- Net sales of $218.5 million were up more than 9 percent versus the prior year quarter’s sales of $199.6 million.
- Net income of $23.0 million resulted in net income as a percentage of sales of 10.5 percent, compared to net income of $11.7 million which resulted in net income as a percentage of sales of 5.9 percent in the prior year quarter.
- Diluted earnings per share were $0.45; diluted adjusted earnings per share were $0.49
- Adjusted EBITDA of $50.2 million were up 4 percent compared to first quarter 2016 adjusted EBITDA of $48.3 million
- Adjusted EBITDA margin of 23.0 percent decreased 120 basis points versus first quarter 2016
- Company maintains fiscal year 2017 sales and adjusted EBITDA guidance
The results and guidance in this release include Non-GAAP financial measures. Refer to the section entitled “Use of Non-GAAP Financial Measures” within this release.
Additionally, this release includes revisions to prior year periods’ financial results. Refer to the section entitled “Correction to Previously Issued Financial Statements.”
Ingevity Corporation (NYSE:NGVT) today reported first quarter net sales
of $218.5 million and net income of $23.0 million, representing 10.5
percent of sales. Sales increased 9.5 percent versus $199.6 million in
the prior year’s first quarter and net income increased 96.6 percent
versus $11.7 million last year. The first quarter diluted earnings per
share were $0.45. Diluted adjusted earnings per share were $0.49
excluding, net of tax, separation costs of $0.01 per share and
restructuring and other costs of $0.03 per share. Adjusted earnings
before interest, taxes, depreciation and amortization (EBITDA) of $50.2
million were up 3.9 percent versus first quarter 2016 adjusted EBITDA of
$48.3 million. Ingevity’s first quarter adjusted EBITDA margin of 23.0
percent was down 120 basis points from the prior year’s first quarter
adjusted EBITDA margin of 24.2 percent.
“We’re off to a solid start to the year,” said Michael Wilson,
Ingevity’s president and CEO. “We delivered a significant increase in
revenues by driving broad-based volume growth. This resulted in earnings
which were in line with our expectations. When compared against a
particularly strong previous year’s quarter while still part of
WestRock, our adjusted EBITDA increased by approximately 4 percent. Our
adjusted EBITDA margins of 23 percent were higher than in the full year
2016.”
Wilson said that in addition to the volume gains, the company is
benefitting from a significantly lower cost structure resulting from
cost reduction initiatives implemented in 2016. These positive impacts
were partially offset by unfavorable price and mix, negative foreign
currency exchange impacts, and additional stand-alone costs versus the
prior year quarter.
Performance Chemicals
First quarter 2017 sales in the Performance Chemicals segment were
$135.1 million, up $5.6 million, or 4.3 percent, versus the first
quarter 2016. Segment operating profit was $10.4 million, up $1.8
million, or 20.9 percent, versus the prior year quarter segment
operating profit. Segment EBITDA were $15.7 million, up $1.3 million, or
9.0 percent, versus the prior year quarter segment EBITDA.
“Our Performance Chemicals segment delivered an encouraging rebound this
quarter,” Wilson said. “Sales to oilfield and industrial specialties
applications rose solidly as a result of increased volumes. While
pricing remains under pressure in the segment, we grew both segment
EBITDA and segment EBITDA margins.” Wilson said that the segment
benefitted from cost reduction initiatives and lower raw materials
costs, including for crude tall oil, or CTO.
Performance Materials
First quarter 2017 sales in the Performance Materials segment were $83.4
million, up $13.3 million, or 19.0 percent, versus the first quarter
2016. Segment operating profit was $29.5 million, down $1.2 million, or
3.9 percent, versus the prior year quarter segment operating profit.
Segment EBITDA were $34.5 million, up $0.6 million, or 1.8 percent,
versus the prior year segment EBITDA.
“Once again, our Performance Materials segment delivered outstanding
financial results across all of its applications,” Wilson said. “In
particular, adoption of Ingevity’s ‘honeycomb’ scrubber products for
automotive customers continued at a rapid pace. The scrubbers are a key
component of Ingevity’s U.S. Tier 3 and LEV III emission solutions. Our
segment EBITDA for Performance Materials was consistent with the
previous year’s quarter. Moreover, segment EBITDA margins of 41.4
percent were slightly higher than the 41.0 percent for the full year
2016.”
