Company Announcements

HIGHLIGHTS:

• Net sales of $376.9 million, down 16% compared to prior year, primarily due to repositioning actions in Performance Chemicals
• Net loss of $107.2 million and diluted loss per share of $2.95 reflects before-tax restructuring charges of $86.9 million and contract termination fees of $100.0 million; adjusted earnings of $40.2 million and diluted adjusted earnings per share (EPS) of $1.10
• Adjusted EBITDA of $106.4 million and adjusted EBITDA margin of 28.2%
• Operating cash flow of $46.5 million with free cash flow of $28.5 million
• Affirms full year guidance of sales between $1.40 billion and $1.50 billion and adjusted EBITDA between $350 million and $360 million

The results and guidance in this release include non-GAAP financial measures. Refer to the section entitled “Use of non-GAAP financial measures” within this release. All comparisons are made versus the same period in 2023 unless otherwise stated.

NORTH CHARLESTON, S.C.--(BUSINESS WIRE)--Oct. 29, 2024-- Ingevity Corporation (NYSE: NGVT) today reported its financial results for the third quarter 2024.

Third quarter net sales of $376.9 million declined 16% primarily due to the repositioning of the Performance Chemicals segment which included reducing exposure to certain markets in the Industrial Specialties product line and weather-related impacts in the Road Technologies product line. The decline was partially offset by higher sales in Performance Materials and Advanced Polymer Technologies.

The net loss of $107.2 million and diluted loss per share of $2.95 reflects before-tax restructuring charges of $86.9 million primarily related to the closure of our Crossett, Arkansas, facility and $100.0 million for the termination of a long-term crude tall oil (CTO) contract, both associated with the repositioning of our Performance Chemicals segment. Adjusted earnings were $40.2 million and diluted adjusted earnings per share (EPS) was $1.10. Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) was $106.4 million, down 3.6%, with adjusted EBITDA margin of 28.2%. Adjusted EBITDA included a $3.8 million inventory charge related to the shutdown of our Crossett, Arkansas, facility and approximately $5 million for CEO severance charges.

“This quarter's results demonstrate the strong foundation that Ingevity has established,” said Luis Fernandez-Moreno, interim president and CEO. “Performance Materials continues to deliver outstanding results, Advanced Polymer Technologies has shown it can maintain strong margins even in a prolonged industrial slowdown, and Performance Chemicals is beginning to show the benefits of its lower cost structure driven by our repositioning actions. I am excited and energized to step into this role where my focus will be on accelerating the teams’ existing business strategies through improved execution and focus to drive consistent revenue growth and margin improvement.”

Performance Materials

Sales in Performance Materials were $151.1 million in the quarter, up 3%, primarily from strategic pricing adjustments. Segment EBITDA was $80.6 million, up 8%, primarily driven by operational improvements that contributed to lower input costs and improved manufacturing efficiency, resulting in segment EBITDA margins of 53.3%.

Advanced Polymer Technologies

Sales in Advanced Polymer Technologies (APT) were up 14% to $48.8 million primarily due to higher volumes. Segment EBITDA was $9.8 million, down 13%, and segment EBITDA margin was 20.1%. Higher volume resulted in improved utilization rates, but these benefits were largely offset by lower price and unfavorable product mix. In addition, foreign exchange negatively impacted this quarter’s EBITDA.

Performance Chemicals

Sales in Performance Chemicals were $177.0 million, down 31%.

Road Technologies product line sales of $119.0 million were down 8% driven by unfavorable weather conditions in key regions in North America. Industrial Specialties product line sales of $58.0 million were down 54% due primarily to the impact of the segment’s repositioning actions which are focused on reducing exposure to lower margin end markets, as well as continued weakness in industrial demand.

Segment EBITDA was $19.8 million, down 20%, reflecting the impact of higher CTO costs and continued weak industrial demand. Segment EBITDA margin improved 160 basis points to 11.2% as the segment benefited from the exit of lower margin end markets and cost savings as a result of repositioning actions.

Liquidity/Other

Third quarter operating cash flow was $46.5 million with free cash flow of $28.5 million, which includes the first of two $50.0 million payments to terminate a long-term CTO supply contract, as well as the cash impact of $21.0 million in restructuring charges. The second and final termination payment of $50.0 million was completed in October. There were no share repurchases for the quarter and $353.4 million remains available under the current $500 million Board authorization. Net leverage was flat to last quarter at 4.0 times but is expected to improve beginning next quarter.

Full Year 2024 Guidance

“We began to see the positive impact of the Performance Chemicals segment repositioning during the quarter. Our focus over the next several quarters will be on execution to ensure we maximize the benefits of our strategy. We are affirming our guidance of sales between $1.40 billion and $1.50 billion and our adjusted EBITDA to between $350 million and $360 million,” said Fernandez-Moreno.

