Slide 1: Outlook for Pine Chemicals and the Rosin Industry
Outlook for Pine Chemicals and the Rosin Industry With a Focus on Industrial Specialties August 25, 2021 Mike Smith, EVP and President, Performance Chemicals Rich White, Vice President, Industrial Specialties 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 Mike Smith Rich White Executive Vice President Vice President, and President, Industrial Specialties Performance Chemicals ▪ Joined Ingevity in 2016 ▪ Joined Ingevity in 2019 ▪ 23 years at FMC Corporation, positions ▪ Formerly Vice President of Global include
Slide 4: Today's Agenda
Today’s Agenda Industrial Specialties Business Strategy Tall Oil Rosin Market Dynamics Tall Oil Fatty Acid Market Dynamics Innovative and Emerging Uses for Industrial Specialties 4
Slide 5: Industrial Specialties Business Strategy
1 Industrial Specialties Business Strategy 5
Slide 6: We're Strategically Focused on High Value-Added Products and Markets
We’re Strategically Focused on High Value- Added Products and Markets Ingevity business model across the value chain Denotes Industrial Specialties STRATEGICALLY VALUING UP REVENUES Sustainable raw materials Essential ingredients Technology partner Ingevity ▪ Tall oil fatty acid (TOFA) ▪ Adhesives ▪
Slide 7: We Add Value Throughout the Pine Chemicals Chain
Renewable raw materials We Add Value Throughout the Pine Chemicals Pulp Mill ▪ CTO contracts in place to Chain cover ~90% of 2022 demand; 65% covered by long-term supply agreements Crude tall oil ▪ Anticipated cost inflation over the next 4-5 years Biorefinery Intermediate products Tall oil Tall oil
Slide 8: Industrial Specialties is Driving Value From Pine-Based Chemistry
Industrial Specialties is Driving Value From Pine-Based Chemistry Sales ($M) (2) 700 Driving value in pine chemistry 600 500 TOR-based TOFA-based Biofractions derivatives derivatives 400 ▪ Tackifier adhesives ▪ Lubricants ▪ Sterols 300 ▪ Paper sizing ▪ Oilfield ▪ Renewable energy 200 ▪ Rubber emulsi
Slide 9: Industrial Specialties Has a Multi-Faceted Strategy
Industrial Specialties Has a Multi-Faceted Strategy HIGHER–VALUE INNOVATION OPERATIONAL POSITION EXCELLENCE ▪ Leverage sustainable nature of ▪ Leverage strong customer ▪ Drive cost efficiencies across renewable raw material-based relationships to drive manufacturing facility network pine chemistry t
Slide 10: Tall Oil Rosin (TOR) Market Dynamics
2 Tall Oil Rosin (TOR) Market Dynamics 10
Slide 11: Chinese and Brazilian Gum Rosin Represent the Majority of the Rosin Market
Chinese and Brazilian Gum Rosin Represent the Majority of the Rosin Market TOR Production by source (1) Use by application (2) Wood rosin Other 6% (stumps) Personal care 5% China Food & beverage Tackifier The Brazil 9% adhesives Tall oil Gum 31% global rosin rosin Indonesia Rubber rosin ROW 13% Road
Slide 12: TOR Pricing Is Correlated to Chinese and Brazilian Gum Rosin
TOR Pricing Is Correlated to Chinese and Brazilian Gum Rosin Pricing behavior of TOR substitutes (1, 2) CGR supply impact on rosin pricing TOR pricing directionally follows CGR but typically with a timing lag 2500 Fire at turpentine If Then facility 2000 COVID-19 CGR… producers… pandemic CGR 1500 be
Slide 13: We're Combining Performance and Sustainability to Drive Growth in Adhesives
We’re Combining Performance and KEY GROWTH Sustainability to Drive Growth in MARKET DYNAMICS Adhesives Rosin use in adhesives (1) Rosin in adhesives growth rates (1) Globally, KT adhesives is a 700 3.4% CAGR roughly $1B Road 600 Tackifiers 500 market with Tackifiers striping 400 4.2% CAGR Road 37% s
