OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 001-37586 __________________________________________________________________________ INGEVITY CORPORATION (Exact name of registrant as specified in its charter) _________________________________________________________________________ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Delaware 47-4027764 (State or other jurisdiction of incorporation or organization) (I.R. ...

Ingevity Corporation (NYSE:NGVT) Q4 2022 Results Conference Call February 28, 2023 10:00 AM ET Company Participants John Nypaver - Treasurer and IR John Fortson - President and CEO Mary Hall - CFO Rich White - President, Industrial Specialties and Pavement Technologies Ed Woodcock - President, Performance Materials Conference Call Participants John McNulty - BMO Capital Markets Jonathan Tanwanteng - CJS Securities, Inc. Vincent Anderson - Stifel Christopher Kapsch - Loop Capital Markets Ian Zaffino - Oppenh ...

Financial Data and Key Metrics Changes - Ingevity reported record sales, adjusted EBITDA, and adjusted EPS for Q3 2022, with sales up 28% and adjusted EBITDA up nearly 16% year-over-year [21][11]. - Adjusted gross profit dollars increased over 21% year-over-year, while adjusted gross margin declined by 220 basis points due to margin compression from rising input costs [23][21]. - Quarterly diluted adjusted EPS reached a record of $2.09, despite a negative impact of approximately 2% on sales from a strong U.S. dollar [26][21]. Business Line Data and Key Metrics Changes - Performance Chemicals segment achieved record sales of $337 million, up over 30% year-over-year, driven by high-performance derivatized products [30][11]. - Engineered Polymers saw strong demand, particularly in automotive applications, with sales of $69.5 million, up over 31% from the previous year [33][30]. - Performance Materials segment sales increased over 22% to $144.9 million, reflecting a rebound in automotive production [40][11]. Market Data and Key Metrics Changes - Sales in Asia Pacific for Performance Materials were up almost 40% compared to Q2 2022, indicating recovery from COVID impacts [41][40]. - North American automotive production reached its highest level since Q4 2020, contributing to improved sales in the region [41][40]. - Sales in Brazil tripled year-over-year, driven by the implementation of more stringent regulations [42][40]. Company Strategy and Development Direction - The company is focused on attractive end markets and unique performance characteristics to gain market share [12][11]. - Ingevity completed the acquisition of Ozark Materials, enhancing its product offerings and market reach [16][11]. - The company aims to continue improving its product mix towards higher-margin derivatized products, reducing reliance on lower-margin commodity products [27][21]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in strong demand across various segments, despite potential economic challenges and customer inventory destocking in certain markets [46][49]. - The company anticipates continued benefits from the recovery in automotive production and infrastructure spending [47][49]. - Management is monitoring the broader economic environment, particularly in Europe, but remains optimistic about growth opportunities [46][49]. Other Important Information - Ingevity received a gold rating for corporate social responsibility from EcoVadis, placing it in the top 3% of respondents in the specialty chemicals sector [19][11]. - The company plans to host an Investor Day event in early 2023 to enhance transparency and share growth opportunities [50][49]. Q&A Session Summary Question: Can you quantify how far behind you might be on the price versus raw materials situation? - Management indicated that they will implement annual price increases in early next year to return to normalized margins, which are typically in the mid-40s percentage range [53][54]. Question: How do you see 2023 layout for paving? - Management noted that while it's early to predict, warm weather is extending the paving season, which bodes well for the end of 2022 and into 2023 [55][54]. Question: Can you discuss the overlap of the Ozark business with your paving business? - Management highlighted significant opportunities for leveraging customer relationships between the two businesses, as they often share the same customer base [56][58]. Question: What is the current state of the European biorefining market? - Management acknowledged the dynamic nature of the CTO market and the impact of reduced Russian supply, while expecting additional production capacity to come online [64][65]. Question: How do you expect your segments to perform in a potential recession? - Management expressed confidence in the automotive recovery and infrastructure spending, which should help mitigate the impact of a broader industrial recession [102][101]. Question: What are the key raw materials experiencing inflation? - Management reported significant inflation across various raw materials, including crude tall oil and phosphoric acid, but noted that some costs appear to be stabilizing [107][106].

