FOURTH QUARTER
- Net sales of $229.5 million were up 8.8 percent versus the prior year quarter’s sales of $210.9 million
- Net income – favorably impacted by volume, price and mix improvements, and tax benefits from U.S. tax reform – of $47.8 million was up 309 percent versus net income in the prior year quarter of $11.7 million; net income as a percentage of sales was 20.8 percent, compared to net income as a percentage of sales of 5.5 percent in the prior year quarter
- Diluted earnings per share were $0.97; diluted adjusted earnings per share were $0.45, excluding tax benefits from the U.S. tax reform
- Adjusted EBITDA of $52.6 million were up 46.1 percent versus fourth quarter 2016 adjusted EBITDA of $36.0 million; adjusted EBITDA margin of 22.9 percent improved 580 basis points versus fourth quarter 2016
FULL YEAR
- Net sales of $972.4 million were up 7.1 percent versus the prior year’s sales of $908.3 million
- Net income – favorably impacted by higher volumes, strong operating performance, and tax benefits from U.S. tax reform – of $145.0 million was up 227 percent versus net income in the prior year of $44.4 million; net income as a percentage of sales was 14.9 percent, compared to net income as a percentage of sales of 4.9 percent in the prior year
- Diluted earnings per share were $2.97; diluted adjusted earnings per share were $2.58, excluding tax benefits from the U.S. tax reform
- Adjusted EBITDA of $242.7 million were up 19.9 percent versus 2016 adjusted EBITDA of $202.4 million; adjusted EBITDA margin of 25.0 percent improved 270 basis points versus 2016
2018 OUTLOOK
- Company announces fiscal year 2018 guidance of sales between $1.070 billion and $1.130 billion and adjusted EBITDA between $285 million and $305 million
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.
Ingevity Corporation (NYSE:NGVT) today reported preliminary fourth
quarter net sales of $229.5 million and net income of $47.8 million,
representing 20.8 percent of sales. Sales were up 8.8 percent versus
$210.9 million in the prior year’s fourth quarter and net income
increased 309 percent versus $11.7 million last year. Net income in the
current period was favorably impacted by volume, price and mix
improvements, and tax benefits recognized from the H.R. 1 - U.S. Tax
Cuts and Jobs Act (U.S. tax reform). As a result of the U.S. tax reform,
the company recorded a one-time benefit of $24.5 million associated with
the re-measurement of deferred tax liabilities. The fourth quarter
diluted earnings per share were $0.97. Diluted adjusted earnings per
share were $0.45 excluding certain items of $0.52 per share, which
includes a benefit of $0.58 per share from U.S. tax reform. Adjusted
earnings before interest, taxes, depreciation and amortization (EBITDA)
of $52.6 million were up 46.1 percent versus fourth quarter 2016
adjusted EBITDA of $36.0 million. Ingevity’s fourth quarter adjusted
EBITDA margin of 22.9 percent was up 580 basis points from the prior
year’s fourth quarter adjusted EBITDA margin of 17.1 percent.
For the full year, net sales were $972.4 million and net income was
$145.0 million, representing 14.9 percent of sales. Sales were up 7.1
percent versus $908.3 million in the prior year and net income increased
227 percent versus $44.4 million last year. Net income in the year was
favorably impacted by higher volumes, stronger operating performance,
and tax benefits from U.S. tax reform. The diluted earnings per share
for 2017 were $2.97. Diluted adjusted earnings per share were $2.58
excluding certain items of $0.39 per share, which includes a benefit of
$0.58 per share from U.S. tax reform. Adjusted EBITDA of $242.7 million
were up 19.9 percent versus 2016 adjusted EBITDA of $202.4 million.
Ingevity’s 2017 adjusted EBITDA margin of 25.0 percent was up 270 basis
points from the prior year’s adjusted EBITDA margin of 22.3 percent.
“This was an outstanding quarter that exceeded our expectations,” said
Michael Wilson. “In what is seasonally a slower quarter, we realized
higher sales of Performance Chemicals’ products to pavement applications
based on weather patterns that extended the paving season. What’s more,
our Performance Materials segment’s sales were higher than expected due
to stronger than forecast U.S. and Canadian auto demand.”
