HIGHLIGHTS: (comparisons versus prior year
period)
- Company delivered record sales of $482.0 million, up 27.9%
- Net income of $75.4 million and diluted earnings per share
(EPS) of $1.98; adjusted earnings of $79.4 million and record
diluted adjusted EPS of $2.09
- Record adjusted EBITDA of $138.2 million, up 15.6% and adjusted
EBITDA margin of 28.7%
- Operating cash flow of $100.1 million and free cash flow of
$64.0 million
- Share repurchases were $49.3 million for the quarter and $139.2
million year to date
- Completed the acquisition of Ozark Materials on October
3rd
- Company raises full year 2022 sales guidance to between $1.65
billion and $1.70 billion and adjusted EBITDA to between $460
million and $475 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 its financial
results for the third quarter 2022.
Record net sales of $482.0 million in the third quarter rose
27.9% versus the prior year quarter, reflecting strong demand and
increased prices which offset higher input costs. Third quarter net
income was $75.4 million compared to a loss of $4.2 million the
prior year quarter, which included an $85.0 million pre-tax
litigation expense.
Diluted earnings per share (EPS) in the current quarter was
$1.98 compared to diluted loss per share of $0.11 in the prior year
quarter. Adjusted earnings of $79.4 million increased 23.3% versus
the prior year quarter and diluted adjusted EPS was a record $2.09,
which excludes $0.11 of certain items, net of tax, primarily costs
related to restructuring and other charges, net recognized during
the quarter. This compares to diluted adjusted EPS of $1.62 in the
prior year quarter.
Third quarter adjusted earnings before interest, taxes,
depreciation and amortization (EBITDA) of $138.2 million was a
record, up 15.6% versus prior year with adjusted EBITDA margin of
28.7%. Third quarter operating cash flow was $100.1 million and
free cash flow was $64.0 million.
“Our team delivered record sales and adjusted EBITDA in the
third quarter, as we saw strong demand across all the businesses,
and we maintained the price discipline necessary to address
inflation. We generated $64.0 million of free cash flow, allowing
us to continue returning cash to shareholders as we repurchased
$49.3 million of shares during the quarter,” said John Fortson,
president and CEO. Commenting on the business segments, Fortson
said “In Performance Chemicals, all three businesses posted record
sales, as demand was strong for our high-value, derivatized
products that deliver the unique performance characteristics
required by our customers. In Performance Materials, increased
global auto production drove sales up 22.7% compared to the prior
year.”
Performance Chemicals
Sales in the Performance Chemicals segment were a record $337.1
million, up 30.3% from prior year.
Industrial Specialties and Pavement Technologies both had record
quarters with sales up 35.2% and 20.6%, respectively, versus the
prior year quarter. Industrial Specialties growth was driven by
continued strength in the oilfield, adhesives, and agricultural
chemicals markets, while Pavement Technologies growth was driven
primarily by higher volume as a result of increased technology
adoption and a strong paving season. Engineered Polymers sales were
also a record, rising 31.4% driven by higher prices which offset
elevated energy and raw material costs. Volumes improved primarily
in strategic growth markets such as automotive, where customers are
increasingly using Engineered Polymers’ caprolactone products in
paint protection films and specialty materials for electrical
vehicle batteries, and footwear & apparel.
“Sales across our Performance Chemicals segment produced another
record quarter,” said Fortson. “We saw better than 20% growth in
all three businesses as we continue to shift the mix to high
performance, derivatized products that bring greater value to our
customers. In addition, we closed on the purchase of Ozark
Materials in early October. Ozark will be reported in our Pavement
Technologies business and we are excited about the opportunities to
expand our presence in the road construction end market.”
Third quarter segment EBITDA was a record $77.0 million, up
22.0% versus the prior year quarter. Segment EBITDA margin was
22.8%, down from 24.4% compared to last year, primarily due to
investment in growth initiatives and increased labor-related
costs.
Performance Materials
Third quarter sales in Performance Materials were $144.9
million, up 22.7% compared to the prior year quarter. Segment
EBITDA of $61.2 million was up 8.5% versus the prior year period.
