Innospec Inc. Q1 FY2020 Earnings Call

Thank you, everyone. Welcome to Innospec’s first-quarter earnings call. Today’s call is being recorded. This is David Jones. I’m Innospec’s general counsel and chief compliance officer. Late yesterday, we reported our financial results for the quarter. The earnings release and this presentation are posted on the company’s website at innospecinc.com. It will be available on the site for at least six months. During this call, we will be making 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, such as its duration, its long-term economic impact, measures taken by governmental authorities to address it, and the manner in which the pandemic may exacerbate other risks and uncertainties that could cause actual results to differ materially from the anticipated results implied by forward-looking statements. These risks and uncertainties are detailed in Innospec’s 10-K, 10-Qs and other filings with the SEC. Please see the SEC’s website or Innospec’s site for these and other documents. In our discussions 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 first-quarter 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 first-quarter 2020 conference call. We are very pleased with our first-quarter performance. But I’d like to start by reviewing the current situation. I’m saddened to report the passing of Joachim Roeser, who was a non-executive director of Innospec for 12 years. Joachim succumbed to COVID-19 on April 26. He was a valued colleague, a great friend, and he will be greatly missed. When we consider the twin issues of the COVID-19 pandemic and the collapse of crude oil facing our industries, I’m acutely conscious that you need to hear how we are responding to these challenges and how we see the near-term prospects. Our first priority will always be the safety and health of our employees, their families, and our customers. My thoughts are with those employees who are sick and with the families who are helping them get through these difficult times. As well as aligning ourselves with our national and local government advice, we have enhanced our hygiene precautions and ensured that our teams are able to operate remotely and safely. We are conscious of our role in supporting our neighboring communities and we have already donated a large quantity of respiratory protection equipment and offered our laboratory facilities as a resource to the health authorities. In terms of manufacturing, we are covered by the definition of an essential industry, so we have continued to manufacture at all our sites. In doing so, we have employed social distancing while ensuring that our employees are protected by appropriate personal protective equipment. I’d like to take this chance to publicly acknowledge my appreciation to the great people of our company who are keeping us going through these difficult times. As a result of these actions, we are continuing to meet our customers’ requirements in all our business units globally. In the near term, our three strategic businesses face different challenges and opportunities. Products for the personal care and home care industries are seeing sustained and even increased demand. This has been moderated a little with some temporary limitations to customer facilities. Fuel specialties is driven by fuel demand. This will take a short-term hit but should bounce back as miles on the road, especially for freight and trucks, return to normal. The outlook for oilfield services is very dependent on crude oil and natural gas prices. We have already responded to the downturn in customer activity. Unfortunately, we’ve had to make redundancies to right-size the current cost base. The survival of many companies through this unprecedented period will depend on their financial strength. Therefore, it’s important to spend a little time reviewing our first-quarter performance and the financial outlook for the rest of the year. We are very pleased with our performance in the first quarter of 2020. Had it not been for the COVID-19 pandemic and the pressures on crude and natural gas, there is no question that Innospec was on pace for an outstanding year. We delivered a 13% increase in operating income and a 14% increase in adjusted EPS in the first quarter. Just as important, we ended the quarter with a very strong balance sheet. We entered these unknown times with a net cash position and with significant headroom on our existing credit facilities. We have held discussions with our banking group and they remain very supportive of our strategy and of the management team. The financial strength of our balance sheet gives us the confidence to continue with our dividend, and I am pleased that the board has approved holding our semiannual payment at $0.52 per share, which is the same level as the second half of 2019. Performance chemicals had a very good quarter overall. Volumes were up significantly, even after allowing for a headwind of 5 points from customers insourcing in Q2 last year. Revenues were down as we passed through lower raw material costs. But with volume growth, the focus on gross margins and cost control, we delivered a 16% increase in operating income. Fuel specialties performed well against a strong comparative quarter, especially with the headwinds of a mild winter. Business has recovered from the supplier disruption of last summer and has a more sustainable foundation for the future. Against a deteriorating market, oilfield services performed very well with both revenues and operating income down only marginally on the same period in 2019. We also had modest but encouraging results by developing new business in drag-reducing agents and completion in production business in the Middle East. Overall, we have continued to demonstrate the value of a balanced portfolio and the benefit of prudent deployment of capital. Now I will 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 first quarter were $372.3 million, a 4% decrease from the $388.3 million a year ago. The overall gross margin increased slightly from last year to 30.6%, driven by improved margins in performance chemicals. EBITDA for the quarter was $56.7 million, a 10% increase compared to last year. Our GAAP earnings per share were $1.34, including special items, the net effect of which decreased our first-quarter earnings by $0.08 per share. A year ago, we reported GAAP earnings per share of $1.17, which included a negative impact from special items of $0.08 per share. Excluding special items in both years, our adjusted EPS for the quarter was $1.42, a 14% increase from $1.25 a year ago. Moving on to Slide 9, revenues in fuel specialties for the first quarter were $147 million, a 6% decrease from the $156 million reported a year ago. Volumes were down by 5% against a strong comparative quarter, which, together with a net adverse currency impact of 2%, was partially offset by a positive price mix of 1%. Fuel specialties gross margin for the quarter was 34.8%, down slightly from 35.7% in the same quarter last year but within our expected range. Operating income for the segment was $32.1 million, down just 2% from $32.9 million in the first quarter of 2019. Turning to Slide 10, revenues in performance chemicals for the first quarter were $113.1 million, compared to $118.1 million last year, a decrease of 4%. Volumes were up by 7%, but there was an adverse price mix effect of 9% driven by the pass-through of lower raw material prices and a negative currency impact of 2%. Gross margins of 24.4% were 1.9 percentage points over the first quarter of 2019. Operating income for the quarter was $15.6 million, up 16% from the $13.5 million in the comparative quarter. Moving on to Slide 11, revenues in oilfield services were $112.2 million, a decrease of just 2%, compared to the $114.2 million last year. Reduced customer activity in completions was partially offset by increases in revenue from production chemicals, drag-reducing agents, and our new business in Saudi Arabia. Gross margins of 32.3% were down slightly from last year’s 33%. Operating income of $7.2 million was also down 8% from the $7.8 million for the same period last year. Moving on to Slide 12, as we expected, there were no sales in octane additives in the first quarter. As a result of this, this has made an operating loss of $1.2 million, compared to an operating loss of $2.8 million a year ago. While our one remaining customer continues to use our product, we have no further orders in place. We will continue to update you on future calls. Turning to Slide 13, corporate costs for the quarter were $12.8 million, compared to $15.2 million a year ago driven mainly by a reduction in accruals in share-based compensation. The effective tax rate for the quarter was 25.1%, compared to 26% last year. Moving on to Slide 14, net cash provided by operating activities in the quarter was $2.4 million, compared to $13.2 million a year ago. Capital expenditure was $7.8 million for the quarter. As of March 31, Innospec had $68.1 million in cash and cash equivalents and total debt of $59.9 million, resulting in a net cash position of $8.2 million. In addition to the net cash position, we also have $190 million of undrawn headroom on our revolving credit facility and access to a further $125 million accordion facility, if needed. As a result, Innospec has a high level of liquidity and is well placed to manage through the current turbulence in the economy. And now I’ll turn it back over to Patrick for some final comments.