He added that, as expected, sales to oilfield customers continued to
strongly rebound as U.S. drilling increased.
Wilson said that in addition to the increased volumes, the company’s
earnings benefited from improved price and mix, and lower raw material
costs. “As a result,” said Wilson, “we posted an increase in adjusted
EBITDA of more than 46 percent.”
Looking at the full year 2017, Wilson said that the year was notable for
the strong growth in the Performance Materials segment and a marked
turnaround in the company’s Performance Chemicals segment. “Our adjusted
EBITDA rose almost 20 percent in 2017, to 25 percent of sales, on higher
revenues in automotive activated carbon products, and sales to oilfield
and pavement applications, combined with lower raw material costs and a
more favorable cost structure based on restructuring initiatives the
company took in 2016,” he said.
“It was a great year for Ingevity,” Wilson said. “I couldn’t be more
proud of our team. Our employees achieved our best-ever safety
performance, executed our business plans and strategies superbly, and
delivered outstanding financial results.”
Reportable Segment Financial Results
Performance Materials: Segment sales in the
fourth quarter 2017 were $91.0 million, up $13.7 million, or 17.7
percent, versus the fourth quarter 2016. Segment operating profit was
$32.5 million, up $10.3 million, or 46.4 percent, versus the prior year
quarter segment operating profit. This translates to segment operating
margin of 35.7 percent. Segment EBITDA were $37.4 million, up $10.4
million, or 38.5 percent, versus the prior year segment EBITDA. Segment
EBITDA margin rose 620 basis points to 41.1 percent. Volumes,
particularly in sales of “honeycomb” products to meet automotive
gasoline emission standards, drove increases in revenues and earnings.
Earnings were moderately impacted by higher SG&A spending.
For the full year 2017, segment sales were $349.3 million, up $48.3
million, or 16.0 percent, versus 2016. Segment operating profit was
$122.0 million, up $15.1 million, or 14.1 percent, versus the prior year
segment operating profit. Segment EBITDA were $141.8 million, up $18.5
million, or 15.0 percent, versus the prior year segment EBITDA.
Performance Chemicals: Segment sales in the
fourth quarter 2017 were $138.5 million, up $4.9 million, or 3.7
percent, versus the fourth quarter 2016. Segment operating profit was
$10.1 million, up $6.7 million, or 197.1 percent, versus the prior year
quarter segment operating profit. This translates to segment operating
margin of 7.3 percent. Segment EBITDA were $15.2 million, up $6.2
million, or 68.9 percent, versus the prior year quarter segment EBITDA.
Segment EBITDA margin rose 430 basis points to 11.0 percent. Revenue
growth in pavement and oilfield applications was partially offset by
lower volumes in industrial specialties applications. Despite modest
revenue growth, earnings benefited from improved price and mix and lower
raw material costs.
For the full year 2017, segment sales were $623.1 million, up $15.8
million, or 2.6 percent, versus 2016. Segment operating profit was $80.3
million, up $23.6 million, or 41.6 percent, versus the prior year
segment operating profit. Segment EBITDA were $100.9 million, up $21.8
million, or 27.6 percent, versus the prior year segment EBITDA.
Outlook
Ingevity announced its fiscal year 2018 guidance for sales between
$1.070 billion and $1.130 billion and adjusted EBITDA between $285
million and $305 million.
“While I am pleased with our financial performance since going public in
May 2016, I remain convinced that even stronger growth lies ahead of
us,” said Wilson. “In 2018, at the mid-point of our guidance we expect
to increase revenues by 13 percent and earnings by 22 percent.”
The company’s expected increase in revenues and earnings is attributable
to the acquisition of Georgia-Pacific’s pine chemicals business, as well
as lower costs for crude tall oil, both of which should benefit the
company’s Performance Chemicals segment. The company also expects
continued implementation of more stringent gasoline vapor emission
regulations – particularly in North America – that will continue to
drive solid revenue growth in the Performance Materials segment.