Financial Data and Key Metrics Changes - The second quarter revenue reached a record high, growing over 17% year-over-year, surpassing the previous record set in the first quarter [22][11] - Gross profit increased nearly 8% year-over-year, while gross margin declined about 300 basis points due to margin compression across segments [23][24] - Adjusted EBITDA for the quarter was $121.1 million, marking the second-highest quarterly figure, with diluted adjusted EPS of $1.73, up over 11% compared to the previous year [25][30] Business Line Data and Key Metrics Changes - Performance Chemicals revenue grew 28% year-over-year, representing 71% of total sales, while Performance Materials revenue decreased by about 3% due to lower auto production in China [24][40] - Performance Chemicals segment EBITDA was nearly $66 million, up 16% year-over-year, but the segment EBITDA margin decreased by 230 basis points [38] - Performance Materials segment sales were $122.4 million, down 2.9% year-over-year, primarily impacted by global auto production declines [40][41] Market Data and Key Metrics Changes - North American light vehicle production increased by 13% year-over-year, contributing to higher volumes in automotive carbon [44] - The automotive sector in China showed signs of recovery, with vehicle manufacturing down 44% in April, down 1% in May, and up 35% in June [104] Company Strategy and Development Direction - The company announced the acquisition of Ozark Materials for $325 million, expected to close in Q4, which aligns with its strategy for value-creating growth in pavement technologies [14][27] - An investment of $60 million in Nexeon Limited was also announced, aimed at developing silicon-based anode materials for electric vehicles, indicating a strategic focus on the growing EV market [17][28] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery of auto production in the second half of the year and reiterated guidance for revenue and EBITDA, while remaining cautious about potential recession risks [58][59] - The company has not yet seen signs of a recession impacting its business, but is monitoring market conditions closely [59] Other Important Information - The company reported a strong safety record for the first half of the year, highlighting its commitment to safety and ESG initiatives [13] - Changes to the board of directors were announced, with the addition of two new members to enhance strategic direction [20] Q&A Session Summary Question: Potential revenue from Nexeon - Management indicated that the potential revenue from Nexeon's technology could be significantly higher than current automotive applications, estimating $75 to $100 per vehicle [63][65] Question: Opportunities with Ozark Materials - Management noted that Ozark has been a customer for a few years, and there are opportunities to extend their rosin products into the pavement marking market [66] Question: Price sensitivity of Capa products - Demand for Capa products remains robust despite operational inefficiencies, with no significant pricing pressure expected [67] Question: Nexeon's agreements and facility needs - Nexeon has signed offtake agreements with large OEMs, and while facility expansions may be needed in the future, current supply can meet initial demands [70][72] Question: Ozark's EBITDA margin and logistics - The 20% EBITDA margin for Ozark does not include potential synergies, and the logistics business will support product movement but will not be a focus as a third-party logistics provider [74][75] Question: Raw material costs and pricing dynamics - Management has not yet seen a peak in raw material costs, and while price increases are being implemented, future concessions may be necessary as costs stabilize [98][100] Question: Growth in the gum rosin industry - The gum rosin pricing has dropped recently but remains significantly higher than in early 2020, indicating ongoing market dynamics [116]