Thanks, Ian. Our first-quarter results were extremely good and we enter the second quarter in a financially strong position. However, the combination of the COVID-19 pandemic and the collapse in crude oil and natural gas prices will provide a challenge for our company. I’d like to preface my next set of comments with a caveat. With the level of uncertainty we have, any comments or forecasts on the future are very speculative and are subject to the rapidly changing global environment. They are the best view we have right now. As our businesses face different challenges, let’s address each one separately. Performance chemicals may see some limited impact in the second quarter due to delayed consumer demand in the personal care sector. However, we expect this to be offset by higher demand for home care and disinfectant products. We would expect the overall market to recover and we should see increased growth with the enhanced consumer focus on cleanliness, hygiene, and sanitation. Fuel specialties prospects will be largely defined by the demand for fuel, which is particularly important in the freight and trucking sector. It is clear there will be a substantial downturn in fuel demand in the second quarter as some parts of our industry are closed down. As the economy recovers, we would expect fuel demand to return to normal levels. The oil and gas industry is caught in a perfect storm. Global markets are oversupplied and the COVID-19 pandemic has caused the biggest demand erosion we have ever seen. The second quarter, we feel, will be the most challenging period in 2020 with a very substantial decline in customer activity. This market may take some time to recover and it’s also the most difficult market to predict. As I said earlier, we have already made the first phase of changes to our cost base and we have prepared ourselves for further actions, if required. When markets recover, we expect them to return to sustainable growth and there may be fewer competitors. Only those with the best technologies and strong balance sheets will survive. Our strong liquidity allows us to maintain our semiannual dividend at the same level as the second half of 2019, which is $0.52 per share. Depending on market conditions, we intend to increase our dividend for the full year. We believe our strategy is aligned to long-term growth and we have adapted to the current conditions. In addition, we have the financial strength to see us back through these challenges to emerge stronger and well-positioned for organic and acquisitive growth. Now I will turn the call over to the operator and Ian and I will take your questions.