Segment EBITDA margin was 42.2% versus 47.8% as increased input
costs outpaced prices during the quarter.
“In the third quarter, improved auto component supplies in all
regions and China government automotive incentives drove stronger
global auto production resulting in higher sales of our activated
carbon products to the automotive sector, and we continued to
experience high demand for our carbon in non-automotive
applications, allowing us to increase prices,” said Fortson.
“Margins in Performance Materials were lower compared to the prior
year due to significant increases in input costs such as a key raw
material that increased over 60% during the year and began
impacting margins noticeably in Q3. In contrast to the process
purification markets, pricing for the auto market is typically set
annually, early in the year.”
Liquidity/Other
The closing of Ozark Materials on October 3rd was funded using a
combination of revolver borrowings and cash on hand, which will be
reflected in Q4. Share repurchases for the quarter were $49.3
million and $139.2 million year to date, and $450.7 million remains
available under the July 2022 $500 million Board authorization.
Full-Year 2022 Guidance
“As we approach the end of the year, we expect to deliver strong
full year performance and are therefore raising our 2022 guidance
to sales between $1.65 billion and $1.70 billion, and adjusted
EBITDA between $460 million and $475 million,” said Fortson.
Ingevity: Purify, Protect and Enhance
Ingevity provides products and technologies that purify, protect
and enhance the world around us. Through a team of talented and
experienced people, we develop, manufacture and bring to market
solutions that help customers solve complex problems and make the
world more sustainable. We operate in two reporting segments:
Performance Chemicals, which includes specialty chemicals and
engineered polymers, and Performance Materials, which includes
high-performance activated carbon. These products are used in a
variety of demanding applications, including adhesives,
agrochemicals, asphalt paving, bioplastics, coatings, elastomers,
lubricants, pavement markings, publication inks, oil exploration
and production and automotive components that reduce gasoline vapor
emissions. Headquartered in North Charleston, South Carolina,
Ingevity operates from 31 locations around the world and employs
approximately 2,050 people. The company’s common stock is traded on
the New York Stock Exchange (NYSE:NGVT). For more information visit
www.ingevity.com.
Additional Information
The company will host a live webcast on Thursday, November 3,
2022, at 10:00 a.m. (Eastern) to discuss third quarter 2022 fiscal
results. The webcast can be accessed here or on the investors
section of Ingevity’s website. You may also listen to the
conference call by dialing 844-200-6205 (inside the U.S.) or
929-526-1599 (outside the U.S.) and entering access code 110669.
Information on how to access the webcast and conference call, along
with a slide deck containing other relevant financial and
statistical information, will be posted to Ingevity’s investor site
prior to the call. A replay will be available beginning at
approximately 2:00 p.m. (Eastern) on November 3, 2022, through
November 3, 2023, at this replay link.
Use of non-GAAP financial measures: This press release
includes certain non‐GAAP financial measures intended to
supplement, not substitute for, comparable GAAP measures.
Reconciliations of non‐GAAP financial measures to GAAP financial
measures are provided within the Appendix to this presentation.
Investors are urged to consider carefully the comparable GAAP
measures and the reconciliations to those measures provided. The
company does not attempt to provide reconciliations of
forward-looking non-GAAP guidance to the comparable GAAP measure
because the impact and timing of the factors underlying the
guidance assumptions are inherently uncertain and difficult to
predict and are unavailable without unreasonable efforts. In
addition, Ingevity believes such reconciliations would imply a
degree of certainty that could be confusing to investors.
