NGVT
Ingevity CORP
NYSE
10-Q: Ingevity Corporation Reports Q3 2024 Results Amidst Restructuring and Market Challenges
Sentiment:
Quarterly Report
30 October 2024 4:21 PM
Ingevity Corporation's Q3 2024 results reflect a net loss, impacted by restructuring charges and lower sales volumes, particularly in the Performance Chemicals segment.
Worse than expected
The company reported a net loss of $107.2 million in Q3 2024, compared to a net income of $25.2 million in Q3 2023.
Net sales decreased by 15% year-over-year, primarily due to lower volumes in the Performance Chemicals segment.
The company incurred significant restructuring and other charges, net of $86.9 million in Q3 and $162.8 million year-to-date.
A goodwill impairment charge of $349.1 million was recorded in the second quarter of 2024.
Summary
- Ingevity Corporation reported a net loss of $107.2 million for the third quarter of 2024, compared to a net income of $25.2 million in the same period last year.
- Net sales decreased to $376.9 million from $446.0 million year-over-year, primarily due to lower volumes in the Performance Chemicals segment.
- The company incurred significant restructuring and other charges, net of $86.9 million in Q3 and $162.8 million year-to-date, related to the repositioning of its Performance Chemicals segment.
- A goodwill impairment charge of $349.1 million was recorded in the second quarter of 2024, impacting the nine-month results.
- The company is undergoing a strategic repositioning of its Performance Chemicals segment, including plant closures and a shift away from certain lower-margin end markets.
- Ingevity expects to realize annualized cash savings of approximately $95 million to $110 million from these restructuring actions, with $65 million to $75 million expected in 2024.
- The company anticipates full-year 2024 net sales to be between $1.40 billion and $1.50 billion and adjusted EBITDA to be between $350 million and $360 million.
Sentiment
Score: 3
Explanation: The document reflects a negative sentiment due to significant losses, restructuring charges, and decreased sales. While cost-saving measures are underway, the overall tone is cautious and indicates a challenging period for the company.
Positives
- The Performance Materials segment saw a 3% increase in net sales and an 8% increase in segment EBITDA, driven by improved pricing and operational efficiencies.
- Ingevity is actively pursuing cost savings through restructuring, with expected annualized savings of $95 million to $110 million.
- The company has taken decisive action to address underperforming segments by repositioning Performance Chemicals.
- The company has terminated a costly CTO supply contract, which will end excess CTO resale activity by the end of 2024.
Negatives
- The company reported a significant net loss of $107.2 million for Q3 2024.
- Net sales decreased by 15% year-over-year, primarily due to lower volumes in the Performance Chemicals segment.
- The Performance Chemicals segment experienced a 31% decrease in net sales and a decline in segment EBITDA.
- The company incurred substantial restructuring charges of $86.9 million in Q3 and $162.8 million year-to-date.
- A goodwill impairment charge of $349.1 million was recorded in the second quarter of 2024.
- The Advanced Polymer Technologies segment saw a decrease in segment EBITDA despite a 14% increase in net sales.
Risks
- The company faces risks related to the successful execution of its Performance Chemicals repositioning, including potential delays and higher-than-expected costs.
- The company is exposed to fluctuations in raw material costs, particularly crude tall oil (CTO), which can impact profitability.
- The company is subject to general global economic, geopolitical, and financial conditions, including inflation and conflicts, which could adversely affect its business.
- The company is exposed to risks related to its international sales and operations.
- Adverse weather conditions may impact demand for certain of the company's road technologies products.
- The company is dependent on certain large customers and may be adversely affected by disruptions in its supply chain.
Future Outlook
Ingevity expects full-year 2024 net sales to be between $1.40 billion and $1.50 billion and adjusted EBITDA to be between $350 million and $360 million. The company anticipates growth in Performance Materials, while Performance Chemicals will be impacted by restructuring and weak industrial demand. Advanced Polymer Technologies is expected to be flat to prior year.
Management Comments
- Management is focused on repositioning the Performance Chemicals segment to improve profitability and reduce cyclicality.
- Management expects to realize significant cost savings from the restructuring actions.
- Management is actively managing the company's debt and liquidity.
Industry Context
The company's performance is being impacted by broader economic trends, including inflation, supply chain disruptions, and weakness in certain industrial end markets. The automotive market is also impacting demand for automotive carbon products. The company is also facing challenges related to the limited supply and price volatility of crude tall oil (CTO).
