Slide 1: First Quarter 2020 Earnings Presentation
First Quarter 2020 Earnings Presentation April 30, 2020 PURIFY I PROTECT I ENHANCE
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 forward looking statements generally include the words “may,” “could,” “should,” “believes,” “plan
Slide 3: Today's Agenda
Today’s Agenda 1. First Quarter Highlights 2. Segment Performance 3. Financial Review 4. Outlook and Guidance 5. Q&A 3
Slide 4: First Quarter 2020 Results
First Quarter 2020 Results 1Q 1Q vs Prior Year $ in millions 2020 2019 % % Performance Highlights Net Sales 288.2 276.8 11.4 4.1% ▪ Strong quarter despite initial impacts from Adjusted EBITDA(1) 92.2 83.5 8.7 10.4% coronavirus (COVID-19) ▪ Effects from Chinese auto demand Adjusted EBITDA(1) 32.0% 30
Slide 5: Response to COVID-19
Response to COVID-19 Crisis Management Manufacturing Operations ▪ Business Continuity Team and Task Force ▪ China locations resumed full operations activated; meet twice per week and daily, ▪ Performance Chemicals’ U.S. and U.K. respectively manufacturing locations running normally ▪ Positive test r
Slide 6: Performance Chemicals
Performance Chemicals 1Q 1Q vs Prior Year $ in millions 2020 2019 % % Performance Highlights Net Sales 167.1 167.7 (0.6) (0.4)% ▪ Revenue essentially flat vs. prior year Industrial Specialties 79.9 95.8 (15.9) (16.6)% ▪ Industrial Specialties: Sales decrease Oilfield Technologies 30.2 29.2 1.0 3.4%
Slide 7: Performance Materials
Performance Materials 1Q 1Q vs Prior Year $ in millions 2020 2019 % % Performance Highlights Net Sales 121.1 109.1 12.0 11.0% ▪ Revenue increase of 11% Automotive 112.9 99.7 13.2 13.2% ▪ Significant sales increase in China as Technologies automakers essentially complete Process Purification 8.2 9.4
Slide 8: First Quarter 2020 Financial Results
First Quarter 2020 Financial Results vs PY $ in millions except EPS Q1 2020 Q1 2019 ∆% Consolidated Income Statement: Net sales $288.2 $276.8 15.6% Gross Profit $114.6 $97.1 18.0% % Margin 39.8% 35.1% +470 bps Core SG&A (Non-GAAP) (1) $30.5 $34.0 (10.3)% Acquisition Amortization 8.0 5.1 56.9% Total
Slide 9: First Quarter 2020 Financial Summary
First Quarter 2020 Financial Summary Capital Structure Working Capital Management $ in millions Current $ in millions Pricing Amount $750m Revolver L+150 $375.0 Term Loans L+100-150 735.9 Inventory, net $236 $213 $166m Interest Rate Swap (1) 1.35% Senior Notes 4.5% 300.0 Accounts receivable, net 150
Slide 10: 2020 Outlook and Guidance Assumptions
2020 Outlook and Guidance Assumptions Performance Chemicals ▪ Chinese gum rosin prices increase modestly ▪ Continued pressure on rosin markets ▪ Significant decline in North American drilling and production, partially offset by international ▪ WTI oil prices recover to high $20s / low $30s ▪ Paving
Slide 11: 2020 Revised Guidance
2020 Revised Guidance ($M) Revised% FY20 Item FY19 Actual Initial FY20 Guidance Guidance Revenue $1,292.9 $1,300 to $1,350 $1,100 to $1,200 Adjusted EBITDA(1) $396.9 $400 to $420 $310 to $350 Adjusted tax rate(1) 21.5% 22-24% 22-24% Capital expenditures $115 $95-$105 ~$85 Free Cash Flow(2) $161 $200
Slide 12: 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 13: For More Information
For More Information Investors Dan Gallagher (843) 740-2126 Media Jack Maurer (843) 746-8242 Thank you for your interest in Ingevity! 13
Slide 14: Appendix
Appendix 14
Slide 15: 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 16: Reconciliation of Net Income to Adjusted Earnings (Q1)