Forward-looking statements:
This press release contains “forward-looking statements” within
the meaning of the Securities Exchange Act of 1934, as amended, and
the Private Securities Litigation Reform Act of 1995. Such
statements generally include the words “will,” “plans,” “intends,”
“targets,” “expects,” “outlook,” “believes,” “anticipates” or
similar expressions. Forward-looking statements may include,
without limitation, the potential benefits of any acquisition or
investment transaction, the anticipated timing of the closing of
any announced acquisition, expected financial positions, guidance,
results of operations and cash flows; financing plans; business
strategies and expectations; operating plans; impact of COVID-19;
capital and other expenditures; competitive positions; growth
opportunities for existing products; benefits from new technology
and cost-reduction initiatives, plans and objectives; litigation
related strategies and outcomes; markets for securities and
expected future repurchases of shares, including statements about
the manner, amount and timing of repurchases. Actual results could
differ materially from the views expressed. 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, adverse effects from the COVID-19 pandemic; adverse
effects from general global economic, geopolitical and financial
conditions beyond our control, including inflation and war in
Ukraine; risks related to our international sales and operations;
adverse conditions in the automotive market; competition from
substitute products, new technologies and new or emerging
competitors; worldwide air quality standards; a decrease in
government infrastructure spending; adverse conditions in cyclical
end markets; the limited supply of or lack of access to sufficient
crude tall oil and other raw materials; integration of future
acquisitions; the provision of services by third parties at several
facilities; supply chain disruptions; natural disasters and extreme
weather events; or other unanticipated problems such as labor
difficulties (including work stoppages), equipment failure or
unscheduled maintenance and repair; attracting and retaining key
personnel; dependence on certain large customers; legal actions
associated with our intellectual property rights; protection of our
intellectual property and other proprietary information;
information technology security breaches and other disruptions;
complications with designing or implementing our new enterprise
resource planning system; government policies and regulations,
including, but not limited to, those affecting the environment,
climate change, tax policies, tariffs and the chemicals industry;
and losses due to lawsuits arising out of environmental damage or
personal injuries associated with chemical or other manufacturing
processes, and the other factors detailed from time to time in the
reports we file with the SEC, including those described in Part I,
Item 1A. Risk Factors in our 2021 Annual Report on Form 10-K as
well as in our other filings with the SEC. These forward-looking
statements speak only to management’s beliefs as of the date of
this press release. Ingevity assumes no obligation to provide any
revisions to, or update, any projections and forward-looking
statements contained in this press release.
INGEVITY CORPORATION Condensed
Consolidated Statements of Operations (Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
In millions, except per share
data
2022
2021
2022
2021
Net sales
$
482.0
$
376.8
$
1,284.7
$
1,055.5
Cost of sales
305.7
235.0
820.0
647.7
Gross profit
176.3
141.8
464.7
407.8
Selling, general and administrative
expenses
54.2
43.5
142.9
131.0
Research and technical expenses
7.6
6.8
23.1
19.3
Restructuring and other (income) charges,
net
3.3
4.1
10.6
12.3
Acquisition-related costs
1.9
0.2
1.9
0.9
Other (income) expense, net
2.0
84.6
(1.0
)
81.6
Interest expense, net
11.5
11.6
37.3
36.2
Income (loss) before income taxes
95.8
(9.0
)
249.9
126.5
Provision (benefit) for income taxes
20.4
(4.8
)
53.9
37.7
Net income (loss)
$
75.4
$
(4.2
)
$
196.0
$
88.8
Per share data
Basic earnings (loss) per share
$
1.99
$
(0.11
)
$
5.10
$
2.22
Diluted earnings (loss) per share