However, Wilson said that a couple factors in the quarter impacted
segment margins versus an exceptional prior year quarter. “Spending was
higher as the company scaled-up to meet demand, and plant outage impacts
– particularly at the Wickliffe, Ky., activated carbon plant – were more
significant than in the prior year quarter,” he said.
Outlook
Ingevity maintained its fiscal year 2017 guidance for sales between $930
million and $950 million and adjusted EBITDA between $215 million and
$225 million.
“Though nothing has significantly changed in terms of market dynamics
that would alter our view of the year, I am even more confident about
our ability to achieve the guidance numbers we’ve provided,” Wilson
said. “We are continuing our focus on implementing our growth strategies
while operating efficiently and holding the line on costs. We expect to
turn in a strong performance in 2017.”
Ingevity: Purify, Protect and Enhance
Ingevity provides specialty chemicals and high-performance carbon
materials and technologies that help customers solve complex problems.
These products are used in a variety of demanding applications,
including asphalt paving, oil exploration and production, agrochemicals,
adhesives, lubricants, printing inks and automotive components that
reduce gasoline vapor emissions. Through a team of talented and
experienced people, Ingevity develops, manufactures and brings to market
products and processes that purify, protect and enhance the world around
us. Headquartered in North Charleston, S.C., Ingevity operates from 25
locations around the world and employs approximately 1,500 people. The
company is traded on the New York Stock Exchange (NYSE: NGVT). For more
information, visit www.ingevity.com.
Additional Information
The company will host a conference call on Thursday, May 4, 2017, at 10
a.m. (Eastern Time) to discuss first quarter fiscal results. Those who
wish to participate in this event should dial 877-209-9922 (inside the
U.S.) or 612-332-0802 (outside the U.S.), at least 15 minutes prior to
the start of the call. In addition, a slide deck for use during the
conference call will be posted on the investors section of Ingevity’s
website shortly before the call begins. Replays will be available
through June 4, 2017, and can be accessed at 800-475-6701 (inside the
U.S.) or 320-365-3844 (outside the U.S.), with access code 421933.
Correction to Previously Issued Financial Statements
During the quarters and year ended December 31, 2016, Ingevity
identified various errors related to its previously issued annual and
interim Combined Financial Statements. The impact of the revision to the
previously issued financial statements for the quarter ended March 31,
2016 is reflected in the schedules to this press release.
Use of Non-GAAP Financial Measures
Ingevity has presented certain financial measures which have not been
prepared in accordance with U.S. generally accepted accounting
principles (GAAP). Definitions of our non-GAAP financial measures and a
reconciliation to the most directly comparable financial measure
calculated in accordance with GAAP are included in the financial
schedules accompanying this news release, under the section entitled
"Non-GAAP Financial Measures."
A reconciliation of net income to adjusted EBITDA as projected for 2017
is not provided. Ingevity does not forecast net income as it cannot,
without unreasonable effort, estimate or predict with certainty various
components of net income. These components include additional costs
associated with the separation from WestRock, further restructuring and
other income or charges incurred in 2017 as well as the related tax
impacts of these items. Additionally, discrete tax items could drive
variability in our projected effective tax rate. All of these components
could significantly impact such financial measures. Further, in the
future, other items with similar characteristics to those currently
included in adjusted EBITDA, that have a similar impact on comparability
of periods, and which are not known at this time, may exist and impact
adjusted EBITDA.
