Fourth Quarter:
- Net sales of $298.8 million decreased 20% compared to prior
year primarily due to repositioning actions in the Performance
Chemicals segment that resulted in the exit of lower-margin end
markets
- Net income of $16.6 million and diluted earnings per share
(EPS) of $0.46, including pre-tax restructuring charges of $23.4
million; adjusted earnings of $34.7 million and diluted adjusted
EPS of $0.95
- Adjusted EBITDA of $80.6 million and adjusted EBITDA margin of
27.0%
- Operating cash flow of $64.5 million and free cash flow of
$39.6 million, which included the second and final $50.0 million
installment of a termination fee for a long-term crude tall oil
(CTO) supply agreement
Full Year:
- Net sales of $1.4 billion decreased 17% compared to prior year
primarily due to repositioning actions in the Performance Chemicals
segment that resulted in the exit of lower-margin end markets
- Net loss of $430.3 million and diluted loss per share of
$11.85, including pre-tax charges of $688.0 million primarily
related to the Performance Chemicals segment; adjusted earnings of
$128.3 million and diluted adjusted EPS of $3.51
- Adjusted EBITDA of $362.7 million and adjusted EBITDA margin of
25.8%
- Operating cash flow of $128.6 million with free cash flow of
$51.0 million
- In January 2025, announced plans to explore strategic
alternatives for Performance Chemicals Industrial Specialties
product line and North Charleston CTO refinery
Guidance:
Company announces full year 2025 guidance of sales between $1.3
billion and $1.4 billion, adjusted EBITDA between $400 million and
$415 million, and free cash flow between $220 and $260 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.
Ingevity Corporation (NYSE: NGVT) today reported its financial
results for the fourth quarter and full year 2024.
Fourth quarter (Q4) net sales of $298.8 million were 20% lower
versus the prior year. Sales increases in the Performance Materials
and Advanced Polymer Technologies segments were more than offset by
the strategic repositioning of the Performance Chemicals segment
(“repositioning actions”) which resulted in the exit of
lower-margin end markets. Q4 net income of $16.6 million included
pre-tax restructuring charges of $23.4 million primarily associated
with the repositioning actions. Adjusted EBITDA of $80.6 million
was up 91% reflecting the benefits of repositioning actions that
drove a $20.4 million improvement in Performance Chemicals segment
EBITDA. In addition, Q4 2023 adjusted EBITDA was negatively
impacted by a $19.7 million non-cash inventory charge related to
repositioning actions. Q4 adjusted EBITDA margin was 27.0%. Diluted
EPS in Q4 was $0.46 compared to diluted loss per share of $3.23 in
the prior year quarter. Diluted adjusted EPS in Q4 was $0.95
compared to diluted adjusted loss per share of $0.20 in the prior
year quarter.
Full year (FY) net sales of $1.4 billion were down 17% compared
to last year. Performance Materials reported record sales, but this
increase was more than offset by lower sales primarily in the
Industrial Specialties product line as strategic repositioning
actions resulted in the exit of lower-margin end markets. Road
Technologies product line reported lower sales due to adverse
weather conditions and the Advanced Polymer Technologies segment
sales were lower due to adverse mix and price concessions
implemented in certain markets. The company reported a FY net loss
of $430.3 million, reflecting a pre-tax goodwill impairment of
$349.1 million and $338.9 million of special charges primarily
related to the repositioning actions which included restructuring
charges of $186.2 million, a $100.0 million termination fee for a
long-term CTO supply agreement and $52.7 million of losses on the
resale of excess CTO. FY adjusted EBITDA was $362.7 million, down
4%, with adjusted EBITDA margin of 25.8%, an increase of 350 basis
points. FY diluted loss per share was $11.85 compared to diluted
loss per share of $0.15 in the prior year. FY diluted adjusted EPS
was $3.51 compared to diluted adjusted EPS of $3.53 in the prior
year.
“Ingevity’s management team and Board have taken aggressive
actions to improve performance and our stronger than expected
results are evidence of our solid execution,” said Luis
Fernandez-Moreno, interim president and CEO. “We remain focused on
our key priorities which are execution excellence, reducing
leverage, and portfolio optimization to accelerate the delivery of
shareholder value.”
Fernandez-Moreno continued, “Performance Materials had its best
year yet, meeting the increased demand for more fuel-efficient
vehicles that require the advanced solutions provided by our
activated carbon. The segment achieved record sales and EBITDA due
to increased volumes, improved price and mix and lower costs. Our
focus on manufacturing efficiency was a key component to reduced
costs and improved profitability which greatly contributed to the
company’s solid free cash flow for the year. Advanced Polymer
Technologies increased volumes despite continued weak industrial
demand, but volume growth was more than offset by adverse mix and
selective price concessions implemented to maintain share. 2024 was
a transformational year for Performance Chemicals (PC) as we took
major steps to reposition the segment, which resulted in
significantly improved segment EBITDA margins in the second half.
As part of the continued review of our portfolio of businesses, we
recently announced plans to explore strategic alternatives for the
Industrial Specialties product line and North Charleston CTO
refinery. We believe this action will further strengthen the PC
segment and enable us to focus our attention on higher growth and
higher margin opportunities within our portfolio while improving
the company’s earnings and cash flow.”