1.98
(0.11
)
5.06
2.21
Weighted average shares
outstanding
Basic
37.8
39.5
38.5
40.0
Diluted
38.1
39.5
38.7
40.2
INGEVITY CORPORATION Segment
Operating Results (Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
In millions
2022
2021
2022
2021
Net sales
Performance Materials
$
144.9
$
118.1
$
415.7
$
384.8
Performance Chemicals
$
337.1
$
258.7
$
869.0
$
670.7
Pavement Technologies product line
88.3
73.2
194.0
162.4
Industrial Specialties product line
179.3
132.6
489.9
364.7
Engineered Polymers product line
69.5
52.9
185.1
143.6
Total net sales
$
482.0
$
376.8
$
1,284.7
$
1,055.5
Segment EBITDA (1)
Performance Materials
$
61.2
$
56.4
$
194.7
$
191.4
Performance Chemicals
77.0
63.1
183.6
151.2
Total segment EBITDA (1)
$
138.2
$
119.5
$
378.3
$
342.6
Interest expense, net
(11.5
)
(11.6
)
(37.3
)
(36.2
)
(Provision) benefit for income taxes
(20.4
)
4.8
(53.9
)
(37.7
)
Depreciation and amortization -
Performance Materials
(8.9
)
(8.9
)
(26.7
)
(26.9
)
Depreciation and amortization -
Performance Chemicals
(16.8
)
(18.7
)
(51.9
)
(54.8
)
Restructuring and other income (charges),
net (2)
(3.3
)
(4.1
)
(10.6
)
(12.3
)
Acquisition and other-related costs
(3)
(1.9
)
(0.2
)
(1.9
)
(0.9
)
Litigation verdict charge (4)
—
(85.0
)
—
(85.0
)
Net income (loss)
$
75.4
$
(4.2
)
$
196.0
$
88.8
_______________
(1)
Segment EBITDA is the primary measure used
by our chief operating decision maker to evaluate the performance
of and allocate resources among our operating segments. Segment
EBITDA is defined as segment revenue less segment operating
expenses (segment operating expenses consist of costs of sales,
selling, general and administrative expenses, research and
technical expenses, other (income) expense, net, excluding
depreciation and amortization). We have excluded the following
items from segment EBITDA: interest expense, net, associated with
corporate debt facilities, income taxes, depreciation,
amortization, restructuring and other (income) charges, net,
acquisition and other related costs, litigation verdict charges,
pension and postretirement settlement and curtailment (income)
charges, net.
(2)
For the three and nine months ended
September 30, 2022 charges of $1.1 million and $3.7 million relate
to the Performance Materials segment and charges of $2.2 million
and $6.9 million relate to the Performance Chemicals segment. For
the three and nine months ended September 30, 2021, charges of $1.1
million and $4.5 million relate to the Performance Materials
segment and charges of $3.0 million and $7.8 million relate to the
Performance Chemicals segment.
(3)
For the three and nine months ended
September 30, 2022, all acquisition costs relate to the integration
of the Ozark Materials business into our Performance Chemicals
segment. For the three and nine months ended September 30, 2021,
charges of zero and $0.2 million relate to the acquisition of a
strategic investment in the Performance Materials segment and
charges of $0.2 million and $0.7 million relate to the integration
of the Perstorp Capa business into our Performance Chemicals
segment, respectively.
(4)
For the three and nine months ended
September 30, 2021, litigation verdict charge relates to the
Performance Materials segment.
INGEVITY CORPORATION Condensed
Consolidated Balance Sheets (Unaudited)
In millions
September 30, 2022
December 31, 2021
Assets
Cash and cash equivalents
$
72.3
$
275.4
Accounts receivable, net
248.4
161.7
Inventories, net
281.8
241.2
Prepaid and other current assets
42.6
46.6
Current assets
645.1
724.9
Property, plant and equipment, net
720.7
719.7
Goodwill
387.6
442.0
Other intangibles, net
272.2
337.6
Restricted investment
77.5
76.1
Other assets
232.3
168.7
Total Assets
$
2,335.4
$
2,469.0
Liabilities
Accounts payable
$
164.6
$
125.8
Accrued expenses
56.9
51.7
Other current liabilities
68.8
91.4
Current liabilities
290.3
268.9
Long-term debt including finance lease
obligations
1,153.2
1,250.0
Deferred income taxes
106.6
114.6
Other liabilities
151.4
161.7
Total Liabilities
1,701.5
1,795.2
Equity
633.9
673.8
Total Liabilities and Equity
$
2,335.4
$
2,469.0
INGEVITY CORPORATION Condensed
Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
