# To Our Shareholders

_Source: `DeepSeekOCR_Ardian_pruned_1k/basic-materials-specialty-chemicals/NYSE_NEU_2021/NYSE_NEU_2021.mmd` · pages 4-10_

---

To Our Shareholders:

The year 2021 will be remembered by many as a year of continued disruption related to the COVID-19 pandemic. The supply chain problems that occurred in 2020 were amplified this past year causing major issues for the world economy, and the whole chemical industry felt these impacts. In addition, inflation reared its head, impacting a wide range of our cost structure. We saw a prolonged period of raw material cost increases and supply shortages, significant shipping issues, and rising energy, logistics, insurance, and other costs. This not only impacted our margins, but it also hurt our ability to meet our customers' product and service needs. We ended the year with net income considerably below our expectations.

Despite the challenges, our company made major strides that position us very well for future growth and performance. Numerous safety records were achieved despite the ongoing COVID-19 challenges; our shipments grew 12% over 2020; our R&D teams delivered on numerous key projects with newer, better products; and our supply teams completed several large, important capital projects to increase both our capacity and product quality.

Looking ahead to 2022, we are laser-focused on the key elements driving our performance. We are continuing our drive for growth by bringing in profitable new business; we are working to recover cost increases through appropriate market actions; and we are redoubling our Cost-2-Serve efforts to drive efficiency in every aspect of our business to combat the inflationary forces in the marketplace.

Our safety-first culture continues to be the cornerstone of our operating philosophy. The institutionalization of "Actively Caring" is yielding results through the dedicated effort of our committed team as we strive toward our "Vision of Zero" injuries. Our products help us achieve one of our main corporate goals of Making the World a Better Place. They help our customers' products reduce emissions, improve fuel economy, reduce fossil fuel use, and extend the life of equipment. We have worked to be more transparent with our Environmental, Social and Governance efforts, making more of this information available on our website. We are working to become even more transparent.

We invest for the long term in people, technology, and facilities to provide our customers with innovative and cost-effective solutions to meet their business needs. Over the past decade, we have greatly expanded our research and production capabilities, positioning us very well for the future. We finished 2021 with modest net debt while putting our strong free cash flow to work for our shareholders, increasing our dividend by approximately 10% and repurchasing $196 million of our common stock. With major capital investments completed for the near term, we will focus free cash on shareholder return, balancing dividends and stock buybacks with acquisition opportunities. We will continue to maintain a strong balance sheet, with a goal of keeping net debt/EBITDA in the 1.5-2.0x range over the long-term.

The fundamentals of our business and industry are sound, and there continue to be growth opportunities to create significant shareholder value. In our thirty-year planning horizon, we recognize the world's shift away from internal-combustion engines and the impact on certain parts of our business. We are increasing our efforts to identify areas for diversification, primarily through acquisitions. This will be a deliberate process over the next five, ten and twenty years.

While disappointed in our financial results in 2021, I am very pleased with how our team has performed over the last two extraordinary years, and I look to this year to be a successful one. Our business decisions will continue to be focused on the long-term success of our company, including emphasis on satisfying customer needs, generating solid operating results, and promoting the greatest long-term value for our shareholders, customers, and employees. We believe the fundamentals of how we run our business – a long-term view, safety- and people-first culture, customer-focused solutions, technology-driven product offerings, and a world-class supply chain capability – will continue to be beneficial for all our stakeholders.

Thank you for your continued support.

Sincerely,

Thomas E. Gottwald
Chairman and CEO