Ingevity(NGVT) - 2025 Q1 - Quarterly Results

Ingevity Q1 2025 Financial Results Overview Q1 2025 Financial Highlights Ingevity's first quarter 2025 results showed a 17% decline in net sales to $284.0 million, primarily due to the strategic repositioning of the Performance Chemicals segment, while adjusted EBITDA grew 23% to $91.3 million with margins improving to 32.1%, driven by cost reductions and a better product mix Q1 2025 Key Financial Metrics | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $284.0M | $340.1M | -17% | | Net Income | $20.5M | ($56.0M) | N/A | | Diluted EPS | $0.56 | ($1.54) | N/A | | Adjusted EBITDA | $91.3M | $74.4M | +23% | | Adjusted EBITDA Margin | 32.1% | 21.9% | +10.2 p.p. | | Diluted Adjusted EPS | $0.99 | $0.47 | +111% | | Operating Cash Flow | $25.4M | ($12.1M) | N/A | | Free Cash Flow | $15.4M | ($28.7M) | N/A | - The decline in net sales was primarily attributed to the strategic repositioning of the Performance Chemicals segment, which involved exiting certain lower-margin end markets[3] - The significant improvement in Adjusted EBITDA and margins was a result of successful repositioning actions in Performance Chemicals, including reduced raw material costs and an improved product mix[4][5] Segment Performance The company's segments showed mixed results, with Performance Materials sales growing slightly, Advanced Polymer Technologies sales declining but achieving higher EBITDA, and Performance Chemicals experiencing a significant sales drop but a substantial improvement in its EBITDA loss Performance Materials Segment Sales in the Performance Materials segment increased by 1% to $146.8 million, driven by higher volumes in China and the Asia Pacific region, with segment EBITDA also rising by 1% to $79.1 million, maintaining a strong EBITDA margin of 53.9% Performance Materials Q1 2025 Results | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $146.8M | $145.1M | +1% | | Segment EBITDA | $79.1M | $78.0M | +1% | | Segment EBITDA Margin | 53.9% | 53.8% | +0.1 p.p. | - Growth was primarily due to higher volumes in China and the Asia Pacific region. In North America, an improved mix of higher-value products for fuel-efficient vehicles offset lower volumes[8] Advanced Polymer Technologies Segment The Advanced Polymer Technologies segment reported a 12% sales decrease to $42.2 million, as lower volumes in Asia offset gains in EMEA and North America, yet segment EBITDA increased by $3.0 million to $12.5 million, and margins expanded to 29.6%, primarily due to higher plant utilization rates Advanced Polymer Technologies Q1 2025 Results | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $42.2M | $48.0M | -12% | | Segment EBITDA | $12.5M | $9.5M | +31.6% | | Segment EBITDA Margin | 29.6% | 19.8% | +9.8 p.p. | - The increase in EBITDA was driven by higher utilization rates as the company built inventory ahead of a planned extended outage in Q2 for new boiler installation[9] Performance Chemicals Segment Performance Chemicals sales fell 35% to $95.0 million, with the Industrial Specialties product line down 50% due to strategic repositioning and the exit from lower-margin markets, but segment EBITDA improved by $10.3 million to a near break-even negative $0.3 million, demonstrating the positive impact of cost savings, improved product mix, and lower raw material costs Performance Chemicals Q1 2025 Results | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $95.0M | $147.0M | -35% | | - Industrial Specialties | $50.7M | $101.3M | -50% | | - Road Technologies | $44.3M | $45.7M | -3% | | Segment EBITDA | ($0.3M) | ($10.6M) | +$10.3M | - The significant improvement in EBITDA reflects the successful execution of repositioning actions, including cost savings, exiting low-margin markets, and lower raw material costs[10] Liquidity and Capital Management The company Generated operating cash flow of $25.4 million and $15.4 million in free cash flow, aided by improved working capital from lower raw material costs, with no shares repurchased and $353.4 million remains available under the current Board authorization, and Net leverage improved sequentially to 3.3 times - Generated operating cash flow of $25.4 million and free cash flow of $15.4 million[11] - No share repurchases were made in Q1; $353.4 million remains available under the current Board authorization[11] - Net leverage improved sequentially to 3.3 times[11] Full Year 2025 Guidance Ingevity has widened to reflect risks from international trade relations and lowered expectations for global auto production, while continuing to focus on improving profitability and reducing leverage Revised Full Year 2025 Guidance | Metric | Guidance Range | | :--- | :--- | | Sales | $1.25 billion to $1.40 billion | | Adjusted EBITDA | $380 million to $415 million | - The guidance range was widened to reflect risks associated with lowered expectations of global auto production due to the current state of international trade relations[12] Financial Statements & Schedules Condensed Consolidated Statements of Operations For Q1 2025, Ingevity reported Net sales of $284.0 million, a decrease from $340.1 million in Q1 2024, with Gross profit increasing to $113.4 million from $99.7 million, and achieving a Net income of $20.5 million, a significant turnaround from a net loss of $56.0 million in the prior-year period, resulting in a Diluted EPS of $0.56 compared to a loss of $1.54 Q1 2025 Statement of Operations (in millions, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net