IOSP
#No.
I think from what we've seen probably in the last month of Q1, <UNK>, was a positive trend upwards in not only revenue, but in profit.
And I think what you're going to see in Q2 is starting to get back to a positive profit trend holding the GPs at a pretty fairly good state as well.
It was a little bit of both.
You did see some destocking going from Q4 into Q1 and it continued until about March.
But ---+ so combined with the one customer that we mentioned that has now resumed their regular order patterns, it was a combination of both that really hit that business in Q1.
But we see quite positive signs moving forward in Q2 and Q3 just from what's on the docket that we've set down with the customers.
I think we've done really what we should have done.
I think that now it's really just driving that revenue line.
And again, as I said, I think you'll see the positive outcome of that in Q2.
We took a lot of those costs out in Q1, but really, you're right.
It's been primarily the SGA (sic) line.
Yes, it was a little bit of everything.
You had exchange headwinds; you had some destocking, as you just mentioned.
You have ---+ when you take Bakken crude out, it's a much higher cetane crude that gets refined.
So when it comes out to a finished fuel, you don't need as much cetane, and we saw that effect of it.
So really, the combination of a warm winter, a higher volume of sweet crude going into the refinery, along with exchange headwinds, and I think with AvTel, it's always a little bit lumpy.
That's coming back to some normalcy and you will see in Q2 that AvTel will come back into a nice order pattern.
So I think you'll see some positive trends moving forward in Q2 as well.
You're exactly right.
You know, I think that the raw materials are in a fairly stable state right now, <UNK>.
And for us, it's just maintaining really our cost infrastructure.
So I think you'll see ---+ you could see margins dip down a little from where it was in Q1, but I still think you're going to have a strong margin profile in fuel additives.
I would probably keep oilfield margins where they are.
I think you'll see a higher revenue in oilfield in Q2 and I'd keep the margins where they are.
Yes, <UNK>, we certainly expect our personal care business to continue growing nicely.
We've done a good job so far and certainly through 2015 as well.
We're targeting high-single-digit sales growth in personal care.
And there is some offset with polymers ---+ that's a commodity business mainly in Europe and volumes were down quite substantially in Q1.
A part of that was due to some manufacturing issues and we do expect it to improve in Q2.
What will be the core focus in that business is going to be on personal care.
As we said earlier, when we split this business out from Q2 onwards, you will be able to see the personal care business as a standalone with higher margins and great growth rates as well.
We are going to fold polymers into fuel specialties, where we can optimize the asset as part of the fuel specialties business as well.
I think to add to <UNK>'s comment, <UNK>, we did have ---+ we will have some volume fall over into Q2 that should have been in Q1 on personal care as well.
So as <UNK> said, personal care is really ---+ the business is reacting and performing exactly as we anticipated.
You saw a little leakage from the first order that leaked into April.
That has now been shipped.
The new order, we're trying to balance that ---+ obviously the AvTel and the Mogas orders.
You could see a little bit of that leak into the third quarter ---+ sorry, the second quarter ---+ the third quarter.
So you could see some leakage into the third quarter.
But we are obviously going to try to get as much out as we can in Q2.
We're still looking at personal care.
We've looked at quite a few deals.
We are in the process of speaking to quite a few people.
We are just ---+ I think the multiples are starting to come down, which is advantageous.
We've steered away from the oilfield for now until some of the better assets come on the market.
You've obviously seen 51 bankruptcies alone in the oilfield services sectors, so it's a highly levered market.
So we're watching that very closely.
You saw that we increased our dividend again 10%, and we've continued to do that on year-on-year basis.
And we are very optimistic in the buybacks and we've taken advantage of the market when we feel it's a good time to buy back.
And we will continue to do that.
And we have the balance sheet to do all three of those.
And as we've stated all along, our preference is organic growth, but obviously to balance out our portfolios to continue to look at the personal care market.
Yes, when you take ---+ a Bakken crude is a very sweet crude.
