Ingevity reports fourth quarter and full year 2024 financial results

February 19, 2025

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.

NORTH CHARLESTON, S.C.–(BUSINESS WIRE)–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.