• Full-Year Sales: $1.4 billion, down 17% from last year's $1.7 billion.
• Performance Materials Sales: Record sales with EBITDA margins surpassing 50%.
• GAAP Net Loss: $430 million, including non-recurring charges totaling $688 million.
• Adjusted Gross Profit: $521 million, down 4% from last year, with gross margin up by 510 basis points.
• Adjusted EBITDA Margin: Improved by 350 basis points to 25.8%.
• Free Cash Flow: Over $50 million, despite $200 million in repositioning cash costs.
• Net Leverage: Ended the year at 3.5 times net debt to adjusted EBITDA.
• Performance Materials EBITDA: Increased 11% to $319 million with EBITDA margins of 52.3%.
• Advanced Polymer Technologies (APT) EBITDA: $35.2 million with an EBITDA margin of 18.7%.
• Performance Chemicals Revenue: $608 million, a 33% decline from the prior year.
• Performance Chemicals EBITDA: $14.7 million, better than the break-even guide.
• 2025 Guidance: Sales between $1.3 billion and $1.4 billion; EBITDA between $400 million and $415 million; Free cash flow between $220 million and $260 million.

• Warning! GuruFocus has detected 7 Warning Signs with NGVT.

Release Date: February 19, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Ingevity Corp (NYSE:NGVT) took proactive steps to improve performance and enhance shareholder value, including repositioning Performance Chemicals towards higher margin markets.
• Performance Materials had a record year in both sales and EBITDA, surpassing margins of 50%, driven by increased demand for advanced carbon technology in hybrid vehicles.
• The company generated over $50 million of free cash flow despite $200 million in repositioning cash costs, and reduced net leverage to 3.5 times.
• Ingevity Corp (NYSE:NGVT) achieved top quartile personal safety performance in the American Chemistry Council's responsible care program.
• The company was named one of America's most responsible companies of 2025 by Newsweek magazine for the third consecutive year.

Negative Points

• Full-year sales of $1.4 billion were down 17% from the previous year, primarily due to a $300 million drop in Performance Chemicals sales.
• Ingevity Corp (NYSE:NGVT) reported a GAAP net loss of $430 million, reflecting several non-recurring charges related to repositioning actions.
• Performance Chemicals revenue declined by 33%, with a significant portion due to exiting lower margin markets and adverse weather impacting Road Technologies.
• The company faced competitive pressures and unfavorable product mix in Advanced Polymer Technologies, leading to an 8% revenue decline.
• Ingevity Corp (NYSE:NGVT) expects higher input costs in 2025 due to rising natural gas prices, which may impact Performance Materials margins.

Q & A Highlights

Q: Can you provide insights on the pricing strategy for the Performance Chemicals business, especially concerning the high-cost CTO inventory? A: Luis Fernandez-Moreno, Interim CEO, explained that current prices reflect the market price of CTO, and they are competitive. As the high-cost CTO inventory is consumed, profitability should improve, but prices have already been adjusted to remain competitive.

Q: What are the trends in the auto markets, particularly regarding hybrids versus EVs? A: Jonathan MacIver, VP of Global Commercial for Performance Materials, noted a declining interest in EVs compared to hybrids, which benefits Ingevity's content in vehicles.

Q: How are tariffs impacting your business and customer order patterns? A: Luis Fernandez-Moreno stated that, so far, tariffs have had minimal impact on Ingevity and its customers. However, there is uncertainty, and potential changes could affect automotive production and consumer demand in the U.S.

Q: Can you elaborate on the increased innovation spend, particularly regarding the Nexeon platform? A: Luis Fernandez-Moreno confirmed that the increased spend is primarily for developing new applications in batteries, specifically silicon anodes, which require significant testing and material fine-tuning.

Q: What are the logistics of exploring strategic alternatives for the industrial business, and does it include the alternative fatty acids business? A: Luis Fernandez-Moreno explained that they plan to remain flexible with raw material supply and keep the capability for alternative fatty acids. The separation of assets would be managed like a condominium, a common practice in the chemical industry.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.