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Financial Performance - Ingevity's net sales for Q3 2025 were $333.1 million, a slight decrease of $0.7 million compared to Q3 2024, driven by a volume decline of $1.4 million and unfavorable pricing and sales mix of $0.3 million[193][196]. - For the nine months ended September 30, 2025, net sales totaled $912.5 million, down $24.3 million from the prior year, primarily due to a volume decline of $37.3 million, partially offset by favorable pricing and sales mix of $11.9 million[193][197]. - Performance Materials net sales for Q3 2025 were $155.0 million, a 3% increase from $151.1 million in Q3 2024, driven by volume growth[218]. - Performance Chemicals net sales increased by $6.0 million (4%) in Q3 2025 to $139.9 million, primarily due to higher sales in the North American pavement market[223]. - Advanced Polymer Technologies net sales decreased by 22% in Q3 2025 compared to the prior year quarter, reflecting continued pressure from indirect tariff impacts and weak industrial demand[229]. - For the nine months ended September 30, 2025, net sales from Advanced Polymer Technologies decreased by $21.0 million, driven by a volume decline of $19.2 million (13%) and unfavorable pricing and sales mix of $3.1 million (2%) [233]. - Net sales from discontinued operations decreased by $72.1 million in the nine months ended September 30, 2025, driven by a volume decline of $67.8 million (40%) and unfavorable pricing and sales mix of $5.2 million (3%) [241]. - Total Advanced Polymer Technologies net sales for the nine months ended September 30, 2025, were $123.7 million, down from $144.7 million in 2024 [230]. - For the three months ended September 30, 2025, net sales from discontinued operations were $29.0 million, down from $43.1 million in 2024, reflecting a volume decline of $10.7 million (25%) [238]. Profitability and Expenses - Gross profit for Q3 2025 increased by $2.3 million, attributed to decreased manufacturing costs of $5.4 million and favorable foreign currency exchange of $2.8 million, despite LIFO charges of $6.6 million[198]. - For the nine months ended September 30, 2025, gross profit rose by $8.8 million, driven by decreased manufacturing costs of $22.7 million and favorable pricing and sales mix of $12.1 million, offset by LIFO charges of $16.2 million[199]. - SG&A expenses for Q3 2025 were $44.1 million (13% of net sales), up from $37.9 million (11% of net sales) in Q3 2024, representing a 16% increase[200]. - For the nine months ended September 30, 2025, SG&A expenses were $129.6 million (14% of net sales), an increase of 8% from $119.5 million (13% of net sales) in the same period of 2024[201]. - Research and technical expenses as a percentage of net sales increased to 2.1% in Q3 2025 from 1.9% in Q3 2024, with a total increase of $0.8 million[202]. - Segment EBITDA for Performance Materials decreased by $0.7 million (1%) in Q3 2025, with a margin decline to 51.5% due to higher variable compensation and foreign currency exchange[217]. - Segment EBITDA for Performance Chemicals increased by $0.5 million (2%) in Q3 2025, with a margin of 17.7% impacted by lower pricing in road markings products[223]. - Segment EBITDA increased by $9.8 million in 2025, driven by decreased manufacturing costs of $20.9 million and favorable pricing and sales mix of $11.7 million, partially offset by LIFO charges of $13.7 million and increased SG&A of $5.6 million [228]. - EBITDA from discontinued operations increased by $34.8 million in the nine months ended September 30, 2025, driven by LIFO liquidation benefit of $23.5 million and decreased manufacturing costs of $13.6 million [242]. Charges and Repositioning - The company expects to incur approximately $365 million in aggregate charges related to the Performance Chemicals repositioning, including $255 million in asset-related charges and $25 million in severance costs[186]. - As of September 30, 2025, the company has incurred $344.7 million associated with the repositioning actions, with $83.1 million of cash charges already paid[187]. - Since November 2023, Ingevity has realized total cash savings of approximately $103 million, with 70-80% attributed to cost of sales[188][189]. - The repositioning of the Performance Chemicals segment aims to improve profitability and reduce cyclicality, focusing on higher-margin product lines[185]. Cash Flow and Capital Management - Cash flow from operating activities for the nine months ended September 30, 2025, was $234.1 million, an increase of $170.0 million compared to $64.1 million in 2024[270]. - Capital expenditures for the nine months ended September 30, 2025, totaled $34.1 million, down from $52.7 million in 2024, with maintenance capital spending at $20.5 million[273]. - The company repurchased $25.2 million in common stock during the nine months ended September 30, 2025, with $328.4 million remaining under the 2022 repurchase authorization[267]. - As of September 30, 2025, cash and cash equivalents totaled $83.4 million, including $79.7 million held by foreign subsidiaries[263]. - The company expects to eliminate approximately $15 million in indirect costs associated with the industrial specialties product line by the end of 2026 through operational efficiencies[259]. - The undrawn capacity under the revolving credit facility was $477.0 million as of September 30, 2025, providing sufficient