Ingevity: Purify, Protect and Enhance
Ingevity provides specialty chemicals and high-performance carbon
materials and technologies that purify, protect and enhance the world
around us. Through a team of talented and experienced people, Ingevity
develops, manufactures and brings to market products and processes 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,
publication inks and automotive components that reduce gasoline vapor
emissions. Headquartered in North Charleston, South Carolina, 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 Wednesday, Feb. 21, 2018, at
10 a.m. (Eastern Time) to discuss fourth quarter and full year 2017
fiscal results. Those who wish to participate in this event should dial
800-230-1059 (inside the U.S.) or 612-234-9959 (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 at
ir.ingevity.com
shortly before the call begins. Replays will be available through March
21, 2018, and can be accessed at 800-475-6701 (inside the U.S.) or
320-365-3844 (outside the U.S.), with access code 443141.
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 2018
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, net of tax, include
additional separation costs associated with the separation from
WestRock; further restructuring and other income (charges);
acquisition-related charges in connection with the planned acquisition
of Georgia-Pacific’s pine chemical business; and revisions due to future
guidance and assessment of U.S. Tax Reform. 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; synergies and the
potential benefits of the acquisition of Georgia-Pacific’s pine
chemicals business (the “acquisition”); the anticipated timing of the
closing of the acquisition; 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, risks
related to the satisfaction of the conditions to closing the acquisition
(including the failure to obtain necessary regulatory approvals) in the
anticipated timeframe or at all, risks that the expected benefits from
the proposed acquisition will not be realized or will not be realized in
the expected time period; the risk that the businesses will not be
integrated successfully; significant transaction costs; unknown or
understated liabilities; 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 or
adoption of alternative technologies; 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-K for the year
ended December 31, 2016 and our other 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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
|
Twelve Months Ended
December 31,
|
|
In millions, except per share data (unaudited)
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Net sales
|
|
|
$
|
229.5
|
|
|
|
$
|
210.9
|
|
|
|
$
|
972.4
|
|
|
|
$
|
908.3
|
|
|
Cost of sales
|
|
|
154.2
|
|
|
|
154.6
|
|
|
|
643.4
|
|
|
|
633.9
|
|
|
Gross profit
|
|
|
75.3
|
|
|
|
56.3
|
|
|
|
329.0
|
|
|
|
274.4
|
|
|
Selling, general and administrative expenses
|
|
|
27.9
|
|
|
|
26.9
|
|
|
|
106.4
|
|
|
|
100.3
|
|
|
Research and technical expenses
|
|
|
5.2
|
|
|
|
3.1
|
|
|
|
19.8
|
|
|
|
13.7
|
|
|
Separation costs
|
|
|
0.2
|
|
|
|
3.9
|
|
|
|
0.9
|
|
|
|
17.5
|
|
|
Restructuring and other (income) charges, net
|
|
|
0.2
|
|
|
|
2.9
|
|
|
|
3.7
|
|
|
|
41.2
|
|
|
Acquisition costs
|
|
|
3.0
|
|
|
|
—
|
|
|
|
7.1
|
|
|
|
—
|
|
|
Other (income) expense, net
|
|
|
(0.4
|
)
|
|
|
0.7
|
|
|
|
0.5
|
|
|
|
(3.2
|
)
|
|
Interest expense, net
|
|
|
6.5
|
|
|
|
3.7
|
|
|
|
15.8
|
|
|
|
17.9
|
|
|
