Ingevity Corp 10-Q for FY2024 Q1

Ingevity Corp (NGVT)

10-Q 2024-05-02 For: 2024-03-31

Added on April 12, 2026

About this 10-Q

Ingevity Corp filed this 10-Q on May 2, 2024, covering the quarter ended March 31, 2024 (FY2024 Q1).

Headline figures

Quarter ended March 31, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $340.1M; down 13.4% from $392.6M a year earlier
Net loss: $56M; compared with net income of $50.7M a year earlier
Diluted EPS: -$1.54; compared with $1.35 a year earlier

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Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock ($0.01 par value)	NGVT	New York Stock Exchange


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐


		Page No.
PART I - FINANCIAL INFORMATION		3
Item 1. Financial Statements		3
	Condensed Consolidated Statements of Operations	3
	Condensed Consolidated Statements of Comprehensive Income (Loss)	4
	Condensed Consolidated Balance Sheets	5
	Condensed Consolidated Statements of Cash Flows	6
	Notes to the Condensed Consolidated Financial Statements	7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		26
Item 3. Quantitative and Qualitative Disclosures About Market Risk		39
Item 4. Controls and Procedures		40
PART II - OTHER INFORMATION		41
Item 1. Legal Proceedings		41
Item 1A. Risk Factors		41
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		41
Item 3. Defaults Upon Senior Securities		42
Item 4. Mine Safety Disclosures		42
Item 5. Other Information		42
Item 6. Exhibits		43
SIGNATURES		44


	Three Months Ended March 31,
In millions, except per share data		2024		2023
Net sales		$	340.1	$	392.6
Cost of sales		240.4		262.2
Gross profit		99.7		130.4
Selling, general, and administrative expenses		47.2		48.6
Research and technical expenses		6.8		8.8
Restructuring and other (income) charges, net		62.8		5.6
Acquisition-related costs		0.3		1.9
Other (income) expense, net		32.2		(18.2)
Interest expense, net		22.3		19.6
Income (loss) before income taxes		(71.9)		64.1
Provision (benefit) for income taxes		(15.9)		13.4
Net income (loss)		$	(56.0)	$	50.7



Per share data
Basic earnings (loss) per share		$	(1.54)	$	1.36
Diluted earnings (loss) per share		(1.54)		1.35


	Three Months Ended March 31,
In millions		2024		2023
Net income (loss)		$	(56.0)	$	50.7
Other comprehensive income (loss), net of tax:
Foreign currency adjustments:
Foreign currency translation adjustment		(9.1)		10.5

Total foreign currency adjustments, net of tax provision (benefit) of zero and zero		(9.1)		10.5
Derivative instruments:
Unrealized gain (loss), net of tax provision (benefit) of $(0.1) and $(0.7)		(0.3)		(2.3)
Reclassifications of deferred derivative instruments (gain) loss, included in net income (loss), net of tax (provision) benefit of $0.2 and $(0.1)		0.5		(0.2)
Total derivative instruments, net of tax provision (benefit) of $0.1 and $(0.8)		0.2		(2.5)




Other comprehensive income (loss), net of tax provision (benefit) of $0.1 and $(0.8)		(8.9)		8.0
Comprehensive income (loss)		$	(64.9)	$	58.7


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


In millions, except share and par value data	March 31, 2024		December 31, 2023
Assets	(Unaudited)
Cash and cash equivalents	$	88.5	$	95.9
Accounts receivable, net of allowance of $1.2 - 2024 and $1.1 - 2023	191.3		182.0
Inventories, net	325.5		308.8
Prepaid and other current assets	63.9		71.9
Current assets	669.2		658.6
Property, plant, and equipment, net	726.5		762.2
Operating lease assets, net	63.6		67.1
Goodwill	525.9		527.5
Other intangibles, net	302.8		336.1
Deferred income taxes	23.8		11.6
Restricted investment, net of allowance of $0.1 - 2024 and $0.2 - 2023	79.8		79.1
Strategic investments	94.1		99.2
Other assets	81.2		81.9
Total Assets	$	2,566.9	$	2,623.3
Liabilities
Accounts payable	$	153.1	$	158.4
Accrued expenses	70.5		72.3
Accrued payroll and employee benefits	16.6		19.9
Current operating lease liabilities	18.8		18.7
Notes payable and current maturities of long-term debt	84.7		84.4
Income taxes payable	8.0		9.2
Current liabilities	351.7		362.9
Long-term debt including finance lease obligations	1,408.7		1,382.8
Noncurrent operating lease liabilities	45.0		48.6
Deferred income taxes	64.4		70.9
Other liabilities	128.9		126.7
Total Liabilities	1,998.7		1,991.9
Commitments and contingencies (Note 13)
Equity
Preferred stock (par value $0.01 per share; 50,000,000 shares authorized; zero issued and outstanding at 2024 and 2023, respectively)	—		—
Common stock (par value $0.01 per share; 300,000,000 shares authorized; 43,585,084 and 43,446,513 issued and 36,324,153 and 36,233,092 outstanding at 2024 and 2023, respectively)	0.4		0.4
Additional paid-in capital	169.2		164.9
Retained earnings	946.3		1,002.3
Accumulated other comprehensive income (loss)	(35.6)		(26.7)
Treasury stock, common stock, at cost (7,260,931 shares - 2024 and 7,213,421 shares - 2023)	(512.1)		(509.5)


