Slide 1: Third Quarter 2018 Earnings Presentation
Third Quarter 2018 Earnings Presentation Oct. 25, 2018
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 Third Quarter Highlights Segment Performance Financial Review Outlook and Revised Guidance Q&A 3
Slide 4: Third Quarter 2018 Results
Third Quarter 2018 Results 3Q 3Q vs Prior Year $ in millions 2018 2017 Performance Highlights ∆ ∆% Net Sales 311.2 264.1 47.1 17.8% Strong demand across the board Adjusted EBITDA (1) 90.7 72.7 18.0 24.8% Adjusted EBITDA All businesses and manufacturing Margin (1) 29.1% 27.5% +160 bps operations
Slide 5: Performance Chemicals
Performance Chemicals 3Q 3Q vs Prior Year $ in millions 2018 2017 Performance Highlights ∆ ∆% Net Sales 214.9 178.7 36.2 20.3% Oilfield Technologies 32.5 20.3 12.2 60.1% Revenue increase of 20% Pavement Technologies 68.1 64.5 3.6 5.6% Georgia-Pacific acquisition 114.3 93.9 20.4 21.7% contributed
Slide 6: Performance Materials
Performance Materials 3Q 3Q vs Prior Year $ in millions 2018 2017 Performance Highlights ∆ ∆% Net Sales 96.3 85.4 10.9 12.8% Automotive Technologies 86.6 75.6 11.0 14.6% Revenue increase of 13% Process Purification 9.7 9.8 (0.1) (1.0)% Continued strong sales for “honeycomb” scrubbers used to Seg
Slide 7: Update on Global Regulatory Developments
Update on Global Regulatory Developments UNITED STATES AND CANADA • Continued strong demand through the “plateau” year in U.S. EPA Tier 3 implementation schedule • Tier 3 requirements step up to 80% for 2020 model years CHINA • Many regions and cities poised to adopt national China 6 standard early
Slide 8: Third Quarter 2018 Financial Results: Key Income Statement Metrics
Third Quarter 2018 Financial Results Key Income Statement Metrics $ in millions except EPS & shares outstanding 3Q 3Q vs PY Q3 YTD Q3 YTD vs PY 2018 2017 ∆% 2018 2017 ∆% Net Sales (GAAP) 311.2 264.1 17.8% 855.0 742.9 15.1% Adjusted EBITDA (Non-GAAP) (1) 90.7 72.7 24.8% 247.2 190.1 30.0% Adjusted EBI
Slide 9: Third Quarter 2018 Financial Results: Balance Sheet & Cash Flow
Third Quarter 2018 Financial Results Key Balance Sheet & Cash Flow Metrics $ in millions September 30, December 31, 2018 2017 Cash & cash equivalents 57.5 87.9 Restricted investment (related to capital lease) (1) 70.7 71.3 Total debt including capital lease obligation (2) 755.7 455.0 Net debt (3) 62
Slide 10: Revised 2018 Outlook and Guidance
Revised 2018 Outlook and Guidance ($M) PERFORMANCE CHEMICALS: Continuing recovery in oilfield Current FY18 Seasonality of pavement technologies Item Guidance Favorable outlook for industrial specialties, especially in high margin niches applications Partial success with tall oil rosin (TOR)
Slide 11: 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 11
Slide 12: Appendix
Appendix 12
Slide 13: 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 14: Reconciliation of Net Income (GAAP) to Adjusted Earnings (Non-GAAP)
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) 2018 2017 2018 2017 Net income (loss) $ 51.7 $ 38.4 $ 139.7 $ 97.2 Less: Net income (loss) attributable to nonco
Slide 15: Reconciliation of Net Income (GAAP) to Adjusted EBITDA (Non-GAAP)
Reconciliation of Net Income (Loss) (GAAP) to Adjusted EBITDA (Non-GAAP) Three Months Ended Nine Months Ended September 30, September 30, In millions (unaudited) 2018 2017 2018 2017 Net income (loss) (GAAP) $ 51.7 $ 38.4 $ 139.7 $ 97.2 Provision (benefit) for income taxes 16.4 16.7 38.5 44.9 Interes
Slide 16: Reconciliation of Segment Operating Profit to Segment EBITDA
Reconciliation of Segment Operating Profit (GAAP) to Segment EBITDA (Non-GAAP) Three Months Ended Nine Months Ended In millions (unaudited) September 30, September 30, Performance Materials 2018 2017 2018 2017 Segment operating profit (GAAP) $ 36.3 $ 29.3 $ 109.8 $ 89.5 Depreciation and amortization
Slide 17: 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 18: Reconciliation of Condensed Statement of Operations to Pro Forma
Reconciliation of Condensed Statement of Operations to Pro Forma Condensed Statement of Operations Quarter Ended September 30, 2017 Historical Pro Forma Pro In millions, except per share data Ingevity Adjustment Forma Net sales $ 264.1 $ 24.0 A $ 288.1 Cost of sales 170.9 16.1 B 187.0 Gross profit 9
Slide 19: Reconciliation of Net Income (Loss) to Pro Forma Adjusted EBITDA
Reconciliation of Net Income (Loss) to Pro Forma Adjusted EBITDA Quarter Ended September 30, 2017 Historical Pro Forma Pro In millions, expect percentages (unaudited) Ingevity Adjustment A Forma Net income (loss) $ 38.4 $ 2.4 $ 40.8 Provision (benefit) for income taxes 16.7 1.3 18.0 Interest expense
Slide 20: 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. B - Cost of sales Adjustments to cost of sales were as follows: In millions (unaudited) Q3 2017 Pine Chemical Business historical results (1) $ 18.8 Depreciation of acquired prop
Slide 21: Notes to the Unaudited Pro Forma Adjustments
Notes to the Unaudited Pro Forma Adjustments D - Acquisition costs Ingevity incurred one time transaction costs related to the Acquisition. An adjustment was made to reflect the reversal of these one-time costs recognized in Ingevity's historical condensed combined statement of operations. In millio