Slide 1: Second Quarter 2018 Earnings Presentation
Second Quarter 2018 Earnings Presentation July 26, 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 Second Quarter Highlights Segment Performance Developments in Performance Materials Financial Review Q&A 3
Slide 4: Second Quarter 2018 Results
Second Quarter 2018 Results 2Q 2Q vs Prior Year $ in millions 2018 2017 Performance Highlights ∆ ∆% Net Sales 308.6 260.3 48.3 18.6% Strong organic growth augmented by Adjusted EBITDA (1) 89.4 67.2 22.2 33.0% Georgia-Pacific pine chemicals acquisition Adjusted EBITDA Margin (1) 29.0% 25.8% +320 bp
Slide 5: Performance Chemicals
Performance Chemicals 2Q 2Q vs Prior Year $ in millions 2018 2017 Performance Highlights ∆ ∆% Net Sales 212.5 170.8 41.7 24.4% Oilfield Technologies 29.1 19.5 9.6 49.2% Revenue increase of 24%; G-P contributed to oilfield and industrial specialties sales Pavement Technologies 65.6 55.7 9.9 17.8% I
Slide 6: Performance Materials
Performance Materials 2Q 2Q vs Prior Year $ in millions 2018 2017 Performance Highlights ∆ ∆% Net Sales 96.1 89.5 6.6 7.4% Automotive Technologies 86.1 79.9 6.2 7.8% Revenue increase of 7% despite 2% reduction in North American vehicle Process Purification 10.0 9.6 0.4 4.2% production and strong y
Slide 7: Purification Cellutions Acquisition
Purification Cellutions Acquisition Agreement to acquire remaining 30% interest in Purification Cellutions, LLC Waynesboro, Ga., plant manufactures “honeycomb” scrubbers Purchase price of approximately $80 million Purification Cellutions is manufacturing JV only Patents and IP are sole pro
Slide 8: Estimated Early China 6 Implementation
Estimated Early China 6 Implementation Estimated Percentages of 2019 China 6 Vehicle Sales Distribution and China 6 Adoption Map Light Vehicle (LV) Sales Based on Published Announcements Effective January 1, 2019 (Hainan, Hebei, Henan and Guangzhou & Shenzhen cities) 2019 LV Sales Forecast = ~26.5 m
Slide 9: Second Quarter 2018 Financial Results
Second Quarter 2018 Financial Results Key Income Statement Metrics $ in millions except EPS & shares outstanding 2Q 2Q vs PY 1H 1H vs PY 2018 2017 ∆% 2018 2017 ∆% Net Sales (GAAP) 308.6 260.3 18.6% 543.8 478.8 13.6% Adjusted EBITDA (Non-GAAP) (1) 89.4 67.2 33.0% 156.5 117.4 33.3% Adjusted EBITDA Mar
Slide 10: Second Quarter 2018 Financial Results
Second Quarter 2018 Financial Results Key Balance Sheet & Cash Flow Metrics $ in millions June 30, December 31, 2018 2017 Cash & cash equivalents 83.0 87.9 Restricted investment (related to capital lease) (1) 71.8 71.3 Total debt including capital lease obligation (2) 755.0 455.0 Net debt (3) 600.2
Slide 11: 2018 Outlook - Update
2018 Outlook - Update PERFORMANCE CHEMICALS: Increased revenues and earnings due to: o Strong recovery in oilfield, moderating in second half o Global growth in pavement technologies o Outlook for industrial specialties industries remains favorable o G-P pine chemicals acquisition synergy accelera
Slide 12: 2018 Revised Guidance
2018 Revised Guidance ($M; includes G-P pine chemicals acquisition) Item Previous FY18 2Q Revised FY18 Guidance Guidance Revenue $1,100 to $1,130 $1,100 to $1,130 Adjusted EBITDA (1) $293 to $307 $302 to $314 Adjusted tax rate (1) 22 - 24% 22 - 24% Capital expenditures $80 to $90 $80 to $90 Free Cas
Slide 13: 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 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 (Loss) (GAAP) to Adjusted Earnings (Loss) (Non-GAAP)
Reconciliation of Net Income (Loss) (GAAP) to Adjusted Earnings (Loss) (Non-GAAP) Three Months Ended Six Months Ended June 30, June 30, In millions, except per data (unaudited) 2018 2017 2018 2017 Net income (loss) $ 52.2 $ 35.8 $ 88.0 $ 58.8 Less: Net income (loss) attributable to noncontrolling in
Slide 17: Reconciliation of Net Income (Loss) to Adjusted EBITDA
Reconciliation of Net Income (Loss) (GAAP) to Adjusted EBITDA (Non-GAAP) Three Months Ended Six Months Ended June 30, June 30, In millions (unaudited) 2018 2017 2018 2017 Net income (loss) (GAAP) $ 52.2 $ 35.8 $ 88.0 $ 58.8 Provision (benefit) for income taxes 12.4 17.2 22.1 28.2 Interest expense, n
Slide 18: Reconciliation of Segment Operating Profit to Segment EBITDA
Reconciliation of Segment Operating Profit (GAAP) to Segment EBITDA (Non-GAAP) Three Months Ended Six Months Ended In millions (unaudited) June 30, June 30, Performance Materials 2018 2017 2018 2017 Segment operating profit (GAAP) $ 36.6 $ 30.7 $ 73.5 $ 60.2 Depreciation and amortization 6.1 5.0 11.
Slide 19: 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 20: Reconciliation of Condensed Statement of Operations to Pro Forma
Reconciliation of Condensed Statement of Operations to Pro Forma Condensed Statement of Operations Quarter Ended June 30, 2017 Historical Pro Forma Pro In millions, except per share data Ingevity Adjustment Forma Net sales $ 260.3 $ 23.3 A $ 283.6 Cost of sales 170.5 17.4 B 187.9 Gross profit 89.8 5
Slide 21: Reconciliation of Net Income (Loss) to Pro Forma Adjusted EBITDA
Reconciliation of Net Income (Loss) to Pro Forma Adjusted EBITDA Quarter Ended June 30, 2017 Historical Pro Forma Pro In millions, expect percentages (unaudited) Ingevity Adjustment A Forma Net income (loss) $ 35.8 $ (1.6) $ 34.2 Provision (benefit) for income taxes 17.2 (1.0) 16.2 Interest expense,
Slide 22: 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) Q2 2017 Pine Chemical Business historical results (1) $ 20.1 Depreciation of acquired prop
Slide 23: Notes to the Unaudited Pro Forma Adjustments
Notes to the Unaudited Pro Forma Adjustments D - Interest expense On January 24, 2018, Ingevity issued $300.0 million aggregate principal amount of 4.50 percent senior unsecured notes (the “Notes”) due 2026. The net proceeds from the sale of the Notes, after deducting deferred financing fees and oth