Ingevity(US:NGVT)2025-05-06 20:24Financial Performance - Ingevity Corporation reported net sales of $284.0 million for Q1 2025, a decrease of approximately 16.5% from $340.1 million in Q1 2024[166]. - The gross profit for Q1 2025 was $113.4 million, compared to $99.7 million in Q1 2024, reflecting an increase in gross profit margin[166]. - The net income for Q1 2025 was $20.5 million, a significant recovery from a net loss of $56.0 million in Q1 2024[166]. - Adjusted EBITDA for the three months ended March 31, 2025, was $91.3 million, compared to $74.4 million in 2024, reflecting an increase of 22.5%[200]. - Cash provided by operating activities for the three months ended March 31, 2025, was $25.4 million, an increase of $37.5 million compared to the same period in 2024[218]. Cost Management - The company incurred approximately $12.3 million in restructuring and other charges in Q1 2025, down from $62.8 million in Q1 2024[166]. - Gross profit for Q1 2025 increased by $13.7 million, primarily due to decreased manufacturing costs of $18.1 million and LIFO liquidation benefit of $4.5 million, partially offset by unfavorable sales volume of $7.7 million[170]. - Selling, general and administrative expenses (SG&A) decreased by $4.1 million (nine percent) to $43.1 million, representing 15 percent of net sales in Q1 2025[171]. - Research and technical expenses increased by $0.9 million, with a percentage of net sales rising to 2.7 percent in Q1 2025 due to lower sales[172]. Segment Performance - Performance Materials net sales increased by $1.7 million (one percent) in Q1 2025, driven by favorable pricing and sales mix[185]. - Performance Chemicals net sales decreased by $52.0 million (35 percent) in Q1 2025, primarily due to repositioning actions and a slower start to the road paving season[187]. - Advanced Polymer Technologies net sales decreased by $5.8 million (12 percent) in Q1 2025, primarily due to a volume decline and unfavorable pricing[192]. - Segment EBITDA for Performance Chemicals improved by $10.3 million in Q1 2025, reflecting cost savings from repositioning actions[191]. Future Outlook - The company expects net sales for 2025 to be between $1.25 billion and $1.4 billion, reflecting a downward adjustment due to an estimated 10% reduction in North America light vehicle production[207]. - The Performance Chemicals reportable segment anticipates improved net sales in its road technologies product line compared to 2024, while the Advanced Polymer Technologies segment expects flat net sales due to weak end market demand[207]. - Projected Adjusted EBITDA for 2025 is expected to be between $380 million and $415 million, with Performance Materials segment EBITDA anticipated to decline compared to the prior year[208]. Cash and Capital Management - As of March 31, 2025, the company had $71.5 million in cash and cash equivalents, with $67.5 million held by foreign subsidiaries[211]. - The company has $353.4 million remaining under its stock repurchase authorization as of March 31, 2025, with no common stock repurchased during the three months ended March 31, 2025[215]. - Capital expenditures for the three months ended March 31, 2025, totaled $10.0 million, a decrease of $6.6 million compared to $16.6 million in 2024[220]. Foreign Operations and Currency Impact - Approximately 27% of the company's net sales in the first three months of 2025 came from foreign-based operations in Europe, South America, and Asia[226]. - 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 $3.5 million or 1% for Q1 2025[226]. Interest Rates and Debt Management - Total interest expense for Q1 2025 was $19.4 million, down from $22.3 million in Q1 2024[177]. - The company entered into a floating-to-fixed interest rate swap with a notional amount of $200 million, converting floating rate debt to a fixed rate of 3.84% until August 2026[227]. - As of March 31, 2025, approximately $547 million of borrowings had a variable interest rate component with a weighted average interest rate of 5.80%[228]. - A hypothetical 100 basis point increase in variable interest rates would have increased annual interest expense by approximately $5.5 million or 8% for Q1 2025[228]. Raw Material Costs - Crude tall oil (CTO) represented 8% of the cost of sales for Q1 2025, with raw material CTO spend of approximately $10 million[230]. - A hypothetical unhedged 10% increase in CTO prices would have increased the cost of sales by approximately $1.0 million or 1% for Q1 2025[230]. - Natural gas constituted approximately 5% of the cost of goods sold for Q1 2025, with a hypothetical 10% increase in natural gas pricing resulting in a $0.9 million increase in cost of sales[231]. - As of March 31, 2025, the fair value of open natural gas derivative contracts was a net asset of $1.0 million[231]. Accounting Policies - The company's critical accounting policies have not substantially changed from those described in the 2024 Annual Report[225].