Income (loss) before income taxes
|
|
|
32.7
|
|
|
|
15.1
|
|
|
|
174.8
|
|
|
|
87.0
|
|
|
Provision (benefit) for income taxes
|
|
|
(15.1
|
)
|
|
|
3.4
|
|
|
|
29.8
|
|
|
|
42.6
|
|
|
Net income (loss)
|
|
|
47.8
|
|
|
|
11.7
|
|
|
|
145.0
|
|
|
|
44.4
|
|
|
Less: Net income (loss) attributable to noncontrolling interests
|
|
|
6.4
|
|
|
|
2.6
|
|
|
|
18.7
|
|
|
|
9.2
|
|
|
Net income (loss) attributable to Ingevity stockholders
|
|
|
$
|
41.4
|
|
|
|
$
|
9.1
|
|
|
|
$
|
126.3
|
|
|
|
$
|
35.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per common share attributable to Ingevity
stockholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
$
|
0.98
|
|
|
|
$
|
0.22
|
|
|
|
$
|
3.00
|
|
|
|
$
|
0.83
|
|
|
Diluted
|
|
|
$
|
0.97
|
|
|
|
$
|
0.22
|
|
|
|
$
|
2.97
|
|
|
|
$
|
0.83
|
|
|
Average number of shares outstanding used in the earnings
(loss) per share computations
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
42.1
|
|
|
|
42.1
|
|
|
|
42.1
|
|
|
|
42.1
|
|
|
Diluted
|
|
|
42.6
|
|
|
|
42.3
|
|
|
|
42.5
|
|
|
|
42.3
|
|
|
|
_________________
|
|
|
|
|
|
|
|
|
(1) On May 15, 2016, WestRock distributed 42,102 thousand shares of
Ingevity's common stock to holders of its common stock. Basic and
diluted earnings (loss) per share for the year ended December 31,
2016 is calculated using the weighted average number of common
shares outstanding for the period beginning after the Distribution
Date.
|
|
|
|
|
|
|
|
|
INGEVITY CORPORATION
Segment Operating Results
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Twelve Months Ended
December 31,
|
|
In millions (unaudited)
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Net sales
|
|
|
|
|
|
|
|
|
|
|
Performance Materials
|
|
|
$
|
91.0
|
|
|
$
|
77.3
|
|
|
$
|
349.3
|
|
|
$
|
301.0
|
|
|
Automotive Technologies product line
|
|
|
82.5
|
|
|
68.5
|
|
|
312.5
|
|
|
263.5
|
|
|
Process Purification product line
|
|
|
8.5
|
|
|
8.8
|
|
|
36.8
|
|
|
37.5
|
|
|
Performance Chemicals
|
|
|
138.5
|
|
|
133.6
|
|
|
623.1
|
|
|
607.3
|
|
|
Pavement Technologies product line
|
|
|
25.8
|
|
|
19.6
|
|
|
163.0
|
|
|
148.8
|
|
|
Oilfield Technologies product line
|
|
|
19.7
|
|
|
15.3
|
|
|
77.8
|
|
|
58.5
|
|
|
Industrial Specialties product line
|
|
|
93.0
|
|
|
98.7
|
|
|
382.3
|
|
|
400.0
|
|
|
Total net sales
|
|
|
$
|
229.5
|
|
|
$
|
210.9
|
|
|
$
|
972.4
|
|
|
$
|
908.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment operating profit
|
|
|
|
|
|
|
|
|
|
|
Performance Materials
|
|
|
$
|
32.5
|
|
|
$
|
22.2
|
|
|
$
|
122.0
|
|
|
$
|
106.9
|
|
|
Performance Chemicals
|
|
|
10.1
|
|
|
3.4
|
|
|
80.3
|
|
|
56.7
|
|
|
Total segment operating profit
|
|
|
42.6
|
|
|
25.6
|
|
|
202.3
|
|
|
163.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Separation costs (1)
|
|
|
(0.2
|
)
|
|
(3.9
|
)
|
|
(0.9
|
)
|
|
(17.5
|
)
|
|
Restructuring and other income (charges) (2)
|
|
|
(0.2
|
)
|
|
(2.9
|
)
|
|
(3.7
|
)
|
|
(41.2
|
)
|
|
Acquisition costs (3)
|
|
|
(3.0
|
)
|
|
—
|
|
|
(7.1
|
)
|
|
—
|
|
|
Interest expense, net
|
|
|
(6.5
|
)
|
|
(3.7
|
)
|
|
(15.8
|
)
|
|
(17.9
|
)
|
|
(Provision) benefit for income taxes
|
|
|
15.1
|
|
|
(3.4
|
)
|
|
(29.8
|
)
|
|
(42.6
|
)
|
|
Net (income) loss attributable to noncontrolling interests
|
|
|
(6.4
|
)
|
|
(2.6
|
)
|
|
(18.7
|
)
|
|
(9.2
|
)
|
|
Net income (loss) attributable to the Ingevity stockholders
|
|
|
$
|
41.4
|
|
|
$
|
9.1
|
|
|
$
|
126.3
|
|
|
$
|
35.2
|
|
|
_________________
|
|
|
|
|
|
(1) 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.
