What changed in this filing

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Item 1A. Risk Factors

2024-02-14 compared with 2023-02-22 · 35 added, 38 removed, 217 unchanged (25% of the section changed)

8 unchanged sentences

These risks could adversely impact our results of operations, financial position and cash flows.

Russian military invasion of the sovereign state of Ukraine.

On February 24, 2022, Russia launched an invasion into Ukraine which has had some effect on our ability to obtain and import certain raw materials used to manufacture our products and our ability to export and sell our products in these countries.

The ongoing conflict, and sanctions imposed upon Russia and Belarus, may impact on the Company’s sales, cost of procuring raw materials or distribution costs in future periods.

The wider implications of the conflict have driven up the cost of energy and utilities used to operate our manufacturing plants, particularly in Europe, with the further potential for issues relating to the supply of energy, particularly natural gas, for our manufacturing sites in countries reliant on supplies from Russia.

The fluidity and continuation of the conflict may result in additional economic sanctions and other impacts which could have a negative impact on the Company’s financial condition, results of operations and cash flows.

These include decreased sales;

supply chain and logistics disruptions;

volatility in foreign exchange rates and interest rates;

inflationary pressures on raw materials and energy;

and heightened cybersecurity threats.

Continuing adverse global economic conditions could materially affect our current and future businesses.

1 unchanged sentence

The availability, cost and terms of credit have been, and may continue to be, adversely affected by the foregoing factors and these circumstances have produced, and may in the future result in, illiquid markets and wider credit spreads, which may make it difficult or more expensive for us to obtain credit.

The level of inflation and energy costs, particularly in Europe, may result in an adverse impact to the Group’s results from employee wages and other costs of operations of our manufacturing sites.

The level of inflation and energy costs may result in an adverse impact to the group’s results from employee wages and other costs of operations of our manufacturing sites.

Continuing uncertainties in the U.S.

9 unchanged sentences

While Innospec maintains business continuity plans that are intended to allow it to continue operations or mitigate the effects of events that could disrupt its business, Innospec cannot provide assurances that its plans would fully protect it from all such events.

In addition, insurance maintained by Innospec to protect against property damage, loss of business and other related consequences resulting from catastrophic events is subject to coverage limitations, depending on the nature of the risk insured.

In addition, insurance maintained by Innospec to protect against property damage, loss of business and other related consequences resulting from catastrophic

events is subject to coverage limitations, depending on the nature of the risk insured.

This insurance may not be sufficient to cover all of Innospec’s damages or damages to others in the event of a catastrophe.

4 unchanged sentences

These effects include a potentially negative impact on the availability of our key personnel, labor shortages and increased turnover, temporary closures of our facilities or facilities of our business partners, customers, suppliers, third-party service providers or other vendors, and interruption of domestic and global supply chains, distribution channels and liquidity and capital or financial markets.

increase demand for raw materials and commodities from competing purchasers, limit our ability to meet customer demand or otherwise have a material adverse effect on our business, financial condition and results of operations or cash flows.

In particular, restrictions on or disruptions of transportation, port closures or increased border controls or closures, or other impacts on domestic and global supply chains or distribution channels, could increase our costs for raw materials and commodity costs, increase demand for raw materials and commodities from competing purchasers, limit our ability to meet customer demand or otherwise have a material adverse effect on our business, financial condition and results of operations or cash flows.

Precautionary measures that we may take in the future intended to limit the impact of any epidemic, pandemic, disease outbreak or other public health development, may result in additional costs.

1 unchanged sentence

The extent to which COVID-19 or other pandemics will impact our business and our financial results in the future will depend on future developments, which are highly uncertain and cannot be predicted.

Such developments may include ongoing spread of the virus, disease severity, outbreak duration, extent of any reoccurrence of the coronavirus or any evolutions or mutations of the virus, and availability, administration and effectiveness of vaccines and development of therapeutic treatments that can restore consumer and business economic confidence.

Such developments may include ongoing spread of the virus, disease severity, outbreak duration, extent of any reoccurrence of the COVID-19 or any evolutions or mutations of the virus, and availability, administration and effectiveness of vaccines and development of therapeutic treatments that can restore consumer and business economic confidence.

Business Operations

7 unchanged sentences

Consummating acquisitions, partnerships or other opportunities and integrating acquisitions involves considerable expense, resources and management time commitments, and our failure to manage these as intended could result in unanticipated expenses and losses.

Post-acquisition integration may result in unforeseen difficulties and may deplete significant financial and management resources that could otherwise be available for the ongoing

development or expansion of existing operations.

Post-acquisition integration may result in unforeseen difficulties and may deplete significant financial and management resources that could otherwise be available for the ongoing development or expansion of existing operations.

Furthermore, we may not realize the benefits of an acquisition in the way we anticipated when we first entered the transaction.

