Slide 1: Fourth Quarter 2019 Earnings Presentation
PURIFY I PROTECT I ENHANCE Fourth Quarter 2019 Earnings Presentation February 3, 2020
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 ▪ Fourth Quarter and Full Year Highlights ▪ Segment Performance ▪ Performance Materials Update ▪ Financial Review ▪ 2020 Outlook and Guidance ▪ Q&A 3
Slide 4: Fourth Quarter and Full Year 2019 Results
Fourth Quarter and Full Year 2019 Results ∆% vs 4Q Prior Year FY ∆% vs Prior Performance Highlights $ in millions 2019 Period 2019 Year Net Sales 303.4 8.9% 1,292.9 14.1% FOURTH QUARTER Adjusted EBITDA(1) 91.1 24.3% 396.9 23.8% ▪ Strong quarter in line with expectations Adjusted EBITDA(1) 30.0% +370
Slide 5: Performance Chemicals
Performance Chemicals ∆% 4Q vs Prior Year FY ∆% vs Performance Highlights $ in millions 2019 Period 2019 Prior Year Net Sales 175.2 5.5% 802.3 9.4% ▪ Revenue increase of 6% driven by addition of Industrial Specialties 88.7 (19.1)% 385.5 (12.5)% Capa (pro forma(1) revenue down 13%) Oilfield Technolog
Slide 6: Performance Materials
Performance Materials ∆% 4Q vs Prior Year ∆% vs Performance Highlights $ in millions 2019 Period FY 2019 Prior Year Net Sales 128.2 14.0% 490.6 22.5% ▪ Revenue increase of 14% Automotive Technologies 120.8 16.8% 454.9 25.7% ▪ Accelerated sales in China due to Process Purification 7.4 (18.7)% 35.7 (7
Slide 7: Performance Materials Growth Strategy
Performance Materials Growth Strategy On-track to double revenues from 2015 base in 2020 ▪ Maintain global leadership in technical and application expertise and regulatory advocacy ▪ Invest to ensure capacity and supply to meet growing global demand ▪ Expand our intellectual property portfolio ▪ Inn
Slide 8: Current Evaporative Emissions Technology Around the World
Current Evaporative Emissions Technology Around the World 8
Slide 9: Regulatory Changes Driving Growth
Regulatory Changes Driving Growth Expect increasing regulatory standards to continue Gasoline Multi-day + ORVR One-day Multi-day Near Zero Region Vehicles* + refueling (e.g. (e.g. Tier 1) (e.g. Euro 6) (e.g. Tier 3) (M) Tier 2 or China 6) US & Canada 17.7 Mid-1970s 1980s Late 1990s 2017-2022 S. Kore
Slide 10: Ingevity's '844 "Bleed" Emissions Patent
Ingevity’s ‘844 “Bleed” Emissions Patent Currently relevant only to U.S./Canada Control Technology TIER 1 ▪ These canister technologies are 1970–80s technology / 0.5-1.0L not covered by the “bleed” One Day Parking India - Europe emissions patent Japan - Brazil - S. Korea ▪ Ingevity’s granular and pe
Slide 11: Defending our Market Position Post 2022
Defending our Market Position Post 2022 NEW ‘649 Family of Patents for New Wave of Low-Purge Engines STRATEGY ELEMENTS ▪ First patent issued in August 2017 ▪ 15% to 20% of U.S. and Canadian vehicles already ▪ Capturing value from our unique fall under patent pelleted carbons through increased ▪ Sale
Slide 12: '844 Patent Litigation Update
’844 Patent Litigation Update MAHLE ▪ Ingevity brought two legal actions against MAHLE • Infringement claim in federal court (stayed pending ITC final resolution) • Action with ITC seeking to ban imports of the infringing product • MAHLE’S solution adds non-Ingevity carbon to reduce or eliminate hon
Slide 13: '844 Patent Litigation Update
’844 Patent Litigation Update BASF ▪ Ingevity brought legal action due to BASF infringing Ingevity’s ‘844 patent • Infringement claim in Federal court; trial date September 2020 • Patent remains valid through the trial and any appeal (likely early 2022) • We do not believe BASF’s solution is on any
Slide 14: Fourth Quarter 2019 Financial Summary
Fourth Quarter 2019 Financial Summary Key Operating Metrics vs PY vs PY $ in millions except EPS Q4 2019 Q4 2018 FY 2019 FY 2018 ∆% ∆% Consolidated Income Statement: Net sales $303.4 $278.6 8.9% $1,292.9 $1,133.6 14.1% Gross Profit $111.0 $97.6 13.7% $482.0 $416.8 15.6% % Margin 36.6% 35.0% +160 bps
Slide 15: Fourth Quarter 2019 Financial Summary
Fourth Quarter 2019 Financial Summary Balance Sheet Snapshot Capital Structure (as of 12/31/19) Working Capital Management $ in millions Current $ in millions Pricing Amount $750m Revolver L+150 $131.3 Term Loans L+100-150 740.6 Inventory, net $213 $210 $141m Interest Rate Swap (1) 1.41% Senior Note
Slide 16: Delivering on Commitments in 2019
Delivering on Commitments in 2019 $M What We Said (Original 2019 Guidance and 2018 Investor Day) What We Did Status Revenue 1,300-1,360 1,293 Adjusted EBITDA(1) 390-410 397 Capex 110-120 115 Free Cash Flow(1) 180-190 161 Net Debt to <3.0x 2.84x Adjusted EBITDA(1) On track to double Double revenue in
Slide 17: 2020 Outlook and Guidance