Performance Materials
Sales in Performance Materials were up 2% in Q4 at $156.2
million driven by volume growth in North America and China. Segment
EBITDA was $78.3 million in Q4, flat to last year, while segment
EBITDA margin was down 100 basis points to 50.1% as lower energy
spend resulting from operational improvements was offset by lower
plant utilization versus last year. FY sales were up 4% to a record
$609.6 million due to higher volumes, price, and favorable mix,
partially offset by a negative foreign exchange impact. FY segment
EBITDA was also a record at $319.1 million, up 11%, with segment
EBITDA margin of 52.3%, an increase of 340 basis points. The
improvement was primarily driven by investments in operational
improvements that resulted in lower energy spend and improved
yields.
Advanced Polymer Technologies
Sales in the Advanced Polymer Technologies segment were $43.9
million in Q4, up 4% due to higher volumes in all regions,
partially offset by lower prices and foreign exchange impacts.
Segment EBITDA for the quarter was down 23% to $6.1 million and
segment EBITDA margin of 13.9% reflected primarily unfavorable
price and mix, and higher energy costs. FY sales were $188.6
million, down 8% for the year as volume increases were more than
offset by unfavorable mix and price concessions implemented in
certain markets. Segment EBITDA for the year was down 21% to $35.2
million due primarily to pricing concessions and unfavorable
product mix, offsetting the benefit from lower input costs,
reducing the EBITDA margin to 18.7%.
Performance Chemicals
Sales in the Performance Chemicals segment were $98.7 million in
Q4, down 44%, reflecting the exit of certain lower-margin end
markets primarily as a result of repositioning actions in the
Industrial Specialties product line, where sales were lower by
$72.9 million. Road Technologies product line sales decreased 9% to
$48.5 million as mild weather in Q4 2023 extended the paving season
as compared to this year. Segment EBITDA was negative $3.8 million,
an improvement of $20.4 million, as the impact of repositioning
actions such as plant closures and cost savings initiatives
resulted in lower costs. FY sales were down 33% to $608.2 million.
Industrial Specialties product line sales were down 50% to $265.9
million primarily as a result of the repositioning actions. Road
Technologies product line sales decreased 7% to $342.3 million
primarily due to adverse weather conditions. FY segment EBITDA was
down 78% to $14.7 million due to higher CTO costs and lower
volumes, partially offset by cost savings initiatives.
Liquidity/Other
Full year operating cash flow was $128.6 million. Free cash flow
was $51.0 million, reflecting disciplined working capital
management, particularly in the fourth quarter, that helped offset
special charges such as a $100.0 million payment to terminate a
long-term CTO supply contract, $46.1 million in cash losses on the
resale of excess CTO, and $59.3 million of restructuring charges
paid during the year. There were no share repurchases for the
quarter and $353.4 million remains available under the current $500
million Board authorization. Net leverage improved sequentially to
3.5 times from last quarter’s 4.0 times due to higher EBITDA and
utilizing free cash flow to reduce debt. Net leverage was 3.4 times
last year.
Full Year 2025 Guidance
Ingevity announced its 2025 guidance of sales between $1.3
billion and $1.4 billion, adjusted EBITDA between $400 million and
$415 million, and free cash flow of between $220 and $260 million.
The 2025 guidance does not include any potential impact from the
exploration of strategic alternatives for the Performance Chemicals
Industrial Specialties product line and North Charleston CTO
refinery announced previously.
“The actions we took in 2024 position the company to deliver
more profitable growth in 2025 and beyond. We are committed to
enhancing shareholder value through improved EBITDA with margins
approaching 30% and significantly stronger cash flow. With our
focus on deleveraging, we expect to reduce our net leverage ratio
to below 2.8 times by the fourth quarter,” said
Fernandez-Moreno.
