FOURTH QUARTER
- Net sales of $278.6 million were up 21.4 percent versus the prior year quarter’s sales of $229.5 million
- Net income of $42.1 million was down 12.3 percent versus net income in the prior year quarter of $48.0 million due to greater tax benefits from U.S. tax reform; net income as a percentage of sales was 15.1 percent, compared to 20.9 percent in the prior year quarter; diluted earnings per share were $0.99 compared to $0.97 in the prior year quarter
- Adjusted earnings of $45.3 million were up 134.7 percent versus adjusted earnings in the prior year quarter of $19.3 million; diluted adjusted earnings per share were $1.07 versus $0.45 in the prior year quarter
- Adjusted EBITDA of $73.3 million were up 39.4 percent versus fourth quarter 2017 adjusted EBITDA of $52.6 million; adjusted EBITDA margin of 26.3 percent improved 340 basis points versus fourth quarter 2017
FULL YEAR
- Net sales of $1.13 billion were up 16.6 percent versus the prior year’s sales of $972.4 million
- Net income of $181.8 million was up 25.2 percent versus net income in the prior year of $145.2 million; net income as a percentage of sales was 16.0 percent, compared to 14.9 percent in the prior year; diluted earnings per share were $3.97 compared to $2.97 in the prior year
- Adjusted earnings of $176.1 million were up 59.9 percent versus adjusted earnings in the prior year of $110.1 million. Diluted adjusted earnings per share were $4.13 versus $2.58 in the prior year
- Adjusted EBITDA of $320.5 million were up 32.1 percent versus 2017 adjusted EBITDA of $242.7 million; adjusted EBITDA margin of 28.3 percent improved 330 basis points versus 2017
2019 OUTLOOK
- Company announces fiscal year 2019 guidance (inclusive of CapaTM caprolactone business acquisition which closed earlier today) of sales between $1.30 billion and $1.36 billion and adjusted EBITDA between $390 million and $410 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.
NORTH CHARLESTON, S.C.--(BUSINESS WIRE)--Ingevity Corporation (NYSE:NGVT) today reported preliminary fourth
quarter net sales of $278.6 million and net income of $42.1 million,
representing 15.1 percent of sales. Sales were up 21.4 percent versus
$229.5 million in the prior year’s fourth quarter and net income was
down 12.3 percent versus $48.0 million last year due to greater tax
benefits from U.S. tax reform, representing 20.9 percent of sales. The
fourth quarter 2018 diluted earnings per share were $0.99 compared to
$0.97 in the prior year period.
Adjusted earnings of $45.3 million were up 134.7 percent versus adjusted
earnings in the prior year quarter of $19.3 million. Diluted adjusted
earnings per share were $1.07 excluding certain items of $0.08 per share
which are primarily costs related to the acquisition of the CapaTM
caprolactone business from Perstorp Holding AB, net of an additional
benefit associated with U.S. tax reform. This compares to adjusted
earnings per share of $0.45 in the prior year quarter. Adjusted earnings
before interest, taxes, depreciation and amortization (EBITDA) of $73.3
million were up 39.4 percent versus fourth quarter 2017 adjusted EBITDA
of $52.6 million. Ingevity’s fourth quarter adjusted EBITDA margin of
26.3 percent was up 340 basis points from the prior year’s fourth
quarter adjusted EBITDA margin of 22.9 percent.
For the full year, net sales were $1.13 billion and net income was
$181.8 million, representing 16.0 percent of sales. Sales were up 16.6
percent versus $972.4 million in the prior year and net income increased
25.2 percent versus $145.2 million last year, representing 14.9 percent
of sales. The diluted earnings per share for 2018 were $3.97 compared to
$2.97 in the prior year.
Adjusted earnings of $176.1 million were up 59.9 percent versus adjusted
earnings in the prior year of $110.1 million. Diluted adjusted earnings
per share were $4.13 excluding certain items of $0.16 per share which
are primarily costs related to the acquisition of Georgia-Pacific’s pine
chemicals business and the acquisition of the Capa caprolactone business
from Perstorp Holding AB, net of an additional benefit associated with
U.S. tax reform. This compares to adjusted earnings per share of $2.58
in the prior year. Full year 2018 adjusted EBITDA of $320.5 million were
up 32.1 percent versus 2017 adjusted EBITDA of $242.7 million.