Additional Information

The company will host a live webcast on Wednesday, October 30, at 10:00 a.m. (Eastern) to discuss third quarter 2024 fiscal results. The webcast can be accessed here or on the investors section of Ingevity’s website. You may also listen to the conference call by dialing 833 470 1428 (inside the U.S.) and entering access code 381718. Callers outside the U.S. can find global dial-in numbers here. For those unable to join the live event, a recording will be available beginning at approximately 2:00 p.m. (Eastern) on October 30, 2024, through October 29, 2025, at this replay link.

Ingevity: Purify, Protect and Enhance

Ingevity provides products and technologies that purify, protect and enhance the world around us. Through a team of talented and experienced people, we develop, manufacture and bring to market solutions that help customers solve complex problems and make the world more sustainable. We operate in three reporting segments: Performance Materials, which includes activated carbon; Advanced Polymer Technologies, which includes caprolactone polymers; and Performance Chemicals, which includes specialty chemicals and road technologies. Our products are used in a variety of demanding applications, including adhesives, agrochemicals, asphalt paving, certified biodegradable bioplastics, coatings, elastomers, lubricants, pavement markings, oil production and automotive components. Headquartered in North Charleston, South Carolina, Ingevity operates from 31 countries around the world and employs approximately 1,700 people. The company’s common stock is traded on the New York Stock Exchange (NYSE:NGVT). For more information, visit ingevity.com.

Use of non-GAAP financial measures: This press release includes certain non‐GAAP financial measures intended to supplement, not substitute for, comparable GAAP measures. Reconciliations of non‐GAAP financial measures to GAAP financial measures are provided within the Appendix to this press release. Investors are urged to consider carefully the comparable GAAP measures and the reconciliations to those measures provided. The company does not attempt to provide reconciliations of forward-looking non-GAAP guidance to the comparable GAAP measure because the impact and timing of the factors underlying the guidance assumptions are inherently uncertain and difficult to predict and are unavailable without unreasonable efforts. In addition, Ingevity believes such reconciliations would imply a degree of certainty that could be confusing to investors.

Forward Looking Statements

This press release contains “forward looking statements” within the meaning of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Such statements generally include the words “will,” “plans,” “intends,” “targets,” “expects,” “outlook,” “guidance,” “believes,” “anticipates” or similar expressions. Forward looking statements may include, without limitation, anticipated timing, charges and costs of any current or future repositioning of our Performance Chemicals segment, including the oleo-based product refining transition, Crossett, Arkansas plant closure, and the previously announced closure of our DeRidder, Louisiana plant; the potential benefits of any acquisition or investment transaction, expected financial positions, guidance, results of operations and cash flows; financing plans; business strategies and expectations; operating plans; capital and other expenditures; competitive positions; growth opportunities for existing products; benefits from new technology and cost reduction initiatives, plans and objectives; litigation-related strategies and outcomes; and markets for securities. Actual results could differ materially from the views expressed. Factors that could cause actual results to materially differ from those contained in the forward looking statements, or that could cause other forward looking statements to prove incorrect, include, without limitation, charges, costs or actions, including adverse legal or regulatory actions, resulting from, or in connection with, the current or future repositioning of our Performance Chemicals segment, including the oleo-based product refining transition, Crossett, Arkansas plant closure, and the previously announced closure of our DeRidder, Louisiana plant; losses due to resale of crude tall oil at less than we paid for it; adverse effects from general global economic, geopolitical and financial conditions beyond our control, including inflation and the Russia Ukraine war and conflict in the middle east; risks related to our international sales and operations; adverse conditions in the automotive market; competition from substitute products, new technologies and new or emerging competitors; worldwide air quality standards; a decrease in government infrastructure spending; adverse conditions in cyclical end markets; the limited supply of or lack of access to sufficient raw materials, or any material increase in the cost to acquire such raw materials; issues with or integration of future acquisitions and other investments; the provision of services by third parties at several facilities; supply chain disruptions; natural disasters and extreme weather events; or other unanticipated problems such as labor difficulties (including work stoppages), equipment failure or unscheduled maintenance and repair; attracting and retaining key personnel; dependence on certain large customers; legal actions associated with our intellectual property rights; protection of our intellectual property and other proprietary information; information technology security breaches and other disruptions; complications with designing or implementing our new enterprise resource planning system; government policies and regulations, including, but not limited to, those affecting the environment, climate change, tax policies, tariffs and the chemicals industry; losses due to lawsuits arising out of environmental damage or personal injuries associated with chemical or other manufacturing processes; and the other factors detailed from time to time in the reports we file with the Securities and Exchange Commission (the “SEC”), including those described in Part I, Item 1A. Risk Factors in our most recent Annual Report on Form 10 K as well as in our other filings with the SEC. These forward looking statements speak only to management’s beliefs as of the date of this press release. Ingevity assumes no obligation to provide any revisions to, or update, any projections and forward looking statements contained in this press release.