Additional Information
The company will host a live webcast on Wednesday, February 19,
at 10:00 a.m. (Eastern) to discuss Ingevity’s fourth-quarter and
full year 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 068901. 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 February 19, 2025, through February 18,
2026, 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, pavement
markings and automotive components. Headquartered in North
Charleston, South Carolina, Ingevity operates from 31 countries
around the world and employs approximately 1,600 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, results, charges and costs of any
current or future repositioning of our Performance Chemicals
segment, including the announced review of strategic alternatives
for the Industrial Specialties product line and North Charleston,
South Carolina crude tall oil refinery, the oleo-based product
refining transition, closure of our plants in Crossett, Arkansas
and DeRidder, Louisiana; leadership transitions within our
organization; 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 announced review of strategic alternatives for the
Industrial Specialties product line and North Charleston, South
Carolina crude tall oil refinery, the oleo-based product refining
transition, closure of our plants in Crossett, Arkansas and
DeRidder, Louisiana; losses due to resale of crude tall oil at less
than we paid for it; leadership transitions within our
organization; 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
Condensed Consolidated
Statements of Operations (Unaudited)
Three Months Ended December
31,
Twelve Months Ended December
31,
In millions, except per share
data
2024
2023
2024
2023
Net sales
$
298.8
$
371.7
$
1,406.4
$
1,692.1
Cost of sales
196.9
312.2
951.7
1,220.2
Gross profit
101.9
59.5
454.7
471.9
Selling, general, and administrative
expenses
39.4
43.4
166.7
183.7
Research and technical expenses
7.3
7.2
28.1
31.8
Restructuring and other (income) charges,
net
23.4
120.8
186.2
170.2
Goodwill impairment charge
—
—
349.1
—
Acquisition-related costs
0.3
(0.2
)
0.3
3.6
Other (income) expense, net
1.9
19.6
169.8
5.7
Interest expense, net
20.8
22.7
90.1
87.0
Income (loss) before income taxes
8.8
(154.0
)
(535.6
)
(10.1
)
Provision (benefit) for income taxes
(7.8
)
(37.2
)
(105.3
)
(4.7
)
Net income (loss)
$
16.6
$
(116.8
)
$
(430.3
)
$
(5.4
)
Per share data
Basic earnings (loss) per share
$
0.46
$
(3.23
)
$
(11.85
)
$
(0.15
)
Diluted earnings (loss) per share
$
0.46
$
(3.23
)
$
(11.85
)
$
(0.15
)
Weighted average shares outstanding
Basic
36.3
36.2
36.3
36.5
Diluted
36.6
36.2
36.3
36.5
INGEVITY CORPORATION
Segment Operating Results
(Unaudited)
Three Months Ended December
31,
Twelve Months Ended December
31,
In millions
2024
2023
2024
2023
Net sales
Performance Materials
$
156.2
$
152.8
$
609.6
$
586.0
Performance Chemicals
98.7
176.5
608.2
902.1
Road Technologies product line
48.5
53.4
342.3
369.8
Industrial Specialties product line
50.2
123.1
265.9
532.3
Advanced Polymer Technologies
43.9
42.4
188.6
204.0
Total net sales
$
298.8
$
371.7
$
1,406.4
$
1,692.1
Segment EBITDA (1)
Performance Materials
$
78.3
$
78.1
$
319.1
$
286.6
Performance Chemicals
(3.8
)
(24.2
)
14.7
65.7
Advanced Polymer Technologies
6.1
7.9
35.2
44.5
Total segment EBITDA (1)
$
80.6
$
61.8
$
369.0
$
396.8
Interest expense, net
(20.8
)
(22.7
)
(90.1
)
(87.0
)
(Provision) benefit for income taxes
7.8
37.2
105.3
4.7
Depreciation and amortization (2)
(25.2
)
(30.7
)
(108.3
)
(122.8
)
Restructuring and other income (charges),
net (3)(4)
(23.4
)
(120.8
)
(186.2
)
(170.2
)
Goodwill impairment charge (3)(5)
—
—
(349.1
)
—
Acquisition and other-related costs
(3)(5)
(0.3
)
0.1
(0.3
)
(4.5
)
Inventory charges (3)(6)
—
(19.7
)
(6.3
)
(19.7
)
Loss on CTO resales (3)(5)
(1.9
)
(22.0
)
(52.7
)
(22.0
)
CTO supply contract termination charges
(3)(5)
—
—
(100.0
)
—
Gain (loss) on sale of strategic
investment (3)(7)
—
—
(11.4
)
19.3
Pension and postretirement settlement and
curtailment (charges) income, net (3)(5)
(0.2
)
—
(0.2
)
—
Net income (loss)
$
16.6
$
(116.8
)
$
(430.3
)
$
(5.4
)
_______________
(1)
Segment EBITDA is the primary measure used
by our chief operating decision maker ("CODM"), the Interim CEO and
President of Ingevity, to evaluate the performance of and allocate
resources among our operating segments. Segment EBITDA is defined
as segment net sales less segment operating expenses (segment
operating expenses consist of costs of sales, selling, general and
administrative expenses, research and technical expenses, other
(income) expense, net, excluding depreciation and amortization). We
have excluded the following items from segment EBITDA: interest
expense associated with corporate debt facilities, interest income,
income taxes, depreciation, amortization, goodwill impairment
charge, restructuring and other income (charges), net, litigation
verdict charges, inventory lower of cost or market charges
associated with restructuring actions, acquisition and
other-related income (costs), gain (loss) on sale of strategic
investments, loss on CTO resales, CTO supply contract termination
charges, and pension and postretirement settlement and curtailment
income (charges), net.
(2)
The table below provides an allocation of
these charges between our three reportable segments to provide
investors, potential investors, securities analysts and others with
the information, should they choose, to apply such charges to each
respective reportable segment for which the charges relate.
Three Months Ended December
31,
Twelve Months Ended December
31,
In millions
2024
2023
2024
2023
Performance Materials
$
(9.7
)
$
(9.6
)
$
(38.7
)
$
(38.3
)
Performance Chemicals
(7.7
)
(13.2
)
(38.8
)
(53.2
)
Advanced Polymer Technologies
(7.8
)
(7.9
)
(30.8
)
(31.3
)
Depreciation and amortization
$
(25.2
)
$
(30.7
)
$
(108.3
)
$
(122.8
)
(3)
For more information on these charges,
refer to the Reconciliation of Adjusted Earnings table on page
7.