Financial Performance - Net sales for Q2 2022 were $419.9 million, a 17.2% increase from $358.4 million in Q2 2021, driven by favorable pricing of $81.7 million (23%) despite a volume decline of $12.6 million (4%) and unfavorable foreign currency effects of $7.6 million (2%) [145][146][147]. - Gross profit for Q2 2022 increased to $150.6 million, up from $139.8 million in Q2 2021, primarily due to favorable pricing improvements of $80.1 million, offset by increased manufacturing costs of $61.9 million due to inflationary pressures [145][148]. - Net income for the first half of 2022 was $120.6 million, compared to $93.0 million in the same period of 2021, reflecting strong operational performance [145]. - The company reported a net income of $59.8 million for the three months ended June 30, 2022, compared to $44.3 million in 2021, reflecting improved financial performance [183]. Expenses and Costs - Selling, general, and administrative expenses (SG&A) for Q2 2022 were $48.7 million, representing 11.6% of net sales, down from 13.3% in Q2 2021, attributed to higher sales and decreased legal costs [151]. - Interest expense for Q2 2022 was $15.1 million, up from $12.2 million in Q2 2021, reflecting changes in financing costs [159]. - Segment EBITDA for Performance Materials decreased by $5.7 million in the second quarter of 2022, primarily due to higher manufacturing costs and unfavorable volume [168]. Sales and Segments - The sales increase for the first half of 2022 was $124.0 million, driven by favorable pricing of $140.2 million (21%), despite a volume decline of $6.0 million (1%) and unfavorable foreign currency effects of $10.2 million (2%) [149]. - For the three months ended June 30, 2022, the Performance Materials segment net sales were $122.4 million, a decrease of $3.6 million compared to $126.0 million in 2021, driven by a volume decline of 4% [165][166]. - The Performance Chemicals segment net sales increased to $297.5 million for the three months ended June 30, 2022, up from $232.4 million in 2021, reflecting a $65.1 million increase primarily due to favorable pricing and product mix [171][172]. - Industrial Specialties sales increased by 38.1% in the second quarter of 2022, driven by strong performance across all markets, particularly in oilfield and adhesives [175]. Guidance and Projections - The company expects 2022 net sales guidance to be between $1.525 billion and $1.650 billion, with adjusted EBITDA guidance of $430 million to $470 million [186]. - Performance Chemicals is anticipated to see continued volume growth, particularly in the Pavement Technologies and Engineered Polymers businesses, while Performance Materials is expected to experience moderate growth due to recovery in auto production [186][187]. - Projected capital expenditures for 2022 are between $155 million and $175 million, with no material commitments associated with these expenditures as of June 30, 2022 [196]. Cash Flow and Financing - Cash flow provided by operating activities for the six months ended June 30, 2022, was $114.8 million, a decrease from $116.9 million in the same period of 2021 [197]. - The company expects to fund interest payments, capital expenditures, and other obligations using cash flow from operations and available capacity under its revolving credit facility, which had an undrawn capacity of $466.2 million as of June 30, 2022 [190]. - Cash used in financing activities for the six months ended June 30, 2022, was $193.3 million, primarily driven by payments on long-term borrowings and stock repurchases [203]. Debt Management - The company redeemed $300 million of its 4.50% Senior Notes due in 2026 and repaid a $323 million Term Loan, indicating a proactive approach to debt management [143]. Risks and Challenges - The company faces risks related to supply chain disruptions and inflationary pressures on raw materials, which could impact future performance [140][144]. - The company is monitoring geopolitical disruptions, particularly the war in Ukraine, but has not seen material adverse effects on its business [142]. - The company anticipates that 2022 will continue to be impacted by global logistical challenges, geopolitical uncertainty, and significant cost inflation [187]. Foreign Operations and Currency Risks - The company’s foreign operations accounted for approximately 23 percent of net sales in the first six months of 2022, exposing it to foreign currency exchange rate risks [207]. - A hypothetical 10 percent adverse change in the average Chinese renminbi and euro to U.S. dollar exchange rates would have decreased net sales and income before income taxes by approximately $9.8 million and $4.1 million, respectively, for the six months ended June 30, 2022 [207]. Cash and Assets - As of June 30, 2022, cash and cash equivalents totaled $131.3 million, a decrease of $144.1 million compared to December 31, 2021, primarily due to share repurchases and debt refinancing activities [191][199]. - Total current assets decreased by $47.2 million to $677.7 million as of June 30, 2022, primarily due to a decrease in cash and cash equivalents [199]. - As of June 30, 2022, approximately $532 million of the company's borrowings included a variable interest rate component, exposing it to interest rate risk [208].