|
|
(2) For the three and twelve months ended December 31, 2017 and
2016, respectively, the restructuring charges related to Performance
Materials and Performance Chemicals as shown in the table below:
|
|
|
|
|
Three Months Ended
December 31,
|
|
Twelve Months Ended
December 31,
|
|
In millions
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Performance Materials
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(0.8
|
)
|
|
Performance Chemicals
|
|
|
(0.2
|
)
|
|
(2.9
|
)
|
|
(3.7
|
)
|
|
(40.4
|
)
|
|
Total Restructuring and other income (charges)
|
|
|
$
|
(0.2
|
)
|
|
$
|
(2.9
|
)
|
|
$
|
(3.7
|
)
|
|
$
|
(41.2
|
)
|
|
|
|
(3) Represents charges incurred in connection with the planned
acquisition of Georgia Pacific's Pine Chemical Business.
|
|
|
|
|
|
|
INGEVITY CORPORATION
Condensed Consolidated Balance Sheets
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
In millions (unaudited)
|
|
|
2017
|
|
|
2016
|
|
Assets
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
87.9
|
|
|
|
$
|
30.5
|
|
Accounts receivable, net
|
|
|
100.0
|
|
|
|
89.8
|
|
Inventories, net
|
|
|
160.0
|
|
|
|
151.2
|
|
Other current assets
|
|
|
21.4
|
|
|
|
23.7
|
|
Current Assets
|
|
|
369.3
|
|
|
|
295.2
|
|
Property, plant and equipment, net
|
|
|
438.5
|
|
|
|
422.8
|
|
Restricted investment
|
|
|
71.3
|
|
|
|
69.7
|
|
Other assets
|
|
|
51.2
|
|
|
|
45.1
|
|
Total Assets
|
|
|
$
|
930.3
|
|
|
|
$
|
832.8
|
|
Liabilities and Equity
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
$
|
83.1
|
|
|
|
$
|
79.2
|
|
Accrued expenses
|
|
|
20.0
|
|
|
|
19.3
|
|
Other current liabilities
|
|
|
50.9
|
|
|
|
38.4
|
|
Current Liabilities
|
|
|
154.0
|
|
|
|
136.9
|
|
Long-term debt including capital lease obligations
|
|
|
444.0
|
|
|
|
481.3
|
|
Deferred income taxes
|
|
|
41.3
|
|
|
|
69.8
|
|
Other liabilities
|
|
|
13.3
|
|
|
|
10.2
|
|
Total Liabilities
|
|
|
652.6
|
|
|
|
698.2
|
|
Equity
|
|
|
277.7
|
|
|
|
134.6
|
|
Total Liabilities and Equity
|
|
|
$
|
930.3
|
|
|
|
$
|
832.8
|
|
|
|
|
|
|
INGEVITY CORPORATION
Condensed Consolidated Statements of Cash Flows
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended December 31,
|
|
In millions (unaudited)
|
|
|
2017
|
|
|
2016
|
|
Cash flows provided by (used in) operating activities:
|
|
|
$
|
174.3
|
|
|
|
$
|
127.9
|
|
|
Cash flows provided by (used in) investing activities:
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
(52.6
|
)
|
|
|
(56.7
|
)
|
|
Net investment in equity securities
|
|
|
(1.4
|
)
|
|
|
—
|
|
|
Restricted investment
|
|
|
(1.6
|
)
|
|
|
(69.7
|
)
|
|
Other investing activities, net
|
|
|
(3.0
|
)
|
|
|
—
|
|
|
Net cash provided by (used in) by investing activities
|
|
|
$
|
(58.6
|
)
|
|
|
$
|
(126.4
|
)
|
|
Cash flows provided by (used in) financing activities:
|
|
|
|
|
|
|
|
Net borrowings under our revolving credit facility
