Ingevity Announces Q4 and Full-Year 2024 Financial Results
Ingevity Corporation (NYSE: NGVT) has released its financial results for the fourth quarter and full year of 2024, highlighting significant strategic transformations and financial performance.
Fourth Quarter 2024 Financial Performance
For the fourth quarter, Ingevity reported net sales of $298.8 million, marking a 20% decline from the previous year. This decrease was primarily driven by the strategic repositioning of the Performance Chemicals segment, which resulted in the exit of lower-margin markets. Despite this, the Performance Materials and Advanced Polymer Technologies segments experienced sales growth. The company’s net income for the quarter was $16.6 million, which included pre-tax restructuring charges of $23.4 million related to repositioning actions.
Adjusted EBITDA surged by 91% to $80.6 million, driven by the benefits of repositioning actions that led to a $20.4 million improvement in Performance Chemicals segment EBITDA. In contrast, the fourth quarter of 2023 had been negatively impacted by a $19.7 million non-cash inventory charge due to repositioning actions. The adjusted EBITDA margin for the quarter stood at 27.0%.
Diluted earnings per share (EPS) for the quarter was $0.46, a significant improvement from a diluted loss per share of $3.23 in the same quarter last year. On an adjusted basis, diluted EPS was $0.95 compared to a diluted adjusted loss per share of $0.20 in the prior-year quarter.
Full-Year 2024 Financial Performance
For the full year, net sales totaled $1.4 billion, a 17% decline compared to the previous year. Performance Materials reported record sales, but this was offset by lower sales in the Industrial Specialties product line due to strategic repositioning. The Road Technologies product line experienced lower sales due to adverse weather conditions, and Advanced Polymer Technologies faced reduced sales due to unfavorable product mix and price concessions in certain markets.
The company reported a net loss of $430.3 million for the year, primarily due to a pre-tax goodwill impairment of $349.1 million and $338.9 million in special charges associated with restructuring. These included $186.2 million in restructuring charges, a $100.0 million termination fee for a long-term CTO supply agreement, and $52.7 million in losses on the resale of excess CTO.
Despite these challenges, adjusted EBITDA for the year stood at $362.7 million, down 4% from the previous year. However, the adjusted EBITDA margin improved by 350 basis points to 25.8%. The diluted loss per share for the year was $11.85 compared to a diluted loss per share of $0.15 in the prior year. On an adjusted basis, diluted EPS was $3.51, nearly unchanged from $3.53 in the previous year.
Strategic Review and Business Segment Performance
Interim President and CEO Luis Fernandez-Moreno emphasized that the company remains focused on execution excellence, reducing leverage, and optimizing its portfolio. He highlighted the strong performance of Performance Materials, which achieved record sales and EBITDA due to increased demand for fuel-efficient vehicles requiring activated carbon solutions.
Meanwhile, Advanced Polymer Technologies saw increased volumes despite weak industrial demand, but revenue growth was offset by adverse mix and selective price concessions. The Performance Chemicals segment underwent significant transformation, with major repositioning actions leading to improved segment EBITDA margins in the second half of the year.
As part of its continued portfolio review, Ingevity announced plans to explore strategic alternatives for the Industrial Specialties product line and the North Charleston CTO refinery. The company believes that this move will further strengthen the Performance Chemicals segment, allowing it to focus on higher-growth, higher-margin opportunities.
Performance Materials
Performance Materials reported fourth-quarter sales of $156.2 million, up 2% year-over-year due to volume growth in North America and China. Segment EBITDA remained stable at $78.3 million, with an EBITDA margin of 50.1%.
For the full year, Performance Materials sales reached a record $609.6 million, up 4% due to higher volumes, improved pricing, and favorable product mix, despite negative foreign exchange impacts. Segment EBITDA also hit a record $319.1 million, an 11% increase, with a margin of 52.3%, driven by investments in operational improvements that reduced energy costs and improved yields.
Advanced Polymer Technologies
The Advanced Polymer Technologies segment posted fourth-quarter sales of $43.9 million, reflecting a 4% increase due to higher volumes across all regions. However, segment EBITDA declined by 23% to $6.1 million due to unfavorable price and product mix, as well as higher energy costs. The EBITDA margin for the quarter was 13.9%.
For the full year, Advanced Polymer Technologies sales totaled $188.6 million, down 8% due to adverse product mix and price concessions, despite volume growth. Segment EBITDA fell 21% to $35.2 million, reducing the EBITDA margin to 18.7% due to pricing concessions and unfavorable mix, offsetting lower input costs.
Performance Chemicals
Performance Chemicals reported fourth-quarter sales of $98.7 million, a 44% decline resulting from repositioning actions in the Industrial Specialties product line, which saw sales drop by $72.9 million. The Road Technologies product line also experienced a 9% decline in sales due to mild weather extending the paving season in Q4 2023 compared to this year.
Segment EBITDA for the quarter improved by $20.4 million, reducing the segment’s losses to $3.8 million. For the full year, Performance Chemicals sales dropped 33% to $608.2 million, with Industrial Specialties sales down 50% to $265.9 million. Road Technologies sales fell 7% to $342.3 million due to weather-related factors. Full-year segment EBITDA declined 78% to $14.7 million due to higher CTO costs and lower volumes, partially offset by cost savings initiatives.
Liquidity and Financial Position
Operating cash flow for the year was $128.6 million, while free cash flow totaled $51.0 million. The company’s disciplined working capital management in Q4 helped mitigate special charges, including a $100.0 million payment to terminate a long-term CTO supply contract, $46.1 million in cash losses on excess CTO resales, and $59.3 million in restructuring charges.
Ingevity did not repurchase shares during the quarter, with $353.4 million remaining available under the current $500 million Board authorization. The company’s net leverage improved to 3.5 times, down from 4.0 times in the previous quarter, due to higher EBITDA and free cash flow utilization to reduce debt.
2025 Financial Guidance
Ingevity has set its 2025 guidance, projecting sales between $1.3 billion and $1.4 billion, adjusted EBITDA between $400 million and $415 million, and free cash flow between $220 million and $260 million. The guidance does not account for potential impacts from the ongoing strategic review of the Industrial Specialties product line and North Charleston CTO refinery.
Fernandez-Moreno expressed confidence that the company’s 2024 strategic actions position Ingevity for more profitable growth in 2025 and beyond. The company aims to improve EBITDA margins to nearly 30% and generate significantly stronger cash flow. By focusing on deleveraging, Ingevity expects to reduce its net leverage ratio to below 2.8 times by the fourth quarter.
