Slide 1: First Quarter 2019 Earnings Presentation
PURIFY I PROTECT I ENHANCE First Quarter 2019 Earnings Presentation May 2, 2019
Slide 2: Disclaimer
Disclaimer: This presentation contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward looking statements generally include the words “may,” “could,” “should,” “believes,” “plans,” “intends,” “targets,” “will,” “expects,” “suggest
Slide 3: Today's Agenda
Today’s Agenda First Quarter Highlights Segment Performance Financial Review Guidance Q&A 3
Slide 4: First Quarter 2019 Results
First Quarter 2019 Results vs Prior Year $ in millions 1Q 2019 1Q 2018 ∆ ∆% Performance Highlights Net Sales 276.8 235.2 41.6 17.7% Adjusted EBITDA(1) 83.5 67.1 16.4 24.4% Financial results in line with company’s expectations Adjusted EBITDA(1) 30.2% 28.5% +170 bps Margin Strong growth in Perfor
Slide 5: Performance Chemicals
Performance Chemicals vs Prior Year $ in millions 1Q 2019 1Q 2018 ∆ ∆% Performance Highlights Net Sales 167.7 139.7 28.0 20.0% Industrial Specialties 95.8 98.8 (3.0) (3.0)% As reported, revenue increase of 20% and Oilfield Technologies 29.2 22.4 6.8 30.4% adjusted EBITDA increase of 30% Pavement T
Slide 6: Performance Materials
Performance Materials vs Prior Year $ in millions 1Q 2019 1Q 2018 ∆ ∆% Performance Highlights Net Sales 109.1 95.5 13.6 14.2% Automotive Technologies 99.7 85.9 13.8 16.1% Revenue increase of 14% Process Purification 9.4 9.6 (0.2) (2.1)% Strong sales for “honeycomb” Segment EBITDA 51.2 42.2 9.0 2
Slide 7: China Update
China Update Implementation requirements should Growth in Ingevity sales volumes for drive a greater than 60% China 6 pelleted products demonstrates China 6 compliance rate in the third quarter. implementation is well underway. +290% More than 2,500 Chinese vehicle platforms (~80%) have been certifi
Slide 8: First Quarter 2019 Financial Results
First Quarter 2019 Financial Results Key Income Statement Metrics 1Q 1Q vs PY $ in millions except EPS & shares outstanding 2019 2018 ∆% Net Sales (GAAP) 276.8 235.2 17.7% Adjusted EBITDA (Non-GAAP)(1) 83.5 67.1 24.4% Adjusted EBITDA Margin (Non-GAAP)(1) 30.2% 28.5% 170 bps Performance Chemicals Net
Slide 9: First Quarter 2019 Financial Results
First Quarter 2019 Financial Results Key Balance Sheet & Cash Flow Metrics $ in millions March 31, 2019 December 31, 2018 Cash & cash equivalents 38.4 77.5 Restricted investment (related to capital lease)(1) 71.7 71.2 Total debt including capital lease obligation(2) 1,429.3 758.9 Net debt(3) 1,319.2
Slide 10: 2019 Guidance
2019 Guidance ($M) Item FY18 Actual FY19 Guidance Revenue $1,133.6 $1,300 to $1,360 Adjusted EBITDA(1) $320.5 $390 to $410 Adjusted tax rate(1) 19.8% 21-23% Capital expenditures $93.9 $110-$120 Free Cash Flow(2) $158.1 $180-$190 Net Debt Ratio(3) 1.88x <3.0x (1) A reconciliation of net income to adj
Slide 11: For More Information
PURIFY │ PROTECT│ENHANCE For More Information Investors Dan Gallagher (843) 740-2126 Media Jack Maurer (843) 746-8242 Thank you for your interest in Ingevity! 11
Slide 12: Appendix
Appendix 12
Slide 13: Non-GAAP Financial Measures
Non-GAAP Financial Measures Ingevity has presented certain financial measures, defined below, which have not been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and has provided a reconciliation to the most directly comparable financial measure calculated in accor
Slide 14: Reconciliation of Net Income to Adjusted Earnings
Reconciliation of Net Income (Loss) (GAAP) to Adjusted Earnings (Loss) (Non-GAAP) Three Months Ended March 31, In millions, except per data (unaudited) 2019 2018 Net income (loss) $ 22.7 $ 35.8 Less: Net income (loss) attributable to noncontrolling interests — 5.0 Net income (loss) attributable to I