Forward-Looking Statements
This press release 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,”
“suggests,” “anticipates,” “outlook,” “continues,” “forecast,”
“prospect,” “potential” or similar expressions. Forward-looking
statements may include, without limitation, expected financial
positions, results of operations and cash flows; financing plans;
business strategies and expectations; operating plans; capital and other
expenditures; competitive positions; growth opportunities for existing
products; benefits from new technology and cost-reduction initiatives,
plans and objectives; and markets for securities. Like other businesses,
Ingevity is subject to risks and uncertainties that could cause its
actual results to differ materially from its expectations or that could
cause other forward-looking statements to prove incorrect. Factors that
could cause actual results to materially differ from those contained in
the forward-looking statements, or that could cause other
forward-looking statements to prove incorrect, include, without
limitation, general economic and financial conditions; international
sales and operations; currency exchange rates and currency devaluation;
compliance with U.S. and foreign regulations; attracting and retaining
key personnel; conditions in the automotive market; worldwide air
quality standards; government infrastructure spending; declining volumes
in the printing inks market; the limited supply of crude tall oil
(“CTO”); lack of access to sufficient CTO; access to and pricing of raw
materials; competition from producers of substitute products and new
technologies; a prolonged period of low energy prices; the provision of
services by third parties at several facilities; natural disasters, such
as hurricanes, winter or tropical storms, earthquakes, floods, fires;
other unanticipated problems such as labor difficulties including
renewal of collective bargaining agreements, equipment failure or
unscheduled maintenance and repair; protection of intellectual property
and proprietary information; information technology security risks;
government policies and regulations, including, but not limited to,
those affecting the environment, climate change, tax policies and the
chemicals industry; and lawsuits arising out of environmental damage or
personal injuries associated with chemical or other manufacturing
processes. These and other important factors that could cause actual
results or events to differ materially from those expressed in
forward-looking statements that may have been made in this document are
and will be more particularly described in our filings with the U.S.
Securities and Exchange Commission, including our Form 10 Registration
Statement and periodic filings. Readers are cautioned not to place undue
reliance on Ingevity’s projections and forward-looking statements, which
speak only as the date thereof. Ingevity undertakes no obligation to
publicly release any revision to the projections and forward-looking
statements contained in this announcement, or to update them to reflect
events or circumstances occurring after the date of this announcement.
|
|
|
|
|
|
INGEVITY CORPORATION
Condensed Consolidated Statements of Operations
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
In millions, except per share amounts
|
|
|
2017
|
|
|
2016
(1)
|
|
Net sales
|
|
|
$
|
218.5
|
|
|
|
$
|
199.6
|
|
|
Cost of sales
|
|
|
147.8
|
|
|
|
136.6
|
|
|
Gross profit
|
|
|
70.7
|
|
|
|
63.0
|
|
|
Selling, general and administrative expenses
|
|
|
26.0
|
|
|
|
22.9
|
|
|
Research and technical expenses
|
|
|
5.1
|
|
|
|
4.6
|
|
|
Separation costs
|
|
|
0.3
|
|
|
|
6.4
|
|
|
Restructuring and other (income) charges, net
|
|
|
2.3
|
|
|
|
4.6
|
|
|
Other (income) expense, net
|
|
|
(0.3
|
)
|
|
|
(3.8
|
)
|
|
Interest expense, net
|
|
|
3.3
|
|
|
|
5.4
|
|
|
Income before income taxes
|
|
|
34.0
|
|
|
|
22.9
|
|
|
Provision for income taxes
|
|
|
11.0
|
|
|
|
11.2
|
|
|
Net income (loss)
|
|
|
23.0
|
|
|
|
11.7
|
|
|
Less: Net income (loss) attributable to noncontrolling interests
|
|
|
4.0
|
|
|
|
2.5
|
|
|
Net income (loss) attributable to Ingevity stockholders
|
|
|
$
|
19.0
|
|
|
|
$
|
9.2
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per common share attributable to Ingevity
stockholders
|
|
|
|
|
|
|
|
Basic
|
|
|
$
|
0.45
|
|
|
|
$
|
0.22
|
|
|
Diluted
|
|
|
$
|
0.45
|
|
|
|
$
|
0.22
|
|
|
Average number of shares outstanding used in the
earnings (loss) per share computations
(2)
|
|
|
|
|
|
|
|
Basic
|
|
|
42.1
|
|
|
|
42.1
|
|
|
Diluted
|
|
|
42.4
|
|
|
|
42.1
|
|
|
_________________
|
|
(1) Certain prior period amounts have been revised to reflect the
impact of adjustments made to our financial statements to correct
for various immaterial errors previously identified during the
quarter and year ended December 31, 2016. See section entitled
"Correction of Previously Issued Financial Statements" on "Financial
Schedules - Page 5" of this press release.
