracking on what he says on federal lands.

If you look at the permitting basis, a lot of the federal lands have been grandfathered in for -- I'd probably say 2 to 3 years of permits have already been grandfathered in for federal land. So it'd be awfully difficult for them to -- they can stop it, but it's going to take years before it negatively affects this business. You have a lot of land that's not federal land that people will just gravitate. After they've drilled on their permits on federal land, they'll move off the federal land and go on to private land. So I don't think it's going to negatively affect us per se. If he completely bans fracking, which he says he's not going to, he backtracked on that, and I don't think he can, we're set up still well to make sure that we've diversified the portfolio and that's what we've done. But I think overall, it should not affect this business for at least 2 to 3 years if Biden gets in office.

Okay. I have a smaller board question and then one bigger one. The smaller board one would be I was -- and I apologize if I missed this, but I did want to know whether IMO 2020 mandates and the development of your fuel additive solutions for that market. Again, maybe you could just give us a quick update on how much traction that part of your new product portfolio is getting.

Yes. It's definitely getting traction, but it's small, but it's gaining. As every month goes by, they have issues. And so whenever you have an issue, typically feel out as what cures it. So it's a small part of our business now. We haven't seen the increase in big sales like we anticipate. It's just going to take some time. It is there. It's just going to take some time.

Okay. Great. And then the final question again is another kind of big picture kind of softer issue kind of question. And it has to do with ESG, okay? So your company was founded on the sale of tetra ethyl lead and tetra ethyl lead alone. And as of a quarter or 2 ago, you're now 100% out of that business, I should -- except for the Avgas element. But you're out of pure TEL for automobiles and you're on to many other things, including many with the environmental or health or safety benefits. And I've noticed from a number of my companies, there is just an increasing focus on ESG and those types of issues at the board level. And I think it is just me personally, but I think the corporate world now has reached kind of that inflection point where it's going to become more of a requirement as opposed to a nice thing to have. Can you just maybe give us a sense of either from the regulatory side, from major investors’ side -- I don't know, corporate responsibility?

I mean, does it make a difference in the investment world that Innospec is now 100% out of the TEL business for automotive uses? And does that allow, I don't know, some socially conscious funds to consider adding you? Does it give you a different standing in any way? What benefits are there, if any, that you might cite from this -- making the final transition out of the automotive TEL business?

Sure. Ian, why don't you pick it up and then I'll talk about the gold award we got from EcoVadis, et cetera?

Sure. So you're right, David. It's actually is a hot topic on our board. What I would say, having you on the call, is we've just released our responsible business report. It's on our website. It covers off a huge amount of the work that this organization is doing across all our businesses and it's a great lead. We share that with our customers. We share that with our investors. And increasingly, we get conversations about ESG with our investors.

And I think when you look at our businesses, David, you're right, transitioning from TEL was a great step for us. When you look at what we do in Fuel Specialties, we improve efficiency, we reduced emissions. In Performance Chemicals, we provide a lot of naturally balanced, environmentally friendly products. And in the Oilfield, we improve efficiency and we protect assets. So a lot of what we do is green or is efficiency related, improves the -- helps improves the environment. So we do an awful lot. I would encourage you to go and have a look at that report. And if you would like to dig into it deeper, we'd be more than happy to do that with you.

Yes. I think -- and I think just to add to what Ian is saying is you got to look at this from an overall perspective too, is that we got the gold again for EcoVadis, which was a much more stringent this year than it was last year. I think if you look at as a holistic too, you've got to look at the general board. We just added another female member and she's going to be a very strong asset to our company. And if you look at the report that Ian is referring to, it talks about less water, talks about CO2 emissions, it talks about sustainability, it talks about the green wave and all the things that our company does to support that. So it is definitely high on everybody and more importantly to investors. And so it's really driving not just us, it's driving the whole market to really be focused on this whole ESG and this whole sustainability and responsibility market.

Thank you. We have no further question. Patrick Williams, please go ahead.

Thank you all 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 Q4 2020 results in February. Have a great day.

Ladies and gentlemen, that does conclude your conference for today. Thank you for participating. You may now all disconnect. Thank you.