Slide 1: Fourth Quarter 2018 Earnings Presentation
Fourth Quarter 2018 Earnings Presentation Feb. 14, 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: Agenda
Agenda Full Year and Fourth Quarter Highlights Segment Performance Strategic Review Financial Review Outlook and Guidance Q&A 3
Slide 4: Delivering on Commitments in 2018
Delivering on Commitments in 2018 $M What We Said What We Did Status Revenue 1,070-1,130 1,134 Adjusted EBITDA(1) 285-305 321 Capex 80-90 94 Free Cash Flow(1) 90-100 158 Net Debt to 2.0x-2.25x 1.90x Adjusted EBITDA(1) Double revenue in 5-7 15% revenue Performance years from 2015 base; growth, 42.3%
Slide 5: Fourth Quarter & Full Year 2018 Results
Fourth Quarter & Full Year 2018 Results ∆% vs 4Q Prior FY ∆% vs Q4 and FY Performance Highlights $ in millions 2018 Year 2018 Prior Period Year Net Sales 278.6 21.4% 1,133.6 16.6% Outstanding quarter despite seasonality Adjusted EBITDA (1) 73.3 39.4% 320.5 32.1% Sales up about 21% Volumes were
Slide 6: Performance Chemicals
Performance Chemicals ∆% vs 4Q Prior FY ∆% vs Q4 Performance Highlights $ in millions 2018 Year 2018 Prior Period Year Revenue increase of 20%; G-P acquisition Net Sales 166.1 19.9% 733.2 17.7% aids oilfield/industrial specialties sales Oilfield Technologies 30.2 53.3% 114.2 46.8% Oilfield Techn
Slide 7: Acquisition of Capa caprolactone business
Acquisition of CapaTM caprolactone business Strategic Rationale Transaction closed on Feb. 13, 2019 Strong, market-leading business focused on high- Highly profitable and scalable business growth end-use applications Expected 2018 sales of ~$175 million Complementary fit with Adj. EBITDA o
Slide 8: Performance Materials
Performance Materials ∆% vs 4Q Prior FY ∆% vs Q4 Performance Highlights $ in millions 2018 Year 2018 Prior Period Year Revenue increase of 24% Net Sales 112.5 23.6% 400.4 14.6% Strong sales for “honeycomb” Automotive Technologies 103.4 25.3% 362.0 15.8% scrubbers to comply with U.S. EPA Process
Slide 9: Update on Global Regulatory Developments
Update on Global Regulatory Developments U.S. EPA Tier 3 / Calif. LEV III “step change” to 80% of all 2020 model year Implementing 2-day vehicles parking requirements on all new gasoline vehicles by Sept. 2019 Full China 6 Implementing 2- adoption by July day parking 2020 with requirements in substa
Slide 10: Estimated Early China 6 Implementation
Estimated Early China 6 Implementation Vehicle Sales Distribution and China 6 Adoption Map Estimated Percentages of 2019 China 6 Effective Mar 1, 2019 (Guangzhou) Light Vehicle (LV) Sales Effective July 1, 2019 (Hainan,Shenzhen,Tianjin,Hangzhou confirmed) Based on Published Announcements Effective J
Slide 11: Our Strategy for Realizing Our Vision
Our Strategy for Realizing Our Vision Strategic Element Key Achievements in 2018 Capture value for shareholders by creating value for our customers • Evotherm warm mix asphalt and other Expand our geographic pavement technologies in eight new countries reach • New extrusion plant in Changshu, China
Slide 12: Fourth Quarter 2018 Financial Results
Fourth Quarter 2018 Financial Results Key Income Statement Metrics $ in millions except EPS & shares outstanding 4Q 4Q vs PY vs PY 2018 2017 2018 2017 ∆% ∆% Net Sales (GAAP) 278.6 229.5 21.4% 1,133.6 972.4 16.6% Adjusted EBITDA (Non-GAAP) (1) 73.3 52.6 39.4% 320.5 242.7 32.1% Adjusted EBITDA Margin
Slide 13: 2018 Financial Results
2018 Financial Results Key Balance Sheet & Cash Flow Metrics $ in millions 2018 2017 Cash & cash equivalents 77.5 87.9 Restricted investment (related to capital lease) (1) 71.2 71.3 Total debt including capital lease obligation (2) 758.9 455.0 Net debt (3) 610.2 295.8 Inventories, net 191.4 160.0 Ac
Slide 14: Engineered Polymers Preliminary Modeling Assumptions
Engineered Polymers Preliminary Modeling Assumptions Expect to file historical & pro forma financials in early April (2015 to 2017 and 9 months 2018) Planning Baseline Sales ~$175 million Adjusted EBITDA ~$60 million Preliminary Purchase Accounting ~$310 million goodwill ~$220 million
Slide 15: 2019 Outlook and Guidance
2019 Outlook and Guidance ($M; includes Capa) PERFORMANCE CHEMICALS: Modest top-line growth for Capa; continued focus on derivatization Item Current FY19 Three-week maintenance outage at Warrington, U.K. (Capa) Guidance Flat oilfield volumes so long as oil steadies Continued globalization an
Slide 16: For More Information
