On July 31, 2024, Ingevity Corp (NGVT, Financial) released its 8-K filing detailing its financial results for the second quarter of 2024. The company, a U.S.-based chemical manufacturer, operates through three segments: Performance Chemicals, Advanced Polymer Technologies, and Performance Materials. The bulk of its revenue is generated by the Performance Chemicals segment, which manufactures specialty chemicals used in various industries, including asphalt paving, oil exploration, and agrochemicals.
Q2 2024 Financial Highlights
Ingevity Corp reported net sales of $390.6 million for the second quarter, a 19% decline compared to the same period last year. This figure fell short of the analyst estimate of $407.58 million. The company posted a net loss of $283.7 million, translating to a diluted loss per share of $7.81, primarily due to a non-cash goodwill impairment charge of $349.1 million in the Performance Chemicals segment. However, on an adjusted basis, the company reported earnings of $1.01 per share, slightly above the analyst estimate of $1.00.
Segment Performance
Performance Materials saw a 9% increase in sales to $157.2 million, driven by higher volumes in automotive end markets and increased pricing. Segment EBITDA rose 28% to $82.2 million, reflecting lower input costs and improved operational efficiency.
Advanced Polymer Technologies (APT) experienced a 10% decline in sales to $47.9 million, primarily due to lower pricing. Segment EBITDA decreased by 16% to $9.8 million, although the segment maintained a strong EBITDA margin of 20.5%.
Performance Chemicals faced significant challenges, with sales dropping 35% to $185.5 million. The segment's EBITDA was $9.3 million, down sharply due to higher crude tall oil (CTO) costs and low plant utilization rates. The company has taken steps to reposition this segment, including terminating a long-term CTO supply contract and closing its Crossett, Arkansas facility.
Financial Metrics and Achievements
Adjusted EBITDA for the quarter was $101.3 million, down 16% from the previous year, with an adjusted EBITDA margin of 25.9%. Operating cash flow stood at $29.7 million, and free cash flow was $11.6 million. The company did not repurchase any shares during the quarter, leaving $353.4 million available under the current $500 million Board authorization.
Income Statement Summary
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Net Sales | $390.6 million | $481.8 million |
| Net Income (Loss) | $(283.7) million | $35.5 million |
| Adjusted EBITDA | $101.3 million | $120.7 million |
| Adjusted EPS | $1.01 | $0.97 |
Challenges and Future Outlook
The Performance Chemicals segment's repositioning efforts are expected to continue impacting results in the near term. The company has revised its full-year guidance, now expecting sales between $1.40 billion and $1.50 billion and adjusted EBITDA between $350 million and $360 million. The ongoing challenges in the Industrial Specialties product line and high-cost CTO inventory are expected to affect profitability through the first quarter of 2025.
“As we move forward with transforming Performance Chemicals into a more profitable and stable segment, we continue to see Performance Materials deliver best-in-class results,” said John Fortson, president and CEO.
Ingevity Corp's strategic actions to reposition its Performance Chemicals segment and focus on higher-margin markets are crucial for long-term stability. The company's ability to navigate these challenges while maintaining strong performance in other segments will be key to its future success.
For more detailed information, readers are encouraged to review the full 8-K filing.
Explore the complete 8-K earnings release (here) from Ingevity Corp for further details.