Ingevity’s 2018 adjusted EBITDA margin of 28.3 percent was up 330 basis
points from the prior year’s adjusted EBITDA margin of 25.0 percent.
“We delivered an outstanding quarter that exceeded our expectations and
capped off another very strong year for Ingevity,” said Michael Wilson,
president and CEO, Ingevity. “In what is seasonally a slower quarter, we
realized higher volumes and improved price and mix. Our profitability
was additionally aided by lower raw materials costs. These positives
were partially offset by higher freight and distribution costs, higher
spending related to plant outages and increased legal expenses.”
Looking at the full year 2018, Wilson said that the company executed its
business plans well and delivered excellent financial results. “What’s
more, we made significant progress on each of the elements of our
strategy thereby keeping us on track to reach our long-term Target 2022
objectives,” he said. “We’re running our business efficiently, creating
value for our customers, continuing to improve our productivity,
broadening our geographic reach and accelerating our organic and
inorganic growth.
“Truly, our employees put forth a great effort this year,” said Wilson.
“Because of them, the company is performing well, realizing our
potential and continuing to reward our shareholders.”
Reportable Segment Financial Results
Performance Chemicals: Segment sales in the
fourth quarter 2018 were $166.1 million, up $27.6 million, or 19.9
percent, versus prior year quarter. Segment operating profit was $21.0
million, up $10.9 million, or 108 percent, versus the prior year quarter
segment operating profit. This translates to segment operating margin of
12.6 percent compared to the prior year quarter of 7.3 percent. Segment
EBITDA were $30.4 million, up $15.2 million, or 100 percent, versus the
prior year quarter segment EBITDA. Segment EBITDA margin rose 730 basis
points to 18.3 percent.
“The sharp increase in segment revenues reflects the additive benefit of
the Georgia-Pacific pine chemicals acquisition to sales to oilfield and
industrial specialties customers,” said Wilson. “Growth in the oilfield
application was also augmented by strength in U.S. drilling, despite
some softening later in the quarter as customers reacted to uncertainty
in the market. In industrial specialties, we achieved strong growth in
adhesives; continued to drive sales in niche applications such as
agricultural and lubricants; and benefitted from higher selling prices
for tall oil fatty acid (TOFA).” Wilson said that revenues in pavement
technologies, while seasonally slow in North America, were supplemented
by continued penetration in international markets such as Peru and China.
“We are concertedly moving toward higher margin applications sometimes
at the expense of volumes in lower margin businesses, such as printing
inks,” said Wilson. “The net impact of these price and mix benefits was
a substantial improvement in segment margins.”
For the full year 2018, segment sales were $733.2 million, up $110.1
million, or 17.7 percent, versus 2017. Segment operating profit was
$116.3 million, up $36.0 million, or 44.8 percent, versus the prior year
segment operating profit. This translates to segment operating margin of
15.9 percent compared to prior year quarter of 12.9 percent. Segment
EBITDA were $151.1 million, up $50.2 million, or 49.8 percent, versus
the prior year segment EBITDA. Segment EBITDA margins increased 440
basis points to 20.6 percent.
Performance Materials: Segment sales in the
fourth quarter 2018 were $112.5 million, up $21.5 million, or 23.7
percent, versus prior year quarter. Segment operating profit was $37.4
million, up $4.9 million, or 15.1 percent, versus the prior year quarter
segment operating profit. This translates to segment operating margin of
33.2 percent compared to prior year quarter of 35.7 percent. Segment
EBITDA were $42.9 million, up $5.5 million, or 14.7 percent, versus the
prior year segment EBITDA. Segment EBITDA margin decreased 300 basis
points to 38.1 percent.
“Volumes, particularly in sales of ‘honeycomb’ products to meet U.S.
Environmental Protection Agency (EPA) Tier 3 and California LEV III
automotive gasoline emission standards, drove increases in revenues and
earnings,” Wilson said. “In addition, we also saw strong revenue growth
in pellet products in the quarter signaling the beginning of regulatory
adoption in China and, to a lesser degree, Europe of new, more stringent
standards. Regulatory drivers were complemented by a 2.2 percent
increase in North American light vehicle production.” Wilson also noted
that the company successfully replaced an activation kiln at its
Covington, Virginia, facility in October. This planned outage – along
with higher legal expenses – impacted segment margins.
