Ingevity Corp (NGVT) Q3 2024 Earnings Call Highlights: Navigating Challenges with Strategic ...

In This Article:

  • Revenue: $376.9 million, down 16% year-over-year.

  • Net Loss: GAAP net loss of $107.2 million.

  • Adjusted Gross Profit: $146 million, flat compared to last year.

  • Gross Margin: Increased by 610 basis points.

  • Adjusted EBITDA: Down $4 million year-over-year; margin improved by 340 basis points to 28.2%.

  • Free Cash Flow: $28.5 million in Q3.

  • Leverage: Around 4 times, expected to move closer to 3.5 times by year-end.

  • Performance Materials Revenue: $151.1 million, up 3%.

  • Performance Materials EBITDA Margin: 53.3%.

  • Advanced Polymer Technologies Revenue: $48.8 million, up 14%.

  • Advanced Polymer Technologies EBITDA Margin: 20.1%.

  • Performance Chemicals Revenue: $177 million, down 31%.

  • Performance Chemicals EBITDA Margin: Improved by 160 basis points to 11.2%.

Release Date: October 30, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Ingevity Corp (NYSE:NGVT) achieved a higher gross margin by 610 basis points due to repositioning actions in performance chemicals.

  • The company realized $18 million in savings during Q3, putting them on track to achieve their 2024 target of $65 million to $75 million in savings.

  • Performance materials segment delivered solid sales growth of 3% and maintained high EBITDA margins, benefiting from lower input costs.

  • Advanced Polymer Technologies (APT) saw a 14% increase in revenue, with signs of market demand improvement in China.

  • Ingevity Corp (NYSE:NGVT) generated free cash flow of $28.5 million in Q3, demonstrating strong cash generation capabilities.

Negative Points

  • Third quarter sales were down 16% due to repositioning actions and unfavorable weather conditions affecting the Road Technologies product line.

  • The company incurred significant restructuring charges of $86.9 million and a $100 million charge for terminating a long-term CTO supply contract, leading to a GAAP net loss of $107.2 million.

  • Performance chemicals segment sales declined 31%, primarily due to repositioning actions and weak industrial demand.

  • Ingevity Corp (NYSE:NGVT) is still consuming high-cost CTO inventory, impacting EBITDA margins negatively.

  • The company expects to deliver toward the lower end of their guidance due to headwinds like slow industrial demand and softening auto production forecasts.

Q & A Highlights

Q: Can you speak to the volume of CTO sales you had in Q3 and how much inventory remains? Is there any update on when you will be done with high-cost inventory? A: Mary Hall, CFO, stated that CTO resales were nominal in Q3, and they expect to finish consuming high-cost CTO inventory by the end of Q1 2025. The high-cost inventory impacts EBITDA margins and profitability.

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