Reconciliation of Net Income (Loss) (GAAP) to Adjusted Earnings (Loss) (Non-GAAP) Three Months Ended March 31, In millions, except per data (unaudited) 2020 2019 Net income (loss) (GAAP) $ 45.3 $ 22.7 Restructuring and other (income) charges (1) 0.5 — Acquisition and other related costs (2) 1.3 31.2
Slide 17: Reconciliation of Net Income to Adjusted EBITDA (Q1)
Reconciliation of Net Income (GAAP) to Adjusted EBITDA (Non-GAAP) Three Months Ended March 31, In millions (unaudited) 2020 2019 Net income (loss) (GAAP) $ 45.3 $ 22.7 Provision (benefit) for income taxes 9.9 — Interest expense, net 10.9 11.1 Depreciation and amortization 24.3 18.5 Restructuring and
Slide 18: Reconciliation of SG&A to Core SG&A; Historical Net Debt Ratio
Reconciliation of Selling, General and Admin (SG&A) (GAAP) to Core SG&A (Non-GAAP) Three Months Ended March In millions (unaudited) 31, 2020 2019 SG&A (GAAP) $ 38.5 $ 39.1 Intangible amortization related to acquisitions 8.0 5.1 Core SG&A (Non-GAAP) $ 30.5 $ 34.0 Net sales $ 288.2 $ 276.8 SG&A as a p
Slide 19: Total Debt to Net Income and Net Debt Ratio (March 2020)
Calculation of Total Debt to Net Income (Loss) Ratio (GAAP) to Net Debt to Adjusted EBITDA Ratio (Non-GAAP) In millions, except ratios (unaudited) March 31, 2020 Notes payable and current maturities of long-term debt $ 21.6 Long-term debt including finance lease obligations 1,467.8 Debt issuance cos
Slide 20: Reconciliation of Net Income to Adjusted Earnings (FY)
Reconciliation of Net Income (Loss) (GAAP) to Adjusted Earnings (Loss) (Non-GAAP) Twelve Months Ended December 31, In millions, except per data (unaudited) 2019 2018 Net income (loss) $ 183.7 $ 181.8 Less: Net income (loss) attributable to noncontrolling interests — 12.7 Net income (loss) attributab
Slide 21: Reconciliation of Net Income to Adjusted EBITDA (FY)
Reconciliation of Net Income (GAAP) to Adjusted EBITDA (Non-GAAP) Twelve Months Ended December 31, In millions (unaudited) 2019 2018 Net income (loss) (GAAP) $ 183.7 $ 181.8 Provision (benefit) for income taxes 44.2 40.0 Interest expense, net 46.9 29.8 Depreciation and amortization 85.0 57.0 Restruc
Slide 22: Total Debt to Net Income and Net Debt Ratio (December 2019)
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 23: Calculation of Free Cash Flow
Calculation of Free Cash Flow (Non-GAAP) Twelve Months Ended In millions (unaudited) December 31, 2019 2018 Cash Flow from Operations $ 275.7 $ 252.0 Less: Capital Expenditures 114.8 93.9 Free Cash Flow $ 160.9 $ 158.1 23
Slide 24: 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 also illustrate the effect of the acquisition of the Capa™ Caprolactone division ("Caprolactone Business") of Perstorp Holding AB (the "Se
Slide 25: Pro Forma Condensed Statement of Operations, Q1 2019
Reconciliation of Condensed Statement of Operations to Pro Forma Condensed Statement of Operations Quarter Ended March 31, 2019 Historical Caprolactone In millions, except per share data Ingevity Business 1 Pro Forma Net sales $ 276.8 $ 17.7 $ 294.5 Cost of sales 179.7 2.6 182.3 Gross profit 97.1 15
Slide 26: Pro Forma Condensed Statement of Operations, FY2019
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: Reconciliation of Net Income to Pro Forma Adjusted EBITDA
Reconciliation of Net Income (Loss) to Pro Forma Adjusted EBITDA Quarter Ended March 31, 2019 Historical Pro Forma In millions, expect percentages (unaudited) Ingevity Adjustment 1 Pro Forma Net income (loss) $ 22.7 $ 23.2 $ 45.9 Provision (benefit) for income taxes — 7.6 7.6 Interest expense, net 1