2020 Outlook and Guidance ($M) OVERALL ▪ Little to no macroeconomic recovery ▪ Limited impacts from coronavirus in China Item 2020 Guidance PERFORMANCE CHEMICALS: ▪ Segment revenues flat to down slightly Revenue $1,300 to $1,350 ▪ Solid growth for Capa; monomer stabilization; growth in derivatives;
Slide 18: For More Information
PURIFY │ PROTECT│ENHANCE For More Information Investors Dan Gallagher dan.gallagher@ingevity.com (843) 740-2126 Media Jack Maurer jack.maurer@ingevity.com (843) 746-8242 Thank you for your interest in Ingevity! 18
Slide 19: Appendix
Appendix 19
Slide 20: 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 21: 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 Ended Twelve Months Ended December 31, December 31, In millions, except per data (unaudited) 2019 2018 2019 2018 Net income (loss) $ 44.3 $ 42.1 $ 183.7 $ 181.8 Less: Net income (loss) attributable to nonc
Slide 22: Reconciliation of Net Income (GAAP) to Adjusted EBITDA (Non-GAAP)
Reconciliation of Net Income (GAAP) to Adjusted EBITDA (Non-GAAP) Three Months Ended Twelve Months Ended December 31, December 31, In millions (unaudited) 2019 2018 2019 2018 Net income (loss) (GAAP) $ 44.3 $ 42.1 $ 183.7 $ 181.8 Provision (benefit) for income taxes 10.8 1.5 44.2 40.0 Interest expen
Slide 23: Calculation of Net Debt to Adjusted EBITDA Ratio (Non-GAAP)
Calculation of Total Debt to Net Income (Loss) Ratio (GAAP) to Net Debt to Adjusted EBITDA Ratio (Non-GAAP) In millions, except ratios (unaudited) December 31, 2019 Notes payable and current maturities of long-term debt $ 22.5 Long-term debt including finance lease obligations 1,228.4 Debt issuance
Slide 24: Reconciliation of SG&A (GAAP) to Core SG&A (Non-GAAP)
Reconciliation of Selling, General and Admin (SG&A) (GAAP) to Core SG&A (Non-GAAP) Three Months Ended Twelve Months Ended In millions (unaudited) December 31, December 31, 2019 2018 2019 2018 SG&A (GAAP) $ 40.8 $ 35.9 $ 163.1 $ 132.4 Intangible amortization related to acquisitions 8.1 3.2 27.1 10.6
Slide 25: 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 26: Pro Forma Condensed Statement of Operations, Year Ended December 31, 2019
Reconciliation of Condensed Statement of Operations to Pro Forma Condensed Statement of Operations Year Ended December 31, 2019 Historical Caprolactone In millions, except per share data Ingevity Business 1 Pro Forma Net sales $ 1,292.9 $ 17.7 $ 1,310.6 Cost of sales 810.9 2.6 813.5 Gross profit 482
Slide 27: Pro Forma Condensed Statement of Operations, Year Ended December 31, 2018
Reconciliation of Condensed Statement of Operations to Pro Forma Condensed Statement of Operations Year Ended December 31, 2018 Pine Historical Chemicals Caprolactone In millions, except per share data Ingevity Business 1 Business 1 Pro Forma Net sales $ 1,133.6 $ 20.2 $ 167.0 $ 1,320.8 Cost of sale
Slide 28: Pro Forma Condensed Statement of Operations, Quarter Ended December 31, 2018
Reconciliation of Condensed Statement of Operations to Pro Forma Condensed Statement of Operations Quarter Ended December 31, 2018 Historical Caprolactone In millions, except per share data Ingevity Business 1 Pro Forma Net sales $ 278.6 $ 36.1 $ 314.7 Cost of sales 181.0 22.3 203.3 Gross profit 97.
Slide 29: Reconciliation of Net Income to Pro Forma Adjusted EBITDA, Year 2019
Reconciliation of Net Income (Loss) to Pro Forma Adjusted EBITDA Year Ended December 31, 2019 Historical Pro Forma In millions, expect percentages (unaudited) Ingevity Adjustment 1 Pro Forma Net income (loss) $ 183.7 $ 28.2 $ 211.9 Provision (benefit) for income taxes 44.2 6.7 50.9 Interest expense,
Slide 30: Reconciliation of Net Income to Pro Forma Adjusted EBITDA, Year 2018
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 1 Pro Forma Net income (loss) $ 181.8 $ 21.7 $ 203.5 Provision (benefit) for income taxes 40.0 3.5 43.5 Interest expense,
Slide 31: Reconciliation of Net Income to Pro Forma Adjusted EBITDA, Quarter 2018
Reconciliation of Net Income (Loss) to Pro Forma Adjusted EBITDA Quarter Ended December 31, 2018 Historical Pro Forma In millions, expect percentages (unaudited) Ingevity Adjustment 1 Pro Forma Net income (loss) $ 42.1 $ 6.1 $ 48.2 Provision (benefit) for income taxes 1.5 0.6 2.1 Interest expense, n
Slide 32: Comparison of Quarter Ended December 31, 2019 to Pro Forma December 31, 2018
Comparison of Quarter Ended December 31, 2019 to Pro Forma December 31, 2018 Pro Forma In millions, expect percentages (unaudited) Q4 2019 Q4 2018 $ Change % Change Total Ingevity Net sales $ 303.4 $ 314.7 $ (11.3) (3.6)% Adjusted EBITDA 91.1 88.1 3.0 3.4% Performance Chemicals Segment Net sales $ 1