For the full year 2018, segment sales were $400.4 million, up $51.1
million, or 14.6 percent, versus 2017. Segment operating profit was
$147.2 million, up $25.2 million, or 20.7 percent, versus the prior year
segment operating profit. This translates to segment operating margin of
36.8 percent compared to prior year quarter of 34.9 percent. Segment
EBITDA were $169.4 million, up $27.6 million, or 19.5 percent, versus
the prior year segment EBITDA. Segment EBITDA margins increased 170
basis points to 42.3 percent.
Outlook
Ingevity announced its fiscal year 2019 guidance for sales between $1.30
billion and $1.36 billion and adjusted EBITDA between $390 million and
$410 million.
“Including our acquisition of the Capa caprolactone business, at the
mid-point of our guidance, we expect to increase revenues about 18
percent and earnings by almost 25 percent versus 2018,” Wilson said.
“Our strategy is sound, and our people are ready and motivated to
execute and turn in another strong year for Ingevity.”
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
1,700 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, Feb. 14, 2019, at 10 a.m. (Eastern Time) to discuss
fourth quarter and full year 2018 fiscal results. Those who wish to
participate in this event should dial 800-230-1074 (inside the U.S.) or
612-332-0107 (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 March
14, 2019, and can be accessed at 800-475-6701 (inside the U.S.) or
320-365-3844 (outside the U.S.), with access code 463005.
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 2019
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), net;
additional acquisition and other related costs in connection with the
acquisition of Georgia-Pacific’s pine chemical business and Perstorp
Holding AB’s Capa caprolactone business; additional pension and
postretirement settlement and curtailment (income) charges; 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 and the acquisition of Perstorp Holding AB’s Capa
caprolactone business (the “acquisitions”); capital and other
expenditures; competitive positions; growth opportunities for existing
products; benefits from new technology and cost-reduction initiatives,
plans and objectives; markets for securities and expected future
repurchase of shares, including statements about the manner, amount and
timing of repurchases. 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 that
the expected benefits from the acquisitions will not be realized or will
not be realized in the expected time period; the risk that the acquired
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, and new or emerging competitors; 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, tariffs
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, 2017 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 (Unaudited)
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
|
Twelve Months Ended
December 31,
|
|
In millions, except per share data
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
Net sales
|
|
|
$
|
278.6
|
|
|
|
$
|
229.5
|
|
|
|
$
|
1,133.6
|
|
|
|
$
|
972.4
|
|
Cost of sales
|
|
|
|
181.0
|
|
|
|
|
154.2
|
|
|
|
|
716.8
|
|
|
|
|
643.4
|
|
Gross profit
|
|
|
|
97.6
|
|
|
|
|
75.3
|
|
|
|
|
416.8
|
|
|
|
|
329.0
|
|
Selling, general and administrative expenses
|
|
|
|
35.9
|
|
|
|
|
27.9
|
|
|
|
|
132.4
|
|
|
|
|
106.4
|
|
Research and technical expenses
|
|
|
|
5.2
|
|
|
|
|
5.2
|
|
|
|
|
21.5
|
|
|
|
|
19.8
|
|
Separation costs
|
|
|
|
—
|
|
|
|
|
0.2
|
|
|
|
|
—
|
|
|
|
|
0.9
|
|
Restructuring and other (income) charges, net
|
|
|
|
0.1
|
|
|
|
|
0.2
|
|
|
|
|
(0.5
|
)
|
|
|
|
3.7
|
|
Acquisition-related costs
|
|
|
|
6.5
|
|
|
|
|
3.0
|
|
|
|
|
10.8
|
|
|
|
|
7.1
|
|
Other (income) expense, net
|
|
|
|
(1.7
|
)
|