liquidity for planned operations[262]. Interest and Foreign Exchange - Total interest expense for the nine months ended September 30, 2025, was $56.4 million, down from $69.3 million in the same period of 2024[210]. - The company entered into a floating-to-fixed interest rate swap for a notional amount of $200 million, converting variable interest payments to a fixed rate of 3.84% until August 2026[279]. - As of September 30, 2025, the weighted average interest rate for variable borrowings was 5.75%, with a hypothetical 100 basis point increase resulting in an annual interest expense increase of approximately $4.1 million or 7%[280]. - A hypothetical 10% adverse change in the average exchange rates of the Brazilian real, Chinese renminbi, and euro to the U.S. dollar would have decreased net sales by approximately $10.8 million or 1% for the nine months ended September 30, 2025[278]. - A hypothetical 10% adverse change in the average exchange rates during the nine months ended September 30, 2024, would have decreased net sales by approximately $11.0 million or 1%[278]. Accounting and Reporting - The company believes that non-GAAP financial measures provide a more complete understanding of the factors affecting historical financial performance and projected future results [244]. - Net income from continuing operations for Q3 2025 was $40.8 million, a decrease from $47.5 million in Q3 2024, while net income from discontinued operations improved to $2.7 million from a loss of $154.7 million[248]. - Adjusted EBITDA from continuing operations for the nine months ended September 30, 2025, was $302.8 million, compared to $296.7 million for the same period in 2024, reflecting a slight increase[248]. - The company revised its 2025 net sales outlook to between $1.25 billion and $1.35 billion, with expectations of a ~2% decline in North America light vehicle production compared to 2024[258]. - Total Adjusted EBITDA outlook for 2025 is projected to be between $390 million and $405 million, reflecting continued pressure on the Advanced Polymers Technologies segment[260]. - The company has not substantially changed its critical accounting policies from those described in the 2024 Annual Report[277]. Risk Factors - Ingevity's operations are impacted by various risks, including global economic conditions, competition, and supply chain disruptions[183]. - Natural gas costs constituted approximately 4% of the cost of goods sold for the nine months ended September 30, 2025, with a hypothetical 10% increase in natural gas pricing resulting in an increase to cost of sales of approximately $2.1 million[282]. - The company had 1.5 million mmBTUS in open natural gas derivative contracts as of September 30, 2025, designated as cash flow hedges[282]. - The fair value of open natural gas derivative contracts was a net asset of $(0.8) million as of September 30, 2025[282]. - The fair value of the interest rate swap was $(0.3) million as of September 30, 2025, compared to $0.6 million at December 31, 2024[279].

Core Viewpoint - Ingevity Corporation will host a virtual Strategic Portfolio Update for investors on December 8, 2025, to discuss its evolving portfolio and long-term value creation strategies [1][2][10] Company Overview - Ingevity Corporation operates in three reporting segments: Performance Materials, Advanced Polymer Technologies, and Performance Chemicals, providing products that purify, protect, and enhance various applications [4] - The company is headquartered in North Charleston, South Carolina, and employs approximately 1,600 people across 24 locations globally [4] Event Details - The Strategic Portfolio Update will be led by Ingevity President and CEO Dave Li and CFO Mary Dean Hall, focusing on key initiatives for strategic focus and company outlook over the next two years [2] - Investors can register for the event through Ingevity's website, with a live audio webcast and presentation materials available during the event, along with a replay for those unable to attend live [3]

Financial Data and Key Metrics Changes - Total company sales for Q3 2025 were $362 million, down approximately 4% year-over-year, with increased sales in performance materials and road technologies offset by declines in industrial specialties and APT [8][9] - Adjusted earnings improved significantly, up almost 500 basis points to $56.3 million, driving adjusted EBITDA margin to 33.5% [9] - Free cash flow for the quarter was $118 million, enabling the company to repurchase $25 million of shares and accelerate deleveraging, ending the quarter with net leverage of 2.7 times, beating the previous year-end target of 2.8 times [9][10] Business Line Data and Key Metrics Changes - Performance materials sales increased by 3%, primarily due to volume growth, although segment EBITDA and EBITDA margin were slightly down due to increased variable compensation and foreign exchange impacts [10] - APT sales declined year-over-year, impacted by tariffs and weak end-market demand, with an expected full-year revenue decline in the mid-teens percentage range and EBITDA margin reduced to 15-20% [11][12] - Road technologies posted a 5% sales increase, achieving record Q3 sales in North America, which is the largest and most profitable region for the company [12] Market Data and Key Metrics Changes - The automotive industry is experiencing volatility due to supply chain challenges, including