sales | $284.0 | $340.1 | | Gross profit | $113.4 | $99.7 | | Restructuring and other charges, net | $12.3 | $62.8 | | Income (loss) before income taxes | $26.8 | ($71.9) | | Net income (loss) | $20.5 | ($56.0) | | Diluted earnings (loss) per share | $0.56 | ($1.54) | Segment Operating Results In Q1 2025, Performance Materials sales grew slightly to $146.8 million with stable EBITDA of $79.1 million, Performance Chemicals sales dropped to $95.0 million from $147.0 million, but its EBITDA loss narrowed significantly to $0.3 million from $10.6 million, and Advanced Polymer Technologies sales decreased to $42.2 million, while its EBITDA grew to $12.5 million Q1 Net Sales by Segment (in millions) | Segment | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Performance Materials | $146.8 | $145.1 | | Performance Chemicals | $95.0 | $147.0 | | Advanced Polymer Technologies | $42.2 | $48.0 | | Total net sales | $284.0 | $340.1 | Q1 Segment EBITDA (in millions) | Segment | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Performance Materials | $79.1 | $78.0 | | Performance Chemicals | ($0.3) | ($10.6) | | Advanced Polymer Technologies | $12.5 | $9.5 | | Total segment EBITDA | $91.3 | $76.9 | Condensed Consolidated Balance Sheets As of March 31, 2025, Ingevity's Total Assets stood at $2,056.1 million, a slight increase from $2,022.6 million at year-end 2024, with Total Liabilities relatively stable at $1,821.5 million, and key changes including an increase in accounts receivable and Inventories, net, while Long-term debt saw a slight reduction Balance Sheet Summary (in millions) | Account | March 31, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $71.5 | $68.0 | | Inventories, net | $245.4 | $226.8 | | Total Assets | $2,056.1 | $2,022.6 | | Long-term debt | $1,332.6 | $1,339.7 | | Total Liabilities | $1,821.5 | $1,827.4 | | Total Equity | $234.6 | $195.2 | Condensed Consolidated Statements of Cash Flows For the first three months of 2025, the company Generated operating cash flow of $25.4 million, a significant improvement from a $12.1 million use of cash in the same period of 2024, with cash used in investing activities at $11.5 million and cash used in financing activities at $11.0 million, leading to a net increase in cash for the quarter Q1 Cash Flow Summary (in millions) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $25.4 | ($12.1) | | Net cash provided by (used in) investing activities | ($11.5) | ($16.3) | | Net cash provided by (used in) financing activities | ($11.0) | $23.4 | | Change in cash, cash equivalents, and restricted cash | $4.3 | ($6.8) | Non-GAAP Reconciliations This section provides reconciliations for key non-GAAP metrics used by management, including Adjusted Earnings, Adjusted EBITDA, Free Cash Flow, and Net Debt Ratio, which are adjusted for items like restructuring charges, acquisition costs, and other special items to provide a clearer view of the company's core operational performance and liquidity Reconciliation of Net Income to Adjusted Earnings Adjusted earnings for Q1 2025 were $36.4 million, or $0.99 per diluted share, compared to $17.2 million, or $0.47 per share, in Q1 2024, with adjustments from GAAP Net income of $20.5 million primarily including $12.3 million in Restructuring and other charges, net and $7.9 million in proxy contest charges Q1 Reconciliation to Adjusted Earnings (in millions) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net income (loss) (GAAP) | $20.5 | ($56.0) | | Restructuring and other charges, net | $12.3 | $62.8 | | Loss on CTO resales | — | $26.5 | | Proxy contest charges | $7.9 | — | | Tax effect and other items | ($4.3) | ($21.2) | | Adjusted earnings (loss) (Non-GAAP) | $36.4 | $17.2 | Reconciliation of Net Income to Adjusted EBITDA Adjusted EBITDA for Q1 2025 was $91.3 million, an increase from $74.4 million in Q1 2024, with the reconciliation from GAAP Net income including adding back interest, taxes, D&A, and Other adjustments, and the Adjusted EBITDA Margin improved significantly to 32.1% from 21.9% in the prior year Q1 Reconciliation to Adjusted EBITDA (in millions) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net income (loss) (GAAP) | $20.5 | ($56.0) | | Provision (benefit) for income taxes | $6.3 | ($15.9) | | Interest expense, net | $19.4 | $22.3 | | Depreciation and amortization | $24.9 | $29.6 | | Restructuring and other charges, net | $12.3 | $62.8 | | Other adjustments | $7.9 | $31.6 | | Adjusted EBITDA (Non-GAAP) | $91.3 | $74.4 | Calculation of Free Cash Flow The company Generated operating cash flow of $15.4 million in free cash flow in Q1 2025, a substantial improvement from a cash use of $28.7 million in Q1 2024, calculated by subtracting Capital expenditures of $10.0 million from net cash provided by operating activities of $25.4 million Q1 Free Cash Flow Calculation (in millions) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $25.4 | ($12.1) | | Less: Capital expenditures | $10.0 | $16.6 | | Free Cash Flow (Non-GAAP) | $15.4 | ($28.7) | Calculation of Net Debt Ratio As of March 31, 2025, Ingevity's Net Debt was calculated at $1,242.8 million, and with a LTM Adjusted EBITDA of $379.6 million, the Net debt ratio stood at 3.3x Net Debt Ratio Calculation as of March 31, 2025 (in millions) | Component | Amount | | :--- | :--- | | Total Debt | $1,397.0 | | Less: Cash and equivalents | $71.7 | | Less: Restricted investment | $82.5 | | Net Debt | $1,242.8 | | LTM Adjusted EBITDA | $379.6 | | Net debt ratio (Non GAAP) | 3.3x |