9 unchanged sentences

Like other global companies, we and our third-party service providers have, from time to time, been and will likely in the future be, subject to or targets of unauthorized or fraudulent access, including, but not limited to, physical or electronic break-ins or unauthorized tampering, as well as attempted cyber and other security threats and other computer-related penetrations including by state actors, terrorists or organized crime.

Also, like other global companies, we have an increasing challenge of attracting and retaining highly qualified security personnel to assist us in combatting these security threats.

Also, like other global companies, we have an increasing challenge of attracting and retaining highly qualified security personnel to assist us in combating these security threats.

The frequency and sophistication of such threats continue to increase, with malicious actors frequently changing tactics and techniques.

These threats often become further heightened in connection with geopolitical tensions.

The rapid evolution and increased adoption of artificial intelligence technologies may intensify our cyber security risks.

The proliferation of third-party financial data aggregators and emerging technologies, including our use of automation, artificial intelligence and robotics, increase our cyber security risks and exposure.

Artificial intelligence capabilities may be used to identify vulnerabilities and craft increasingly sophisticated cyber security attacks.

Vulnerabilities may be introduced from the use of artificial intelligence by us, our customers, suppliers and other business partners and third-party providers.

Although we have implemented administrative and technical controls and take protective actions to reduce the risk of cyber incidents and breaches of our information technology, and we endeavor to modify such procedures as circumstances warrant, such measures may be insufficient to prevent physical and electronic break-ins, cyber-attacks or other security breaches to our computer systems.

2 unchanged sentences

Our information technology costs may increase to ensure the appropriate level of cyber security as we continuously adapt to the changing technological environment.

While we have limited insurance coverage in place that may, subject to policy terms and conditions, cover certain aspects of cyber risks, this insurance coverage is subject to certain

limitations and may not be applicable to a particular incident or otherwise be sufficient to cover all our losses beyond any coverage limitations.

While we have limited insurance coverage in place that may, subject to policy terms and conditions, cover certain aspects of cyber risks, this insurance coverage is subject to certain limitations and may not be applicable to a particular incident or otherwise be sufficient to cover all of our losses beyond any coverage limitations.

Furthermore, a significant or protracted information technology system failure may result in a material adverse effect on our results of operations, financial position and cash flows.

6 unchanged sentences

The most significant announcement impacting the Company is the stated aim of EAGLE to eliminate lead emissions from general aviation by the end of 2030.

There are also regulatory projects underway for the European Union, which are considering the phase out of leaded fuel for the aviation industry earlier than the FAA timetable.

There are also regulatory projects underway for the E.U., which are considering the phase out of leaded fuel for the aviation industry earlier than the FAA timetable.

While we expect that at some point in the future a replacement fuel will be identified, trialed and supplied to the industry, there is no currently available alternative.

8 unchanged sentences

Trends in oil and gas prices affect the level of exploration, development and production activity of our customers, and the demand for our services and products, which could have a material adverse impact on our business.

Demand for our services and products in our Oilfield Services business is particularly sensitive to the level of exploration, development and production activity of, and the

corresponding capital spending by, oil and gas companies.

Demand for our services and products in our Oilfield Services business is particularly sensitive to the level of exploration, development and production activity of, and the corresponding capital spending by, oil and gas companies.

The level of exploration, development and production activity is directly affected by trends in demand for and prices of oil and gas, which historically have been volatile and are likely to continue to be volatile.

20 unchanged sentences

We use long-term contracts (generally with fixed or formula-based costs) and advance bulk purchases to help ensure availability and continuity of supply, and to manage the risk of cost increases.

From time to time, we have

entered into hedging arrangements for certain utilities and raw materials, but do not typically enter into hedging arrangements for all raw materials, chemicals or energy costs.

If the costs of raw materials, chemicals or energy increase, and we are not able to pass on these cost increases to our customers, then profit margins and cash flows from operating activities would be adversely impacted.

From time to time, we have entered into hedging arrangements for certain utilities and raw materials, but do not typically enter into hedging arrangements for all raw materials, chemicals or energy costs.

If the costs of raw

materials, chemicals or energy increase, and we are not able to pass on these cost increases to our customers, then profit margins and cash flows from operating activities would be adversely impacted.

If raw material costs increase significantly, then our need for working capital could increase.

7 unchanged sentences

We are subject to extensive regulation of our international operations that could adversely affect our business and results of operations.

Due to our global operations, we are subject to many laws governing international commercial activity, conduct and relations, including, but are not limited to, those that prohibit improper payments to government officials, restrict where and with whom we can do business and limit the products, software and technology that we can supply to certain countries and customers.

Due to our global operations, we are subject to many laws governing international commercial activity, conduct and relations, including, but not limited to, those that prohibit improper payments to government officials, restrict where and with whom we can do business and limit the products, software and technology that we can supply to certain countries and customers.