chip shortages and aluminum plant fires, which have impacted production forecasts [20][39] - North American auto production is expected to be down a couple of percent year-over-year, although this is an improvement over prior forecasts [39] Company Strategy and Development Direction - The company announced the sale of its industrial specialties business for $110 million, expected to close in early 2026, with proceeds likely used for debt reduction [4][16] - The company is focusing on disciplined capital allocation and has raised full-year free cash flow guidance, expecting net leverage to be around 2.6 times by year-end [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the business model despite ongoing tariff uncertainties and slower industrial demand impacting APT [16] - The company anticipates a solid Q4 but expects it to be softer compared to strong Q2 and Q3 results [10] Other Important Information - The company will host an investor update on December 8, where it will share results from the strategic portfolio review and future expectations [6][17] Q&A Session Summary Question: Impact of aluminum plant fires and chip shortages on performance materials outlook - Management acknowledged the dynamic year for the industry and confirmed that results and outlook reflect impacts from these supply chain challenges [20] Question: Clarification on discontinued operations and Q4 implications - Management indicated that the full-year metrics for discontinued operations should be straightforward to extrapolate from Q3 results [21][23] Question: Working capital management post-divestiture - Management provided insights on the balance sheet and indicated that the impact of discontinued operations has been clearly outlined [28] Question: Net debt targets post-sale of industrial specialties - Management confirmed that net leverage finished the quarter at 2.7 times and is targeting 2.6 times by year-end, with proceeds from the sale primarily used for debt reduction [30][31] Question: Performance materials full-year sales outlook - Management explained that the flat to slightly down outlook is influenced by overall auto production forecasts and market dynamics, including EV volatility [38][39] Question: Update on Nexeon platform - Management stated that the Nexeon plant is expected to be operational in the coming months, emphasizing the ongoing partnership [40]

Financial Performance - Total net sales decreased by 39% to $3621 million compared to Q3 2024[7] - Adjusted EBITDA increased by 139% to $1212 million with a margin of 335%[7] - Free cash flow increased to $118 million due to higher earnings and working capital benefits[5, 16] - Net debt ratio improved to 27x[5, 16] - The company is selling the North Charleston crude tall oil refinery and the majority of the Industrial Specialties product line for $110 million[5] Segment Performance - Performance Materials net sales increased by 26% to $1550 million[17] - Advanced Polymer Technologies net sales decreased by 217% to $382 million[21] - Performance Chemicals combined net sales decreased by 46% to $1689 million[26] - Road Technologies sales increased by 45% to $1399 million, while Industrial Specialties sales decreased by 327% to $290 million[26] Guidance - Full-year net sales are projected to be $125 - $135 billion[31] - Full-year adjusted EBITDA is projected to be $390 - $405 million[31] - Free cash flow for the full year is expected to be $250 - $270 million, including ~$40 million from discontinued operations[31, 34]

Financial Performance - Net sales from continuing operations were $333.1 million, flat compared to the prior year[4] - Total net sales, including discontinued operations, were $362.1 million, down 4% year-over-year[7] - Total adjusted EBITDA increased 14% to $121.2 million, with a margin improvement to 33.5%[7] - Performance Materials sales increased 3% to $155.0 million, driven by volume growth from improved global auto production[9] - Advanced Polymer Technologies sales declined by $10.6 million to $38.2 million due to indirect tariff impacts and weak industrial demand[10] - Performance Chemicals sales from continuing operations were $139.9 million, up nearly 5% due to record pavement sales in North America[11] - Net sales for Q3 2025 were $333.1 million, a slight decrease of 0.2% compared to $333.8 million in Q3 2024[21] - Gross profit increased to $133.9 million in Q3 2025, up 1.7% from $131.6 million in Q3 2024[21] - Net income from continuing operations for Q3 2025 was $40.8 million, down 14.1% from $47.5 million in Q3 2024[21] - Basic earnings per share from continuing operations decreased to $1.12 in Q3 2025, down from $1.31 in Q3 2024[21] - Performance Materials segment net sales were $155.0 million in Q3 2025, an increase of 2.6% from $151.1 million in Q3 2024[23] - Performance Chemicals segment net sales increased to $139.9 million in Q3 2025, up from $133.9 million in Q3 2024, representing a 4.5% growth[23] - Advanced Polymer Technologies segment net sales decreased to $38.2 million in Q3 2025, down 21.4% from $48.8 million in Q3 2024[23] - Total adjusted earnings for Q3 2025 were $56.3 million, up from $40.2 million in Q3 2024, representing an increase of approximately 40.5%[60] - The diluted adjusted earnings per share from continuing operations for Q3 2025 was $1.31, slightly down from $1.33 in Q3 2024[62] - The total diluted adjusted earnings per share for