(4)
We regularly perform strategic reviews and
assess the return on our operations, which sometimes results in a
plan to restructure the business. These costs are excluded from our
reportable segment results. The table below provides an allocation
of these charges between our three reportable segments to provide
investors, potential investors, securities analysts and others with
the information, should they choose, to apply such (income) charges
to each respective reportable segment for which the charges
relate.
Three Months Ended December
31,
Twelve Months Ended December
31,
In millions
2024
2023
2024
2023
Performance Materials
$
0.2
$
1.6
$
0.9
$
9.0
Performance Chemicals
23.1
104.8
185.1
144.5
Advanced Polymer Technologies
0.1
14.4
0.2
16.7
Restructuring and other (income) charges,
net
$
23.4
$
120.8
$
186.2
$
170.2
(5)
For all periods presented, charges relate
to the Performance Chemicals reportable segment.
(6)
For all periods presented, inventory
charges represent lower of cost or market charges associated with
the Performance Chemicals’ repositioning. These charges were not
allocated in the measurement of our Performance Chemicals
reportable segment profitability used by our CODM. Amounts are
included in Cost of sales on the consolidated statement of
operations.
(7)
The table below provides an allocation of
these charges between our three reportable segments to provide
investors, potential investors, securities analysts and others with
the information, should they choose, to apply such (income) charges
to each respective reportable segment for which the charges
relate.
Three Months Ended December
31,
Twelve Months Ended December
31,
In millions
2024
2023
2024
2023
Performance Materials
$
—
$
—
$
(0.1
)
$
(19.3
)
Performance Chemicals
—
—
9.3
—
Advanced Polymer Technologies
—
—
2.2
—
(Gain) loss on sale of strategic
investment
$
—
$
—
$
11.4
$
(19.3
)
INGEVITY CORPORATION
Condensed Consolidated Balance
Sheets (Unaudited)
December 31,
In millions
2024
2023
Assets
Cash and cash equivalents
$
68.0
$
95.9
Accounts receivable, net
141.0
182.0
Inventories, net
226.8
308.8
Prepaid and other current assets
57.4
71.9
Current assets
493.2
658.6
Property, plant, and equipment, net
658.9
762.2
Goodwill
175.2
527.5
Other intangibles, net
278.8
336.1
Restricted investment
81.6
79.1
Strategic investments
87.3
99.2
Other assets
247.6
160.6
Total Assets
$
2,022.6
$
2,623.3
Liabilities
Accounts payable
$
94.5
$
158.4
Accrued expenses
58.1
72.3
Notes payable and current maturities of
long-term debt
61.3
84.4
Other current liabilities
50.2
47.8
Current liabilities
264.1
362.9
Long-term debt including finance lease
obligations
1,339.7
1,382.8
Deferred income taxes
56.2
70.9
Other liabilities
167.4
175.3
Total Liabilities
1,827.4
1,991.9
Equity
195.2
631.4
Total Liabilities and Equity
$
2,022.6
$
2,623.3
INGEVITY CORPORATION
Condensed Consolidated
Statements of Cash Flows (Unaudited)
Three Months Ended December
31,
Twelve Months Ended December
31,
In millions
2024
2023
2024
2023
Cash provided by (used in) operating
activities:
Net income (loss)
$
16.6
$
(116.8
)
$
(430.3
)
$
(5.4
)
Adjustments to reconcile net income (loss)
to cash provided by operating activities:
Depreciation and amortization
25.2
30.7
108.3
122.8
(Gain) loss on strategic investment
—
—
11.4
(19.3
)
CTO resales
1.9
22.0
52.7
22.0
Goodwill impairment charge
—
—
349.1
—
Restructuring and other (income) charges,
net
23.4
120.8
186.2
170.2
Other non-cash items
(100.8
)
(15.9
)
(89.3
)
99.5
Changes in operating assets and
liabilities, net of effect of acquisitions:
Restructuring and other spending
(15.4
)
(12.8
)
(59.3
)
(44.0
)
CTO Resales
(1.1
)
(10.6
)
(46.1
)
(10.6
)
Changes in other operating assets and
liabilities, net
114.7
27.0
45.9
(130.1
)
Net cash provided by (used in) operating
activities
$
64.5
$
44.4
$
128.6
$
205.1
Cash provided by (used in) investing
activities:
Capital expenditures
$
(24.9
)
$
(29.2
)
$
(77.6
)
$
(109.8
)
Proceeds from sale of strategic
investment
—
—
—
31.5
Purchase of strategic investments
(0.3
)
—
(0.3
)
(2.4
)
Other investing activities, net
(2.8
)
4.5
(1.6
)
3.4
Net cash provided by (used in) investing
activities
$
(28.0
)
$
(24.7
)
$
(79.5
)
$
(77.3
)
Cash provided by (used in) financing
activities:
Proceeds from revolving credit facility
and other borrowings
$
81.1
$
136.8
$
404.5
$
376.3
Payments on revolving credit facility
(178.4
)
(142.8
)
(470.6
)
(382.9
)
Debt issuance costs
—
(0.4
)
—
(0.4
)
Financing lease obligations, net
(0.1
)
(0.1
)
(1.0
)
(0.7
)
Tax payments related to withholdings on
vested equity awards
(0.2
)
—
(3.1
)
(4.8
)
Proceeds and withholdings from share-based
compensation plans, net
—
—
—
4.7
Repurchases of common stock under publicly
announced plan
—
—
—
(92.1
)
Net cash provided by (used in) financing
activities
$
(97.6
)
$
(6.5
)
$
(70.2
)
$
(99.9
)
Increase (decrease) in cash, cash
equivalents, and restricted cash
(61.1
)
13.2
(21.1
)
27.9
Effect of exchange rate changes on
cash
(5.8
)
2.7
(4.2
)
(0.3
)
Change in cash, cash equivalents, and
restricted cash
(66.9
)
15.9
(25.3
)
27.6
Cash, cash equivalents, and restricted
cash at beginning of period
153.5
96.0
111.9
84.3
Cash, cash equivalents, and restricted
cash at end of period (1)
$
86.6
$
111.9
$
86.6
$
111.9
(1) Includes restricted cash of $18.6
million and $16.0 million, and cash and cash equivalents of $68.0
million and $95.9 million, for the years ended December 31, 2024
and 2023, respectively. Restricted cash is included within "Prepaid
and other current assets" and "Restricted investment" within the
condensed consolidated balance sheets.