Slide 15: Reconciliation of Net Income to Adjusted EBITDA
Reconciliation of Net Income (GAAP) to Adjusted EBITDA (Non-GAAP) Three Months Ended March 31, In millions (unaudited) 2019 2018 Net income (loss) (GAAP) $ 22.7 $ 35.8 Provision (benefit) for income taxes — 9.7 Interest expense, net 11.1 6.1 Depreciation and amortization 18.5 11.5 Restructuring and
Slide 16: Reconciliation of SG&A to Core SG&A
Reconciliation of Selling, General and Admin (SG&A) (GAAP) to Core SG&A (Non-GAAP) Three Months Ended In millions (unaudited) March 31, 2019 2018 SG&A (GAAP) $ 39.1 $ 26.5 Amortization related to acquisitions 5.1 0.7 Legal costs associated with Performance Materials litigation 2.4 0.1 Core SG&A (Non
Slide 17: Supplemental Historical Quarterly Pro Forma Financial Information
Supplemental Historical Quarterly Pro Forma Financial Information The following unaudited pro forma condensed combined financial information has been prepared to illustrate the effect of the acquisition of substantially all the assets primarily used in the pine chemical business of Georgia-Pacific L
Slide 18: Reconciliation of Condensed Statement of Operations
Reconciliation of Condensed Statement of Operations to Pro Forma Condensed Statement of Operations Quarter Ended March 31, 2019 Historical Caprolactone Pro In millions, except per share data Ingevity Business 1 Forma Net sales $ 276.8 $ 17.7 A $ 294.5 Cost of sales 179.7 2.6 B 182.3 Gross profit 97.
Slide 19: Reconciliation of Condensed Statement of Operations
Reconciliation of Condensed Statement of Operations to Pro Forma Condensed Statement of Operations Quarter Ended March 31, 2018 Pine Historical Chemicals Caprolactone Pro In millions, except per share data Ingevity Business 1 Business 2 Forma Net sales $ 235.2 $ 20.2 $ 46.5 A $ 301.9 Cost of sales 1
Slide 20: Reconciliation of Net Income to Pro Forma EBITDA
Reconciliation of Net Income (Loss) to Pro Forma Adjusted EBITDA Quarter Ended March 31, 2019 Historical Pro Forma In millions, expect percentages (unaudited) Ingevity Adjustment 1 Pro Forma Net income (loss) $ 22.7 $ 23.2 $ 45.9 Provision (benefit) for income taxes — 7.6 7.6 Interest expense, net 1
Slide 21: Reconciliation of Net Income to Pro Forma EBITDA
Reconciliation of Net Income (Loss) to Pro Forma Adjusted EBITDA Quarter Ended March 31, 2018 Historical Pro Forma In millions, expect percentages (unaudited) Ingevity Adjustment 1 Pro Forma Net income (loss) $ 35.8 $ 11.0 $ 46.8 Provision (benefit) for income taxes 9.7 2.7 12.4 Interest expense, ne
Slide 22: Notes to the Unaudited Pro Forma Adjustments
Notes to the Unaudited Pro Forma Adjustments A - Net sales Represents the historical sales of the Caprolactone Business for the 2019 period and the historical sales of the Caprolactone Business and Pine Chemical Business for the 2018 period. Table below represents the pro forma sales by product line
Slide 23: Notes to the Unaudited Pro Forma Adjustments
Notes to the Unaudited Pro Forma Adjustments C - Selling, general and administrative expenses and Research and technical expenses Adjustments to selling, general and administrative expenses ("SG&A") and research and technical expenses were as follows: Q1 In millions (unaudited) 2019 2018 Historical
Slide 24: Notes to the Unaudited Pro Forma Adjustments
Notes to the Unaudited Pro Forma Adjustments F - Interest expense The Company funded the acquisition of the Caprolactone Business through combination of borrowings under its existing credit facilities and cash on hand. For the preparation of the unaudited condensed combined pro forma financial infor