Ingevity Corporation · NYSE:NGVT
Ingevity — Investor Presentation (June 2023)
49 slides from Ingevity's investor presentation, Jun 20, 2023
Slide 1: Ingevity Investor Presentation
Ingevity Investor Presentation 1
Slide 2: Use of non-GAAP financial measures and forward-looking statements
Use of non-GAAP financial measures: This presentation includes certain non‐GAAP financial measures intended to supplement, not substitute for, comparable GAAP measures. Reconciliations of non‐GAAP financial measures to GAAP financial measures are provided within the Appendix to this presentation. In
Slide 3: Agenda
Agenda 1. Company Overview 2. Accelerating on the Road to Growth 3. Performance Chemicals 4. Performance Materials 5. Advanced Polymer Technologies 6. Appendix 3
Slide 4: Company Overview
Company Overview 4
Slide 5: 1. See appendix for Ingevity's use of non-GAAP financial measures, definitions of those financial
1. See appendix for Ingevity's use of non-GAAP financial measures, definitions of those financial measures and reconciliations to the nearest GAAP financial measures. 5 2. Advanced Polymer Technologies was reported within our Performance Chemicals segment for 2022. The total revenue for Performance
Slide 6: Applications and end markets
COATINGS AGRICULTURAL INGREDIENTS DISPERSANTS ASPHALT PAVING Performance-driven AltaHance™ sticker adjuvant Materials for batteries and 60% reduction in organic compound industrial coatings provides up to 80% rainfastness! textile dyes emissions when using Evotherm®! LUBRICANTS RENEWABLE ENERGY AND
Slide 7: 1: Management estimate based on novel and externally published methodologies 2: Management estimate based
7 1: Management estimate based on novel and externally published methodologies 2: Management estimate based on Ingevity sales data
Slide 8: Deep Bench of Talent Led by an Experienced and Proven Leadership Team
Deep Bench of Talent Led by an Experienced and Proven Leadership Team John Fortson Mary Dean Hall Ed Woodcock Rich White Steve Hulme President and Chief EVP and Chief EVP and President, SVP and President, SVP and President, Advanced Executive Officer Financial Officer Performance Materials Performan
Slide 9: Accelerating on the Road to Growth
Accelerating on the Road to Growth 9
Slide 10: Historical Financial Performance
Historical Financial Performance We have nearly doubled the size of the company since the spin Revenue In the seven years since EBITDA the spin: $1,668 • Nearly doubled revenue $1,392 • More than doubled EBITDA $1,293 $USD (Millions) $1,216 • Consistently maintained top quartile $1,134 $972 EBITDA m
Slide 11: Our Path Forward
Our Path Forward Achieving breakthrough growth and profitability Next Gen Ingevity 5+ Years Deliver extraordinary financial performance Accelerate Commercialize battery technology 2-5 Years Build leading positions in new end markets Globalize solutions Transition Expand into battery technology marke
Slide 12: Outpacing Industry Growth With Our Unique Capabilities
Outpacing Industry Growth With Our Unique Capabilities Expected ’22-’29 Ingevity’s Product/Market Macro Trend Growth Rate + Unique Position Opportunities Profitability 80+ year history Legacy markets: adhesives, Performance 10-14% Revenue growth Chemicals of refining pine oils oilfield, ag chemicals
Slide 13: Biofuels Impact on CTO
Biofuels Impact on CTO Biofuels entrants are constraining available supply and driving unprecedented upward pricing pressure Global CTO Processing Capacity in Tons1 Oleochemical Feedstock Pricing2 700,000 600,000 500,000 400,000 New biofuels entrants 300,000 200,000 100,000 0 Palm fatty acid distill
Slide 14: Innovating Into New End Markets