the nine months ended September 30, 2025 was $3.90, compared to $2.56 for the same period in 2024, indicating a significant increase of approximately 52.3%[62] Cash Flow and Debt Management - Operating cash flow was $129.7 million, with strong free cash flow of $117.8 million enabling $25 million in share repurchases[12] - Cash provided by operating activities increased to $129.7 million for the three months ended September 30, 2025, compared to $46.5 million in the same period of 2024, marking an increase of 178.5%[37] - Free cash flow for Q3 2025 was $117.8 million, significantly higher than $28.5 million in Q3 2024, with a total free cash flow of $200.0 million for the nine months ended September 30, 2025, compared to $11.4 million in the same period of 2024[70] - Long-term debt, including finance lease obligations, decreased from $1,339.7 million on December 31, 2024, to $1,158.5 million on September 30, 2025, a reduction of approximately 13.5%[35] - Cash paid for interest decreased to $13.5 million for the three months ended September 30, 2025, down from $18.7 million in the same period of 2024[39] - The net debt ratio as of September 30, 2025, was 2.7x, calculated using total adjusted EBITDA of $403.1 million for the last twelve months[72] Strategic Decisions and Future Outlook - Full-year guidance revised to total net sales between $1.25 billion and $1.35 billion and total adjusted EBITDA between $390 million and $405 million[13] - The company announced the sale of the majority of the Industrial Specialties product line and North Charleston crude tall oil refinery for $110 million, expected to close by early 2026[7] - The company plans to continue focusing on strategic investments to enhance its market position and operational efficiency[41] - The company is expected to continue its strategic investments and market expansion efforts, although specific future guidance was not detailed in the provided content[68] Impairments and Charges - The company reported a significant goodwill impairment charge of $183.8 million for the nine months ended September 30, 2025[37] - The company reported a goodwill impairment charge of $183.8 million for the nine months ended September 30, 2025, compared to $306.6 million for the same period in 2024[60] - Restructuring and other charges for Q3 2025 amounted to $1.0 million, down from $3.3 million in Q3 2024[63] - The company incurred $10.1 million in restructuring and other charges for the nine months ended September 30, 2025, compared to $8.3 million in the same period of 2024[63] Tax and Non-GAAP Adjustments - The tax effect on non-GAAP adjustments for the nine months ended September 30, 2025 was $51.2 million, compared to $74.2 million for the same period in 2024[60] - The company anticipates variability in projected effective tax rates due to discrete tax items and other components impacting financial measures[57] - The company does not provide a reconciliation of net income to Total Adjusted EBITDA for 2025 due to the uncertainty in estimating various components of net income[57]

Core Insights - The London Company Small Cap Strategy reported a 1.9% appreciation in its small-cap portfolio for Q3 2025, underperforming the Russell 2000 Index which gained 12.4% [1] - The report highlighted Ingevity Corporation (NYSE:NGVT) as a key holding, noting its significant margin recovery and performance improvements in the Performance Chemicals segment [3] Company Performance - Ingevity Corporation's stock closed at $53.84 on November 3, 2025, with a market capitalization of $1.963 billion [2] - The company achieved a one-month return of 0.71% and a 52-week gain of 24.11% [2] - Ingevity Corporation outperformed its benchmark due to a recovery in margins and strategic portfolio shifts, despite facing a cyclical downturn [3] Hedge Fund Interest - Ingevity Corporation was held by 25 hedge fund portfolios at the end of Q2 2025, an increase from 22 in the previous quarter [4] - While the company shows potential, the report suggests that certain AI stocks may offer greater upside potential with less downside risk [4]

Core Viewpoint - Ingevity Corporation has appointed Ruth Castillo as president of its Performance Materials segment, effective November 10, 2025, to drive innovation and strategic growth in its activated carbon portfolio [1][12]. Group 1: Leadership Appointment - Ruth Castillo brings over 25 years of global experience in the chemicals and materials industries, previously serving as vice president of global chemicals at Avantor [2][4]. - Castillo has a proven track record in driving innovation, operational excellence, and strategic growth, having led high-value portfolios at companies like Avantor and Celanese [2][4]. - Ingevity's CEO, Dave Li, emphasized Castillo's strategic and innovation-focused leadership style, which aligns with the company's market-driven priorities [3]. Group 2: Company Overview - Ingevity specializes in products and technologies that purify, protect, and enhance the environment, operating in three segments: Performance Materials, Advanced Polymer Technologies, and Performance Chemicals [5]. - The Performance Materials segment includes activated carbon, which is crucial for applications such as evaporative emissions control [2][5]. - The company is headquartered in North Charleston, South Carolina, and employs approximately 1,600 people across 24 locations globally [6].