And when you have a very sweet crude and typically as you refine the crude, it puts out a higher cetane fuel.
And obviously, cetane is a large product line for our Company.
And so it requires less cetane in some of that fuel.
It primary hit the Gulf Coast and West Coast.
Now, we see that starting to normalize because they are starting to blend heavy crude with sweet.
So we're starting to see some normalize in the market, which should benefit us in Q2 and Q3.
Sure.
We saw the hit in cetane even in 2014 and 2015.
But you got to remember: we had a very cold winter in 2015 and we had a very strong first quarter in 2015.
And so when you look at a like-for-like quarter, your big negative impact was that cetane business with the warm winter as well as as we said just earlier in the conversation, customer order patterns ---+ specific customers.
And one quite significant order as well.
That's correct.
We can't talk specific customer, but we can talk specific application.
It's in oilfield application that's basically an asphalting dispersant.
And the customer just ---+ they destocked in Q1, and so now it's just restocking back up in Q2.
That is correct.
It varies from business to business.
Our main target in fuel specialties is around about 35% of products ---+ of sales from new products in the last five years.
Oilfield is different again, and personal care is a lot higher.
But our main field specialties business we target over 35%.
That's a little bit higher.
That's more like 40% to 45%.
Yes.
Diesel volumes are off.
If you look at ---+
It's about 2% to 3%.
If you look at the overall market, obviously diesel sales going into the energy sector, which is extremely high usage for diesel.
Diesel sales into the mining market is quite significantly down.
So in this general market conditions, you saw diesel sales decline a tad.
Now, not necessarily in passenger vehicles and not necessarily in over-the-road vehicles from a transportation standpoint.
It was more direct towards the oil and gas business and the mining business.
And the hope is that you start seeing that trend come back up, and I think we're starting to see that trend come back up latter part of the Q1 and starting into Q2.
We don't break it down that way, unfortunately, <UNK>, but you can just tell by the sales pattern that it affected us.
You might be talking about ECOCLEAN.
Strong sales.
You've got higher pressure, higher temperature engines.
You've got obviously a lot of the Clean Air acts and CARB.
So ECOCLEAN has continued to surge forward.
As a matter of fact, we've got trials going on with the railroads.
As in any process with fuel additives and new technology and new engine technology, it's continuous.
And so we have multiple trials and we have multiple applications that are in play.
Great product and we will continue to push forward.
You know, we have such a diverse portfolio, <UNK>.
It's not like if ECOCLEAN went way that it would kill our portfolio.
It's still a very small portion because we are so evenly dispersed with all of our product lines.
But it's obviously very key to customers.
It's very key to showing off our technology.
It's probably about in that same area.
It might be a little bit higher, but it's all about in that same area.
They are starting to get more pressure.
And I think it's ---+ just watching the news, you just have to watch ---+ look at China and look at India and the pressure that's come about from all the other national countries about having a Clean Air Act ---+ a CARB-type diesel or a Euro-type or LSD standardized diesel.
It's going to come, <UNK>; it's just a matter of time.
I think every quarter, we have a discussion about this at some point in time.
We will hopefully have good news and say it's started.
We're well positioned when the turn does happen.
Still working on it.
I would probably say we are still a ways off.
I wouldn't say years, but I would say that it's probably something we need to discuss within the next six months.
It's going to be around about $20 million, <UNK>.
What we actually saw ---+ we expected it to increase over Q1.
If you look back at the year end, we finished at a little bit lower than we expect did.
So we expected some build.
Perhaps not as much as we would have expected, given the slowdown in oilfield.
But I think as oilfield starts to come back and we see a higher demand in fuels, you would expect a little bit more of an expansion.
And as always dependent on how the order patterns go in octane additives will depend on how we finish each quarter because that can have quite a large swing in working capital.
That will stay where it is.
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 on this call, please give us a call at any time.
We look forward to meeting with you again to discuss our Q2 results in August.
Thanks again.