Total Equity	568.2		631.4
Total Liabilities and Equity	$	2,566.9	$	2,623.3


	Contract Asset
	March 31,
In millions	2024		2023
Beginning balance	$	11.2	$	6.4
Contract asset additions	8.8		3.9
Reclassification to accounts receivable, billed to customers	(4.1)		(4.1)
Ending balance (1)	$	15.9	$	6.2


In millions	Level 1(1)		Level 2(2)		Level 3(3)		Total
March 31, 2024
Assets:

Deferred compensation plan investments (4)	$	3.1	$	—	$	—	$	3.1
Total assets	$	3.1	$	—	$	—	$	3.1
Liabilities:
Deferred compensation arrangement (4)	$	16.1	$	—	$	—	$	16.1


Total liabilities	$	16.1	$	—	$	—	$	16.1

In millions	Level 1(1)		Level 2(2)		Level 3(3)		Total
December 31, 2023
Assets:

Deferred compensation plan investments (4)	$	3.0	$	—	$	—	$	3.0
Total assets	$	3.0	$	—	$	—	$	3.0
Liabilities:
Deferred compensation arrangement (4)	$	15.5	$	—	$	—	$	15.5


Total liabilities	$	15.5	$	—	$	—	$	15.5


	HTM Debt Securities
In millions	AA+		AA-	A	A-	BBB+	Total
March 31, 2024	$	13.3	10.4	13.2	17.0	10.0	$	63.9
December 31, 2023	$	13.3	10.4	13.2	17.0	10.0	$	63.9


	Reporting Units
In millions	Performance Materials		Performance Chemicals		Advanced Polymer Technologies		Total
December 31, 2023	$	4.3	$	349.4	$	173.8	$	527.5

Foreign currency translation	—		(0.1)		(1.5)		(1.6)
March 31, 2024	$	4.3	$	349.3	$	172.3	$	525.9


In millions	Customer contracts and relationships		Brands (1)		Developed Technology		Total
Gross Asset Value
December 31, 2023	$	396.5	$	92.6	$	91.7	$	580.8
Retirements (2)	(129.0)		—		(1.9)		(130.9)
Foreign currency translation	(1.3)		(0.6)		(0.5)		(2.4)
March 31, 2024	$	266.2	$	92.0	$	89.3	$	447.5
Accumulated Amortization
December 31, 2023	$	(179.4)	$	(30.3)	$	(35.0)	$	(244.7)
Amortization (3)	(27.5)		(1.4)		(2.7)		(31.6)
Retirements (2)	129.0		—		1.9		130.9
Foreign currency translation	0.3		0.2		0.2		0.7
March 31, 2024	$	(77.6)	$	(31.5)	$	(35.6)	$	(144.7)
Other intangibles, net	$	188.6	$	60.5	$	53.7	$	302.8


















In millions	Amount of Gain (Loss) Recognized in AOCI				Amount of Gain (Loss) Reclassified from AOCI into Net income (loss)				Location of Gain (Loss) Reclassified from AOCI in Net income (loss)
	Three Months Ended March 31,
	2024		2023		2024		2023
Cash flow hedging derivatives
Currency exchange contracts	$	—	$	(0.1)	$	—	$	(0.2)	Net sales
Natural gas contracts	(0.4)		(2.9)		(0.7)		0.5		Cost of sales

Total	$	(0.4)	$	(3.0)	$	(0.7)	$	0.3



In millions, except percentages	March 31, 2024		December 31, 2023

Revolving Credit Facility and other lines of credit (1)(2)	$	764.0	$	738.0




3.88% Senior Notes due 2028	550.0		550.0

Finance lease obligations (3)	100.8		101.1
Accounts receivable securitization (4)	81.6		81.3
Other notes payable	2.0		2.1
Total debt including finance lease obligations	$	1,498.4	$	1,472.5
Less: debt issuance costs	5.0		5.3
Total debt, including finance lease obligations, net of debt issuance costs	$	1,493.4	$	1,467.2
Less: debt maturing within one year (5)	84.7		84.4
Long-term debt including finance lease obligations	$	1,408.7	$	1,382.8