Core Viewpoint - Ingevity Corporation (NGVT) has agreed to divest its North Charleston crude tall oil (CTO) refinery assets and the majority of its Performance Chemicals Industrial Specialties product line to Mainstream Pine Products, LLC [1][9] Financial Impact - The transaction is expected to generate approximately $110 million in cash proceeds, with a contingent payment ranging from $0 to $19 million based on future business performance [2][9] - Adjusted EBITDA guidance has been reaffirmed to be between $390 million and $415 million, while sales estimates remain between $1.25 billion and $1.40 billion [5] Strategic Objectives - The divestiture aims to reduce portfolio volatility, strengthen margin and cash flow profile, and enhance future strategic optionality [3][9] - The cash proceeds will facilitate deleveraging and provide more flexibility in future capital allocation decisions [3] Operational Considerations - The sale will not impact the production of the Road Technologies product line or the lignin-based dispersants manufactured at the North Charleston plant [4] - NGVT will enter into arrangements with Mainstream, including supplying certain refinery products and collaborating on toll manufacturing and plant operating services [4] Market Performance - NGVT stock has increased by 76.7% over the past year, contrasting with a 0.4% decline in the industry [6]

Core Viewpoint - Ingevity's recent earnings report shows a mixed performance with a significant loss but improved adjusted earnings, raising questions about future trends leading up to the next earnings release [1][2]. Financial Performance - Ingevity reported a Q2 2025 loss of $146.5 million or $4.02 per share, an improvement from a loss of $283.7 million or $7.81 per share in the same quarter last year [2]. - Adjusted earnings were $1.39 per share, up from $1.01 a year ago, surpassing the Zacks Consensus Estimate of $1.02 per share [2]. - Revenues declined 6.5% year over year to $365.1 million, primarily due to lower sales in the Performance Chemicals segment [3]. Segmental Review - The Performance Chemicals division generated revenues of $167.9 million, down 9.5% year over year, with Road Technologies' sales at $119.5 million, down 7.4%, and Industrial Specialties' sales at $48.4 million, down 14.2% [4]. - Performance Materials revenues fell 2.1% to $153.9 million, affected by lower sales in Asia and Europe, while North America saw higher sales [5]. - Advanced Polymer Technologies segment sales decreased 9.6% to $43.3 million due to reduced customer demand, particularly in Europe [6]. Financial Metrics - Operating cash flow for Q2 was $79 million, with free cash flow of $66.8 million, and no share repurchases during the quarter [7]. - Net leverage improved to 3x from 3.3x in the previous quarter [7]. 2025 Outlook - Ingevity revised its EBITDA guidance upward, now expecting adjusted EBITDA between $390 million and $415 million, compared to the previous range of $380-$415 million [8]. - Sales estimates remain between $1.25 billion and $1.40 billion [8]. Analyst Sentiment - Analysts have not made any earnings estimate revisions in the past two months, indicating a period of stability in expectations [9]. Investment Scores - Ingevity has a Growth Score of A but a low Momentum Score of F, resulting in an aggregate VGM Score of B [10]. Industry Context - Ingevity operates within the Zacks Chemical - Specialty industry, where competitor Element Solutions reported revenues of $625.2 million, reflecting a year-over-year increase of 2% [12].