HIGHLIGHTS: (comparisons versus prior year period)
- Net sales of $446.0 million, down 7%, compared to a record
prior year
- Net income of $25.2 million and diluted earnings per share
(EPS) of $0.69; adjusted earnings of $44.2 million and diluted
adjusted EPS of $1.21
- Adjusted EBITDA of $110.4 million and adjusted EBITDA margin of
24.8%
- Operating cash flow of $106.9 million with free cash flow of
$73.4 million
- Updated 2023 full-year guidance for adjusted EBITDA between
$375 million to $390 million
- The company also announced today actions to accelerate the
repositioning of its Performance Chemicals segment, including the
closure of its DeRidder, Louisiana, facility and company-wide
restructuring
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.
Ingevity Corporation (NYSE: NGVT) today reported its financial
results for the third quarter 2023.
Third quarter net sales of $446.0 million declined 7% versus the
record prior year quarter, reflecting lower volumes due to weak
industrial demand primarily impacting Advanced Polymer Technologies
and the Industrial Specialties business line, partially offset by
improved North America and Asia sales in Performance Materials and
increased pricing in the Pavement Technologies business line.
Net income of $25.2 million and diluted earnings per share (EPS)
of $0.69 decreased 67% and 65%, respectively, and were negatively
impacted by lower operating earnings, restructuring and other
charges recorded during the quarter, and higher interest expense
associated with the Ozark acquisition. Adjusted EBITDA of $110.4
million was down versus the prior year quarter, with adjusted
EBITDA margin of 24.8%.
“This quarter we saw lower sales versus a record quarter last
year as continued weak industrial demand reduced volumes. However,
we maintained mid-twenties adjusted EBITDA margins due to the value
delivered by our specialty businesses, and the cost reduction
actions taken early in the quarter,” said Ingevity president and
CEO, John Fortson. “Performance Materials benefited from increased
sales in automotive products in both Asia and North America, and
our Pavement Technologies business line continued to capture value
in their specialty products that allow customers to reduce energy
costs and emissions, and make longer lasting roads. Advanced
Polymer Technologies saw lower volumes in areas like footwear and
apparel but delivered strong margins due to disciplined price and
cost management. The Industrial Specialties business line continues
to address high Crude Tall Oil (CTO) costs along with weak demand
for industrial products, particularly in rosin end markets. Our
announcement today accelerates the repositioning of the Performance
Chemicals segment as the next step in executing our corporate
strategy that focuses on higher margin and higher growth specialty
products, diversifies feedstocks, and optimizes our manufacturing
network.”
Performance Chemicals
Sales in Performance Chemicals were $256.0 million, down 4% from
prior year.
Industrial Specialties posted sales of $126.3 million, down 30%,
due to lower volumes attributed primarily to weak demand across end
markets, particularly for rosin-based products. Pavement
Technologies sales increased to $129.7 million, driven by higher
pricing in legacy pavement applications and sales associated with
Ozark.
Segment EBITDA was $24.7 million, down 62%, reflecting lower
sales volumes in Industrial Specialties and higher CTO costs,
resulting in a segment EBITDA margin of 9.6%.
“Pavement Technologies continues to see increased technology
adoption of their high-value products, both in the U.S. and abroad,
as strong sales in South America contributed to our results. In
Industrial Specialties, end market demand for rosin-based products
remains weak, and during the quarter we also saw a reduction in oil
drilling activity which negatively impacted our oilfield end
market,” said Fortson. “These challenging end market dynamics
combined with continued elevated CTO costs, resulted in a
significant drop in EBITDA and margins, and we expect these
dynamics to persist and be more impactful in the fourth quarter as
the Pavement Technologies business line enters its customary slow
season.”
Advanced Polymer Technologies
Sales in Advanced Polymer Technologies (APT) were down 38% to
$42.8 million due to market weakness across the segment’s end
markets in all regions. Segment EBITDA remained flat at $11.2
million and segment EBITDA margin improved to 26.2% due to price,
cost management and lower input costs.