Comparison to Industry Standards
- The company's performance is below industry standards in terms of profitability, as evidenced by the significant net loss and goodwill impairment.
- The company's restructuring efforts are similar to actions taken by other companies in the chemical industry facing similar challenges.
- The company's focus on cost savings and operational efficiencies is a common strategy in the current economic environment.
- The company's reliance on CTO as a raw material is a unique challenge compared to companies using more diversified feedstocks.
Stakeholder Impact
- Shareholders are negatively impacted by the net loss and decreased share value.
- Employees are affected by workforce reductions and plant closures.
- Customers may experience changes in product availability and pricing due to the restructuring.
- Suppliers may be impacted by changes in the company's raw material needs.
- Creditors may be concerned about the company's financial performance and debt levels.
Next Steps
- The company will continue to execute its Performance Chemicals repositioning plan.
- The company will focus on realizing cost savings from restructuring actions.
- The company will monitor market conditions and adjust its strategies as needed.
- The company will continue to test its remaining goodwill balance as part of its required annual October 1st goodwill impairment testing.
Legal Proceedings
- The company is involved in ongoing litigation with BASF Corporation related to patent infringement and antitrust claims. The company has appealed the verdict and the U.S. District Courts dismissal of its patent infringement claims against BASF.
- The full amount of the trebled jury's verdict, $85.0 million, is accrued in Other liabilities on the condensed consolidated balance sheets as of September 30, 2024.
Key Dates
- 2019-02-14: BASF lawsuit initiated.
- 2021-09-15: Jury verdict in favor of BASF on counterclaims.
- 2022-07-25: Board of Directors authorized a $500 million share repurchase program.
- 2023-05: WestRock announced the closure of its North Charleston paper mill.
- 2023-07-19: Ingevity filed suit against BASF Corporation.
- 2023-11-01: Ingevity announced strategic actions to reposition its Performance Chemicals segment.
- 2024-07-01: Termination of CTO supply contract.
- 2024-07-31: Ingevity announced the closure of its Crossett, Arkansas manufacturing facility.
- 2024-09-30: End of the reporting period for the Q3 2024 results.
- 2024-10-02: John C. Fortson resigned from the Board of Directors.
- 2024-10-28: Date of outstanding shares count.
- 2024-10-30: Date of report filing.
Keywords
restructuring, performance chemicals, net loss, goodwill impairment, cost savings, crude tall oil, segment EBITDA, net sales, plant closure, financial results
NGVT
Ingevity CORP
NYSE
Sector: TBD
Filings with Classifications
Worse than expected
6 May 2025 4:24 PM
Quarterly Report
- The company is adjusting the lower end of its previously disclosed outlook to Net sales between $1.25 billion and $1.4 billion for 2025.
- The adjusted EBITDA outlook, which has been adjusted to incorporate the ~10 percent reduction in North America light vehicle production, is expected to be between $380 million and $415 million for 2025.
Worse than expected
5 May 2025 4:17 PM
Quarterly Report
- The company has widened its full-year guidance range to reflect declines in industry forecasts of auto production due to trade tensions and tariff uncertainty, indicating worse than expected results.
Worse than expected
26 March 2025 3:07 PM
Proxy Statement
- Ingevity's Total Shareholder Return (TSR) has been worst-in-class compared to its peers.
- Key financial metrics like Net Debt, Financial Leverage, Free Cash Flow, and Return on Invested Capital (ROIC) have worsened over time.
- Vision One believes Ingevity has struggled to effectively implement its corporate strategy.
Better than expected
20 March 2025 9:30 PM
Definitive Proxy Statement
- Ingevity's 2024 financial results, including revenue, adjusted EBITDA, and cost savings, exceeded expectations.
- The company's free cash flow in 2024 was well above prior guidance.
- Ingevity's stock has outperformed the S&P 400 Chemicals Index since the announcement of the CEO search.
Better than expected
20 March 2025 8:15 PM
Proxy Statement
- The company's adjusted EBITDA exceeded analyst expectations.
- The company's EBITDA margins improved by 350 basis points.
- The company's Performance Materials segment delivered record performance.
Better than expected
25 February 2025 5:27 PM
Proxy Statement Communication
- Ingevity's Performance Materials segment achieved record performance with margins surpassing 50%, indicating better than expected results.
- The company realized $84 million in savings from Performance Chemicals repositioning, exceeding the initial target of $65-$75 million, which is better than expected.
