Slide 1: Performance Materials
Performance Materials June 25, 2020 Ed Woodcock, EVP and President, Performance Materials 1
Slide 2: Disclaimer
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 statements generally include the words “will,” “plans,” “intends,” “targets,” “expects,” “outlook,
Slide 3: Strong, Experienced Business Leadership
Strong, Experienced Business Leadership Ed Woodcock Executive Vice President and President, Performance Materials ▪ Joined Ingevity in 1988 ▪ 32 years of global experience managing Performance Materials and Performance Chemicals product lines ▪ Created a regulatory advocacy program to drive emission
Slide 4: Today's Agenda
Today’s Agenda 1 Performance Materials Segment Overview 2 Global Regulatory Landscape 3 Three-Pronged Growth Strategy 4 2020 and Near-Term Outlook 5 Q&A 4
Slide 5: Performance Materials Segment Overview
1 Performance Materials Segment Overview 5
Slide 6: Performance Materials Overview
Performance Materials Overview Technology Leader: Engineering, manufacturing and selling activated carbon since 1914 Manufacturing Footprint in U.S. & China: Two Largest Automotive Markets in the World Hardwood-based, chemically activated carbon products, produced through a highly BASE CARBON PRODUC
Slide 7: Performance Materials Overview
Performance Materials Overview History of growth and outstanding financial results Segment Revenue Segment EBITDA Segment EBITDA Margin Increased 97% in five years More than doubled in five years Continued margin accretion 213 491 169 43% 400 42% 142 41% 349 41% 123 301 39% 249 256 97 88 34% 2014 20
Slide 8: Performance Materials Strategic Advantages
Performance Materials Strategic Advantages Deep customer Reputation as global expert Early insight into the future relationships with Tier 1 on regulatory issues and of engine design and suppliers and OEMs evaporative emissions emissions control regulations Robust innovation and 40+ year history of
Slide 9: Ingevity's Carbon Technology Advantage
Ingevity’s Carbon Technology Advantage Unique processes and product features are the “secret sauce” Ingevity operates three hardwood sawdust/acid carbon activation facilities These unique facilities are complex and highly capital intensive compared to the alternate thermal/steam activation process I
Slide 10: Providing Activated Carbon Solutions
Providing Activated Carbon Solutions Technology leader in activated carbon solutions for gasoline vapor emissions control systems 1 Automotive Solutions Canister Solutions — High capacity and superior durability automotive granular and pellet activated carbons “Near Zero” Solutions — Activated carbo
Slide 11: '844 "Bleed" Emissions Patent Overview
‘844 “Bleed” Emissions Patent Overview Complete solution for “near zero” emissions - no single component is the key Patent covers Ingevity’s state-of-the-art canister system solution for the U.S. Tier 3 Pelleted Carbon Honeycombs near-zero emissions technology Filled Canister Typical configuration o
Slide 12: Anticipating New Trends in Engine Design
Anticipating New Trends in Engine Design Low-Purge Engines Examples of Low-Purge Engines New ‘649 Patent Family for New Wave of Low-Purge Engines • Flex Fuel — fuel injection and spark timing • ‘649 patent family designed to enable low-purge engines to adjusted automatically by sensor that detects f
Slide 13: Global Regulatory Landscape
2 Global Regulatory Landscape 13
Slide 14: Three Current-Day Standards and Solutions
Three Current-Day Standards and Solutions Ingevity activated carbon plays a key role across the board Environmental standards drive the Control Technology implementation of gasoline vapor emission control systems by automotive manufacturers. 1970–80s Technology | 0.5–1.0L TIER 1 One-day or Multi-Day
Slide 15: Imminent Shifts in Regulatory Standards
Imminent Shifts in Regulatory Standards Influencing and adapting to increasing stringency ENACTED POTENTIAL Regulatory Requirement Based on NGVT Management Estimate Gasoline Multi-day + One-day Multi-day Near Zero Region Vehicles* ORVR/refueling (e.g. Tier 1) (e.g. Euro 6d) (e.g. Tier 3) (M) (e.g. T
Slide 16: Much More Emissions to be Eliminated
Much More Emissions to be Eliminated Nearly half of the world’s gasoline vehicles are still subject to antiquated emissions standards Total Annual Evaporative Emissions on New Vehicles vs. Latitude (incl. parking, refueling, running loss, permeation, and hot soak) ~45% of world’s gasoline vehicles u
Slide 17: Gasoline-Powered Engines Will Continue to be Dominant for Multiple Decades
Gasoline-Powered Engines Will Continue to be Dominant for Multiple Decades Million Vehicles / Year Carbon Canisters — Gasoline-using vehicles Non-Gasoline, million (standard ICE and electric vehicles hybrids) continue to be the primary power source for Diesel = 236M, 10% the next decades Battery EVs
Slide 18: Three-Pronged Growth Strategy
3 Three-Pronged Growth Strategy 18
Slide 19: Regulatory Strategy
Regulatory Strategy Capitalize on increasingly Leverage strong leadership Work collaboratively with stringent regulatory and technical expertise with OEMs and Tier 1 suppliers standards being implemented regulatory decision-makers globally 19
Slide 20: Innovation Strategy
Leverage the application of the ‘649 patent family Maintain intellectual property and world-leading automotive carbon technology Innovation Strategy Innovate new technologies, materials and systems Offer customers comprehensive product portfolio and innovative solutions Explore new applications, suc
Slide 21: Commercial Strategy
Capture the premium associated with world leading carbon technology Continued global harmonization — OEMs simplifying designs, working toward a universal platform Commercial Reduce production costs through Strategy operational excellence Continue to build customer preference through unfailing qualit
Slide 22: '844 Patent Remains Valid and in Full Effect
‘844 Patent Remains Valid and in Full Effect Appeal Process Likely to Extend Past Patent Expiry 2022+ July 2018 November 2018 April 2019 October 2019 January / April 2020 May 2020 Anticipated Ingevity files suit in Ingevity files request MAHLE initiates U.S. Patent Office ITC ruled MAHLE’s Ingevity
Slide 23: 2020 and Near-Term Outlook
4 2020 and Near-Term Outlook 23
Slide 24: Auto Industry Outlook: Europe
Auto Industry Outlook Light Vehicle Sales by Region — Europe 2,750,000 • Broader, deeper U-shaped drop than U.S. and the 2008/2009 crisis • Carbon/HCA inventory hangover 2,250,000 • Ongoing diesel share decline • Incentives 1,750,000 • Additional volume • Expect Europe light vehicle sales to 1,250,0
Slide 25: Auto Industry Outlook: China
Auto Industry Outlook Light Vehicle Sales by Region — China 2,750,000 • Rapid V-shaped recovery • August shutdowns 2,250,000 • China 6 fully implemented • NEV (BEV, PHEV) near-term struggles 1,750,000 • Incentives & behaviors • Expect China light vehicle sales will continue at or above 75-85% for 1,
Slide 26: Auto Industry Outlook: U.S./Canada
Auto Industry Outlook Light Vehicle Sales by Region — U.S./Canada 2,750,000 • U.S. vehicle sales • Carbon/HCA inventory hangover 2,250,000 • Low U.S. vehicle inventory • Increased production/July shutdowns 1,750,000 • Light truck/SUV focus • Mexico production and supply chain issues impacting restar
Slide 27: Performance Materials: Confidence in Strong, Long-Term Growth
Performance Materials: Confidence in Strong, Long-Term Growth 40 years of technology leadership; Ingevity is widely recognized by regulators around the world as the leading experts in gasoline vapor emission control A reputation of superior quality and consistency that makes Ingevity the safe choice
Slide 28: Q&A
Q&A 28