“APT delivered strong EBITDA margins in the face of lower demand
in all of their end markets. We began to see customers become more
price sensitive, which caused some volume to be lost to substitute
products,” said Fortson. “We believe that the weakness in global
demand has begun to abate, but it will likely take some time for a
significant recovery in markets such as industrial applications and
footwear and apparel. The trend toward higher value markets such as
bioplastics is continuing, and we remain focused on helping our
customers deliver sustainable products that make things tougher and
more durable, as well as biodegradable at end of life.”
Performance Materials
Sales in Performance Materials were $147.2 million in the
quarter, up 2% as increased automotive carbon demand, particularly
in Asia Pacific and North America, offset volume declines of our
lower margin, non-automotive carbon. Segment EBITDA was $74.5
million, up 22% versus the prior year quarter as a result of
improved product mix and lower SG&A, with segment EBITDA
margins of 50.6%.
“Performance Materials benefited from increased auto production
as well as the increased adoption of hybrid vehicles, resulting in
a higher mix of sales of automotive carbon during the quarter,”
said Fortson. “We have seen the demand for hybrid vehicles improve,
and as that trend continues, it will be a tailwind for this
segment. The U.S. automotive strike had a limited impact for the
quarter.”
Liquidity/Other
Third quarter operating cash flow was $106.9 million with free
cash flow of $73.4 million, reflecting higher inventory driven by
increased CTO prices and reduced rosin demand. There were no share
repurchases for the quarter and $353.4 million remains available
under the July 2022 $500 million Board authorization. Net leverage
was 3.2 times, reflecting increased borrowing for the Ozark
acquisition in Q4 2022.
Full Year 2023 Guidance
“The weak industrial demand environment we have seen throughout
the year does not appear to be recovering as we enter the fourth
quarter, and therefore we expect continued volume weakness. In
addition, as the slowdown persists, there is more pricing pressure,
particularly in cyclical markets such as adhesives and oilfield.
With our CTO costs rising in the fourth quarter, and our inability
to recover costs through pricing actions, we are reducing our
full-year adjusted EBITDA guidance to between $375 million and $390
million,” said Fortson.
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 Chemicals, which includes specialty chemicals and
Pavement Technologies; Advanced Polymer Technologies, which
includes biodegradable plastics and polyurethane materials; and
Performance Materials, which includes activated carbon. Our
products are used in a variety of demanding applications, including
adhesives, agrochemicals, asphalt paving, bioplastics, coatings,
elastomers, lubricants, pavement markings, publication inks, oil
exploration and production and automotive components. Headquartered
in North Charleston, South Carolina, Ingevity operates from 31
countries around the world and employs approximately 1,900 people.
The company’s common stock is traded on the New York Stock Exchange
(NYSE: NGVT). For more information, visit Ingevity.com. Follow
Ingevity on LinkedIn.
Additional Information
The company will host a live webcast on Thursday, November 2, at
10:00 a.m. (Eastern) to discuss third-quarter 2023 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.) or 929 526 1599 (outside the
U.S.) and entering access code 140564. Information on how to access
the webcast and conference call, along with a slide deck containing
other relevant financial and statistical information, will be
posted to Ingevity’s investor site prior to the call. For those
unable to join the live event, a recording will be available
beginning at approximately 2:00 p.m. (Eastern) on November 2, 2023,
through November 1, 2024, at this replay link.