For More Information Thank you for your interest in Ingevity! Investors Dan Gallagher (843) 740-2126 Media Jack Maurer (843) 746-8242 16
Slide 17: Appendix
Appendix 17
Slide 18: 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 19: Reconciliation of Net Income (Loss) (GAAP) to Adjusted Earnings (Loss) (Non-GAAP)
Reconciliation of Net Income (Loss) (GAAP) to Adjusted Earnings (Loss) (Non-GAAP) Three Months Twelve Months Ended December 31, December 31, In millions, except per data (unaudited) 2018 2017 2018 2017 Net income (loss) $ 42.1 $ 48.0 $ 181.8 $ 145.2 Less: Net income (loss) attributable to noncontrol
Slide 20: Reconciliation of Net Income (Loss) (GAAP) to Adjusted EBITDA (Non-GAAP)
Reconciliation of Net Income (Loss) (GAAP) to Adjusted EBITDA (Non-GAAP) Three Months Twelve Months Ended December 31, December 31, In millions (unaudited) 2018 2017 2018 2017 Net income (loss) (GAAP) $ 42.1 $ 48.0 $ 181.8 $ 145.2 Provision (benefit) for income taxes 1.5 (15.3) 40.0 29.6 Interest ex
Slide 21: Reconciliation of Segment Operating Profit (GAAP) to Segment EBITDA (Non-GAAP)
Reconciliation of Segment Operating Profit (GAAP) to Segment EBITDA (Non-GAAP) Three Months Twelve Months Ended In millions (unaudited) December 31, December 31, Performance Materials 2018 2017 2018 2017 Segment operating profit (GAAP) $ 37.4 $ 32.5 $ 147.2 $ 122.0 Depreciation and amortization 5.5
Slide 22: 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 23: Reconciliation of Condensed Statement of Operations to Pro Forma Condensed Statement of Operations
Reconciliation of Condensed Statement of Operations to Pro Forma Condensed Statement of Operations Quarter Ended December 31, 2017 Historical Pro Forma Pro In millions, except per share data Ingevity Adjustment Forma Net sales $ 229.5 $ 29.0 A $ 258.5 Cost of sales 154.2 20.6 B 174.8 Gross profit 75
Slide 24: Reconciliation of Condensed Statement of Operations to Pro Forma Condensed Statement of Operations
Reconciliation of Condensed Statement of Operations to Pro Forma Condensed Statement of Operations Year Ended December 31, 2017 Historical Pro Forma In millions, except per share data Ingevity Adjustment Pro Forma Net sales $ 972.4 $ 100.6 A $ 1,073.0 Cost of sales 643.4 72.0 B 715.4 Gross profit 32
Slide 25: Reconciliation of Condensed Statement of Operations to Pro Forma Condensed Statement of Operations
Reconciliation of Condensed Statement of Operations to Pro Forma Condensed Statement of Operations Year Ended December 31, 2018 Historical Pro Forma In millions, except per share data Ingevity Adjustment Pro Forma Net sales $ 1,133.6 $ 20.2 A $ 1,153.8 Cost of sales 716.8 14.0 B 730.8 Gross profit 4
Slide 26: Reconciliation of Net Income (Loss) to Pro Forma Adjusted EBITDA
Reconciliation of Net Income (Loss) to Pro Forma Adjusted EBITDA Quarter Ended December 31, 2017 Historical Pro Forma Pro In millions, expect percentages (unaudited) Ingevity Adjustment A Forma Net income (loss) $ 48.0 $ 1.9 $ 49.9 Provision (benefit) for income taxes (15.3) 1.0 (14.3) Interest expe
Slide 27: Reconciliation of Net Income (Loss) to Pro Forma Adjusted EBITDA
Reconciliation of Net Income (Loss) to Pro Forma Adjusted EBITDA Year Ended December 31, 2017 Historical Pro Forma In millions, expect percentages (unaudited) Ingevity Adjustment A Pro Forma Net income (loss) $ 145.2 $ 1.6 $ 146.8 Provision (benefit) for income taxes 29.6 0.5 30.1 Interest expense,
Slide 28: Reconciliation of Net Income (Loss) to Pro Forma Adjusted EBITDA
Reconciliation of Net Income (Loss) to Pro Forma Adjusted EBITDA Year Ended December 31, 2018 Historical Pro Forma In millions, expect percentages (unaudited) Ingevity Adjustment A Pro Forma Net income (loss) $ 181.8 $ 4.1 $ 185.9 Provision (benefit) for income taxes 40.0 1.3 41.3 Interest expense,
Slide 29: Notes to the Unaudited Pro Forma Adjustments
Notes to the Unaudited Pro Forma Adjustments A - Net sales Represents the historical sales of the Pine Chemical Business. Table below represents the pro forma sales by product line. 2017 2018 In millions (unaudited) Q4 FY FY Pro Forma Net Sales $ 29.0 $ 100.6 $ 20.2 Oilfield Technologies product lin
Slide 30: Notes to the Unaudited Pro Forma Adjustments
Notes to the Unaudited Pro Forma Adjustments C - Selling, general and administrative expenses Adjustments to selling, general and administrative expenses ("SG&A") were as follows: 2017 2018 In millions (unaudited) Q4 FY FY Pine Chemical Business historical results (1) $ 1.8 $ 6.8 $ 1.4 Amortization