Your first question today comes from Jon Tanwanteng of CJS Securities. Please ask your question.

Good morning, gentlemen. Nice quarter, and my condolences on the loss of your director. I’m sorry to hear that. Maybe to start, Ian, could you give a little bit more color on the decline in opex from last quarter? How much was active cost-cutting versus comp accruals and kind of the impact of the stock price on compensation as well?

Yes, Jon. The actual impact from the coronavirus was quite minimal throughout the quarter. We experienced some impact in our fuel specialties business and marine, notably in the middle of the quarter when shipping in China faced some delays. Toward the end of the quarter, we observed a slight decrease in miles traveled, which affected our trucking business somewhat. However, nothing significant in the fuel specialties area. Performance chemicals remained largely unaffected throughout the quarter by the coronavirus; there was only a small temporary disruption in production, but we are back to normal operations now. The decline in our oilfield business was primarily due to the price of crude oil, and the demand side influenced that part of the business as well. Regarding share-based compensation, in our press release last night, we indicated that there was a credit of about $5.8 million in the quarter, equating to $0.18 per share, which benefitted from cash-based compensation alongside a decrease in share price.

Got it. Okay. Thank you. And then just as you look forward, you mentioned reductions in costs and particularly in oilfield. How much are you expecting to save in terms of SAR and other expenses on a year-over-year basis?

I’ll let Ian pick this up, and I’ll address it after Ian’s done.

Sure, Jon. There will be a slight delay before the financial impact of the decisions we had to make is felt. We've decided on measures that should save approximately $4 million to $5 million each quarter in operating expenses related to oilfield activities. We anticipate making additional decisions that will further contribute to these savings. By the beginning of Q3, you can expect to see savings in operational expenses from oilfield in the range of $5 million to $6 million per quarter.

Got it. Please continue, Patrick.

Yes. It’s interesting that we’ve seen this before in 2009. We’ve seen it in 2015 and 2016. So there is a pre-prep that has been done and we’ve gone through this process before. So we have lined up additional cutbacks, if need be. But what you don’t want to do, Jon, is decimate the business. So when it does come back, you’re scrambling to take care of your customers. So we have to be very prudent on our cutbacks and our cost base to make sure that we don’t fall on our face down the road.

Understood. And I know it’s kind of hard to tell at this point, but what are your expectations for profitability for the segment for the year? And again, what assumptions are you making about oil prices to get to that number, if you have an internal view?

Yes. For the oilfield sector, crude prices likely need to settle in the mid-30s range, low to mid-30s, for activity to start increasing again. There are many hedges in place in certain areas, so people should be fine. For us, it's about reducing some of the market's cyclicality, which we've managed to do. We just need to keep an eye on it. Ultimately, it's a matter of supply and demand. Once we see more miles being driven, inventories will begin to decrease, and prices should rise again. So, it's more about being patient and observing than anything else.

Okay, got it. You mentioned a little bit of, I guess, client or production headwinds in the performance chemicals segment. Can you quantify and kind of qualify what’s going on there?

Yes. Some of our customers had some of their facilities shut down due to the COVID-19 pandemic. When you can’t get into a facility and deliver product, you can’t manufacture products. So that was part of the issue. Most of those have been resolved, and so most of our customers are back up and running. We’re seeing a pick-up in volumes again, as we anticipated.