Slide 14: Safety Road Striping Adhesives
Safety Road Striping Adhesives KEY GROWTH WestRez is a 90% bio-based rosin technology that enhances MARKET adhesive performance and increases driver safety SPOTLIGHT Industry challenge The U.S. spends $2 billion per year on safety road marking materials and transportation agencies continue to seek w
Slide 15: We're Supporting the Inks Market With Phenol- and Formaldehyde-Free Resins
We’re Supporting the Inks Market With LEGACY MARKET DYNAMICS Phenol- and Formaldehyde-Free Resins Global printing inks market size (1) The global printing inks market is in $B decline but we’re mi 38 Since 2020, between 25% also seeing a 37 to 40% of our inks sales positive shift to sales 36 35 have
Slide 16: Tall Oil Fatty Acid (TOFA) Market Dynamics
3 Tall Oil Fatty Acid (TOFA) Market Dynamics 16
Slide 17: TOFA Is a Small Fraction of the Total Global Non-Food Fatty Acid Market
TOFA Is a Small Fraction of the Total Global Non-Food Fatty Acid Market Non-food fatty acid production by source (1) Non-food fatty acid use (2) 2020 Palm Oilfield Chemicals 4% Other 3% Lubricants Tallow 6% Rubber & Plastic Cosmetics Coconut & palm kernel 8% & Personal Care TOFA 36% Household Other
Slide 18: We're Leveraging the Bio-Based Nature of TOFA Derivatives into Lubricants
We’re Leveraging the Bio-Based Nature of KEY GROWTH MARKET TOFA Derivatives into Lubricants DYNAMICS Global lubricants demand (1) The lubricants market has a Grease 3% Africa and Middle East 9% 3-4% CAGR with the largest Metalworking 6% S. America 2% demand occurring in China and expected further gr
Slide 19: We See Continued Opportunity to Grow Adoption of Our Products in Oilfield
We See Continued Opportunity to Grow LEGACY MARKET Adoption of Our Products in Oilfield DYNAMICS Global oilfield chemicals spend/year (1) Ingevity 2020 sales - $75.6 M The oilfield 32 By application By region market 2020 - 2025 CAGR of 13.5% EMEA APAC continues to $B 22 9% 8% recover. Production 12
Slide 20: Oilfield Drilling and Production
Oilfield Drilling and Production LEGACY Our EnvaDry® powder emulsifier additive enhances drilling mud MARKET SPOTLIGHT formulation safety and is more environmentally friendly Industry challenge Liquid emulsifiers often pose challenges for offshore and cold-weather oil drilling and production locatio
Slide 21: Innovative and Emerging Uses for Industrial Specialties
4 Innovative and Emerging Uses for Industrial Specialties 21
Slide 22: Agricultural Chemicals
Agricultural Chemicals Our lignin-based portfolio contains sustainable, multifunctional formulation enhancers Industry challenge ▪ Crop protection, micronutrients and seed treatment are high-growth global markets ▪ Customer base consolidation ▪ Safer and more complex formulations are being required
Slide 23: Emerging Industrial Specialties Technologies
Emerging Industrial Specialties Technologies Biofuels Alternative fatty acids (AFA) ▪ GHG reduction push for transportation fuels ▪ ESG goals and government regulations shifting driving biofuels investment in U.S. and Europe formulations to bio-based products ▪ Demand and prices for fats, oils, resi
Slide 24: Industrial Specialties Has a Multi-Faceted Strategy
Industrial Specialties Has a Multi-Faceted Strategy HIGHER–VALUE INNOVATION OPERATIONAL POSITION EXCELLENCE ▪ Leverage sustainable nature of ▪ Leverage strong customer ▪ Drive cost efficiencies across renewable raw material-based relationships to drive manufacturing facility network pine chemistry t