Ingevity(US:NGVT)2025-08-05 20:45PART I - FINANCIAL INFORMATION Financial Statements The company reported a reduced net loss of $146.5 million in Q2 2025, with total assets at $1.88 billion and operating cash flow improving to $104.4 million Condensed Consolidated Statements of Operations Net sales for Q2 2025 decreased to $365.1 million from $390.6 million in Q2 2024, while gross profit increased to $137.9 million, leading to a net loss of $146.5 million | Financial Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $365.1 M | $390.6 M | $649.1 M | $730.7 M | | Gross profit | $137.9 M | $123.2 M | $251.3 M | $222.9 M | | Goodwill impairment charge | $183.8 M | $349.1 M | $183.8 M | $349.1 M | | Net income (loss) | $(146.5) M | $(283.7) M | $(126.0) M | $(339.7) M | | Diluted earnings (loss) per share | $(4.02) | $(7.81) | $(3.46) | $(9.36) | Condensed Consolidated Balance Sheets As of June 30, 2025, total assets decreased to $1,877.7 million, primarily due to a goodwill impairment, with total liabilities at $1,757.0 million and total equity at $120.7 million | Balance Sheet Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $76.9 M | $68.0 M | | Goodwill | $4.3 M | $175.2 M | | Total Assets | $1,877.7 M | $2,022.6 M | | Long-term debt | $1,235.6 M | $1,339.7 M | | Total Liabilities | $1,757.0 M | $1,827.4 M | | Total Equity | $120.7 M | $195.2 M | Condensed Consolidated Statements of Cash Flows Net cash provided by operating activities significantly improved to $104.4 million for the six months ended June 30, 2025, while investing activities decreased and financing activities reflected net debt payments | Cash Flow Activity (Six Months Ended June 30) | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $104.4 M | $17.6 M | | Net cash provided by (used in) investing activities | $(14.3) M | $(34.1) M | | Net cash provided by (used in) financing activities | $(74.0) M | $33.7 M | | Change in cash, cash equivalents, and restricted cash | $20.5 M | $13.4 M | Notes to the Condensed Consolidated Financial Statements The notes detail a $183.8 million goodwill impairment charge, ongoing Performance Chemicals repositioning with $335.1 million incurred, and an accrued $93.4 million for a BASF jury verdict under appeal - A non-cash goodwill impairment charge of $183.8 million was recorded for the Advanced Polymer Technologies (APT) reporting unit in Q2 2025, representing all goodwill associated with the unit. This was triggered by escalated global trade tensions, increased consumer uncertainty, and unfavorable movements in valuation inputs like the discount rate5860 - The company expects to incur total charges of approximately $365 million for the Performance Chemicals repositioning. Through June 30, 2025, $335.1 million has been incurred, with an expected $10 to $15 million in cash charges remaining for 2025106107 - The company is appealing a jury verdict in favor of BASF, for which it has accrued $93.4 million as of June 30, 2025, inclusive of post-judgment interest. A final resolution of the appeals is expected within twelve months131132 | Segment Net Sales (in millions) | Q2 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :--- | :--- | :--- | :--- | :--- | | Performance Materials | $153.9 | $157.2 | $300.7 | $302.3 | | Performance Chemicals | $167.9 | $185.5 | $262.9 | $332.5 | | Advanced Polymer Tech. | $43.3 | $47.9 | $85.5 | $95.9 | | Total Net Sales | $365.1 | $390.6 | $649.1 | $730.7 | Management's Discussion and Analysis of Financial Condition and Results of Operations Q2 net sales declined 6.5% due to repositioning, while gross profit improved, and 2025 Adjusted EBITDA outlook was revised - The company reaffirmed its 2025 sales outlook of $1.25 billion to $1.4 billion230 - The Adjusted EBITDA outlook for 2025 was revised to a range of $390 million to $415 million, reflecting improved profitability in the Performance Chemicals segment and current forecasts for North American light vehicle production232 - The Performance Chemicals repositioning, initiated in November 2023, has resulted in total realized cash savings of approximately $103 million as of June 30, 2025173 Results of Operations Q2 2025 net sales decreased by $25.5 million due to volume decline, while gross profit increased by $14.7 million from lower manufacturing costs and a LIFO liquidation benefit | Net Sales Variance (Q2 2025 vs Q2 2024) | Amount (in millions) | | :--- | :--- | | Volume | $(37.6) | | Price/Mix | $10.5 | | Currency Effect | $1.6 | | Total Change | $(25.5) | - Q2 2025 gross profit increased by $14.7 million, driven by favorable pricing/mix ($11.4M), decreased manufacturing costs ($11.2M), and a LIFO liquidation benefit ($4.1M), which offset unfavorable sales volume ($11.5M)182 Segment Operating Results In Q2 2025, Performance Materials saw sales and EBITDA decline, Performance Chemicals' sales fell but EBITDA surged, and Advanced Polymer Technologies experienced significant sales and EBITDA drops | Segment EBITDA (in millions) | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Performance Materials | $77.1 | $82.2 | (6.2%) | | Performance Chemicals | $32.0 | $9.3 | +244.1% | | Advanced Polymer Technologies | $0.9 | $9.8 | (90.8%) | | Total Segment EBITDA | $110.0 | $101.3 | +8.6% | Liquidity and Capital Resources Operating cash flow significantly increased to $104.4 million for the first six months of 2025, with $400.0 million available under the revolving credit facility and projected capital expenditures of $50-70 million for 2025 - As of June 30, 2025, the company had $400.0 million of undrawn capacity under its revolving credit facility240 - Projected capital expenditures for the full year 2025 are estimated to be between $50 million and $70 million246 - No common stock was repurchased during the six months ended June 30, 2025. At quarter-end, $353.4 million remained available under the 2022 share repurchase authorization245 Quantitative and Qualitative Disclosures About Market Risk The company faces market risks from foreign currency, interest rates, and commodity prices, with CTO risk significantly reduced post-repositioning - The company's exposure to Crude Tall Oil (CTO) price risk has been significantly reduced following the Performance Chemicals repositioning and termination of a long-term supply contract260 - As of June 30, 2025, approximately $485 million of borrowings have a variable interest rate component. A hypothetical 100 basis point increase in rates would increase annual interest expense by about $4.8 million258 Controls and Procedures Management concluded disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2025264 - No changes occurred during the quarter ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting264 PART II - OTHER INFORMATION Legal Proceedings The company is appealing a jury verdict in favor of BASF Corporation, for which it has accrued $85.0 million, as detailed in Note 13 - The company is involved in a legal proceeding with BASF Corporation and has accrued for the full amount of the jury's verdict. The case is currently under appeal. Details are provided in Note 13129131267 Risk Factors Risk factors remain largely unchanged, with new emphasis on tariffs and potential disruptions at key single-site manufacturing facilities - Recent changes to U.S. and international tariffs, particularly with China, are expected to make it more difficult or costly to export products and import raw materials, potentially reducing demand and profitability269 - The company faces risk from potential disruptions at its manufacturing facilities, noting that certain key products are made only at a single site, such as the Covington, Virginia plant, with limited ability to shift production elsewhere272 Unregistered Sales of Equity Securities and Use of Proceeds No common stock was repurchased in Q2 2025, with $353.4 million remaining available under the 2022 share repurchase authorization - No shares of common stock were repurchased by the company during the three months ended June 30, 2025273275 - Approximately $353.4 million remains available for repurchase under the 2022 share repurchase authorization as of June 30, 2025275 Exhibits This section lists exhibits filed with Form 10-Q, including employee stock plans, a separation agreement, and CEO/CFO certifications