Ingevity(US:NGVT)2024-07-31 20:26Financial Performance - Net sales for Q2 2024 were $390.6 million, a decrease of 19% compared to the prior year, primarily due to repositioning in the Performance Chemicals segment [2]. - The company reported a net loss of $283.7 million, with a diluted loss per share of $7.81, largely attributed to a non-cash goodwill impairment charge of $349.1 million in the Performance Chemicals segment [3]. - Adjusted EBITDA for the quarter was $101.3 million, reflecting a 16% decrease, with an adjusted EBITDA margin of 25.9% [3]. - Performance Materials segment sales increased by 9% to $157.2 million, driven by higher volumes in automotive markets and improved pricing, resulting in an EBITDA margin of 52.3% [4]. - Advanced Polymer Technologies (APT) sales decreased by 10% to $47.9 million, with an EBITDA margin of 20.5% [6]. - Performance Chemicals segment sales fell by 35% to $185.5 million, with an EBITDA margin of 5.0% [7]. - Gross profit for Q2 2024 was $123.2 million, down 19.5% from $153.0 million in Q2 2023 [14]. - Total segment EBITDA for Q2 2024 was $101.3 million, down 16.0% from $120.7 million in Q2 2023 [17]. - Net income for Q2 2024 was $(283.7) million, compared to $35.5 million for Q2 2023, representing a significant decline [27]. - Adjusted earnings for Q2 2024 were $36.8 million, down from $51.6 million in Q2 2023, indicating a decrease of approximately 28.5% [27]. - The company reported a net income margin of (72.6)% for Q2 2024, compared to a margin of 7.4% in Q2 2023 [34]. Cash Flow and Debt - Operating cash flow for Q2 was $29.7 million, with free cash flow of $11.6 million, impacted by $25.5 million in losses on crude tall oil resales [8]. - Cash and cash equivalents increased to $107.4 million as of June 30, 2024, up from $95.9 million at the end of 2023 [22]. - Long-term debt, including finance lease obligations, increased to $1,401.0 million as of June 30, 2024, compared to $1,382.8 million at the end of 2023 [22]. - Net cash provided by operating activities was $29.7 million for the three months ended June 30, 2024, down from $48.4 million in the same period last year [23]. - The net cash used in investing activities was $17.8 million for the three months ended June 30, 2024, compared to $22.8 million in the same period last year [23]. - Free cash flow for Q2 2024 was $11.6 million, down from $26.7 million in Q2 2023, reflecting a decrease of 56.5% [39]. - The net debt ratio as of June 30, 2024, was 4.0x, calculated using adjusted EBITDA of $328.2 million for the last twelve months [41]. Guidance and Future Outlook - The company revised its full-year sales guidance to between $1.40 billion and $1.50 billion, and adjusted EBITDA guidance to between $350 million and $360 million [9]. - The Performance Chemicals segment is expected to improve profitability starting in Q2 2025 as high-cost inventory is worked through [8]. - The company has taken actions to reposition the Performance Chemicals segment, including exiting long-term supply agreements and closing the Crossett, Arkansas facility [8]. - The company expects to end its CTO resale activity by the end of 2024 following the termination of a supply contract, which will impact future operations [30]. - The company plans to provide updates on strategic reviews and restructuring efforts in future filings, indicating ongoing operational adjustments [30]. Impairment and Charges - Goodwill impairment charge for Q2 2024 was $349.1 million, reflecting significant asset valuation adjustments [14]. - The company experienced a goodwill impairment charge of $349.1 million in the second quarter of 2024, which significantly impacted net income [23]. - The company recorded a goodwill impairment charge of $349.1 million in Q2 2024, which was not present in the same quarter of the previous year [27]. - Restructuring and other charges for Q2 2024 totaled $13.1 million, down from $19.2 million in Q2 2023 [28]. - Performance Chemicals' repositioning incurred costs of $10.0 million in Q2 2024, compared to $7.0 million in Q2 2023 [28]. Non-GAAP Measures - Ingevity's management emphasizes the importance of non-GAAP measures such as Adjusted EBITDA and Free Cash Flow for evaluating business performance [25]. - Adjusted EBITDA guidance for 2024 was not provided due to uncertainties in estimating various components of net income [26]. - The company revised its non-GAAP Adjusted EBITDA calculation to remove previous adjustments of $2.5 million related to inventory charges, as requested by the SEC [35]. - The adjusted EBITDA margin for the twelve months ended December 31, 2023, was 22.3%, reflecting a decrease from previous periods [38]. - Adjusted EBITDA for the last twelve months (LTM) as of March 31, 2024, is $369.8 million, up from $347.6 million [43].