|
|
|
(111.9
|
)
|
|
|
111.9
|
|
|
Proceeds from long-term borrowings
|
|
|
75.0
|
|
|
|
300.0
|
|
|
Debt issuance costs
|
|
|
(1.3
|
)
|
|
|
(3.6
|
)
|
|
Borrowings (repayments) of notes payable and other short-term
borrowings, net
|
|
|
—
|
|
|
|
(9.4
|
)
|
|
Tax payments related to withholdings on vested restricted stock units
|
|
|
(1.2
|
)
|
|
|
(0.3
|
)
|
|
Proceeds and withholdings from share-based compensation plans, net
|
|
|
0.5
|
|
|
|
—
|
|
|
Repurchases of common stock under publicly announced plan
|
|
|
(6.6
|
)
|
|
|
—
|
|
|
Noncontrolling interest distributions
|
|
|
(12.3
|
)
|
|
|
(5.4
|
)
|
|
Cash distributed to WestRock at separation
|
|
|
—
|
|
|
|
(448.5
|
)
|
|
Transactions with WestRock, net
|
|
|
—
|
|
|
|
51.9
|
|
|
Net cash provided by (used in) by financing activities
|
|
|
$
|
(57.8
|
)
|
|
|
$
|
(3.4
|
)
|
|
Increase (decrease) in cash and cash equivalents
|
|
|
57.9
|
|
|
|
(1.9
|
)
|
|
Effect of exchange rate changes on cash
|
|
|
(0.5
|
)
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
Change in cash, cash equivalents and restricted cash
|
|
|
57.4
|
|
|
|
(1.5
|
)
|
|
Cash, cash equivalents, and restricted cash at beginning of period
|
|
|
30.5
|
|
|
|
32.0
|
|
|
Cash, cash equivalents, and restricted cash at end of period
|
|
|
$
|
87.9
|
|
|
|
$
|
30.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, acquisition costs and the income tax
expense (benefit) on those items, less the benefit from U.S. Tax Reform.
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, net per share, separation
costs per share, acquisition costs per share and the income tax expense
(benefit) per share on those items, less the per share tax benefit from
U.S. Tax Reform.
Adjusted EBITDA is defined as net income (loss) plus provision
for income taxes, interest expense, depreciation and amortization,
restructuring and other (income) charges, separation costs and
acquisition costs.
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 2018
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, net of tax, include
additional separation costs associated with the separation from
WestRock; further restructuring and other income (charges);
acquisition-related charges in connection with the planned acquisition
of Georgia-Pacific’s pine chemical business; and revisions due to future
guidance and assessment of U.S. Tax Reform. 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
December 31,
|
|
|
Twelve Months Ended
December 31,
|
|
In millions, except per share data (unaudited)
|
|
|
2017
|
|
2016
|
|
|
2017
|
|
2016
|
|
Net income (loss)
|
|
|
$
|
47.8
|
|
|
$
|
11.7
|
|
|
|
$
|
145.0
|
|
|
$
|
44.4
|
|
|
Less: Net income (loss) attributable to noncontrolling interests
|
|
|
6.4
|
|
|
2.6
|
|
|
|
18.7
|
|
|
9.2
|
|
|
Net income (loss) attributable to Ingevity stockholders (GAAP)