These laws include, but are not limited to, the U.S.

1 unchanged sentence

Bribery Act, sanctions and assets control programs administered by the U.S.

Department of the Treasury and/or the European Union from time to time, and the U.S.

Department of the Treasury and/or the E.U.

from time to time, and the U.S.

export control laws such as the regulations under the U.S.

1 unchanged sentence

Violations of any of these laws or regulations, which are often complex in their application, may result in criminal or civil penalties that could have a material adverse effect on our results of operations, financial position and cash flows.

Our United Kingdom defined benefit pension plan could adversely impact our financial condition, results of operations and cash flows.

Movements in the underlying plan asset value and Projected Benefit Obligation (“PBO”) of our United Kingdom defined benefit pension plan (“UK Plan”) are dependent on our assumptions in respect of the discount rate, annual member mortality rates, future return on assets and future inflation.

defined benefit pension plan could adversely impact our financial condition, results of operations and cash flows.

Movements in the underlying plan asset value and Projected Benefit Obligation (“PBO”) of our U.K.

defined benefit pension plan (“UK Plan”) are dependent on our assumptions in respect of the discount rate, annual member mortality rates, future return on assets and future inflation.

A change in any one of these assumptions could impact the plan asset value, PBO and pension credit recognized in the income statement.

3 unchanged sentences

The initial value of the asset associated with this contract was equal to the premium paid to secure the contract and is adjusted each reporting period to reflect the estimated fair value of the premium that would be paid for such a contract at that time.

The buy-in reduces the UK Plan’s value at risk in relation to key risks associated with improved longevity, inflation and interest rate movements while improving the security to the UK Plan and its members.

The buy-in reduces the UK Plan’s value at risk in relation to key risks associated with improved longevity, inflation and interest rate movements while improving

the security to the UK Plan and its members.

The Company consequently benefits from the buy-in as it reduces the UK Plan’s potential reliance on the Company for future cash funding requirements.

7 unchanged sentences

Should any tax authority disagree with our estimates and determine any additional tax liabilities, including interest and penalties for us, this could adversely impact our results of operations, financial position and cash flows.

In 2021, the Organization for Economic Cooperation and Development (“OECD”) released Pillar Two Global Anti-Base Erosion model rules (“Pillar Two Rules”), designed to ensure large corporations are taxed at a minimum rate of 15% in all countries of operation.

Although the U.S.

has not yet enacted legislation implementing Pillar Two Rules, other countries where Innospec does business, including the U.K., have enacted legislation implementing Pillar Two Rules which are effective from January 1, 2024.

We are continuing to evaluate the Pillar Two Rules and their potential impact on future periods, though we do not expect the Pillar Two Rules to have a material impact on the Company’s effective tax rate.

Our products are subject to extensive government scrutiny and regulation.

7 unchanged sentences

We cannot be sure that necessary approvals will be granted on a timely basis or at all.

Any delay in obtaining, or any

failure to obtain or maintain, these approvals would adversely affect our ability to introduce new products and to generate income from those products.

Any delay in obtaining, or any failure to obtain or maintain, these approvals would adversely affect our ability to introduce new products and to generate income from those products.

New or stricter laws and regulations may be introduced that could result in additional compliance costs and prevent or inhibit the development, manufacture, distribution and sale of our products.

35 unchanged sentences

We have in place a credit facility with a syndicate of banks.

From time to time, we use derivatives, including, but not limited to,

interest rate swaps, commodity swaps and foreign currency forward exchange contracts, in the normal course of business to manage market risks.

From time to time, we use derivatives, including, but not limited to, interest rate swaps, commodity swaps and foreign currency forward exchange contracts, in the normal course of business to manage market risks.

We enter into derivative instruments with a diversified group of major financial institutions in order to manage the exposure to non-performance of such instruments.

11 unchanged sentences

dollar have fluctuated in recent years and may continue to do so.

We cannot accurately predict future exchange rate variability among these currencies or relative to the U.S.

We cannot accurately predict future exchange rate variability among

these currencies or relative to the U.S.

While we take steps to manage currency exchange rate exposure, including entering into hedging transactions, we cannot eliminate all exposure to future exchange rate variability.

18 unchanged sentences

Section 22 of the Securities Act of 1933 (“Securities Act”) creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder.

Our stockholders will not be deemed by operation of our choice of forum provision to have waived our compliance with the federal securities laws and the regulations promulgated thereunder.

Our stockholders will not be deemed by operation of our choice of forum provision to have waived our compliance with the federal securities laws and the

regulations promulgated thereunder.

The selection of legal jurisdiction for litigation claims may impact the outcome of legal proceedings which could in turn impact our results of operations, financial position and cash flows.

9 unchanged sentences

If we were found to be in default under the revolving credit facility, it could adversely impact our results of operations, financial position and cash flows.

Unresolved Staff Comments

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors