Slide 1: Third Quarter 2020 Earnings Presentation
Third Quarter 2020 Earnings Presentation October 29, 2020 PURIFY I PROTECT I ENHANCE
Slide 2: Disclaimer: forward-looking statements
Disclaimer: This presentation contains “forward-looking statements” within the meaning of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Such forward looking statements generally include the words “may,” “could,” “should,” “believes,” “plan
Slide 3: Today's Agenda
Today’s Agenda 1 Third Quarter Highlights 2 Segment Performance 3 Financial Review 4 Guidance 5 Ingevity 2.0 6 Q&A 3
Slide 4: Third Quarter 2020 Results
Third Quarter 2020 Results $ in millions 3Q 2020 3Q 2019 vs Prior Year % % Performance Highlights ▪ Revenues down only 8% Net Sales 331.7 359.9 (28.2) (7.8)% ▪ Results driven by: Adjusted EBITDA(1) 127.6 114.0 13.6 11.9% ▪ Strong rebounds in automotive sales and Adjusted EBITDA(1) 38.5% 31.7% +680bp
Slide 5: Performance Chemicals
Performance Chemicals $ in millions 3Q 2020 3Q 2019 vs Prior Year % % Performance Highlights Net Sales ▪ Revenue of $188 million; down 18% 187.9 229.7 (41.8) (18.2)% Pavement Technologies 72.5 69.8 2.7 3.9% ▪ Pavement Technologies: Record quarterly sales; sales flat in North America, while up Engine
Slide 6: Performance Materials
Performance Materials $ in millions 3Q 2020 3Q 2019 vs Prior Year % % Performance Highlights Net Sales ▪ Record revenues of $144 million; up 10% 143.8 130.2 13.6 10.4% Automotive ▪ Strong rebound in U.S./Canada as OEMs 136.8 120.5 16.3 13.5% refill pipeline; U.S. vehicle inventory at 9- Technologies
Slide 7: Third Quarter 2020 Financial Summary
Third Quarter 2020 Financial Summary Capital Structure Working Capital Management $ in millions Current $ in millions Pricing Amount $750m Revolver L+150 $170.0 Term Loans L+100-150 726.6 Inventory, net $204 $224 $166mm Interest Rate Swap (1) 1.35% Senior Notes 4.5% 300.0 Accounts receivable, net 15
Slide 8: Updated Capital Structure
Updated Capital Structure Notes Offering and Debt Maturity Profile as of Sept. 30 Credit Facility Amendment $1,200 ▪ $550 million 8-year senior notes issued at $1,000 3.875% $800 ▪ Amended and extended revolving credit facility $580 (RCF) $600 $375 $170 ▪ Downsized from $750 million to $500 $400 $30
Slide 9: 2020 Revised Guidance
2020 Revised Guidance ($M) Current Narrowed Item FY20 Guidance FY20 Guidance Revenue $1,100 - $1,200 $1,150 - $1,200 Adjusted EBITDA(1) $310 - $350 $355 - $365 Adjusted tax rate(1) 22 - 24% 21 - 22% Capital expenditures ~$85 ~$85 Free Cash Flow(1) $130 - 170 $175 Net Debt Ratio(1) ~2.75 - 3.25x 2.75
Slide 10: From Ingevity 1.0 to Ingevity 2.0
From Ingevity 1.0 to Ingevity 2.0 Ingevity 1.0 Success Ingevity 2.0 Focus Completed successful spin-off into publicly Drive further organic growth by leveraging traded company technology-driven customer relationships Executed to opportunity for Performance Continue to improve top line across the bus
Slide 11: Ingevity 2.0: Favorable Trends Provide Growth Opportunities
Ingevity 2.0 Favorable Trends Provide Growth Opportunities Customer focus on renewable resources as they seek to reduce their GHG footprints Continued regulatory activity in end-use applications that favor our products Biofuels market expected to grow rapidly Increasing renewable natural gas contain
Slide 12: Ingevity 2.0: Strategic approach to growth
Ingevity 2.0 Strategic approach to growth Sustainability as a Customer- and Focused Approach Competitive Advantage Market-Driven Culture to Innovation Demonstrate value to Lean into existing Establish growth customers and customer-centric pipelines across both shareholders by approach to achieve bus
Slide 13: Well Positioned for Value Creation
Well Positioned for Value Creation Developing and Deep and Market-leading Strong balance Experienced delivering high- longstanding global specialty sheet and cash flow and proven performance customer chemical company generation management team solutions relationships • Well-positioned to • Brings ex
Slide 14: For More Information
For More Information Investors Jack Maurer (843) 746-8242 Media Laura Woodcock (843) 746-8197 Thank you for your interest in Ingevity! 14
Slide 15: Appendix
Appendix 15
Slide 16: Third Quarter 2020 Financial Results
Third Quarter 2020 Financial Results Q3 QTD Q3 QTD vs PY Q3 YTD Q3 YTD vs PY $ in millions except EPS 2020 2019 ∆% 2020 2019 ∆% Consolidated Income Statement: Net sales $331.7 $359.9 (7.8)% $890.5 $989.5 (10.0)% Gross Profit $139.6 $139.5 0.1% $338.1 $371.0 (8.9)% % Margin 42.1% 38.8% +330 bps 38.0%
Slide 17: 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 18: Reconciliation of Net Income to Adjusted Earnings
Reconciliation of Net Income (Loss) (GAAP) to Adjusted Earnings (Loss) (Non-GAAP) Three Months Ended Nine Months Ended September 30, September 30, In millions, except per data (unaudited) 2020 2019 2020 2019 Net income (loss) (GAAP) $ 69.9 $ 59.9 $ 135.4 $ 139.4 Restructuring and other (income) char
Slide 19: Reconciliation of Net Income to Adjusted EBITDA
Reconciliation of Net Income (GAAP) to Adjusted EBITDA (Non-GAAP) Three Months Ended Nine Months Ended September 30, September 30, In millions (unaudited) 2020 2019 2020 2019 Net income (loss) (GAAP) $ 69.9 $ 59.9 $ 135.4 $ 139.4 Provision (benefit) for income taxes 18.2 17.5 33.3 33.4 Interest expe
Slide 20: Calculation of Total Debt to Net Income Ratio and Net Debt Ratio
Calculation of Total Debt to Net Income (Loss) Ratio (GAAP) to Net Debt to Adjusted EBITDA Ratio (Non-GAAP) In millions, except ratios (unaudited) September 30, 2020 Notes payable and current maturities of long-term debt $ 22.4 Long-term debt including finance lease obligations 1,277.0 Debt issuance
Slide 21: Calculation of Historical Net Debt Ratio
Calculation of Historical Net Debt Ratio (Non-GAAP) 2016 2017 2018 In millions, except ratios (unaudited) Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Net Debt(1) $ 445.2 $ 424.0 $ 391.7 $ 405.1 $ 370.2 $ 314.0 $ 295.8 $ 628.7 $ 600.2 $ 627.5 $ 610.2 Adjusted EBITDA(2) 58.4 59.6 36.0 50.2 67.2 72.7 52.6 67.1 89
Slide 22: 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 Nine Months Ended In millions (unaudited) September 30, September 30, 2020 2019 2020 2019 SG&A (GAAP) $ 34.9 $ 40.7 $ 107.9 $ 122.3 Intangible amortization related to acquisitions 8.0 6.9 23.9 19.0