Got it. Okay. And then, finally, Patrick, just the commentary on the dividend, pretty strong commentary, especially your comment on increasing it later in the year. How committed are you to that given the headwinds you’re facing? Is the cash flow there to support it? And what was driving your confidence there, really?

We have a solid balance sheet and have always been careful with our capital allocation, focusing both on acquisitions and on delivering value to our shareholders by returning money to them. Looking ahead to the second, third, and fourth quarters, we remain optimistic about our ability to increase our dividend over the long term, as we believe it adds significant value. We consider the dividend to be a wise use of our cash. Additionally, we have good credit facilities available for potential acquisitions if market conditions and valuations align with our strategy. Overall, our balance sheet positions us well to maintain and likely increase the dividend. The decision not to raise it this quarter was made to ensure that the markets are recovering as we expected, and we are beginning to see signs of that, which is encouraging.

Thank you. Your next question today comes from the line of David Silver of C.L. King. Please ask your question.

Yes. Hi, good morning, David. I have several questions. I guess maybe I’ll just start with performance chemicals. If I’m reading this right, the operating income was a record in that group. I’m wondering if you could point to where the incremental earnings came from. In other words, was it the sale of higher-margin products? Or were there continued efficiencies that you were able to wring out of the business? Secondly, it would seem that performance chemicals would be well-positioned to benefit from increased demand for disinfection and sanitation products. I believe that your company is positioned more at the higher-value end of the business there. But maybe if you could talk about the secular growth opportunities you see in the current post-pandemic environment for a structural pick-up in demand in performance chemicals.

Okay. Let me take some of that, and I’m sure Patrick will come over with some additional comments. First of all, you’re correct. Q1 was a record performance in terms of operating income for the business. We’re delighted with the performance of the guys that produce there and to see them in pretty difficult times. What’s really driven that is our continued focus on new product introduction, changing the sales mix toward higher-end, higher-value products, so initiatives to reduce costs in the operational end of the business. All these incremental efforts are really starting to show through now. So that’s where you’re getting the additional volumes and gross margin expansion, and that’s why we’re starting to see the benefits of the efforts of the guys really reflecting in the operating income line. In terms of the actual products, it’s really across the line, both in personal care and home care products. You called it pretty spot-on there, David, in terms of the medium to longer term. We do expect the world to change its habits. We play toward the sanitation, hand sanitizers, disinfectants, cleanliness, and a lot more products fit into those arenas. We think there’s going to be a change in consumer activity, where they’ll be more focused on those items. So we have a very, very good opportunity coming down the track, not only just to grow our existing core business but also to add on some more lines in the sanitation area and the disinfectant area and really grow our business in many different ways.

Yes, I think Ian made some good comments there, David. One of the things that we talked about when we expanded this business a while back and made the acquisition over in Europe is that we would focus on margins and conversions of margins into operating income and product mix. We’ve done that, and you’ve seen that consistently over the quarters, and it’s really starting to show. I give credit to the guys in the business for doing what they’ve done. I think Ian’s right. There’s a lot of new secular trends and secular growth going on in this market, primarily pushed by COVID-19. As he alluded to, the antibacterial and antiviral products represent multiple opportunities that fit right into our strategy long-term and align with our technology growth sector. So there are a lot of things that you’re going to see in this market, where some will be what we would call a mid-tier and some will be specialty. There will be a good balance moving forward. Again, it’s based on consumer trends. We have to look at social behaviors and consumer trends, and that’s really what we’re going to be focusing on moving forward.

That’s great color. Thanks, Patrick. I want to stick with you here, and I know that your historical background is in the oilfield services area. I have a number of questions that I’d like you to comment on. But just, in general, oil prices go up and down, and I was always impressed with your company’s ability to gain significant share over the past few years via bundled products and service offerings that were very appealing to customers. Just a couple of things: do you think that there might be share opportunities for you as oil prices recover and production resumes? In other words, with production down, it gives the remaining operators a chance to rethink how they want to operate once conditions are more favorable. Will that bundled products and service offering prove incrementally more attractive to them coming out? And then, maybe ancillary to that, from an M&A perspective, I know you’ve said that you feel you have everything you need with your bout of M&A activity roughly five or seven years ago. But in this environment, is this an opportunity to add, I don’t know, a single service or an additional incremental product or two that you think would improve your competitiveness with a greater breadth or a greater portfolio to bring to bear on the market once it does resume back to more normal operations?