Securities registered pursuant to Section 12(b) of the Act:


	Three Months Ended March 31,
In millions	2024		2023
Cash provided by (used in) operating activities:
Net income (loss)	$	(56.0)	$	50.7
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:
Depreciation and amortization	29.6		31.1
Non cash operating lease costs	4.9		4.3
Deferred income taxes	(18.4)		(0.9)

Restructuring and other (income) charges, net	62.8		5.6
Loss on CTO resales	26.5		—
LIFO reserve	(6.8)		22.3
Share-based compensation	4.3		4.0

(Gain) loss on strategic investment	4.8		(19.2)
Other non-cash items	5.8		4.7
Changes in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable, net	(10.2)		(14.0)
Inventories, net	(14.3)		(48.1)
Prepaid and other current assets	—		5.2

Accounts payable	(3.8)		(0.8)
Accrued expenses	(2.4)		(2.7)
Accrued payroll and employee benefits	(3.2)		(31.7)
Income taxes	(0.8)		9.5

Restructuring and other spending, net	(10.0)		(5.6)
Operating leases	(5.7)		(5.2)

CTO resales spending, net	(19.8)		—
Changes in other operating assets and liabilities, net	0.6		(3.9)
Net cash provided by (used in) operating activities	$	(12.1)	$	5.3
Cash provided by (used in) investing activities:
Capital expenditures	$	(16.6)	$	(25.4)



Proceeds from sale of strategic investment	—		31.4


	Three Months Ended March 31,
In millions		2024		2023
North America		$	202.7	$	234.7
Asia Pacific		78.4		85.7
Europe, Middle East, and Africa		48.3		62.7
South America		10.7		9.5
Net sales		$	340.1	$	392.6


In millions	March 31, 2024		December 31, 2023
Raw materials	$	129.9	$	128.3
Production materials, stores, and supplies	26.2		26.0
Finished and in-process goods	263.3		255.2
Subtotal	$	419.4	$	409.5
Less: LIFO reserve	(93.9)		(100.7)
Inventories, net	$	325.5	$	308.8



	Common Stock
In millions, shares in thousands	Shares	Amount		Additional paid in capital		Retained earnings		Accumulated other comprehensive income (loss)		Treasury stock		Total Equity
Balance at December 31, 2023	43,447	$	0.4	$	164.9	$	1,002.3	$	(26.7)	$	(509.5)	$	631.4
Net income (loss)	—	—		—		(56.0)		—		—		(56.0)
Other comprehensive income (loss)	—	—		—		—		(8.9)		—		(8.9)
Common stock issued	139	—		—		—		—		—		—
Exercise of stock options, net	—	—		—		—		—		—		—
Tax payments related to vested restricted stock units	—	—		—		—		—		(2.6)		(2.6)
Share repurchase program	—	—		—		—		—		—		—

Share-based compensation plans	—	—		4.3		—		—		—		4.3

Balance at March 31, 2024	43,585	$	0.4	$	169.2	$	946.3	$	(35.6)	$	(512.1)	$	568.2


Reclassifications of accumulated other comprehensive income (loss)
	Three Months Ended March 31,
In millions		2024		2023
Derivative instruments
Currency exchange contracts (1)		$	—	$	(0.2)
Natural gas contracts (2)		(0.7)		0.5

Total before tax		(0.7)		0.3
(Provision) benefit for income taxes		0.2		(0.1)
Amount included in net income (loss)		$	(0.5)	$	0.2


In millions	Severance and other employee-related costs		Other charges (income) (1)		Asset disposal charges (2)		Total
Performance Chemicals' repositioning	$	2.1	$	5.2	$	55.0	$	62.3

Three Months Ended March 31, 2024	$	2.1	$	5.2	$	55.0	$	62.3

Other	$	3.0	$	0.1	$	—	$	3.1
Three Months Ended March 31, 2023	$	3.0	$	0.1	$	—	$	3.1


Balance at		Change in	Cash		Balance at
12/31/2023 (1)		Reserve (2)	Payments	Other (3)	3/31/2024 (1)
$	8.2	7.8	(10.0)	—	$	6.0


	Three Months Ended March 31,
In millions (except share and per share data)		2024		2023
Net income (loss)		$	(56.0)	$	50.7

Basic and Diluted earnings (loss) per share
Basic earnings (loss) per share		$	(1.54)	$	1.36
Diluted earnings (loss) per share		(1.54)		1.35

Shares (in thousands)
Weighted average number of common shares outstanding - Basic		36,264		37,169
Weighted average additional shares assuming conversion of potential common shares		—		377
Shares - diluted basis (1)		36,264		37,546
_______________
(1) For the quarter ended March 31, 2024, all potentially dilutive common shares were excluded from the calculation of diluted earnings (loss) per share as we had a net loss for the period.