|
|
(2) On May 15, 2016, WestRock distributed 42,102 thousand shares of
Ingevity's common stock to holders of its common stock. The
computation of basic and diluted earnings per common share for all
periods prior to May 15, 2016 was calculated using the number of
shares distributed on May 15, 2016.
|
|
|
|
|
|
|
INGEVITY CORPORATION
Segment Operating Results
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
In millions
|
|
|
2017
|
|
|
2016
(1)
|
|
Net sales
|
|
|
|
|
|
|
|
Performance Materials
|
|
|
$
|
83.4
|
|
|
|
$
|
70.1
|
|
|
Performance Chemicals
|
|
|
135.1
|
|
|
|
129.5
|
|
|
Total net sales
|
|
|
$
|
218.5
|
|
|
|
$
|
199.6
|
|
|
|
|
|
|
|
|
|
|
Segment operating profit
|
|
|
|
|
|
|
|
Performance Materials
|
|
|
$
|
29.5
|
|
|
|
$
|
30.7
|
|
|
Performance Chemicals
|
|
|
10.4
|
|
|
|
8.6
|
|
|
Total segment operating profit
|
|
|
39.9
|
|
|
|
39.3
|
|
|
Separation costs (2)
|
|
|
(0.3
|
)
|
|
|
(6.4
|
)
|
|
Restructuring and other income (charges) (3)
|
|
|
(2.3
|
)
|
|
|
(4.6
|
)
|
|
Interest expense, net
|
|
|
(3.3
|
)
|
|
|
(5.4
|
)
|
|
Provision for income taxes
|
|
|
(11.0
|
)
|
|
|
(11.2
|
)
|
|
Net (income) loss attributable to noncontrolling interests
|
|
|
(4.0
|
)
|
|
|
(2.5
|
)
|
|
Net income (loss) attributable to the Ingevity stockholders
|
|
|
$
|
19.0
|
|
|
|
$
|
9.2
|
|
|
_________________
|
|
(1) Certain prior period amounts have been revised to reflect the
impact of adjustments made to our financial statements to correct
for various immaterial errors previously identified during the
quarter and year ended December 31, 2016. See section entitled
"Correction of Previously Issued Financial Statements" on "Financial
Schedules - Page 5" of this press release.
|
|
(2) Represents transaction costs associated with separation of
Ingevity from WestRock. These costs are primarily related to
professional fees associated with separation activities within the
finance, tax and legal functions.
|
|
(3) For the three months ended March 31, 2017 and March 31, 2016 the
charges related to Performance Materials and Performance Chemicals
as shown in the table below:
|
|
|
|
|
Three Months Ended
March 31,
|
|
In millions
|
|
|
2017
|
|
|
2016
|
|
Performance Materials
|
|
|
$
|
—
|
|
|
|
$
|
0.8
|
|
|
Performance Chemicals
|
|
|
2.3
|
|
|
|
3.8
|
|
|
Total
|
|
|
$
|
2.3
|
|
|
|
$
|
4.6
|
|
|
|
|
|
|
|
|
|
|
INGEVITY CORPORATION
Condensed Consolidated Balance Sheets
|
|
|
|
|
|
|
|
|
|
In millions
|
|
|
March 31, 2017
|
|
|
December 31, 2016
|
|
Assets
|
|
|
(unaudited)
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
29.7
|
|
|
|
$
|
30.5
|
|
Accounts receivable, net
|
|
|
107.0
|
|
|
|
89.8
|
|
Inventories, net
|
|
|
160.1
|
|
|
|
151.2
|
|
Prepaid and other current assets
|
|
|
25.8
|
|
|
|
23.7
|
|
Current assets
|
|
|
322.6
|
|
|
|
295.2
|
|
Property, plant and equipment, net
|
|
|
422.4
|
|
|
|
422.8
|
|
Restricted investment
|
|
|
70.2
|
|
|
|
69.7
|
|
Other assets
|
|
|
46.3
|
|
|
|
45.1
|
|
Total assets
|
|
|
$
|
861.5
|
|
|
|
$
|
832.8
|
|
Liabilities and Equity
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
$
|
75.3
|
|
|
|
$
|