Sure, David. If you look at the oilfield sector, there are a lot of balance sheets that are very stretched, especially on the service side, and you could even include midstream as well. Our focus right now will obviously be on technology and making sure we’re prepared for when that growth comes back. The benefit of our balance sheet is that it gives us the ability to wait these things out. We can do things that a lot of companies can’t at this point in time. A lot of equity and small companies had jumped into this business when it came back after 2016, and they’re now facing stretched balance sheets; a lot of the majors are going through layoffs like we are. That’s what you have to do to right-size the business. Our focus on technology puts us on the forefront, and that’s why we were able to grow a lot quicker than most of our competitors in this marketplace. I think that will also help us grow as we come out of this sometime in the near future. Yes, it’s about watching where we can be advantageous in the market; I think there will definitely be some customer growth coming out of this. Again, our focus needs to be technology and customers. That’s what we’re doing right now: rightsizing the business but not decimating it. That’s the focus moving forward for oilfield specialties. If you consider acquisitive growth, we’ve strategically placed our business in low-lift cost bases. We said on numerous calls that we want to take as much cyclicality out of the oilfield business as we can. Therefore, we got into DRA, which is more midstream. We think we have the best DRA product in the market. Secondly, we aimed to have a presence in the Middle East; we set up a base there and are now currently selling product in the Middle East as well as across South America and all the Americas. In terms of acquisitions, most of what we’re exploring right now—frankly, I probably wouldn’t even pay asset value for them. We’re focused on technology. If there is a technology in this market sector, like water—which could cross over into fuels and other parts of our business—we would look at it. Water is one of the only things we don’t have in our portfolio yet, a true water-based business. So that’s something we would consider. We are also developing technology internally. But for the majority of what we do in the oilfield, we’re covered; it’s about finding new technology if we don’t already have it in our portfolio or are working on it, or looking for organic growth and controlling our own destiny in certain markets. So that’s really what we’re looking at doing on the M&A side in oilfield if we pursue anything at all.

That’s great color, Patrick. Thank you. One last question, if you don’t mind. This would be one area where maybe you were a little spare on comments that I was anticipating would be a discussion of your new product efforts. You did touch on the DRAs, but I was also interested in the low-sulfur marine fuel additives and the GDI engines. On low-sulfur fuels, my understanding was there had to be kind of a feedback loop between the operators and the fuel additive makers, such as yourselves. I’m wondering, even with reduced travels, if slower operating demand has allowed yourselves and your counterparts to analyze the results to date and potentially come up with fuel-additive solutions that address the needs. And certainly not over the next quarter, but do you think you can accelerate the development and commercialization of those additive formulations for the vessels affected by IMO 2020? Secondarily, any comment on your penetration of the GDI engine market?

Sure. If you look at the IMO 2020 and the advent of the low-sulfur fuel, it takes time for some of these vessel engines to have problems, to build up particulate, to have issues in the tanks, etc. We’ve stated that we know there’s going to be a problem. It’s a function of whether you treat it at the refinery, at the terminal, or on the vessel, or if it’s all three. Until you start seeing major problems in the field with these fuels or with operations, people obviously aren’t going to pay for fuel additives if they don’t think they need to until there’s a problem. We’re now starting to see that. Unfortunately, with the COVID-19 issues at hand, it’s slowed down quite a bit on vessel freight, and so for us, once you see that pick back up, I think you’ll start seeing the IMO 2020 products coming back into play. We are selling them; we were expecting to sell a lot more until the pandemic hit. I think we’re properly positioned with great technology. We are starting to see the problems arise, and they’re becoming clear. We expect to see that pick up, and we feel we’re well-positioned to take advantage of that market. This is a highly functional, highly technological product that typically yields fair margins for our business. We’re looking forward to restoring normality so we can see the increase in sales in that product line. On GDI, it’s similar. Most engines produced now are GDI; you don’t see PFI engines out there. But the old fleet consists of PFI, while the new fleet has GDI. We have a great patented product with a market waiting to mature, and that’s going to take time. Both the IMO 2020 and GDI are future products from which we anticipate benefits as we observe improved miles on the road and vessel activity. We believe that by the third and fourth quarters, and into the first quarter next year, we’ll start to witness the advantages of those sales.