Innovating Into New End Markets Diversifying our raw materials creates new end market opportunities TOFA / AFA into Biofuels High-Growth Excess volumes available to service high-growth biofuels market Markets End Markets Personal Care New AFA in New Markets Cosmetics with New Customers Animal Feed &
Slide 15: Expected Carbon Growth Outpaces BEV Adoption Rates
Expected Carbon Growth as a Result of Stricter Regulatory Trends Outpaces BEV Adoption Rates Automotive production by vehicle type1 $11.50 100 Average $ of NGVT $10.50 content per vehicle Emerging Fuel Types $9.50 BEV 80 Diesel Vehicles in millions $8.50 PHEV 60 FHEV Ingevity’s activated carbon is i
Slide 16: Advanced Polymer Technologies Revenue and Margin Growth Accelerators
Advanced Polymer Technologies Revenue and Margin Growth Accelerators Gaining market share through new economy growth markets Macro Trends Drive Growth in Key End Markets Bioplastics Automotive and Footwear & Adhesives Transportation and Apparel in Packaging Growing Profitability to Mid-Upper 20% EBI
Slide 17: Plan to Double Revenue and EBITDA Over Next Seven Years
Plan to Double Revenue and EBITDA Over Next Seven Years Revenue (M) EBITDA (M) Revenue EBITDA ~$3,500 ~$1,000 ~$300 ~$150 ~$400 EBITDA ~$160 Revenue $500 $1,700 ~$240 ~$1,100 2022 Performance Advanced Performance 2029 2022 Performance Advanced Performance 2029 Chemicals Polymer Materials Chemicals P
Slide 18: Performance Chemicals
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Slide 19: Performance Chemicals Business Overview
Performance Chemicals Business Overview Revenue growth ($M) EBITDA ($M) 1000 180 160 875 900 160 800 733 689 140 680 700 607 623 578 120 600 100 79 500 80 400 300 60 200 40 100 20 0 0 2016 2017 2018 2019 2020 2021 2022 2016 2022 Revenue Shifting revenue mix towards higher-value derivatized products
Slide 20: Industrial Specialties Business Overview
Industrial Specialties Business Overview Revenue growth ($M) Margin Profile of End Markets 700 634 LOWER HIGHER 600 555 497 494 500 459 460 392 • Industrial • Adhesives • Oilfield 400 Applications 1 300 • Agricultural Chemicals 200 • Lubricants 100 0 2016 2017 2018 2019 2020 2021 2022 2022 Revenue 1
Slide 21: Strong Revenue Growth Enhanced by AFA
Strong Revenue Growth Enhanced by AFA Key Drivers Targeted growth rates Oilfield 2022-2029 • Geographic expansion with customized ($M) regional solutions in specialized applications such as pipelines Adhesives • Increased need for higher performing 100%+ $1.2-1.4B adhesives in areas such as road str
Slide 22: Pavement Technologies Business Overview
Pavement Technologies Business Overview Revenue growth ($M) 300 250 241 179 183 187 195 200 163 149 150 100 50 0 2016 2017 2018 2019 2020 2021 2022 2022 Revenue 4% 9% North America 37% 9% APAC By End Pavement By Europe, Middle Application* Preservation Region* East, and Africa 63% Evotherm
Slide 23: Ingevity Pavement Solutions Layer by Layer
Ingevity Pavement Solutions Layer by Layer Road Striping • Thermoplastics, preformed, paints, Stabilizers,Preservation Pavement Polymers PAVEMENT PRESERVATION • Emulsifiers, Stabilizers, Polymers EVOTHERM TECHNOLOGIES Evotherm Technologies • Warm Mix Additives (Evotherm) • Rejuvenators (EvoFlex) • L
Slide 24: Delivering Double-Digit Revenue Growth
Delivering Double-Digit Revenue Growth Accelerated by road markings acquisition Estimated Growth ($M) Key Drivers $500-800 Increased focus on safety and sustainability Advocacy and education guide improvement in global regulatory standards Innovation accelerates global technology adoption $241 Lever
Slide 25: EVOTHERM Warm Mix Asphalt Technology