79.2
|
|
Accrued expenses
|
|
|
16.3
|
|
|
|
19.3
|
|
Other current liabilities
|
|
|
35.8
|
|
|
|
38.4
|
|
Current liabilities
|
|
|
127.4
|
|
|
|
136.9
|
|
Long term debt including capital lease obligations
|
|
|
490.8
|
|
|
|
481.3
|
|
Deferred income taxes
|
|
|
73.3
|
|
|
|
69.8
|
|
Other liabilities
|
|
|
11.2
|
|
|
|
10.2
|
|
Total liabilities
|
|
|
702.7
|
|
|
|
698.2
|
|
Equity
|
|
|
158.8
|
|
|
|
134.6
|
|
Total liabilities and equity
|
|
|
$
|
861.5
|
|
|
|
$
|
832.8
|
|
|
|
|
|
|
INGEVITY CORPORATION
Condensed Consolidated Statements of Cash Flows
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
In millions
|
|
|
2017
|
|
|
2016
(1)
|
|
Cash flows from operating activities:
|
|
|
$
|
6.5
|
|
|
|
$
|
3.1
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
(10.7
|
)
|
|
|
(11.3
|
)
|
|
Restricted investment
|
|
|
(0.5
|
)
|
|
|
—
|
|
|
Net investment in equity securities
|
|
|
(2.1
|
)
|
|
|
—
|
|
|
Other investing activities, net
|
|
|
(3.0
|
)
|
|
|
—
|
|
|
Net cash provided (used) by investing activities
|
|
|
(16.3
|
)
|
|
|
(11.3
|
)
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
Net borrowings under our revolving credit facility
|
|
|
13.1
|
|
|
|
—
|
|
|
Taxes withheld for employee equity award vesting
|
|
|
(0.5
|
)
|
|
|
—
|
|
|
Noncontrolling interest distributions
|
|
|
(2.6
|
)
|
|
|
(0.9
|
)
|
|
Transactions with WestRock, net
|
|
|
—
|
|
|
|
(0.3
|
)
|
|
Net cash provided (used) by financing activities
|
|
|
10.0
|
|
|
|
(1.2
|
)
|
|
Increase (decrease) in cash and cash equivalents
|
|
|
0.2
|
|
|
|
(9.4
|
)
|
|
Effect of exchange rate changes on cash
|
|
|
0.3
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
Change in cash, cash equivalents and restricted cash
|
|
|
0.5
|
|
|
|
(9.3
|
)
|
|
At beginning of period (2)
|
|
|
30.5
|
|
|
|
32.0
|
|
|
At end of period (2)
|
|
|
$
|
31.0
|
|
|
|
$
|
22.7
|
|
|
_______________
|
|
(1) Certain prior period amounts have been revised to reflect the
impact of adjustments made to our financial statements to correct
for various immaterial errors previously identified during the
quarter and year ended December 31, 2016. See section entitled
"Correction of Previously Issued Financial Statements" on "Financial
Schedules - Page 5" of this press release.
|
|
(2) Includes restricted cash of $1.3 million and zero for the
periods March 31, 2017 and 2016, respectively. Restricted cash is
included within Prepaid and Other Current Assets within the
Consolidated Balance Sheets.
|
|
|
Ingevity Corporation
Correction to Previously Issued Financial Statements
During 2016, Ingevity identified various errors related to its
previously issued annual and interim Combined Financial Statements.
Specifically, in the first quarter of 2016, the company determined that
$3.3 million of cumulative intercompany profit in inventory had not been
eliminated in prior years. During the fourth quarter, the company also
identified errors related to a $1.8 million understatement of accruals
for services rendered in prior years, as well as errors related to the
timing for which revenue has been previously recognized.