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 the 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; impact of COVID-19; 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
closure of our DeRidder, Louisiana plant; losses due to resale of
CTO 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
Israel-Gaza war; 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, including the impact of
WestRock’s shutdown of its North Charleston paper mill; adverse
effects from the COVID-19 pandemic; 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; and 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 September
30,
Nine Months Ended September
30,
In millions, except per share
data
2023
2022
2023
2022
Net sales
$
446.0
$
482.0
$
1,320.4
$
1,284.7
Cost of sales
317.0
305.7
908.0
820.0
Gross profit
129.0
176.3
412.4
464.7
Selling, general and administrative
expenses
40.0
54.2
140.3
142.9
Research and technical expenses
7.8
7.6
24.6
23.1
Restructuring and other (income) charges,
net
24.6
3.3
49.4
10.6
Acquisition-related costs
0.1
1.9
3.8
1.9
Other (income) expense, net
1.3
2.0
(13.9
)
(1.0
)
Interest expense, net
23.1
11.5
64.3
37.3
Income (loss) before income taxes
32.1
95.8
143.9
249.9
Provision (benefit) for income taxes
6.9
20.4
32.5
53.9
Net income (loss)
$
25.2
$
75.4
$
111.4
$
196.0
Per share data
Basic earnings (loss) per share
$
0.70
$
1.99
$
3.05
$
5.10
Diluted earnings (loss) per share
0.69
1.98
3.03
5.06
Weighted average shares outstanding
Basic
36.2
37.8
36.6
38.5
Diluted
36.4
38.1
36.8
38.7
INGEVITY CORPORATION
Segment Operating Results
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
In millions
2023
2022
2023
2022
Net sales
Performance Materials
$
147.2
$
144.9
$
433.2
$
415.7
Performance Chemicals
$
256.0
$
267.6
$
725.6
$
683.9
Pavement Technologies product line
129.7
88.3
316.4
194.0
Industrial Specialties product line
126.3
179.3
409.2
489.9
Advanced Polymer Technologies
$
42.8
$
69.5
$
161.6
$
185.1
Total net sales
$
446.0
$
482.0
$
1,320.4
$
1,284.7
Segment EBITDA (1)
Performance Materials
$
74.5
$
61.2
$
208.5
$
194.7
Performance Chemicals
24.7
65.7
89.9
158.2
Advanced Polymer Technologies
11.2
11.3
36.6
25.4
Total segment EBITDA (1)
$
110.4
$
138.2
$
335.0
$
378.3
Interest expense, net
(23.1
)
(11.5
)
(64.3
)
(37.3
)
(Provision) benefit for income taxes
(6.9
)
(20.4
)
(32.5
)
(53.9
)
Depreciation and amortization -
Performance Materials
(9.5
)
(8.9
)
(28.7
)
(26.7
)
Depreciation and amortization -
Performance Chemicals
(17.8
)
(9.7
)
(45.6
)
(29.4
)
Depreciation and amortization - Advanced
Polymer Technologies
(7.9
)
(7.1
)
(23.4
)
(22.5
)
Restructuring and other income (charges),
net (2) (5)
(20.0
)
(3.3
)
(43.8
)
(10.6
)
Acquisition and other-related costs (3)
(6)
(0.1
)
(1.9
)
(4.6
)
(1.9
)
Gain on sale of strategic investment
(4)
0.1
—
19.3
—
Net income (loss)
$
25.2
$
75.4
$
111.4
$
196.0
_______________
(1)
Segment EBITDA is the primary
measure used by our chief operating decision maker to evaluate the
performance of and allocate resources among our operating segments.
Segment EBITDA is defined as segment revenue 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, net, associated with
corporate debt facilities, income taxes, depreciation,
amortization, restructuring and other (income) charges, net,
acquisition and other related costs, litigation verdict charges,
(losses) and gains from the sale of strategic investments, pension
and postretirement settlement and curtailment (income) charges,
net.
(2)
For the three and nine months
ended September 30, 2023, charges of $1.3 million and $7.5 million
relate to the Performance Materials segment, charges of $18.3
million and $34.0 million relate to the Performance Chemicals
segment, and charges of $0.4 million and $2.3 million relate to the
Advanced Polymer Technologies segment, respectively. For the three
and nine months ended September 30, 2022, charges of $1.1 million
and $3.7 million relate to the Performance Materials segment,
charges of $1.7 million and $5.4 million relate to the Performance
Chemicals segment, and charges of $0.5 million and $1.5 million
relate to the Advanced Polymer Technologies segment,
respectively.
(3)
For the three and nine months
ended September 30, 2023 and September 30, 2022, all charges relate
to the acquisition and integration of Ozark Materials into the
Performance Chemicals segment.
(4)
For the three and nine months
ended September 30, 2023, gain on sale of strategic investment
relates to the Performance Materials segment.