Supplemental cash flow
information:
Cash paid for interest, net of capitalized
interest
$
24.4
$
24.8
$
85.4
$
82.7
Cash paid for income taxes, net of
refunds
2.9
1.8
26.9
29.7
Purchases of property, plant and equipment
in accounts payable
0.2
(3.3
)
2.4
2.8
Leased assets obtained in exchange for new
finance lease liabilities
—
—
—
0.2
Leased assets obtained in exchange for new
operating lease liabilities
0.5
3.1
6.0
29.1
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 2025 Adjusted EBITDA
Guidance
A reconciliation of net income to adjusted EBITDA as projected
for 2025 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
Reconciliation of Net Income
(Loss) (GAAP) to Adjusted Earnings (Loss) (Non-GAAP) and
Reconciliation of Diluted
Earnings (Loss) per Common Share (GAAP) to
Diluted Adjusted Earnings per
Share (Non-GAAP)
Three Months Ended December
31,
Twelve Months Ended December
31,
In millions, except per share data
(unaudited)
2024
2023
2024
2023
Net income (loss) (GAAP)
$
16.6
$
(116.8
)
$
(430.3
)
$
(5.4
)
Restructuring and other (income) charges,
net (1)
23.4
120.8
186.2
170.2
Goodwill impairment charge (2)
—
—
349.1
—
Acquisition and other-related costs
(3)
0.3
(0.1
)
0.3
4.5
Loss on CTO resales (4)
1.9
22.0
52.7
22.0
CTO supply contract termination charges
(5)
—
—
100.0
—
(Gain) loss on sale of strategic
investment (6)
—
—
11.4
(19.3
)
Pension and postretirement settlement and
curtailment income (charges), net (7)
0.2
—
0.2
—
Tax effect on items above (8)
(7.7
)
(33.6
)
(165.7
)
(41.8
)
Certain discrete tax provision (benefit)
(9)
—
0.5
24.4
(0.6
)
Adjusted earnings (loss)
(Non-GAAP)
$
34.7
$
(7.2
)
$
128.3
$
129.6
Diluted earnings (loss) per common
share (GAAP)
$
0.46
$
(3.23
)
$
(11.85
)
$
(0.15
)
Restructuring and other (income)
charges
0.64
3.34
5.12
4.64
Goodwill impairment charge
—
—
9.62
—
Acquisition and other-related costs
0.01
—
0.01
0.12
Loss on CTO resales
0.05
0.61
1.45
0.60
CTO supply contract termination
charges
—
—
2.75
—
(Gain) loss on sale of strategic
investment
—
—
0.31
(0.52
)
Pension and postretirement settlement and
curtailment income (charges), net
0.01
—
0.01
—
Tax effect on items above
(0.22
)
(0.93
)
(4.58
)
(1.14
)
Certain discrete tax provision
(benefit)
—
0.01
0.67
(0.02
)
Diluted adjusted earnings (loss) per
share (Non-GAAP)
$
0.95
$
(0.20
)
$
3.51
$
3.53
Weighted average common shares outstanding
- Diluted (10)
36.6
36.2
36.5
36.7
___________
(1)
We regularly perform strategic reviews and
assess the return on our operations, which sometimes results in a
plan to restructure the business. These costs are excluded from our
reportable segment results; details of which are included in the
table below. For the details of these costs between our reportable
segments, see Segment Operating Results on page 2.
Three Months Ended December
31,
Twelve Months Ended December
31,
In millions
2024
2023
2024
2023
Work force reductions and other
$
2.3
$
0.9
$
2.3
$
12.5
Performance Chemicals' repositioning
14.8
113.1
172.7
113.1
Restructuring charges (1)
$
17.1
$
114.0
$
175.0
$
125.6
Alternative feedstock transition
—
3.7
—
22.1
North Charleston plant transition
6.3
2.1
11.2
14.8
Business transformation costs
—
1.0
—
7.7
Other (income) charges, net (1)
$
6.3
$
6.8
$
11.2
$
44.6
Restructuring and other (income) charges,
net (2)
$
23.4
$
120.8
$
186.2
$
170.2
_________________
(1) Amounts are recorded within
Restructuring and other (income) charges, net on the condensed
consolidated statement of operations.