The cumulative impact of the errors identified in 2016 had resulted in
the overstatement of pre-tax and net income of $1.6 million and $1.0
million in 2015 and $0.9 million and $0.6 million in 2014, and a
cumulative impact to net parent investment of $2.5 million as of January
1, 2014. In addition, such errors resulted in the $9.4 million and $5.5
million overstatement of revenue in 2015 and 2014, respectively.
Although Ingevity’s management has determined that the impact of such
errors is immaterial to all previously issued financial statements, we
revised the previously issued financial statements for the periods ended
December 31, 2015 and 2014, as shown in our 2016 Annual Report, and
those corrections are also reflected for the three months ended March
31, 2016 in the tables below.
|
|
|
|
|
|
Impact of Corrections to the Condensed Consolidated Statements
of Operations
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31, 2016
|
|
In millions, unaudited
|
|
|
increase/(decrease)
|
|
Net sales
|
|
|
$
|
(4.3
|
)
|
|
Cost of sales
|
|
|
(7.3
|
)
|
|
Gross profit
|
|
|
3.0
|
|
|
Selling, general and administrative costs
|
|
|
(0.1
|
)
|
|
Income before income taxes
|
|
|
3.1
|
|
|
Provision for income taxes
|
|
|
1.2
|
|
|
Net income (loss)
|
|
|
1.9
|
|
|
Net income (loss) attributable to Ingevity stockholders
|
|
|
1.0
|
|
|
|
|
|
|
|
Impact of Corrections to the Segment Operating Results
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31, 2016
|
|
In millions, unaudited
|
|
|
increase/(decrease)
|
|
Net sales
|
|
|
|
|
Performance Materials
|
|
|
$
|
(0.7
|
)
|
|
Performance Chemicals
|
|
|
(3.6
|
)
|
|
Total net sales
|
|
|
$
|
(4.3
|
)
|
|
|
|
|
|
|
Segment operating profit
|
|
|
|
|
Performance Materials
|
|
|
$
|
3.1
|
|
|
Performance Chemicals
|
|
|
—
|
|
|
Total segment operating profit
|
|
|
$
|
3.1
|
|
|
|
|
|
|
|
Impact of Corrections to the Condensed Consolidated Statements
of Cash Flows
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2016
|
|
In millions, unaudited
|
|
|
increase/(decrease)
|
|
Cash flows from operating activities:
|
|
|
$
|
4.1
|
|
|
Cash flows from financing activities:
|
|
|
|
|
Transactions with WestRock, net
|
|
|
(4.1
|
)
|
|
Net cash provided (used) by financing activities
|
|
|
$
|
(4.1
|
)
|
|
|
|
|
|
|
|
Ingevity Corporation
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 accordance with
GAAP. These financial measures are not meant to be considered in
isolation or as a substitute for the most directly comparable financial
measure calculated in accordance with GAAP. The company believes these
non-GAAP measures provide investors, potential investors, securities
analysts and others with useful information to evaluate the performance
of the business, because such measures, when viewed together with our
financial results computed in accordance with GAAP, provide a more
complete understanding of the factors and trends affecting our
historical financial performance and projected future results.
Ingevity uses the following non-GAAP measures:
Adjusted earnings (loss) is defined as net income (loss)
attributable to Ingevity stockholders plus restructuring and other
(income) charges, separation costs, and the income tax expense (benefit)
on those items.
Diluted adjusted earnings (loss) per share is defined as diluted
earnings (loss) per common share attributable to Ingevity stockholders
plus restructuring and other (income) charges per share, separation
costs per share, and the income tax expense (benefit) per share on those
items.
Adjusted EBITDA is defined as net income (loss) plus provision
for income taxes, interest expense, depreciation and amortization,
separation costs and restructuring and other (income) charges.
Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by
Net Sales
Segment EBITDA is defined as segment operating profit plus
depreciation and amortization.
Segment EBITDA Margin is defined as Segment EBITDA divided by Net
Sales.