Financial Data and Key Metrics Changes - Ingevity achieved record sales of nearly $383 million in Q1 2022, representing a year-over-year growth of approximately 20% [30] - Adjusted EBITDA increased by about 13% year-over-year to $119 million, marking a record first quarter result [31] - Diluted adjusted earnings per share rose nearly 28% over the prior year to $1.62, driven by increased sales and effective cost management [31] - Gross profit was up over 9% year-over-year, although gross margin declined due to a revenue mix shift from Performance Materials to Performance Chemicals [31] Business Line Data and Key Metrics Changes - Performance Chemicals segment saw a 30% increase in sales quarter-over-quarter to $234 million, driven by strong demand and price improvements [36] - Performance Materials segment sales increased by 5.5% to $148 million, marking the second-best quarter ever for this segment [42] - EBITDA for Performance Chemicals was $41 million, up almost 30% year-over-year, while Performance Materials' EBITDA was $78 million, up nearly 6% [39][48] Market Data and Key Metrics Changes - North American vehicle production decreased by 3.9% in Q1 2022, impacting the Performance Materials segment [44] - Sales in South America grew significantly due to the implementation of Brazil's Proconve L-7 emission standards, expected to progressively increase revenue over three years [45] - The supply-demand dynamic for Chinese gum rosins remains favorable, with prices 50% above levels from late 2020 due to poor harvests [38] Company Strategy and Development Direction - Ingevity is focused on capturing value through price increases to offset inflationary pressures in energy, raw materials, and logistics [15] - The company aims to drive long-term organic growth through innovation, including new product introductions in the oilfield market [17] - Sustainability is positioned as a competitive advantage, with ongoing efforts to generate data for product certifications to command higher prices [21][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in a strong year ahead, despite uncertainties related to auto production issues, the situation in Ukraine, and COVID-19 in China [51] - The company anticipates a good paving season and is prepared to adapt to market conditions to maximize profitability [51][52] - Management highlighted the importance of operational excellence and flexibility in navigating economic and geopolitical distractions [25][26] Other Important Information - Ingevity spent approximately $28 million on capital expenditures in Q1 2022, with over 40% allocated to growth initiatives [33] - The company has approximately $262 million remaining under its share repurchase authorization, with plans to continue repurchasing shares as part of its capital allocation strategy [33] Q&A Session Summary Question: Insights on potential new European regulations - Management expects an ORVR standard similar to US Tier 2, which could significantly increase revenue potential [56] Question: Capital allocation strategy and M&A opportunities - The company is open to both small and larger-scale M&A opportunities, focusing on organic growth projects and maintaining a robust M&A pipeline [58][60] Question: Impact of Chinese gum rosin market and lockdowns - Lockdowns in China are tightening the gum rosin market, affecting harvesting and supply [62] Question: Growth in adhesives market post-Kraton acquisition - The company sees significant growth potential in the adhesives market, independent of Kraton's acquisition [66] Question: Infrastructure bill impact on paving business - The infrastructure bill is expected to positively impact the paving business in the second half of the year, but current demand is driven by strong market conditions [79] Question: Pricing and inflation in Performance Materials - Pricing increases are anticipated to help offset inflation, with a focus on maintaining supply in China [123]

| --- | --- | --- | --- | |-------------------------------------------|-------|-------|-------| | | | | | | | | | | | | | | | | | | | | | | | | | | FIRST QUARTER 2022 EARNINGS PRESENTATION | | | | | May 5, 2022 | | | | Use of non-GAAP financial measures: This presentation 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 presentat ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _______________________________________________________________________ FORM 10-Q _______________________________________________________________________ ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Registrant's telephone number, including area code) Sec ...