|
|
|
(0.4
|
)
|
|
|
|
1.0
|
|
|
|
|
0.5
|
|
Interest expense, net
|
|
|
|
8.0
|
|
|
|
|
6.5
|
|
|
|
|
29.8
|
|
|
|
|
15.8
|
|
Income (loss) before income taxes
|
|
|
|
43.6
|
|
|
|
|
32.7
|
|
|
|
|
221.8
|
|
|
|
|
174.8
|
|
Provision (benefit) for income taxes
|
|
|
|
1.5
|
|
|
|
|
(15.3
|
)
|
|
|
|
40.0
|
|
|
|
|
29.6
|
|
Net income (loss)
|
|
|
|
42.1
|
|
|
|
|
48.0
|
|
|
|
|
181.8
|
|
|
|
|
145.2
|
|
Less: Net income (loss) attributable to noncontrolling interests
|
|
|
|
—
|
|
|
|
|
6.4
|
|
|
|
|
12.7
|
|
|
|
|
18.7
|
|
Net income (loss) attributable to Ingevity stockholders
|
|
|
$
|
42.1
|
|
|
|
$
|
41.6
|
|
|
|
$
|
169.1
|
|
|
|
$
|
126.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per common share attributable to Ingevity
stockholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
$
|
1.01
|
|
|
|
$
|
0.98
|
|
|
|
$
|
4.02
|
|
|
|
$
|
3.00
|
|
Diluted
|
|
|
$
|
0.99
|
|
|
|
$
|
0.97
|
|
|
|
$
|
3.97
|
|
|
|
$
|
2.97
|
|
Weighted average common shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
41.9
|
|
|
|
|
42.1
|
|
|
|
|
42.0
|
|
|
|
|
42.1
|
|
Diluted
|
|
|
|
42.5
|
|
|
|
|
42.6
|
|
|
|
|
42.6
|
|
|
|
|
42.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INGEVITY CORPORATION
Segment Operating Results (Unaudited)
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
|
Twelve Months Ended
December 31,
|
|
In millions
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
Net sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Materials
|
|
|
$
|
112.5
|
|
|
|
$
|
91.0
|
|
|
|
$
|
400.4
|
|
|
|
$
|
349.3
|
|
|
Automotive Technologies product line
|
|
|
|
103.4
|
|
|
|
|
82.5
|
|
|
|
|
362.0
|
|
|
|
|
312.5
|
|
|
Process Purification product line
|
|
|
|
9.1
|
|
|
|
|
8.5
|
|
|
|
|
38.4
|
|
|
|
|
36.8
|
|
|
Performance Chemicals
|
|
|
$
|
166.1
|
|
|
|
$
|
138.5
|
|
|
|
$
|
733.2
|
|
|
|
$
|
623.1
|
|
|
Oilfield Technologies product line
|
|
|
|
30.2
|
|
|
|
|
19.7
|
|
|
|
|
114.2
|
|
|
|
|
77.8
|
|
|
Pavement Technologies product line
|
|
|
|
26.3
|
|
|
|
|
25.8
|
|
|
|
|
178.5
|
|
|
|
|
163.0
|
|
|
Industrial Specialties product line
|
|
|
|
109.6
|
|
|
|
|
93.0
|
|
|
|
|
440.5
|
|
|
|
|
382.3
|
|
|
Total net sales
|
|
|
$
|
278.6
|
|
|
|
$
|
229.5
|
|
|
|
$
|
1,133.6
|
|
|
|
$
|
972.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment operating profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Materials
|
|
|
$
|
37.4
|
|
|
|
$
|
32.5
|
|
|
|
$
|
147.2
|
|
|
|
$
|
122.0
|
|
|
Performance Chemicals
|
|
|
|
21.0
|
|
|
|
|
10.1
|
|
|
|
|
116.3
|
|
|
|
|
80.3
|
|
|
Total segment operating profit
|
|
|
$
|
58.4
|
|
|
|
$
|
42.6
|
|
|
|
$
|
263.5
|
|
|
|
$
|
202.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Separation costs (1)
|
|
|
|
—
|
|
|
|
|
(0.2
|
)
|
|
|
|
—
|
|
|
|
|
(0.9
|
)
|
|
Restructuring and other income (charges) (2)
|
|
|
|
(0.1
|
)
|
|
|
|
(0.2
|
)
|
|
|
|
0.5
|
|
|
|
|
(3.7
|
)
|
|
Acquisition and other related costs (3)
|
|
|
|
(6.5
|
)
|
|
|
|
(3.0
|
)
|
|
|
|
(12.2
|
)
|
|
|
|
(7.1
|
)
|
|
Pension and postretirement settlement and curtailment charges
(income)
|
|
|
|
(0.2
|
)
|
|
|
|
—
|
|
|
|
|
(0.2
|
)
|
|
|
|
—
|
|
|
Interest expense, net
|
|
|
|
(8.0
|
)
|
|
|
|
(6.5
|
)
|
|
|
|
(29.8
|
)
|
|
|
|
(15.8
|
)
|
|
(Provision) benefit for income taxes
|
|
|
|
(1.5
|
)
|
|
|
|
15.3
|
|
|
|
|
(40.0
|
)
|
|
|
|
(29.6
|
)
|
|
Net (income) loss attributable to noncontrolling interests
|
|
|
|
—
|
|
|
|
|
(6.4
|
)
|
|
|
|
(12.7
|
)
|
|
|
|
(18.7
|
)
|
|
Net income (loss) attributable to the Ingevity stockholders
|
|
|
$
|
42.1
|
|
|
|
$
|
41.6
|
|
|
|
$
|
169.1
|
|
|
|
$
|
126.5
|
|
|
_________________
|
|
|
|
|
|
|
|
(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) The restructuring activity relates to Performance Chemicals for
all periods presented.
