Slide 1: Third Quarter 2023 Earnings Presentation
THIRD QUARTER 2023 EARNINGS PRESENTATION November 2, 2023
Slide 2: Use of non-GAAP financial measures and forward-looking statements
Use of non-GAAP financial measures: This presentation includes certain non‐GAAP financial measures intended to supplement, not substitute for, comparable GAAP measures. Reconciliations of non‐GAAP financial measures to GAAP financial measures are provided within the Appendix to this presentation. In
Slide 3: Agenda
AGENDA 1 Quarter highlights and updates 2 Consolidated financial results 3 Segment performance 4 Guidance 5 Performance Chemicals repositioning 6 Q&A 3
Slide 4: Quarter Highlights and Updates
QUARTER HIGHLIGHTS AND UPDATES Performance Chemicals segment EBITDA lower by 62% due to higher Crude Tall Oil (CTO) costs and weak demand, primarily in rosin-based end markets and oilfield Performance Materials grew segment EBITDA by over 20% with EBITDA margins of 50.6% on increased automotive sale
Slide 5: Third Quarter (Q3) Consolidated Financial Performance
THIRD QUARTER (Q3) CONSOLIDATED FINANCIAL PERFORMANCE Q3 financials (1) Performance highlights Q3 Q3 vs PY Q3 sales reflect weaker volumes across all segments compared to a record $ in millions except percentage and EPS 2023 2022 ∆% prior year, partially offset by growth in Performance Materials (PM
Slide 6: Q3 2023 Financial Metrics and Highlights
Q3 2023 FINANCIAL METRICS AND HIGHLIGHTS Net Sales Free cash flow (FCF) $ in millions $ in millions ▪ Q3 sales lower versus record Q4 ▪ FCF of $73 million 383 prior year primarily due to Q3 driven by a Q4 reduced demand in Industrial Q2 reduction in AR 336 122 303 446 Specialties and APT Q1 which of
Slide 7: Performance Chemicals
PERFORMANCE CHEMICALS Q3 Q3 $ % $ IN MILLIONS 2023 2022 VS. PRIOR YEAR VS. PRIOR YEAR Performance highlights Net Sales 256.0 267.6 (11.6) (4.3)% Sales of $256.0 million down 4% due to lower volumes in Industrial Industrial Specialties 126.3 179.3 (53.0) (29.6)% Specialties as a result of weaker indu
Slide 8: Advanced Polymer Technologies
ADVANCED POLYMER TECHNOLOGIES Q3 Q3 $ % $ IN MILLIONS 2023 2022 VS. PRIOR YEAR VS. PRIOR YEAR Performance highlights Net Sales 42.8 69.5 (26.7) (38.4)% Sales of $42.8 million down 38% reflect global market weakness impacting Segment EBITDA 11.2 11.3 (0.1) (0.9)% volumes across all end markets, parti
Slide 9: Performance Materials
PERFORMANCE MATERIALS Q3 Q3 $ % $ IN MILLIONS VS. PRIOR VS. PRIOR 2023 2022 YEAR YEAR Performance highlights Net Sales 147.2 144.9 2.3 1.6% Sales of $147.2 million up 2% as automotive carbon benefited from Segment EBITDA 74.5 61.2 13.3 21.7% increased auto production Segment EBITDA Margin 50.6% 42.2
Slide 10: 2023 Guidance and Outlook
2023 GUIDANCE AND OUTLOOK Adjustment to Guidance: FY Guidance Financial ▪ Weak industrial markets expected to continue into the fourth FY Guidance metric quarter Revenue $1.6 - $1.7 billion ▪ Inventory build, primarily of CTO and rosin, negatively Adj. EBITDA (1) $375 - $390 million impacting workin
Slide 11: Performance Chemicals Business Repositioning
PERFORMANCE CHEMICALS BUSINESS REPOSITIONING
Slide 12: Performance Chemicals Repositioning
PERFORMANCE CHEMICALS REPOSITIONING Focusing on higher margin, higher growth specialty products which are less cyclical ▪ Prioritizing pavement applications, and certain industrial and oilfield markets; exiting non-specialty, commoditized markets ▪ Performance Chemicals segment EBITDA margins to imp
Slide 13: Performance Chemicals Repositioning
PERFORMANCE CHEMICALS REPOSITIONING 2022 Revenue 2023 Estimated Adjusted Revenue By Segment/Business Line By Segment/Business Line Current State Future State ▪ Repositioning results in ~$300 million less revenue in Performance Chemicals ▪ Reducing presence in rosin-based end markets such as adhesive