The Company also uses the above financial measures as the primary
measures of profitability used by managers of the business and its
segments. In addition, the Company believes Adjusted EBITDA, Adjusted
EBITDA Margin, Segment EBITDA and Segment EBITDA Margin are useful
measures because they exclude the effects of financing and investment
activities as well as non-operating activities. These non-GAAP financial
measures are not intended to replace the presentation of financial
results in accordance with GAAP and investors should consider the
limitations associated with these non-GAAP measures, including the
potential lack of comparability of these measures from one company to
another. Reconciliations of these non-GAAP financial measures are set
forth within the following pages.
A reconciliation of net income to adjusted EBITDA as projected for 2017
is not provided. Ingevity does not forecast net income as we cannot,
without unreasonable effort, estimate or predict with certainty various
components of net income. These components include additional costs
associated with the separation from WestRock, further restructuring and
other income or charges incurred in 2017 as well as the related tax
impacts of these items. Additionally, discrete tax items could drive
variability in our projected effective tax rate. All of these components
could significantly impact such financial measures. Further, in the
future, other items with similar characteristics to those currently
included in adjusted EBITDA, that have a similar impact on comparability
of periods, and which are not known at this time, may exist and impact
adjusted EBITDA.
|
|
|
|
|
|
INGEVITY CORPORATION
Reconciliation of Non-GAAP Financial Measures
Reconciliation of Net Income (Loss) (GAAP) to Adjusted Earnings
(Loss) (Non-GAAP)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
In millions, except per share amounts; unaudited
|
|
|
2017
|
|
|
2016
(1)
|
|
Net income (loss)
|
|
|
$
|
23.0
|
|
|
|
$
|
11.7
|
|
|
Less: Net income (loss) attributable to noncontrolling interests
|
|
|
4.0
|
|
|
|
2.5
|
|
|
Net income (loss) attributable to Ingevity stockholders (GAAP)
|
|
|
19.0
|
|
|
|
9.2
|
|
|
Restructuring and other (income) charges (2)
|
|
|
2.3
|
|
|
|
4.6
|
|
|
Separation costs (3)
|
|
|
0.3
|
|
|
|
6.4
|
|
|
Income tax effect on items above
|
|
|
(0.7
|
)
|
|
|
(1.9
|
)
|
|
Adjusted earnings (loss) (Non-GAAP)
|
|
|
$
|
20.9
|
|
|
|
$
|
18.3
|
|
|
Diluted earnings (loss) per common share (GAAP)
|
|
|
$
|
0.45
|
|
|
|
$
|
0.22
|
|
|
Restructuring and other (income) charges
|
|
|
0.05
|
|
|
|
0.11
|
|
|
Separation costs
|
|
|
0.01
|
|
|
|
0.15
|
|
|
Income tax effect on items above
|
|
|
(0.02
|
)
|
|
|
(0.04
|
)
|
|
Diluted adjusted earnings (loss) per share (Non-GAAP)
|
|
|
$
|
0.49
|
|
|
|
$
|
0.44
|
|
|
|
|
|
|
|
|
|
|
Average number of shares outstanding used in
diluted adjusted after-tax earnings per share computations
|
|
|
42.4
|
|
|
|
42.1
|
|
|
_______________
|
|
(1) Certain prior period amounts have been revised to reflect the
impact of adjustments made to our financial statements to correct
for various immaterial errors previously identified during the
quarter and year ended December 31, 2016.
|
|
(2) Charges incurred for the three months ended March 31, 2017
include $1.3 million in severance and other employee-related costs
related to a reorganization as part of an effort to streamline our
leadership team, flatten the organization and reduce costs.
Additional charges include $1.0 million in miscellaneous costs
primarily associated with the exit of our Performance Chemicals'
manufacturing operations in Palmeira, Santa Catarina, Brazil.