|
|
(3) Charges primarily relate to legal and professional fees,
inventory step-up amortization, and purchase price hedge
adjustments incurred associated with acquisitions in the
Performance Chemicals segment. For the twelve months ended
December 31, 2018, the legal and professional fees of $6.9 million
and purchase price hedge adjustments of $3.9 million are included
in “Acquisition-related costs” and the inventory step-up
amortization of $1.4 million are included in “Cost of sales” on
the condensed statement of operations, respectively.
|
|
|
|
|
|
INGEVITY CORPORATION
Condensed Consolidated Balance Sheets
|
|
|
|
|
|
|
December 31,
|
|
In millions
|
|
|
2018
|
|
|
2017
|
|
Assets
|
|
|
(Unaudited)
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
77.5
|
|
|
$
|
87.9
|
|
Accounts receivable, net
|
|
|
|
118.9
|
|
|
|
100.0
|
|
Inventories, net
|
|
|
|
191.4
|
|
|
|
160.0
|
|
Prepaid and other current assets
|
|
|
|
34.9
|
|
|
|
20.8
|
|
Current assets
|
|
|
|
422.7
|
|
|
|
368.7
|
|
Property, plant and equipment, net
|
|
|
|
523.8
|
|
|
|
438.5
|
|
Goodwill
|
|
|
|
130.7
|
|
|
|
12.4
|
|
Other intangibles, net
|
|
|
|
125.6
|
|
|
|
4.9
|
|
Restricted investment
|
|
|
|
71.2
|
|
|
|
71.3
|
|
Other assets
|
|
|
|
41.2
|
|
|
|
33.8
|
|
Total assets
|
|
|
$
|
1,315.2
|
|
|
$
|
929.6
|
|
Liabilities
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
$
|
92.9
|
|
|
$
|
83.1
|
|
Accrued expenses
|
|
|
|
36.7
|
|
|
|
20.0
|
|
Other current liabilities
|
|
|
|
53.7
|
|
|
|
50.1
|
|
Current liabilities
|
|
|
|
183.3
|
|
|
|
153.2
|
|
Long-term debt including capital lease obligations
|
|
|
|
741.2
|
|
|
|
444.0
|
|
Deferred income taxes
|
|
|
|
37.2
|
|
|
|
41.3
|
|
Other liabilities
|
|
|
|
13.9
|
|
|
|
13.2
|
|
Total liabilities
|
|
|
|
975.6
|
|
|
|
651.7
|
|
Equity
|
|
|
|
339.6
|
|
|
|
277.9
|
|
Total liabilities and equity
|
|
|
$
|
1,315.2
|
|
|
$
|
929.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INGEVITY CORPORATION
Condensed Consolidated Statements of Cash Flows (Unaudited)
|
|
|
|
|
|
|
Twelve Months Ended December 31,
|
|
In millions
|
|
|
2018
|
|
|
2017
|
|
Cash flows provided by (used in) operating activities:
|
|
|
$
|
252.0
|
|
|
|
$
|
174.3
|
|
|
Cash flows provided by (used in) investing activities:
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
|
(93.9
|
)
|
|
|
|
(52.6
|
)
|
|
Payments for acquired business, net of cash acquired
|
|
|
|
(315.5
|
)
|
|
|
|
—
|
|
|
Purchase of equity securities
|
|
|
|
—
|
|
|
|
|
(2.4
|
)
|
|
Sale of equity securities
|
|
|
|
1.1
|
|
|
|
|
1.0
|
|
|
Other investing activities, net
|
|
|
|
(6.1
|
)
|
|
|
|
(4.6
|
)
|
|
Net cash provided by (used in) by investing activities
|
|
|
$
|
(414.4
|
)
|
|
|
$
|
(58.6
|
)
|
|
Cash flows provided by (used in) financing activities:
|
|
|
|
|
|
|
|
Net borrowings under our revolving credit facility
|
|
|
|
—
|
|
|
|
|
(111.9
|
)
|
|
Proceeds from long-term borrowings
|
|
|
|
300.0
|
|
|
|
|
75.0
|
|
|
Debt issuance costs
|
|
|
|
(7.1
|
)
|
|
|
|
(1.3
|
)
|
|