- Ingevity's second half EBITDA margins increased to approximately 28% in 2024, and it delivered free cash flow that significantly exceeded prior guidance, indicating better than expected results.
Worse than expected
19 February 2025 4:18 PM
Annual Report
- The company reported a significant net loss compared to the previous year.
- The Performance Chemicals segment experienced a substantial goodwill impairment charge.
- Net sales decreased due to volume declines and repositioning actions.
Delay expected
19 February 2025 4:18 PM
Annual Report
- Final resolution of the intellectual property legal proceedings with BASF Corporation could take up to 15 months.
Worse than expected
18 February 2025 4:37 PM
Earnings Release
- The company reported a net loss of $430.3 million for the full year, including pre-tax charges of $688.0 million.
- Full year net sales decreased 17% year-over-year.
Better than expected
16 January 2025 6:32 AM
Strategic Review and Preliminary Results Announcement
- The company's full year Adjusted EBITDA is expected to reach the high end of previous guidance.
- Free cash flow is expected to significantly exceed prior guidance.
Worse than expected
30 October 2024 4:21 PM
Quarterly Report
- The company reported a net loss of $107.2 million in Q3 2024, compared to a net income of $25.2 million in Q3 2023.
- Net sales decreased by 15% year-over-year, primarily due to lower volumes in the Performance Chemicals segment.
- The company incurred significant restructuring and other charges, net of $86.9 million in Q3 and $162.8 million year-to-date.
- A goodwill impairment charge of $349.1 million was recorded in the second quarter of 2024.
Worse than expected
29 October 2024 4:20 PM
Quarterly Report
- The company reported a net loss of $107.2 million, significantly worse than the net income of $25.2 million in the same quarter last year.
- Net sales decreased by 16% year-over-year, indicating a decline in revenue performance.
- The company incurred substantial restructuring charges and contract termination fees, negatively impacting profitability.
Worse than expected
1 August 2024 4:18 PM
Quarterly Report
- The company reported a significant net loss due to a goodwill impairment charge and restructuring costs, indicating worse than expected financial performance.
- Net sales decreased significantly, particularly in the Performance Chemicals segment, reflecting weaker demand and the impact of strategic repositioning.
- The company incurred a substantial loss on CTO resales, further contributing to the worse than expected results.
Worse than expected
31 July 2024 4:26 PM
Quarterly Report
- The company reported a significant net loss of $283.7 million, primarily due to a goodwill impairment charge, which is worse than expected.
- The 19% decrease in net sales and 16% decrease in adjusted EBITDA also indicate worse than expected performance.
- The revised full-year guidance for sales and adjusted EBITDA is lower than previous expectations.
Worse than expected
8 July 2024 4:20 PM
Material Definitive Agreement Termination
- The company is paying a significant $100 million termination fee, which is a negative financial impact.
Worse than expected
2 May 2024 4:16 PM
Quarterly Report
- The company reported a net loss of $56 million, a significant downturn from the $50.7 million net income in the same period last year.
- Net sales decreased by 13.4% year-over-year, indicating weaker performance compared to the previous year.
- The company incurred substantial restructuring charges of $62.8 million, impacting overall profitability.
Worse than expected
1 May 2024 4:19 PM
Quarterly Report
- The company reported a net loss of $56.0 million and a 13% decrease in net sales, indicating worse than expected results compared to the prior year.
Worse than expected
11 March 2024 4:19 PM
Proxy Statement
- The document indicates that the company's adjusted EBITDA decreased 12% to $396.8 million, suggesting worse than expected financial performance.
Delay expected
22 February 2024 4:16 PM
Annual Results
- The closure of the DeRidder plant is expected to be completed by the end of the first half of 2024.
Worse than expected
22 February 2024 4:16 PM
Annual Results
- The company reported a net loss of $5.4 million for 2023, compared to a net income of $211.6 million in 2022.
- Adjusted EBITDA for 2023 was $396.8 million, down from $452.6 million in 2022.
- Gross profit decreased to $471.9 million in 2023, down from $570.1 million in 2022.
Worse than expected
21 February 2024 4:24 PM
Quarterly Report
- The company reported a net loss for both Q4 and the full year, which is worse than the prior year's net income.
- Adjusted EBITDA was down 17% in Q4 and 12% for the full year, indicating a decline in profitability.
- Diluted earnings per share were significantly lower in both Q4 and the full year compared to the prior year.
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