EVOTHERM® Warm Mix Asphalt Technology EVOTHERM warm mix asphalt technology allows asphalt to be manufactured at lower temperatures, providing numerous benefits for the community and surrounding environment Improves Reduces Extends the Life Reduces Your Increases Air Quality Paving Costs of the Road
Slide 26: Expanding Into New End Markets by Diversifying Our Raw Materials
Expanding Into New End Markets by Diversifying Our Raw Materials Legacy CTO Renewable North Charleston, SC Pulp mill Crude tall oil raw materials DeRidder, LA Intermediate products Lignin Tall Oil Fatty Distilled Tall Oil Rosin Biofractions Acid (TOFA) Tall Oil (TOR) Derivative end-uses • Ag Chem •
Slide 27: Transforming Our Plant Network to Produce an Array of Fatty Acids
Transforming Our Plant Network to Produce an Array of Fatty Acids Our Plant Network Today Our Plant Network of Tomorrow Single key raw material Diversity of feedstocks Soy Canola Palm Crude Tall Oil Crude Tall Oil Other Oleo Raw Materials 3 plants running at 2/3 capacity Optimizing plant utilization
Slide 28: Crossett Value Chain Transition
Crossett Value Chain Transition Optimizing use of existing vessels increases capacity 120% CTO Soy/Canola + PFAD + TBD Soy/ Palmitic Oleic Canola Future Biorefinery + Glycerin Fatty + Fatty Fatty Feedstocks Acid Acid Acid 125kT Capacity 275kT Capacity Lignin 28
Slide 29: Performance Chemicals 2029 Targets
Performance Chemicals 2029 Targets Growing revenue and EBITDA by more than 2X; EBITDA margins grow from mid-high teens to low 20s Targeted Financials ($M) $1.7-2.2B Revenue EBITDA $1.4-1.6B $350-450 $875 $200-235 $160 29 2022 Mid Decade 2029
Slide 30: Performance Materials
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Slide 31: Performance Materials Business Overview
Performance Materials Business Overview Revenue growth ($M) Regional Sales 2022 549 510 517 12% 491 400 349 301 48% 2016 2017 2018 2019 2020 2021 2022 39% China 6 COVID-19 Q3 ‘18– Q3 ‘19 Depressed automotive production EBITDA ($M) & EBITDA Margin % 1% 249 249 252 North America 213 South America 169
Slide 32: Ingevity's Advantage
Ingevity’s Advantage Our Carbon vs Others Ingevity’s Other carbons • Unique large surface area and Hardwood-based Micro porosity in other flexible pore structure carbon carbons only captures, Our carbon’s pore doesn’t release • 50+ years running complex design captures AND global manufacturing relea
Slide 33: Activated Carbon Products
Activated Carbon Products Renewable Hardwood Sawdust Carbon Honeycomb Sawmill raw materials + Phosphoric Acid Activation Facility Facility Intermediate Powdered Granular Pelletized Activated carbon products activated carbon activated carbon activated carbon ceramic honeycombs End-uses • Water treatm
Slide 34: Stricter Regulations on Gasoline Evaporative Emissions
Stricter Regulations on Gasoline Evaporative Emissions Increases the Canister Size and Dollar of Ingevity Content per Vehicle Increasing canister size Potential for new regulations by country and region 1,2 increases the dollar of Ingevity content per vehicle 2023 2024 2025 2026 2027 2028 Region Uni
Slide 35: Expected Carbon Growth Outpaces BEV Adoption Rates
Expected Carbon Growth as a Result of Stricter Regulatory Trends Outpaces BEV Adoption Rates Automotive production by vehicle type1 100 Revenue continues to Emerging Fuel Types grow even as the BEV 80 Diesel percentage of ICE vehicles declines, Vehicles in millions PHEV FHEV 60 MHEV because Ingevity
Slide 36: Ingevity Grows Through the BEV Transition
Ingevity Grows Through the Battery Electric Vehicle (BEV) Transition Stricter regulations and increased production of hybrids more than offsets BEVs Even under BEV Adoption Assumptions Performance Materials Revenue Growth1 the most aggressive BEV BCG Aggressive adoption % Vehicles BEV 2 2025 2029 as