(5)
Excludes $4.6 million and $5.6
million of Depreciation and amortization for the three and nine
months ended September 30, 2023, relating to the alternative
feedstock transition and North Charleston plant transition within
our Performance Chemicals reportable segment, respectively.
(6)
Includes zero and $0.8 million of
Inventory fair value step-up amortization for the three and nine
months ended September 30, 2023, respectively, relating to the
acquisition and integration of Ozark Materials into the Performance
Chemicals segment. Included within "Cost of sales" on the
consolidated statement of operations.
INGEVITY CORPORATION
Condensed Consolidated Balance
Sheets (Unaudited)
In millions
September 30, 2023
December 31, 2022
Assets
Cash and cash equivalents
$
84.5
$
76.7
Accounts receivable, net
216.6
224.8
Inventories, net
386.7
335.0
Prepaid and other current assets
46.7
42.5
Current assets
734.5
679.0
Property, plant, and equipment, net
800.0
798.6
Goodwill
520.1
518.5
Other intangibles, net
375.6
404.8
Restricted investment
80.2
78.0
Strategic investments
99.3
109.8
Other assets
157.1
147.8
Total Assets
$
2,766.8
$
2,736.5
Liabilities
Accounts payable
$
197.3
$
174.8
Accrued expenses
64.5
54.4
Other current liabilities
43.3
74.3
Current liabilities
305.1
303.5
Long-term debt including finance lease
obligations
1,469.7
1,472.5
Deferred income taxes
105.0
106.5
Other liabilities
168.3
155.7
Total Liabilities
2,048.1
2,038.2
Equity
718.7
698.3
Total Liabilities and Equity
$
2,766.8
$
2,736.5
INGEVITY CORPORATION
Condensed Consolidated
Statements of Cash Flows (Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
In millions
2023
2022
2023
2022
Cash provided by (used in) operating
activities:
Net income (loss)
$
25.2
$
75.4
$
111.4
$
196.0
Adjustments to reconcile net income (loss)
to cash provided by (used in) operating activities:
Depreciation and amortization
35.2
25.7
97.7
78.6
Gain on sale of strategic investment
(0.1
)
—
(19.3
)
—
Other non-cash items
34.2
11.9
109.8
48.3
Changes in operating assets and
liabilities, net of effect of acquisitions:
Changes in other operating assets and
liabilities, net
12.4
(12.9
)
(139.1
)
(108.0
)
Net cash provided by (used in) operating
activities
$
106.9
$
100.1
$
160.5
$
214.9
Cash provided by (used in) investing
activities:
Capital expenditures
$
(33.5
)
$
(36.1
)
$
(80.6
)
$
(93.3
)
Proceeds from sale of strategic
investment
0.1
—
31.5
—
Purchase of strategic investment
(2.4
)
(60.8
)
(2.4
)
(62.8
)
Net investment hedge settlement
—
14.7
—
14.7
Other investing activities, net
1.0
(3.9
)
(4.8
)
(3.3
)
Net cash provided by (used in) investing
activities
$
(34.8
)
$
(86.1
)
$
(56.3
)
$
(144.7
)
Cash provided by (used in) financing
activities:
Proceeds from revolving credit
facility
$
39.3
$
—
$
237.1
$
788.0
Payments on revolving credit facility
(95.3
)
(23.0
)
(240.1
)
(279.0
)
Payments on long-term borrowings
—
—
—
(628.1
)
Debt issuance costs
—
—
—
(3.0
)
Debt repayment costs
—
—
—
(3.8
)
Financing lease obligations, net
(0.1
)
—
(0.6
)
(0.4
)
Borrowings (repayments) of notes payable
and other short-term borrowings, net
2.4
—
2.4
—
Tax payments related to withholdings on
vested equity awards
(0.3
)
(0.2
)
(4.8
)
(2.2
)
Proceeds and withholdings from share-based
compensation plans, net
0.7
0.9
4.7
2.8
Repurchases of common stock under publicly
announced plan
—
(49.3
)
(92.1
)
(139.2
)
Net cash provided by (used in) financing
activities
$
(53.3
)
$
(71.6
)
$
(93.4
)
$
(264.9
)
Increase (decrease) in cash, cash
equivalents, and restricted cash
18.8
(57.6
)
10.8
(194.7
)
Effect of exchange rate changes on
cash
(2.3
)
(1.4
)
(3.0
)
(8.6
)
Change in cash, cash equivalents, and
restricted cash(1)
16.5
(59.0
)
7.8
(203.3
)
Cash, cash equivalents, and restricted
cash at beginning of period
68.6
131.8
77.3
276.1
Cash, cash equivalents, and restricted
cash at end of period (1)
$
85.1
$
72.8
$
85.1
$
72.8
(1) Includes restricted cash of $0.6
million and $0.5 million and cash and cash equivalents of $84.5
million and $72.3 million at September 30, 2023 and 2022,
respectively. Restricted cash is included within "Prepaid and other
current assets" within the condensed consolidated balance
sheets.