(2) For information on our Workforce
reductions and other, Performance Chemicals' repositioning,
Alternative feedstock transition, North Charleston plant
transition, and the Business transformation costs please refer to
Note 11, Restructuring and Other (Income) Charges, net, in the
Notes to the Condensed Consolidated Financial Statements included
in the Company’s Form 10-Q for the quarter ended September 30,
2024, filed on October 30, 2024. Updates will be provided in the
subsequent filing of the Company's Form 10-K for 2024.
(2)
During the second quarter of 2024, the
company concluded that the carrying amount of the Performance
Chemicals reporting unit exceeded its fair value, resulting in a
non-cash goodwill impairment charge.
(3)
Charges represent (gains) losses incurred
to complete and integrate acquisitions and other strategic
investments. Charges may include the expensing of the inventory
fair value step-up resulting from the application of purchase
accounting for acquisitions and certain legal and professional fees
associated with the completion of acquisitions and strategic
investments. For the details of these costs between our reportable
segments, see Segment Operating Results on page 2.
Three Months Ended December
31,
Twelve Months Ended December
31,
In millions
2024
2023
2024
2023
Legal and professional service fees
$
0.3
$
(0.2
)
$
0.3
$
3.6
Acquisition-related (income) costs
$
0.3
$
(0.2
)
$
0.3
$
3.6
Inventory fair value step-up amortization
(1)
—
0.1
—
0.9
Acquisition and other-related (income)
charges
$
0.3
$
(0.1
)
$
0.3
$
4.5
_________________
(1) Included in Cost of sales on the
condensed consolidated statement of operations.
(4)
Due to the DeRidder Plant closure and the
corresponding reduced CTO refining capacity, we were obligated,
under an existing CTO supply contract, to purchase CTO through 2025
at amounts in excess of required CTO volumes. As of July 1, 2024,
we have terminated the CTO supply contract that resulted in these
excess CTO volumes. As a result of the termination, the purchases
under the CTO supply contract ended effective June 30, 2024. The
CTO resale activity described above ended in 2024 and no excess CTO
volumes were on hand at December 31, 2024.
(5)
As consideration for the termination of
the CTO supply contract, we made a cash payment in the amount of
$100.0 million in 2024. Since this contract termination is directly
attributable to the Performance Chemicals repositioning, that is,
it does not represent normal, recurring expenses necessary to
operate our business, we have excluded the CTO supply contract
termination charges for the purposes of calculating our non-GAAP
financial performance measures. Updates will be provided in the
subsequent filing of the Company's Form 10-K for 2024.
(6)
We exclude gains and losses from sales of
strategic investments from our segment results, as well as our
non-GAAP financial measures, because we do not consider such gains
or losses to be directly associated with the operational
performance of the segment. We believe that the inclusion of such
gains or losses, would impair the factors and trends affecting the
historical financial performance of our reportable segments. We
continue to include undistributed earnings or loss, distributions,
amortization or accretion of basis differences, and
other-than-temporary impairments for equity method investments that
we believe are directly attributable to the operational performance
of such investments, in our reportable segment results.
(7)
Our pension and postretirement settlement
and curtailment charges (income) are related to the acceleration of
prior service costs, as a result of a reduction in the number of
participants within the Union Hourly defined benefit pension plan.
These are excluded from our segment results because we consider
these costs to be outside our operational performance. We continue
to include the service cost, amortization of prior service cost,
interest costs, expected return on plan assets, and amortized
actual gains and losses in our segment EBITDA.
(8)
Income tax impact of non-GAAP adjustments
is the summation of the calculated income tax charge related to
each pre-tax non-GAAP adjustment. The non-GAAP adjustments relate
primarily to adjustments in the United States. As such, the income
tax effect is calculated using the statutory tax rates of 21% for
the United States and approximately 2.5% for state and local taxes,
applied to the non-GAAP adjustments.
(9)
Represents certain discrete tax items such
as excess tax benefits on stock compensation and impacts of
legislative tax rate changes.
(10)
The weighted average number of shares
outstanding used in diluted adjusted earnings per share computation
(Non-GAAP) includes an average of 0.2 million diluted shares for
the twelve months ended December 31, 2024 and 2023, respectively.
This number of shares differs from the weighted average number of
shares outstanding used in diluted loss per share computations
(GAAP) as we had a net loss for each of those periods,
respectively.
Reconciliation of Net Income (Loss) (GAAP)
to Adjusted Earnings (Loss) (Non-GAAP) and Reconciliation of
Diluted Earnings (Loss) per Common Share (GAAP) to Diluted
Adjusted Earnings per Share (Non-GAAP)
We revised our December 31, 2023 non-GAAP Adjusted earnings
(loss) calculation to remove previous adjustments of $19.7 million
related to inventory lower of cost or market charges associated
with the Company's Performance Chemicals repositioning. This change
was made to address a request from the Securities and Exchange
Commission to revise future filings to no longer exclude these
adjustments from non-GAAP performance measures. The following table
presents the three and twelve months ended December 31, 2023 as
previously reported and as revised.