Tax payments related to withholdings on vested restricted stock units
|
|
|
|
(2.5
|
)
|
|
|
|
(1.2
|
)
|
|
Proceeds and withholdings from share-based compensation plans, net
|
|
|
|
2.1
|
|
|
|
|
0.5
|
|
|
Repurchases of common stock under publicly announced plan
|
|
|
|
(47.4
|
)
|
|
|
|
(6.6
|
)
|
|
Acquisition of noncontrolling interest
|
|
|
|
(80.0
|
)
|
|
|
|
—
|
|
|
Noncontrolling interest distributions
|
|
|
|
(15.3
|
)
|
|
|
|
(12.3
|
)
|
|
Other financing activities, net
|
|
|
|
3.9
|
|
|
|
|
—
|
|
|
Net cash provided by (used in) by financing activities
|
|
|
$
|
153.7
|
|
|
|
$
|
(57.8
|
)
|
|
Increase (decrease) in cash, cash equivalents and restricted cash
|
|
|
|
(8.7
|
)
|
|
|
|
57.9
|
|
|
Effect of exchange rate changes on cash
|
|
|
|
(1.4
|
)
|
|
|
|
(0.5
|
)
|
|
|
|
|
|
|
|
|
|
Change in cash, cash equivalents and restricted cash
|
|
|
|
(10.1
|
)
|
|
|
|
57.4
|
|
|
Cash, cash equivalents, and restricted cash at beginning of period
|
|
|
|
87.9
|
|
|
|
|
30.5
|
|
|
Cash, cash equivalents, and restricted cash at end of period (1)
|
|
|
$
|
77.8
|
|
|
|
$
|
87.9
|
|
|
_______________
|
|
(1) Includes restricted cash of $0.3 million and zero
and cash and cash equivalents of $77.5 million and $87.9 million
as of December 31, 2018 and 2017, respectively. Restricted cash is
included within “Prepaid and Other Current Assets” within the
condensed consolidated balance sheets.
|
|
|
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.
We believe these non-GAAP financial measures provide management as well
as 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 and other related costs,
pension and postretirement settlement and curtailment (income) charges
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 and other related costs per share, pension
and postretirement settlement and curtailment (income) charges 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, net, depreciation and amortization,
restructuring and other (income) charges, separation costs and
acquisition and other related costs, pension and postretirement
settlement and curtailment (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
Segment 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 2019
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), net;
additional acquisition and other related costs in connection with the
acquisition of Georgia-Pacific’s pine chemical business and Perstorp
Holding AB’s Capa caprolactone business; additional pension and
postretirement settlement and curtailment (income) charges; 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)
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
Net income (loss)
|
|
|
$
|
42.1
|
|
|
|
$
|
48.0
|
|
|
|
$
|
181.8
|
|
|
|
$
|
145.2
|
|
|
Less: Net income (loss) attributable to noncontrolling interests
|
|
|
|
—
|
|
|
|
|
6.4
|
|
|
|
|
12.7
|
|
|
|
|
18.7
|
|
|
Net income (loss) attributable to Ingevity stockholders (GAAP)
|
|
|
|
42.1
|
|
|
|
|
41.6
|
|
|
|
|
169.1
|
|
|
|
|
126.5
|
|
|
Restructuring and other (income) charges (1)
