Ingevity Corporation NGVT recorded a third-quarter 2024 loss of $107.2 million or $2.95 per share. This compares unfavorably with a profit of $25.2 million or 69 cents in the year-ago quarter. Excluding one-time items, adjusted earnings in the quarter were $1.10 per share, down from $1.21. The figure surpassed the Zacks Consensus Estimate of 60 cents.

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Revenues fell 15.5% year over year to $376.9 million in the quarter. The downside is attributable to the repositioning of the Performance Chemicals segment, which includes limiting exposure to specific markets in the Industrial Specialties product line and weather-related impacts in the Road Technologies product line. The decline was partly offset by increased sales of Performance Materials and Advanced Polymer Technologies.

NGVT’s Segmental Review

The Performance Chemicals division generated revenues of $177 million in the reported quarter, down around 30.8% year over year. Road Technologies' product line sales of $119 million were down 8% due to bad weather conditions in key North American regions. Industrial Specialties product line sales of $58 million fell 54%, owing to the impact of the segment's repositioning measures, which are aimed at lowering exposure to lower margin end markets and persistent deterioration in industrial demand. Earnings before interest, taxes, depreciation, and amortization (EBITDA) for the segment fell 20% to $19.8 million, reflecting higher CTO costs and ongoing sluggish industrial demand. 

Revenues in the Performance Materials unit rose around 2.6% year over year to $151.1 million. The upside was due to strategic pricing adjustments. Segment EBITDA was $80.6 million, up 8%, driven by operational improvements that led to lower input costs and better manufacturing efficiency.

Sales in the Advanced Polymer Technologies segment were up 14% to $48.8 million. The upside was due to higher volumes. Segment EBITDA was $9.8 million, down 13%, and segment EBITDA margin was 20.1%. Higher volume resulted in better utilization rates, but these benefits were offset by reduced prices and unfavorable product mix.

NGVT’s Financials

The third-quarter operating cash flow was $46.5 million, with free cash flow of $28.5 million, which included the first of two $50 million payments to terminate a long-term CTO supply contract, as well as the impact of $21 million in restructuring expenses. The second and final termination payment of $50 million was made in October. There were no share repurchases during the quarter, leaving $353.4 million remaining under the current $500 million authorization. Net leverage was flat with the previous quarter at 4X, but is likely to improve beginning next quarter.

NGVT’s Outlook

During the quarter, the company began to notice the benefits of repositioning its Performance Chemicals segment. NGVT's focus over the next few quarters will be on execution to ensure that it maximizes the benefits of its approach. The company anticipates sales between $1.40 billion and $1.50 billion, with adjusted EBITDA between $350 million and $360 million for 2024.

NGVT’s Stock Price Performance

Shares of Ingevity have declined 12.3% in a year against a 1.3% rise of the industry.

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NGVT’s Rank & Key Picks

NGVT currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks worth a look in the basic materials space include IAMGOLD Corporation IAG, Kinross Gold Corporation KGC and Barrick Gold Corporation GOLD.

IAMGOLD is slated to report third-quarter results on Nov. 7. The Zacks Consensus Estimate for third-quarter earnings is pegged at 11 cents. IAG beat the Zacks Consensus Estimate in three of the last four quarters, with the average earnings surprise being 200%. IAG carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Kinross Gold is slated to report third-quarter results on Nov 5, after market close. The Zacks Consensus Estimate for KGC’s third-quarter earnings is pegged at 17 cents. KGC beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 29.1%. KGC currently carries a Zacks Rank #1.

Barrick Gold is slated to report third-quarter results on Nov. 7, before the opening bell. The consensus estimate for Barrick Gold’s third-quarter earnings is pegged at 33 cents. GOLD, carrying a Zacks Rank #2, beat the consensus estimate in each of the last four quarters, with the average earnings surprise being 21.2%. 

 

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