Supplemental cash flow
information:
Cash paid for interest, net of capitalized
interest
$
17.9
$
7.2
$
57.9
$
35.9
Cash paid for income taxes, net of
refunds
4.3
15.7
27.9
42.6
Purchases of property, plant, and
equipment in accounts payable
0.8
(0.9
)
6.1
5.1
Leased assets obtained in exchange for new
finance lease liabilities
0.2
—
0.2
—
Leased assets obtained in exchange for new
operating lease liabilities
7.2
1.5
26.0
9.2
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 or
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 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, acquisition and other-related costs, debt refinancing fees,
litigation verdict charges, (losses) and gains from the sale of
strategic investments, pension and postretirement settlement and
curtailment (income) 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,
acquisition and other-related costs per share, debt refinancing
fees per share, litigation verdict charge per share, (losses) and
gains from the sale of strategic investments per share, pension and
postretirement settlement and curtailment (income) charges per
share and the income tax expense (benefit) per share on those
items, less the per share tax 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, acquisition and other-related costs,
litigation verdict charge, (losses) and gains from the sale of
strategic investments, 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 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 less the sum of cash and cash equivalents,
restricted cash associated with our New Market Tax Credit financing
arrangement, and restricted investment excluding the allowance for
credit losses on held-to-maturity debt securities.
Net Debt Ratio is defined as Net Debt
divided by last twelve months Adjusted EBITDA, inclusive of
acquisition-related pro forma adjustments.
Ingevity also uses the above financial measures as the primary
measures of profitability used by managers 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 2023 Adjusted EBITDA
Guidance
A reconciliation of net income to adjusted EBITDA as projected
for 2023 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 costs; litigation
verdict charges; (losses) and gains from the sale of strategic
investments; 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 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) and Diluted Earnings (Loss) Per Share (GAAP) to
Adjusted Earnings (Loss) (Non-GAAP) and Diluted Adjusted Earnings
(Loss) Per Share (Non-GAAP)
Three Months Ended September
30,
Nine Months Ended September
30,
In millions, except per share data
(unaudited)
2023
2022
2023
2022
Net income (loss) (GAAP)
$
25.2
$
75.4
$
111.4
$
196.0
Restructuring and other (income) charges,
net
24.6
3.3
49.4
10.6
Acquisition and other-related costs
0.1
1.9
4.6
1.9
Debt refinancing fees (1)
—
—
—
5.1
Gain on sale of strategic investment
(0.1
)
—
(19.3
)
—
Tax effect on items above
(5.8
)
(1.2
)
(8.1
)
(4.1
)
Certain discrete tax provision (benefit)
(2)
0.2
—
(1.1
)
0.4
Adjusted earnings (loss)
(Non-GAAP)
$
44.2
$
79.4
$
136.9
$
209.9
Diluted earnings (loss) per common
share (GAAP)
$
0.69
$
1.98
$
3.03
$
5.06
Restructuring and other (income) charges,
net
0.67
0.09
1.34
0.27
Acquisition and other-related costs
—
0.05
0.13
0.05
Debt refinancing fees
—
—
—
0.13
Gain on sale of strategic investment
—
—
(0.52
)
—
Tax effect on items above
(0.16
)
(0.03
)
(0.23
)
(0.10
)
Certain discrete tax provision
(benefit)
0.01
—
(0.03
)
0.01
Diluted adjusted earnings (loss) per
share (Non-GAAP)
$
1.21
$
2.09
$
3.72
$
5.42
Weighted average common shares outstanding
- Diluted
36.4
38.1
36.8
38.7
_______________
(1)
Represents the acceleration of
deferred financing fees, debt extinguishment premium paid and other
fees incurred related to our senior note redemption, term loan
repayment, revolving credit facility amendment, and termination of
certain interest rate swaps during the second quarter of 2022.