|
|
|
|
0.1
|
|
|
|
|
0.2
|
|
|
|
|
(0.5
|
)
|
|
|
|
3.7
|
|
|
Separation costs (2)
|
|
|
|
—
|
|
|
|
|
0.2
|
|
|
|
|
—
|
|
|
|
|
0.9
|
|
|
Acquisition and other related costs (3)
|
|
|
|
6.5
|
|
|
|
|
3.0
|
|
|
|
|
12.2
|
|
|
|
|
7.1
|
|
|
Pension and postretirement settlement and curtailment charges
(income)(4)
|
|
|
|
0.2
|
|
|
|
|
—
|
|
|
|
|
0.2
|
|
|
|
|
—
|
|
|
Tax effect on items above
|
|
|
|
(1.7
|
)
|
|
|
|
(1.2
|
)
|
|
|
|
(3.0
|
)
|
|
|
|
(3.6
|
)
|
|
Tax benefit from U.S. Tax Reform
|
|
|
|
(1.9
|
)
|
|
|
|
(24.5
|
)
|
|
|
|
(1.9
|
)
|
|
|
|
(24.5
|
)
|
|
Adjusted earnings (loss) (Non-GAAP)
|
|
|
$
|
45.3
|
|
|
|
$
|
19.3
|
|
|
|
$
|
176.1
|
|
|
|
$
|
110.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per common share (GAAP)
|
|
|
$
|
0.99
|
|
|
|
$
|
0.97
|
|
|
|
$
|
3.97
|
|
|
|
$
|
2.97
|
|
|
Restructuring and other (income) charges
|
|
|
|
—
|
|
|
|
|
0.01
|
|
|
|
|
(0.01
|
)
|
|
|
|
0.09
|
|
|
Separation costs
|
|
|
|
—
|
|
|
|
|
0.01
|
|
|
|
|
—
|
|
|
|
|
0.02
|
|
|
Acquisition and other related costs
|
|
|
|
0.15
|
|
|
|
|
0.07
|
|
|
|
|
0.28
|
|
|
|
|
0.17
|
|
|
Pension and postretirement settlement and curtailment charges
(income)
|
|
|
|
0.01
|
|
|
|
|
—
|
|
|
|
|
0.01
|
|
|
|
|
—
|
|
|
Tax effect on items above
|
|
|
|
(0.04
|
)
|
|
|
|
(0.03
|
)
|
|
|
|
(0.07
|
)
|
|
|
|
(0.09
|
)
|
|
Tax benefit from U.S. Tax Reform
|
|
|
|
(0.04
|
)
|
|
|
|
(0.58
|
)
|
|
|
|
(0.05
|
)
|
|
|
|
(0.58
|
)
|
|
Diluted adjusted earnings (loss) per share (Non-GAAP)
|
|
|
$
|
1.07
|
|
|
|
$
|
0.45
|
|
|
|
$
|
4.13
|
|
|
|
$
|
2.58
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding - Diluted
|
|
|
|
42.5
|
|
|
|
|
42.6
|
|
|
|
|
42.6
|
|
|
|
|
42.5
|
|
|
_______________
|
|
|
|
|
|
|
|
(1) The restructuring activity relates to Performance Chemicals for
all periods presented.
|
|
(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,
inventory step-up amortization, and a purchase price hedge incurred,
associated with acquisitions in the Performance Chemicals segment.
|
|
|
|
|
|
|
Three Months
Ended December 31,
|
|
|
Twelve Months
Ended December 31,
|
|
In millions
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
Legal and professional service fees (i)
|
|
|
$
|
2.6
|
|
|
|
$
|
3.0
|
|
|
|
$
|
6.9
|
|
|
|
$
|
7.1
|
|
|
Inventory fair value step-up amortization (ii)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
1.4
|
|
|
|
|
—
|
|
|
Caprolactone Acquisition purchase price hedge (i)
|
|
|
$
|
3.9
|
|
|
|
$
|
—
|
|
|
|
$
|
3.9
|
|
|
|
$
|
—
|
|
|
Acquisition and other related costs
|
|
|
$
|
6.5
|
|
|
|
$
|
3.0
|
|
|
|
$
|
12.2
|
|
|
|
$
|
7.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i) Included within “Acquisition and other related costs” on the
condensed consolidated statement of operations.
|
|
(ii) Included within “Cost of sales” on the condensed consolidated
statement of operations.
|
|
(4) Charges relate to pension curtailment which are included in
“Cost of sales” on the condensed statement of operations.