Slide 37: EV Batteries Consist of Many Components and Opportunities for Ingevity
EV Batteries Consist of Many Components and Potential Opportunities for Ingevity to Participate Lithium-ion Battery Component Breakdown We are in early stages of evaluating future battery technologies as well… Solid-state Active Material Binder Cathode Conductive Agent Additives Solute Natural Graph
Slide 38: Exciting Alternative Use of Ingevity Activated Carbon
Exciting Alternative Use of Ingevity Activated Carbon Silicon anodes in batteries Why silicon anode batteries in EVs? What our carbon does Global market for anode material 2020–2030 • Enables greater energy storage, • Unique design of our carbon’s porous CAGR1 approximately 10x the capacity network
Slide 39: Performance Materials 2029 Targets
Performance Materials 2029 Targets Consistently delivering mid-to-upper 40% EBITDA margins Targeted Financials ($M) Revenue $775-1.0B EBITDA $625-700 $549 $350-450 $290-325 $252 39 2022 Mid Decade 2029
Slide 40: Advanced Polymer Technologies
Advanced Polymer Technologies 40
Slide 41: Advanced Polymer Technologies Business Overview
Advanced Polymer Technologies Business Overview Revenue growth ($M) EBITDA ($M) 245 186 40 128 33 32 2020 2021 2022 2020 2021 2022 2022 Revenue 2% 3% Automotive & Transportation 6% 23% 21% 7% Industrial Equipment 23% 27% 27% North America 31% Monomer Footwear & Apparel By 42% By APAC 9% By end- prod
Slide 42: What Are Capa Caprolactones?
What Are Capa® Caprolactones? Advanced polymer technologies value chain What do Capa products do? Traditional Caprolactone Caprolactone Specialty derivatization Capa enables high-performing feedstocks reactor facility monomer end-use products that are contributing to sustainability • More flexible •
Slide 43: Focus on Strategic, High-Margin and High-Growth End-Markets
Focus on Strategic, High-Margin and High-Growth End-Markets Estimated Growth ($M) $480-650 Growth Drivers Above industry CAGR driven by Capa’s sustainability value proposition • Durability in use • Biodegradability at end of life Consumer packaging, auto & transport, $245 footwear and apparel accoun
Slide 44: Advanced Polymer Technologies 2029 Targets
Advanced Polymer Technologies 2029 Targets Impressive growth in attractive end markets enables improved EBITDA margins Targeted Financials ($M) Revenue $480-650 EBITDA $360-410 $245 $145-200 $80-100 $40 44 2022 Mid Decade 2029
Slide 45: Why Invest in Ingevity?
Why Invest in Ingevity? Evolving and expanding product lines/feedstocks to Growth Focus capture high growth, high value, environmentally beneficial opportunities globally History of developing and commercializing winning Innovation Leader products from sustainable, renewable sources A robust custome
Slide 46: Appendix
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Slide 47: Non-GAAP financial measures definitions
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 accordance with GAAP. These finan
Slide 48: Reconciliation of Net Income and Diluted EPS to Adjusted Earnings
Reconciliation of Net Income (Loss) (GAAP) and Diluted Earnings (Loss) Per Share (GAAP) to Adjusted Earnings (Loss) (Non-GAAP) and Diluted Adjusted Earnings (Loss) per share (Non-GAAP) In millions, except per data (unaudited) 2022 Net income (loss) (GAAP) $ 211.6 Restructuring and other (income) cha
Slide 49: Reconciliation of Net Income to Adjusted EBITDA
Reconciliation of Net Income (GAAP) to Adjusted EBITDA (Non-GAAP) Twelve Months Ended December 31, In millions, except percentages (unaudited) 2016 2017 2018 2019 2020 2021 2022 Net income (loss) (GAAP) $ 44.4 $ 145.0 $ 181.8 $ 183.7 $ 181.4 $ 118.1 $ 211.6 Provision (benefit) for income taxes 42.6