All right. Thank you very much. That was great color again. I appreciate it.

Thank you. Your next question today comes from the line of Chris Shaw from Monness, Crespi and Hardt. Please ask your question.

Good morning, everyone. I guess this is pretty much a question for Patrick. I know your experience, and you’ve been quite accurate in predicting how the oilfield business looks in general. I wanted to know how this downturn differs from 2015 and 2016, both for the industry as a whole and perhaps more specifically for your business? I mean, I know there’s the change that you’ve mentioned, DRA, Middle East. I guess, specifically for Innospec, is the profit bottom floor much higher than it was in the past?

Yes, they are two very different downturns. The one in 2016 was driven by a recession, but there was still activity on the roads and demand for travel, with planes flying and cars driving. This current downturn is unprecedented, making it hard to determine its timeline, duration, and overall impact. Companies with strong balance sheets, including all our businesses, are well-positioned in this situation. We are monitoring when governments and local authorities will begin to reopen, and we are starting to see a demand resurgence. This demand extends beyond fuel and oil to include niche products like shampoos used in hair salons, which we haven't encountered before compared to 2016. Navigating this is challenging since it’s a new experience for us. Nonetheless, I am confident in our ability to manage through this. The key factor is timing—when things will return to normal. If they don't, and we encounter shifts in consumer behavior, we will need to adapt to those changes. Our executive, sales, and technical teams are continuously assessing this, and we are well-prepared.

I mean, do you think, specifically for your customers in the oilfield, is there anything different this time? Or will there be anything different in their behavior? Or is it like you simply said before, once we get back up to $35 a barrel, things will just start right back up, and you’ll see things will be somewhat normal?

Yes. It’s interesting. When you shut in wells, you still have to treat them for bio stability and other issues so you don’t ruin the well formation. I think some wells will come back and have issues. People will be reluctant to come back quickly, especially to drill and frac at $35 a barrel. Some companies are hedged appropriately and will be fine through this process. Overall, it depends on factors like the location, what basin it is, and what the cost structure looks like to predict how the environment will appear when crude hits $35. At that price, I think people who have shut production in will return, while those who were hedged during this process will begin drilling and completing wells. Some won’t return at all, potentially going through bankruptcy or requiring a bailout. You will see some build at this moment, but as demand returns, that build will drop off significantly. You’re facing a big decline when demand comes back, spiking volumes and usage a lot more than there is product available due to OPEC cuts and declining production globally. It’s important for us to be well positioned to take advantage of this, and that focus is on technology. We have to ensure that our customers have the right technology at the best cost base. That’s what we’re focused on during these times.

Thank you. We do have one more question at the moment. This comes from the line of Bill Dezellem of Tieton Capital. Please ask a question.

Thank you. I have a couple of questions. First, regarding the octane additives business, you mentioned that your customer is using the products. What are your expectations for their conversion in the long term, and how do you foresee future orders, considering you mentioned there aren't any currently on the order book? Second, I would like to know about the performance chemicals business, and possibly the fuel specialties as well. You noted that some customers’ plants have shut down. Is this business lost permanently, or is there a possibility for catch-up since those products were being ordered or inventory was decreasing while the plants were not operational?

Good morning, Bill. Good questions. On the OA demand, we know the last country is Algeria. We have been speaking to them on a constant basis. They are still using excess inventory that’s in-country. We’re waiting to see if they’re going to order again; we don’t think they are. However, again, it’s a wait-and-see scenario. In terms of refineries, all but one have converted to the new fuel, and so we’ll just have to see what happens. That’s probably all I can say about octane additives. Regarding the performance chemicals business and others, many customers were shut down due to the pandemic, not due to lack of demand, as you noted. You’ll see some catch-up in sales, particularly in specialty products, but it won’t be a huge spike as might be anticipated. You will definitely see some catch-up in sales as most of our clients are starting to come back online. 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 Q2 2020 results in August. Have a great day.