|
|
|
41.4
|
|
|
9.1
|
|
|
|
126.3
|
|
|
35.2
|
|
|
Restructuring and other (income) charges (1)
|
|
|
0.2
|
|
|
2.9
|
|
|
|
3.7
|
|
|
41.2
|
|
|
Separation costs (2)
|
|
|
0.2
|
|
|
3.9
|
|
|
|
0.9
|
|
|
17.5
|
|
|
Acquisition costs (3)
|
|
|
3.0
|
|
|
—
|
|
|
|
7.1
|
|
|
—
|
|
|
Tax effect on items above
|
|
|
(1.2
|
)
|
|
(1.6
|
)
|
|
|
(3.6
|
)
|
|
(5.9
|
)
|
|
Tax benefit from U.S. Tax Reform
|
|
|
(24.5
|
)
|
|
—
|
|
|
|
(24.5
|
)
|
|
—
|
|
|
Adjusted earnings (loss) (Non-GAAP)
|
|
|
$
|
19.1
|
|
|
$
|
14.3
|
|
|
|
$
|
109.9
|
|
|
$
|
88.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per common share (GAAP)
|
|
|
$
|
0.97
|
|
|
$
|
0.22
|
|
|
|
$
|
2.97
|
|
|
$
|
0.83
|
|
|
Restructuring and other (income) charges
|
|
|
0.01
|
|
|
0.07
|
|
|
|
0.09
|
|
|
0.98
|
|
|
Separation costs
|
|
|
0.01
|
|
|
0.09
|
|
|
|
0.02
|
|
|
0.41
|
|
|
Acquisition costs
|
|
|
0.07
|
|
|
—
|
|
|
|
0.17
|
|
|
—
|
|
|
Tax effect on items above
|
|
|
(0.03
|
)
|
|
(0.04
|
)
|
|
|
(0.09
|
)
|
|
(0.14
|
)
|
|
Tax benefit from U.S. Tax Reform
|
|
|
(0.58
|
)
|
|
—
|
|
|
|
(0.58
|
)
|
|
—
|
|
|
Diluted adjusted earnings (loss) per share (Non-GAAP)
|
|
|
$
|
0.45
|
|
|
$
|
0.34
|
|
|
|
$
|
2.58
|
|
|
$
|
2.08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average number of shares outstanding used in diluted adjusted
after-tax earnings per share computations
|
|
|
42.6
|
|
|
42.3
|
|
|
|
42.5
|
|
|
42.3
|
|
|
_______________
|
|
|
|
|
|
|
(1) In January 2017, we initiated a reorganization to streamline our
leadership team, flatten the organization and reduce costs. As a
result of this reorganization, we recorded zero and $1.3 million, in
severance and other employee-related costs for the three and twelve
months ended December 31, 2017, respectively. During the three and
twelve months ended December 31, 2017, respectively, we also
recorded $0.2 million and $2.4 million of additional miscellaneous
exit costs primarily associated with the exit of our Performance
Chemicals' manufacturing operations in Palmeira, Santa Catarina,
Brazil which began in the fourth quarter of 2016. Charges incurred
during 2016 primarily related to restructuring activities within our
Brazilian Performance Chemicals operations. Charges for the three
months ended December 31, 2016 were comprised of miscellaneous exit
costs of $2.9 million. Charges for the twelve months ended December
31, 2016 were comprised of asset write-downs, including the asset
impairment charge of $30.2 million, accelerated depreciation of $0.4
million, $7.0 million in severance related charges, and
miscellaneous exit costs of $3.6 million.
|
|
(2) 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.
|
|
(3) Charges primarily relate to legal and professional fees incurred
associated with the planned acquisition of Georgia Pacific's Pine
Chemicals Business.