Three Months Ended
December 31, 2023
Twelve Months Ended
December 31, 2023
In millions, except per share data
(unaudited)
As previously
reported
As revised
As previously
reported
As revised
Net income (loss) (GAAP)
$
(116.8
)
$
(116.8
)
$
(5.4
)
$
(5.4
)
Restructuring and other (income) charges,
net (1)
140.5
120.8
189.9
170.2
Acquisition and other-related costs
(1)
(0.1
)
(0.1
)
4.5
4.5
Loss on CTO resales (1)
22.0
22.0
22.0
22.0
Gain on sale of strategic investment
(1)
—
—
(19.3
)
(19.3
)
Tax effect on items above (1)
(38.3
)
(33.6
)
(46.4
)
(41.8
)
Certain discrete tax provision (benefit)
(1)
0.5
0.5
(0.6
)
(0.6
)
Adjusted earnings (loss)
(Non-GAAP)
$
7.8
$
(7.2
)
$
144.7
$
129.6
Diluted earnings (loss) per common
share (GAAP)
$
(3.23
)
$
(3.23
)
$
(0.15
)
$
(0.15
)
Restructuring and other (income)
charges
3.86
3.34
5.17
4.64
Acquisition and other-related costs
—
—
0.12
0.12
Loss on CTO resales
0.61
0.61
0.60
0.60
Gain on sale of strategic investment
—
—
(0.52
)
(0.52
)
Tax effect on items above
(1.04
)
(0.93
)
(1.26
)
(1.14
)
Certain discrete tax provision
(benefit)
0.01
0.01
(0.02
)
(0.02
)
Diluted adjusted earnings (loss) per
share (Non-GAAP)
$
0.21
$
(0.20
)
$
3.94
$
3.53
Weighted average common shares outstanding
- Diluted
36.4
36.2
36.7
36.7
___________
(1)
For more information on these charges,
refer to the Reconciliation of Adjusted Earnings included in the
Company’s Form 8-K for the year ended December 31, 2023, filed on
February 21, 2024.
Reconciliation of Net Income
(Loss) (GAAP) to Adjusted EBITDA (Non-GAAP)
Three Months Ended December
31,
Twelve Months Ended December
31,
In millions, except percentages
(unaudited)
2024
2023
2024
2023
Net income (loss) (GAAP)
$
16.6
$
(116.8
)
$
(430.3
)
$
(5.4
)
Interest expense, net
20.8
22.7
90.1
87.0
Provision (benefit) for income taxes
(7.8
)
(37.2
)
(105.3
)
(4.7
)
Depreciation and amortization
25.2
30.7
108.3
122.8
Restructuring and other (income) charges,
net (1)
23.4
120.8
186.2
170.2
Goodwill impairment charge (1)
—
—
349.1
—
Acquisition and other-related (income)
costs (1)
0.3
(0.1
)
0.3
4.5
Loss on CTO resales (1)
1.9
22.0
52.7
22.0
CTO supply contract termination charges
(1)
—
—
100.0
—
(Gain) loss on sale of strategic
investments (1)
—
—
11.4
(19.3
)
Pension and postretirement settlement and
curtailment charges (income) (1)
0.2
—
0.2
—
Adjusted EBITDA (Non-GAAP)
$
80.6
$
42.1
$
362.7
$
377.1
Net sales
$
298.8
$
371.7
$
1,406.4
$
1,692.1
Net income (loss) margin
5.6
%
(31.4
)%
(30.6
)%
(0.3
)%
Adjusted EBITDA margin
27.0
%
11.3
%
25.8
%
22.3
%
___________
(1)
For more information on these charges,
refer to the Reconciliation of Adjusted Earnings table on page
7.
Reconciliation of Net Income (Loss) (GAAP)
to Adjusted EBITDA (Non-GAAP)
We revised our December 31, 2023 non-GAAP Adjusted EBITDA
calculation to remove previous adjustments of $19.7 million related
to inventory lower of cost or market charges associated with the
Company's Performance Chemicals repositioning. This change was made
to address a request from the Securities and Exchange Commission to
revise future filings to no longer exclude these adjustments from
non-GAAP performance measures. The following table presents the
three and twelve months ended December 31, 2023 as previously
reported and as revised.
Three Months Ended
December 31, 2023
Twelve Months Ended
December 31, 2023
In millions, except percentages
(unaudited)
As previously
reported
As revised
As previously
reported
As revised
Net income (loss) (GAAP)
$
(116.8
)
$
(116.8
)
$
(5.4
)
$
(5.4
)
Provision (benefit) for income taxes
22.7
22.7
87.0
87.0
Interest expense, net
(37.2
)
(37.2
)
(4.7
)
(4.7
)
Depreciation and amortization
30.7
30.7
122.8
122.8
Restructuring and other (income) charges,
net (1)
140.5
120.8
189.9
170.2
Acquisition and other-related (income)
costs (1)
(0.1
)
(0.1
)
4.5
4.5
Loss on CTO resales (1)
22.0
22.0
22.0
22.0
(Gain) loss on strategic investments
(1)
—
—
(19.3
)
(19.3
)
Adjusted EBITDA (Non-GAAP)
$
61.8
$
42.1
$
396.8
$
377.1
Net sales
$
371.7
$
371.7
$
1,692.1
$
1,692.1
Net income (loss) margin
(31.4
)%
(31.4
)%
(0.3
)%
(0.3
)%
Adjusted EBITDA margin
16.6
%
11.3
%
23.5
%
22.3
%
___________
(1)
For more information on these charges,
refer to the Reconciliation of Adjusted Earnings included in the
Company’s Form 8-K for the year ended December 31, 2023, filed on
February 21, 2024.
