In This Article:
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Revenue: $376.9 million, down 16% year-over-year.
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Net Loss: GAAP net loss of $107.2 million.
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Adjusted Gross Profit: $146 million, flat compared to last year.
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Gross Margin: Increased by 610 basis points.
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Adjusted EBITDA: Down $4 million year-over-year; margin improved by 340 basis points to 28.2%.
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Free Cash Flow: $28.5 million in Q3.
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Leverage: Around 4 times, expected to move closer to 3.5 times by year-end.
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Performance Materials Revenue: $151.1 million, up 3%.
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Performance Materials EBITDA Margin: 53.3%.
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Advanced Polymer Technologies Revenue: $48.8 million, up 14%.
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Advanced Polymer Technologies EBITDA Margin: 20.1%.
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Performance Chemicals Revenue: $177 million, down 31%.
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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
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Ingevity Corp (NYSE:NGVT) achieved a higher gross margin by 610 basis points due to repositioning actions in performance chemicals.
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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.
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Performance materials segment delivered solid sales growth of 3% and maintained high EBITDA margins, benefiting from lower input costs.
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Advanced Polymer Technologies (APT) saw a 14% increase in revenue, with signs of market demand improvement in China.
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Ingevity Corp (NYSE:NGVT) generated free cash flow of $28.5 million in Q3, demonstrating strong cash generation capabilities.
Negative Points
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Third quarter sales were down 16% due to repositioning actions and unfavorable weather conditions affecting the Road Technologies product line.
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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.
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Performance chemicals segment sales declined 31%, primarily due to repositioning actions and weak industrial demand.
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Ingevity Corp (NYSE:NGVT) is still consuming high-cost CTO inventory, impacting EBITDA margins negatively.
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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.