Financial Data and Key Metrics Changes - Company achieved a revenue growth of 14% year-over-year and a 3% increase in Q4 compared to the previous year, driven by robust volumes in Performance Chemicals despite a decline in Performance Materials automotive emission products [7][15] - Adjusted EBITDA reached a record $422 million with an adjusted EBITDA margin of 30.3%, reflecting a compound annual growth rate of over 20% since 2016 [16][17] - Free cash flow was down compared to 2020 but increased by more than 17% from 2019, with net debt to adjusted EBITDA reduced to 2.2x from 2.5x at year-end 2020 [18] Performance by Business Segment - Performance Chemicals segment saw a revenue increase of 24% in Q4 and for the full year, with sales reaching $204 million and $875 million respectively, driven by strong demand and price increases [20] - Performance Materials segment experienced an 18% decline in Q4 sales to $132 million due to ongoing microchip shortages affecting automotive production, although full-year sales were slightly up due to price increases [26][28] Market Data and Key Metrics Changes - North American vehicle production ended 2021 at 13 million, with IHS forecasting 15.2 million for 2022, indicating a cautious outlook due to ongoing microchip shortages [54] - The company noted that the automotive industry is directing limited microchip volumes to more profitable vehicles, which benefits Ingevity's product mix [27] Company Strategy and Industry Competition - Company is focused on leveraging operational excellence to gain market share, particularly in adhesives, where significant share gains were reported [11][77] - Strategic investments in growth initiatives, including new product launches and alternative fatty acid production, are expected to drive future sales growth [12][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate supply chain challenges and inflationary pressures, with expectations for revenue growth in Performance Chemicals and a cautious outlook for Performance Materials due to microchip supply constraints [30][31] - The company plans to continue investing in growth while returning capital to shareholders, with guidance for 2022 sales between $1.525 billion and $1.6 billion and adjusted EBITDA between $430 million and $460 million [30] Other Important Information - The company improved its ESG ratings and increased the number of USDA certified bio-based products in its portfolio by 50% [13] - Management highlighted the successful introduction of new products in the Pavement Technologies segment, achieving its 10th consecutive year of sales growth [23] Q&A Session Summary Question: Revenue mix in Engineered Polymers and margin expectations - Management indicated a continued focus on driving derivative sales in Engineered Polymers, with expectations for a favorable mix [37] Question: Pricing and inflation outlook for Performance Materials - Management confirmed that significant price increases were implemented and more pricing adjustments are expected in 2022 to offset inflation [60] Question: Auto unit sales expectations for 2022 - Management referenced IHS forecasts of 15.2 million vehicles for 2022, with a focus on North America's highest value market [54] Question: Exposure to Eastern Europe and conflict impacts - Management noted that Eastern Europe accounts for only 4% of sales, indicating limited direct impact from the situation in Ukraine [55] Question: Update on regulatory growth in Brazil and Euro 7 mandate - Management expressed confidence in regulatory growth in Brazil and provided updates on the Euro 7 mandate timeline [57] Question: Share gains in adhesives - Management highlighted significant market opportunities in adhesives, particularly in road striping and packaging, with expectations for continued growth [77]

Financial Performance - Full Year 2021 net sales reached $1391.5 million, a 14.4% increase compared to $1216.1 million in 2020[15] - Full Year 2021 adjusted EBITDA was $422.2 million, a 6.1% increase compared to $397.9 million in 2020[15] - Q4 2021 net sales increased by 3.2% to $336.0 million from $325.6 million in Q4 2020[15] - Q4 2021 adjusted EBITDA decreased by 28.2% to $79.6 million from $110.9 million in Q4 2020[15] - The company repurchased over 1.4 million shares for a total of $109 million[24] Segment Performance - Performance Chemicals' Q4 2021 net sales were $204.0 million, a 23.7% increase year-over-year, and full year sales were $874.7 million, up 23.9%[26] - Performance Materials' Q4 2021 net sales were $132.0 million, a decrease of 17.9% year-over-year, while full year sales were $516.8 million, up 1.3%[28] - Engineered Polymers sales increased by 22% in Q4 and 46% in FY due to increased global volumes and higher selling prices[27] - Industrial Specialties sales increased by 28% in Q4 and 26% in FY driven by growth in adhesives, TOFA, dispersants and oilfield markets[27] 2022 Guidance - The company projects revenue between $1525 million and $1600 million for FY 2022[31] - Adjusted EBITDA is expected to be between $430 million and $460 million for FY 2022[31]