Calculation of Free Cash Flow
(Non-GAAP)
Three Months Ended December
31,
Twelve Months Ended December
31,
In millions (unaudited)
2024
2023
2024
2023
Net cash provided by (used in) operating
activities
$
64.5
$
44.4
$
128.6
$
205.1
Less: Capital expenditures
24.9
29.2
77.6
109.8
Free Cash Flow (Non-GAAP)
$
39.6
$
15.2
$
51.0
$
95.3
Calculation of Net Debt Ratio
(Non-GAAP)
In millions, except ratios
(unaudited)
December 31, 2024
Notes payable and current maturities of
long-term debt
$
61.3
Long-term debt including finance lease
obligations
1,339.7
Debt issuance costs
4.2
Total Debt
1,405.2
Less:
Cash and cash equivalents (1)
68.2
Restricted investment (2)
81.8
Net Debt
$
1,255.2
Net Debt Ratio (Non-GAAP)
Adjusted EBITDA (Non-GAAP) (3)
Adjusted EBITDA - last twelve months (LTM)
as of December 31, 2024
$
362.7
Net debt ratio (Non-GAAP)
3.5x
_______________
(1)
Includes $0.2 million of Restricted Cash
related to the new market tax credit financing arrangement.
(2)
Our restricted investment is a trust
managed in order to secure repayment of the finance lease
obligation associated with Performance Materials' Wickliffe,
Kentucky, manufacturing site at maturity. The trust, presented as
Restricted investment on our consolidated balance sheets,
originally purchased long-term bonds that mature through 2026. The
principal received at maturity of the bonds, along with interest
income that is reinvested in the trust, are expected to be equal to
or more than the $80.0 million finance lease obligation that is due
in 2027. The restricted investment balance excludes $0.2 million
allowance for credit losses on held-to-maturity debt securities
within the trust.
(3)
Refer to the Reconciliation of Net Income
(GAAP) to Adjusted EBITDA (Non-GAAP) schedule for the
reconciliation to the most comparable GAAP financial measure.
Calculation of Net Debt Ratio
(Non-GAAP)
We revised our December 31, 2023 non-GAAP Net debt ratio
calculation to remove the previous adjustment of $19.7 million from
the three months ended December 31, 2023, from the last twelve
months Adjusted EBITDA related to inventory lower of cost or market
charges associated with the Company's Performance Chemicals'
repositioning. This change was made to address a request from the
Securities and Exchange Commission to revise future filings to no
longer exclude these adjustments from non-GAAP performance
measures. The following table presents the period ended December
31, 2023 as previously reported and as revised.
December 31, 2023
In millions, except ratios
(unaudited)
As previously
reported
As revised
Notes payable and current maturities of
long-term debt
$
84.4
$
84.4
Long-term debt including finance lease
obligations
1,382.8
1,382.8
Debt issuance costs
5.3
5.3
Total Debt
1,472.5
1,472.5
Less:
Cash and cash equivalents (1)
96.1
96.1
Restricted investment (2)
79.3
79.3
Net Debt
$
1,297.1
$
1,297.1
Net Debt Ratio (Non GAAP)
Adjusted EBITDA (3)
Adjusted EBITDA - last twelve months (LTM)
as of December 31, 2023
$
396.8
$
377.1
Net debt ratio (Non GAAP)
3.3x
3.4x
_______________
(1)
Includes $0.2 million of Restricted Cash
related to the New Market Tax Credit arrangement.
(2)
Our restricted investment is a trust
managed in order to secure repayment of the finance lease
obligation associated with Performance Materials' Wickliffe,
Kentucky, manufacturing site at maturity. The trust, presented as
Restricted investment on our condensed consolidated balance sheets,
originally purchased long-term bonds that mature through 2026. The
principal received at maturity of the bonds, along with interest
income that is reinvested in the trust, are expected to be equal to
or more than the $80.0 million finance lease obligation that is due
in 2027. Excludes $0.2 million allowance for credit losses on
held-to-maturity debt securities.
(3)
Refer to the Reconciliation of Net Income
(GAAP) to Adjusted EBITDA (Non-GAAP) schedule for the
reconciliation to the most comparable GAAP financial measure.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20250218303081/en/
Caroline Monahan 843-740-2068 media@ingevity.com
Investors: John E. Nypaver, Jr. 843-740-2002
investors@ingevity.com
Ingevity (NYSE:NGVT)
Historical Stock Chart
From Jan 2025 to Feb 2025
Ingevity (NYSE:NGVT)
Historical Stock Chart
From Feb 2024 to Feb 2025