Charges incurred for the three months ended March 31, 2016 include
severance and other employee-related costs of $1.8 million related
to the closure of our Performance Chemicals' derivatives operation
in Duque De Caxias, Rio de Janeiro, Brazil and $2.7 million related
to a company-wide restructuring that resulted in workforce
reductions at several of our locations as well as $0.1 million
impairment charge on fixed assets.
|
|
(3) In connection with the separation from WestRock we have incurred
pre-tax separation costs. These costs were primarily related to
professional fees associated with separation activities within the
finance, tax and legal functions.
|
|
|
|
|
|
|
INGEVITY CORPORATION
Reconciliation of Non-GAAP Financial Measures
Reconciliation of Net Income (GAAP) to Adjusted EBITDA
(Non-GAAP)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
In millions, unaudited
|
|
|
2017
|
|
|
2016
(1)
|
|
Net income (loss) (GAAP)
|
|
|
$
|
23.0
|
|
|
|
$
|
11.7
|
|
|
Provision for income taxes
|
|
|
11.0
|
|
|
|
11.2
|
|
|
Interest expense, net
|
|
|
3.3
|
|
|
|
5.4
|
|
|
Separation costs
|
|
|
0.3
|
|
|
|
6.4
|
|
|
Depreciation and amortization
|
|
|
10.3
|
|
|
|
9.0
|
|
|
Restructuring and other (income) charges
|
|
|
2.3
|
|
|
|
4.6
|
|
|
Adjusted EBITDA (Non-GAAP)
|
|
|
$
|
50.2
|
|
|
|
$
|
48.3
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
$
|
218.5
|
|
|
|
$
|
199.6
|
|
|
Net income (loss) margin
|
|
|
10.5
|
%
|
|
|
5.9
|
%
|
|
Adjusted EBITDA margin
|
|
|
23.0
|
%
|
|
|
24.2
|
%
|
|
_______________
|
|
(1) Certain prior period amounts have been revised to reflect the
impact of adjustments made to our financial statements to correct
for various immaterial errors previously identified during the
quarter and year ended December 31, 2016.
|
|
|
|
|
|
|
INGEVITY CORPORATION
Reconciliation of Non-GAAP Financial Measures
Reconciliation of Segment Operating Profit (GAAP) to Segment
EBITDA (Non-GAAP)
|
|
|
|
|
|
|
In millions, unaudited
|
|
|
Three Months Ended
March 31,
|
|
Performance Materials
|
|
|
2017
|
|
|
2016
(1)
|
|
|
|
|
|
|
|
|
|
Segment operating profit (GAAP)
|
|
|
$
|
29.5
|
|
|
|
$
|
30.7
|
|
|
Depreciation and amortization
|
|
|
5.0
|
|
|
|
3.2
|
|
|
Segment EBITDA (Non-GAAP)
|
|
|
$
|
34.5
|
|
|
|
$
|
33.9
|
|
|
Net sales
|
|
|
$
|
83.4
|
|
|
|
$
|
70.1
|
|
|
Segment operating margin
|
|
|
35.4
|
%
|
|
|
43.8
|
%
|
|
Segment EBITDA margin
|
|
|
41.4
|
%
|
|
|
48.4
|
%
|
|
|
|
|
|
|
|
|
|
Performance Chemicals
|
|
|
|
|
|
|
|
Segment operating profit (GAAP)
|
|
|
$
|
10.4
|
|
|
|
$
|
8.6
|
|
|
Depreciation and amortization
|
|
|
5.3
|
|
|
|
5.8
|
|
|
Segment EBITDA (Non-GAAP)
|
|
|
$
|
15.7
|
|
|
|
$
|
14.4
|
|
|
Net sales
|
|
|
$
|
135.1
|
|
|
|
$
|
129.5
|
|
|
Segment operating margin
|
|
|
7.7
|
%
|
|
|
6.6
|
%
|
|
Segment EBITDA margin
|
|
|
11.6
|
%
|
|
|
11.1
|
%
|
|
_______________
|
|
(1) Certain prior period amounts have been revised to reflect the
impact of adjustments made to our financial statements to correct
for various immaterial errors previously identified during the
quarter and year ended December 31, 2016.
|
Ingevity Corporation
Jack Maurer, 843-746-8242
jack.maurer@ingevity.com
or
Investors:
Dan Gallagher, 843-740-2126
daniel.gallagher@ingevity.com