	Three Months Ended March 31,
In thousands		2024	2023
Average number of potential common shares - antidilutive		304	182


			Change vs. prior year
In millions	Prior year Net sales		Volume	Price/Mix	Currency effect	Current year Net Sales

Three months ended March 31, 2024 vs. 2023	$	392.6	(45.0)	(4.0)	(3.5)	$	340.1


	Change vs. prior year
Performance Materials (In millions)	Prior year Net sales		Volume	Price/Mix	Currency effect	Current year Net sales

Three months ended March 31, 2024 vs. 2023	$	141.4	2.2	3.9	(2.4)	$	145.1


	Change vs. prior year
Performance Chemicals (In millions)	Prior year Net sales		Volume	Price/Mix	Currency effect	Current year Net Sales

Three months ended March 31, 2024 vs. 2023	$	185.6	(35.5)	(2.8)	(0.3)	$	147.0


	Change vs. prior year
Advanced Polymer Technologies (In millions)	Prior year Net sales		Volume	Price/Mix	Currency effect	Current year Net sales

Three months ended March 31, 2024 vs. 2023	$	65.6	(11.7)	(5.1)	(0.8)	$	48.0


Reconciliation of Net Income (Loss) to Adjusted EBITDA
	Three Months Ended March 31,
In millions		2024		2023
Net income (loss) (GAAP)		$	(56.0)	$	50.7
Interest expense, net		22.3		19.6
Provision (benefit) for income taxes		(15.9)		13.4
Depreciation and amortization - Performance Materials		9.6		10.0
Depreciation and amortization - Performance Chemicals		12.4		13.8
Depreciation and amortization - Advanced Polymer Technologies		7.6		7.3
Restructuring and other (income) charges, net (1)		65.3		5.6
Acquisition and other-related (income) costs, net (2)		0.3		2.7
Loss on CTO resales (3)		26.5		—
(Gain) loss on strategic investments (4)		4.8		(19.2)
Adjusted EBITDA (Non-GAAP)		$	76.9	$	103.9


Capital expenditure categories	Three Months Ended March 31,
In millions	2024		2023
Maintenance	$	9.1	$	10.8
Safety, health and environment	1.1		2.6
Growth and cost improvement	6.4		12.0
Total capital expenditures	$	16.6	$	25.4


				Publicly Announced Program (1)
Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs(1)
January 1-31, 2024	—	$	—	—	$	353,384,633
February 1-29, 2024	—	$	—	—	$	353,384,633
March 1-31, 2024	—	$	—	—	$	353,384,633
Total	—			—


Exhibit No.			Description of Exhibit
3.1			Third Amended and Restated Certificate of Incorporation of Ingevity Corporation.







31.1			Rule 13a-14(a)/15d-14(a) Certification of the Company’s Principal Executive Officer.

31.2			Rule 13a-14(a)/15d-14(a) Certification of the Company’s Principal Financial Officer.

32.1			Section 1350 Certification of the Company’s Principal Executive Officer. The information contained in this Exhibit shall not be deemed filed with the Securities and Exchange Commission nor incorporated by reference in any registration statement filed by the registrant under the Securities Act of 1933, as amended.

32.2			Section 1350 Certification of the Company’s Principal Financial Officer. The information contained in this Exhibit shall not be deemed filed with the Securities and Exchange Commission nor incorporated by reference in any registration statement filed by the registrant under the Securities Act of 1933, as amended.

101			Inline XBRL Instance Document and Related Items - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

104			The cover page from the Company’s Quarterly Report on Form 10-Q formatted in Inline XBRL (included in Exhibit 101).


INGEVITY CORPORATION
(Registrant)

By:			/S/ MARY DEAN HALL
			Mary Dean Hall
			Executive Vice President and Chief Financial Officer
			(Principal Financial Officer and Duly Authorized Officer)


			INGEVITY CORPORATION

			By:			/s/ Stacy L. Cozad
						Name: Stacy L. Cozad
						Title: Executive Vice President, General Counsel and Secretary


Date:			May 2, 2024


By:			/S/ JOHN C. FORTSON
			John C. Fortson
			President and Chief Executive Officer