Management believes excluding these items assists investors,
potential investors, securities analysts, and others in
understanding the continuing operating results thereby providing
useful supplemental information about operational performance.
(2)
Represents certain discrete tax
items such as excess tax benefits on stock compensation and impacts
of legislative tax rate changes. Management believes excluding
these discrete tax items assists investors, potential investors,
securities analysts, and others in understanding the tax provision
and the effective tax rate related to continuing operating results
thereby providing useful supplemental information about operational
performance.
Reconciliation of Net Income
(Loss) (GAAP) to Adjusted EBITDA (Non-GAAP)
Three Months Ended September
30,
Nine Months Ended September
30,
In millions, except percentages
(unaudited)
2023
2022
2023
2022
Net income (loss) (GAAP)
$
25.2
$
75.4
$
111.4
$
196.0
Provision (benefit) for income taxes
6.9
20.4
32.5
53.9
Interest expense, net
23.1
11.5
64.3
37.3
Depreciation and amortization
35.2
25.7
97.7
78.6
Restructuring and other (income) charges,
net (1)
20.0
3.3
43.8
10.6
Acquisition and other-related costs
0.1
1.9
4.6
1.9
Gain on sale of strategic investment
(0.1
)
—
(19.3
)
—
Adjusted EBITDA (Non-GAAP)
$
110.4
$
138.2
$
335.0
$
378.3
Net sales
$
446.0
$
482.0
$
1,320.4
$
1,284.7
Net income (loss) margin
5.7
%
15.6
%
8.4
%
15.3
%
Adjusted EBITDA margin
24.8
%
28.7
%
25.4
%
29.4
%
_______________
(1)
Excludes $4.6 million and $5.6
million of Depreciation and amortization for the three and nine
months ended September 30, 2023, relating to the alternative
feedstock transition and North Charleston plant transition within
our Performance Chemicals reportable segment.
Calculation of Free Cash Flow
(Non-GAAP)
Three Months Ended September
30,
Nine Months Ended September
30,
In millions (unaudited)
2023
2022
2023
2022
Cash Flow from Operations
$
106.9
$
100.1
$
160.5
$
214.9
Less: Capital Expenditures
33.5
36.1
80.6
93.3
Free Cash Flow
$
73.4
$
64.0
$
79.9
$
121.6
Calculation of Net Debt Ratio
(Non-GAAP)
In millions, except ratios
(unaudited)
September 30, 2023
Notes payable and current maturities of
long-term debt
$
3.0
Long-term debt including finance lease
obligations
1,469.7
Debt issuance costs
5.6
Total Debt
1,478.3
Less:
Cash and cash equivalents (1)
84.7
Restricted investment (2)
80.5
Net Debt
$
1,313.1
Net Debt Ratio (Non GAAP)
Adjusted EBITDA (3)
Twelve months ended December 31, 2022
$
452.6
Nine months ended September 30, 2022
(378.3
)
Nine months ended September 30, 2023
335.0
Adjusted EBITDA - last twelve months (LTM)
as of September 30, 2023
$
409.3
Net debt ratio (Non GAAP)
3.2x
_______________
(1) Includes $0.2 million of Restricted
Cash related to the New Market Tax Credit arrangement.
(2) Excludes $0.3 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/20231101996956/en/
Contact: Caroline Monahan 843-740-2068
media@ingevity.com
Investors: John E. Nypaver, Jr. 843-740-2002
investors@ingevity.com
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