|
|
|
|
|
|
|
|
|
|
INGEVITY CORPORATION
Reconciliation of Non-GAAP Financial Measures
Reconciliation of Net Income (GAAP) to Adjusted EBITDA
(Non-GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
|
Twelve Months Ended
December 31,
|
|
In millions (unaudited)
|
|
|
2017
|
|
2016
|
|
|
2017
|
|
2016
|
|
Net income (loss) (GAAP)
|
|
|
$
|
47.8
|
|
|
$
|
11.7
|
|
|
|
$
|
145.0
|
|
|
$
|
44.4
|
|
|
Provision (benefit) for income taxes
|
|
|
(15.1
|
)
|
|
3.4
|
|
|
|
29.8
|
|
|
42.6
|
|
|
Interest expense, net
|
|
|
6.5
|
|
|
3.7
|
|
|
|
15.8
|
|
|
17.9
|
|
|
Separation costs
|
|
|
0.2
|
|
|
3.9
|
|
|
|
0.9
|
|
|
17.5
|
|
|
Depreciation and amortization
|
|
|
10.0
|
|
|
10.4
|
|
|
|
40.4
|
|
|
38.8
|
|
|
Restructuring and other (income) charges, net
|
|
|
0.2
|
|
|
2.9
|
|
|
|
3.7
|
|
|
41.2
|
|
|
Acquisition costs
|
|
|
3.0
|
|
|
—
|
|
|
|
7.1
|
|
|
—
|
|
|
Adjusted EBITDA (Non-GAAP)
|
|
|
$
|
52.6
|
|
|
$
|
36.0
|
|
|
|
$
|
242.7
|
|
|
$
|
202.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
$
|
229.5
|
|
|
$
|
210.9
|
|
|
|
$
|
972.4
|
|
|
$
|
908.3
|
|
|
Net income (loss) margin
|
|
|
20.8
|
%
|
|
5.5
|
%
|
|
|
14.9
|
%
|
|
4.9
|
%
|
|
Adjusted EBITDA margin
|
|
|
22.9
|
%
|
|
17.1
|
%
|
|
|
25.0
|
%
|
|
22.3
|
%
|
|
|
|
|
|
|
|
|
|
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
December 31,
|
|
|
Twelve Months Ended
December 31,
|
|
Performance Materials
|
|
|
2017
|
|
2016
|
|
|
2017
|
|
2016
|
|
Segment operating profit (GAAP)
|
|
|
$
|
32.5
|
|
|
$
|
22.2
|
|
|
|
$
|
122.0
|
|
|
$
|
106.9
|
|
|
Depreciation and amortization
|
|
|
4.9
|
|
|
4.8
|
|
|
|
19.8
|
|
|
16.4
|
|
|
Segment EBITDA (Non-GAAP)
|
|
|
$
|
37.4
|
|
|
$
|
27.0
|
|
|
|
$
|
141.8
|
|
|
$
|
123.3
|
|
|
Net sales
|
|
|
$
|
91.0
|
|
|
$
|
77.3
|
|
|
|
$
|
349.3
|
|
|
$
|
301.0
|
|
|
Segment operating margin
|
|
|
35.7
|
%
|
|
28.7
|
%
|
|
|
34.9
|
%
|
|
35.5
|
%
|
|
Segment EBITDA margin
|
|
|
41.1
|
%
|
|
34.9
|
%
|
|
|
40.6
|
%
|
|
41.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Chemicals
|
|
|
|
|
|
|
|
|
|
|
|
Segment operating profit (GAAP)
|
|
|
$
|
10.1
|
|
|
$
|
3.4
|
|
|
|
$
|
80.3
|
|
|
$
|
56.7
|
|
|
Depreciation and amortization
|
|
|
5.1
|
|
|
5.6
|
|
|
|
20.6
|
|
|
22.4
|
|
|
Segment EBITDA (Non-GAAP)
|
|
|
$
|
15.2
|
|
|
$
|
9.0
|
|
|
|
$
|
100.9
|
|
|
$
|
79.1
|
|
|
Net sales
|
|
|
$
|
138.5
|
|
|
$
|
133.6
|
|
|
|
$
|
623.1
|
|
|
$
|
607.3
|
|
|
Segment operating margin
|
|
|
7.3
|
%
|
|
2.5
|
%
|
|
|
12.9
|
%
|
|
9.3
|
%
|
|
Segment EBITDA margin
|
|
|
11.0
|
%
|
|
6.7
|
%
|
|
|
16.2
|
%
|
|
13.0
|
%
|
Ingevity Corporation
Jack Maurer, 843-746-8242
jack.maurer@ingevity.com
or
Investors:
Dan Gallagher, 843-740-2126
daniel.gallagher@ingevity.com