Ingevity Corporation

Non-GAAP Financial Measures

Ingevity has presented certain financial measures, defined below, which have not been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and has provided a reconciliation to the most directly comparable financial measure calculated in accordance with GAAP on the following pages. These financial measures are not meant to be considered in isolation nor as a substitute for the most directly comparable financial measure calculated in accordance with GAAP. Investors should consider the limitations associated with these non-GAAP measures, including the potential lack of comparability of these measures from one company to another.

We believe these non-GAAP financial measures provide management as well as investors, potential investors, securities analysts, and others with useful information to evaluate the performance of the business, because such measures, when viewed together with our financial results computed in accordance with GAAP, provide a more complete understanding of the factors and trends affecting our historical financial performance, liquidity measures, and projected future results.

Ingevity uses the following non-GAAP measures:

Adjusted earnings (loss) is defined as net income (loss) plus restructuring and other (income) charges, net, goodwill impairment charge, acquisition and other-related (income) costs, pension and postretirement settlement and curtailment (income) charges, loss on CTO resales, CTO supply contract termination charges, (gain) loss on strategic investments, debt refinancing fees, litigation verdict charges, and the income tax expense (benefit) on those items, less the provision (benefit) from certain discrete tax items.

Diluted adjusted earnings (loss) per share is defined as diluted earnings (loss) per common share plus restructuring and other (income) charges, net, per share, goodwill impairment charge per share, acquisition and other-related (income) costs per share, pension and postretirement settlement and curtailment (income) charges per share, loss on CTO resales per share, CTO supply contract termination charges per share, (gain) loss on strategic investments per share, debt refinancing fees per share, litigation verdict charge per share, and the income tax expense (benefit) per share on those items, less the provision (benefit) from certain discrete tax items per share.

Adjusted EBITDA is defined as net income (loss) plus interest expense, net, provision (benefit) for income taxes, depreciation, amortization, restructuring and other (income) charges, net, goodwill impairment charge, acquisition and other-related (income) costs, litigation verdict charges, (gain) loss on strategic investments, loss on CTO resales, CTO supply contract termination charges, and pension and postretirement settlement and curtailment (income) charges, net.

Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by Net sales.

Free Cash Flow is defined as the sum of net cash provided by (used in) the following items: operating activities less capital expenditures.

Net Debt is defined as the sum of notes payable, short-term debt, current maturities of long-term debt and long-term debt including finance lease obligations less the sum of cash and cash equivalents, restricted cash associated with our new market tax credit financing arrangement, and restricted investment associated with certain finance lease obligations, excluding the allowance for credit losses on held-to-maturity debt securities held within the restricted investment.

Net Debt Ratio is defined as Net Debt divided by the last twelve months Adjusted EBITDA, inclusive of acquisition-related pro forma adjustments.

Ingevity's management also uses the above financial measures as the primary measures of profitability and liquidity of the business. In addition, Ingevity believes Adjusted EBITDA and Adjusted EBITDA Margin are useful measures because they exclude the effects of financing and investment activities as well as non-operating activities.

GAAP Reconciliation of 2024 Adjusted EBITDA Guidance

A reconciliation of net income to adjusted EBITDA as projected for 2024 is not provided. Ingevity does not forecast net income as it cannot, without unreasonable effort, estimate or predict with certainty various components of net income. These components, net of tax, include further restructuring and other income (charges), net; additional acquisition and other-related (income) costs; litigation verdict charges; additional pension and postretirement settlement and curtailment (income) charges; and revisions due to legislative tax rate changes. Additionally, discrete tax items could drive variability in our projected effective tax rate. All of these components could significantly impact such financial measures. Further, in the future, other items with similar characteristics to those currently included in adjusted EBITDA, that have a similar impact on the comparability of periods, and which are not known at this time, may exist and impact adjusted EBITDA.

INGEVITY CORPORATION

Reconciliation of Non-GAAP Financial Measures

View source version on businesswire.com: https://www.businesswire.com/news/home/20241029418496/en/

Caroline Monahan
843-740-2068
media@ingevity.com

Investors:
John E. Nypaver, Jr.
843-740-2002
investors@ingevity.com

Source: Ingevity Corporation