|
|
|
|
|
|
INGEVITY CORPORATION
|
|
|
|
Reconciliation of Non-GAAP Financial Measures
|
|
|
|
|
|
Reconciliation of Net Income (Loss) (GAAP) to Adjusted EBITDA
(Non-GAAP)
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
|
Twelve Months Ended
December 31,
|
|
In millions (unaudited)
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
Net income (loss) (GAAP)
|
|
|
$
|
42.1
|
|
|
|
$
|
48.0
|
|
|
|
$
|
181.8
|
|
|
|
$
|
145.2
|
|
|
Provision (benefit) for income taxes
|
|
|
|
1.5
|
|
|
|
|
(15.3
|
)
|
|
|
|
40.0
|
|
|
|
|
29.6
|
|
|
Interest expense, net
|
|
|
|
8.0
|
|
|
|
|
6.5
|
|
|
|
|
29.8
|
|
|
|
|
15.8
|
|
|
Separation costs
|
|
|
|
—
|
|
|
|
|
0.2
|
|
|
|
|
—
|
|
|
|
|
0.9
|
|
|
Depreciation and amortization
|
|
|
|
14.9
|
|
|
|
|
10.0
|
|
|
|
|
57.0
|
|
|
|
|
40.4
|
|
|
Restructuring and other (income) charges, net
|
|
|
|
0.1
|
|
|
|
|
0.2
|
|
|
|
|
(0.5
|
)
|
|
|
|
3.7
|
|
|
Acquisition and other related costs
|
|
|
|
6.5
|
|
|
|
|
3.0
|
|
|
|
|
12.2
|
|
|
|
|
7.1
|
|
|
Pension and postretirement settlement and curtailment charges
(income)
|
|
|
|
0.2
|
|
|
|
|
—
|
|
|
|
|
0.2
|
|
|
|
|
—
|
|
|
Adjusted EBITDA (Non-GAAP)
|
|
|
$
|
73.3
|
|
|
|
$
|
52.6
|
|
|
|
$
|
320.5
|
|
|
|
$
|
242.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
$
|
278.6
|
|
|
|
$
|
229.5
|
|
|
|
$
|
1,133.6
|
|
|
|
$
|
972.4
|
|
|
Net income (loss) margin
|
|
|
|
15.1
|
%
|
|
|
|
20.9
|
%
|
|
|
|
16.0
|
%
|
|
|
|
14.9
|
%
|
|
Adjusted EBITDA margin
|
|
|
|
26.3
|
%
|
|
|
|
22.9
|
%
|
|
|
|
28.3
|
%
|
|
|
|
25.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
Segment operating profit (GAAP)
|
|
|
$
|
37.4
|
|
|
|
$
|
32.5
|
|
|
|
$
|
147.2
|
|
|
|
$
|
122.0
|
|
|
Depreciation and amortization
|
|
|
|
5.5
|
|
|
|
|
4.9
|
|
|
|
|
22.2
|
|
|
|
|
19.8
|
|
|
Segment EBITDA (Non-GAAP)
|
|
|
$
|
42.9
|
|
|
|
$
|
37.4
|
|
|
|
$
|
169.4
|
|
|
|
$
|
141.8
|
|
|
Net sales
|
|
|
$
|
112.5
|
|
|
|
$
|
91.0
|
|
|
|
$
|
400.4
|
|
|
|
$
|
349.3
|
|
|
Segment operating margin
|
|
|
|
33.2
|
%
|
|
|
|
35.7
|
%
|
|
|
|
36.8
|
%
|
|
|
|
34.9
|
%
|
|
Segment EBITDA margin
|
|
|
|
38.1
|
%
|
|
|
|
41.1
|
%
|
|
|
|
42.3
|
%
|
|
|
|
40.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Chemicals
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment operating profit (GAAP)
|
|
|
$
|
21.0
|
|
|
|
$
|
10.1
|
|
|
|
$
|
116.3
|
|
|
|
$
|
80.3
|
|
|
Depreciation and amortization
|
|
|
|
9.4
|
|
|
|
|
5.1
|
|
|
|
|
34.8
|
|
|
|
|
20.6
|
|
|
Segment EBITDA (Non-GAAP)
|
|
|
$
|
30.4
|
|
|
|
$
|
15.2
|
|
|
|
$
|
151.1
|
|
|
|
$
|
100.9
|
|
|
Net sales
|
|
|
$
|
166.1
|
|
|
|
$
|
138.5
|
|
|
|
$
|
733.2
|
|
|
|
$
|
623.1
|
|
|
Segment operating margin
|
|
|
|
12.6
|
%
|
|
|
|
7.3
|
%
|
|
|
|
15.9
|
%
|
|
|
|
12.9
|
%
|
|
Segment EBITDA margin
|
|
|
|
18.3
|
%
|
|
|
|
11.0
|
%
|
|
|
|
20.6
|
%
|
|
|
|
16.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jack Maurer
843-746-8242
[email protected]
Investors:
Dan Gallagher
843-740-2126
[email protected]