Slide 14: Performance Chemicals Repositioning
PERFORMANCE CHEMICALS REPOSITIONING Plant Network End Markets Charleston Crude Tail Oil and Prioritized Lignin Based Pavement Road Markings Ramp up AFA; Dispersants continued focus Future State New AFA Markets on Road Tech(1) Performance Chemicals Paper Chemicals Rubber 15-20% (Illustrative future s
Slide 15: For More Information
FOR MORE INFORMATION Investors John E. Nypaver, Jr. (843) 740 - 2002 Media Caroline Monahan (843) 740 - 2068 Thank you for your interest in Ingevity. 15
Slide 16: Appendix
APPENDIX 16
Slide 17: Definitions of 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 accordance with GAAP. These finan
Slide 18: Reconciliation of Net Income and Diluted EPS to Adjusted Earnings
Reconciliation of Net Income (Loss) (GAAP) and Diluted Earnings (Loss) Per Share (GAAP) to Adjusted Earnings (Loss) (Non-GAAP) and Diluted Adjusted Earnings (Loss) Per Share (Non-GAAP) Three Months Ended September 30, Nine Months Ended September 30, In millions, except per data (unaudited) 2023 2022
Slide 19: Reconciliation of Net Income to Adjusted EBITDA
Reconciliation of Net Income (GAAP) to Adjusted EBITDA (Non-GAAP) Three Months Ended September 30, Nine Months Ended September 30, In millions, except percentages (unaudited) 2023 2022 2023 2022 Net income (loss) (GAAP) $ 25.2 $ 75.4 $ 111.4 $ 196.0 Provision (benefit) for income taxes 6.9 20.4 32.5
Slide 20: Reconciliation of Gross Profit to Adjusted Gross Profit
Reconciliation of Gross Profit (GAAP) to Adjusted Gross Profit (Non-GAAP) Three Months Ended September 30, Nine Months Ended September 30, In millions, except percentages (unaudited) 2023 2022 2023 2022 Gross Profit (GAAP) $ 129.0 $ 176.3 $ 412.4 $ 464.7 Plus: Depreciation and amortization 21.1 15.8
Slide 21: Reconciliations of SG&A to Adjusted SG&A
Reconciliations of SG&A (GAAP) to Adjusted SG&A (Non-GAAP) Three Months Ended September 30, Nine Months Ended September 30, In millions, except percentages (unaudited) 2023 2022 2023 2022 SG&A (GAAP) $ 40.0 $ 54.2 $ 140.3 $ 142.9 Research and technical expenses (GAAP) 7.8 7.6 24.6 23.1 Total SG&A (G
Slide 22: Reconciliations of Other (income) expense, net to Adjusted
Reconciliations of Other (income) expense, net (GAAP) to Adjusted Other (income) expense, net (Non-GAAP) Three Months Ended September 30, Nine Months Ended September 30, In millions, except percentages (unaudited) 2023 2022 2023 2022 Other (income) expense, net (GAAP) $ 1.3 $ 2.0 $ (13.9) $ (1.0) Le
Slide 23: Reconciliation of Cash Flow from Operations to Free Cash Flow
Reconciliation of Cash Flow from Operations (GAAP) to Free Cash Flow (Non-GAAP) Three Months Ended September 30, Nine Months Ended September 30, In millions (unaudited) 2023 2022 2023 2022 Cash Flow from Operations $ 106.9 $ 100.1 $ 160.5 $ 214.9 Less: Capital Expenditures 33.5 36.1 80.6 93.3 Free C
Slide 24: Calculation of Net Debt to Adjusted EBITDA Ratio
Calculation of Net Debt to Adjusted EBITDA Ratio (Non-GAAP) In millions, except ratios (unaudited) September 30, 2023 Notes payable and current maturities of long-term debt $ 3.0 Long-term debt including finance lease obligations 1,469.7 Debt issuance costs 5.6 Total Debt $ 1,478.3 Less: Cash and ca
Slide 25: Calculation of Historical Net Debt Ratio
Calculation of Historical Net Debt Ratio (Non-GAAP) December 31, 2022 2023 In millions, except ratios (unaudited) 2019 2020 2021 Q1 Q2 Q3 Q4 Q1 Q2 Net Debt (1) $ 1,121.0 $ 982.7 $ 928.7 $ 976.7 $ 975.9 $ 1,011.3 $ 1,324.3 $ 1,352.3 $ 1,384.4 Adjusted EBITDA(2) 396.9 397.9 422.2 435.8 439.2 457.9 452