In millions
2022
2021
2022
2021
Cash provided by (used in) operating
activities:
Net income (loss)
$
75.4
$
(4.2
)
$
196.0
$
88.8
Adjustments to reconcile net income (loss)
to cash provided by (used in) operating activities:
Depreciation and amortization
25.7
27.6
78.6
81.7
Other non-cash items
11.9
(5.8
)
48.3
29.2
Changes in operating assets and
liabilities, net of effect of acquisitions:
Changes in other operating assets and
liabilities, net
(12.9
)
82.5
(108.0
)
17.3
Net cash provided by (used in) operating
activities
$
100.1
$
100.1
$
214.9
$
217.0
Cash provided by (used in) investing
activities:
Capital expenditures
$
(36.1
)
$
(25.5
)
$
(93.3
)
$
(66.4
)
Strategic investments
(60.8
)
—
(62.8
)
(16.5
)
Net investment hedge settlement
14.7
—
14.7
—
Other investing activities, net
(3.9
)
(0.7
)
(3.3
)
(0.5
)
Net cash provided by (used in) investing
activities
$
(86.1
)
$
(26.2
)
$
(144.7
)
$
(83.4
)
Cash provided by (used in) financing
activities:
Proceeds from revolving credit
facility
$
—
$
—
$
788.0
$
—
Payments on revolving credit facility
(23.0
)
—
(279.0
)
—
Payments on long-term borrowings
—
(4.7
)
(628.1
)
(18.8
)
Debt issuance costs
—
—
(3.0
)
—
Debt repayment costs
—
—
(3.8
)
—
Financing lease obligations, net
—
(0.2
)
(0.4
)
(0.6
)
Borrowings (repayments) of notes payable
and other short-term borrowings, net
—
—
—
(1.9
)
Tax payments related to withholdings on
vested equity awards
(0.2
)
(0.1
)
(2.2
)
(2.4
)
Proceeds and withholdings from share-based
compensation plans, net
0.9
0.5
2.8
3.7
Repurchases of common stock under publicly
announced plan
(49.3
)
(32.2
)
(139.2
)
(100.3
)
Net cash provided by (used in) financing
activities
$
(71.6
)
$
(36.7
)
$
(264.9
)
$
(120.3
)
Increase (decrease) in cash, cash
equivalents, and restricted cash
(57.6
)
37.2
(194.7
)
13.3
Effect of exchange rate changes on
cash
(1.4
)
(1.2
)
(8.6
)
(1.8
)
Change in cash, cash equivalents, and
restricted cash(1)
(59.0
)
36.0
(203.3
)
11.5
Cash, cash equivalents, and restricted
cash at beginning of period
131.8
233.9
276.1
258.4
Cash, cash equivalents, and restricted
cash at end of period (1)
$
72.8
$
269.9
$
72.8
$
269.9
(1) Includes restricted cash of $0.5
million and $0.5 million and cash and cash equivalents of $72.3
million and $269.4 million at September 30, 2022 and 2021,
respectively. Restricted cash is included within "Prepaid and other
current assets" within the condensed consolidated balance
sheets.
Supplemental cash flow
information:
Cash paid for interest, net of capitalized
interest
$
7.2
$
11.4
$
35.9
$
35.5
Cash paid for income taxes, net of
refunds
15.7
16.2
42.6
43.2
Purchases of property, plant and equipment
in accounts payable
(0.9
)
2.8
5.1
5.9
Leased assets obtained in exchange for new
operating lease liabilities
1.5
7.3
9.2
14.7
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 on the following pages. 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. 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.
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) plus restructuring and other (income) charges,
net, acquisition and other-related costs, debt refinancing fees,
litigation verdict charges, pension and postretirement settlement
and curtailment (income) charges and the income tax expense
(benefit) on those items, less the provision (benefit) from certain
discrete tax items.
Diluted adjusted earnings (loss) per
share is defined as net income (loss) per diluted share plus
restructuring and other (income) charges, net, acquisition and
other related costs, debt refinancing fees, litigation verdict
charges, pension and postretirement settlement and curtailment
(income) charges and the income tax expense (benefit) on those
items, less the tax provision (benefit) from certain discrete tax
items, in each case on a per share basis.
Adjusted EBITDA is defined as net
income (loss) plus interest expense, net, provision (benefit) for
income taxes, depreciation, amortization, restructuring and other
(income) charges, net, acquisition and other-related costs,
litigation verdict charges, pension and postretirement settlement
and curtailment (income) charges, net.
Adjusted EBITDA Margin is defined as
Adjusted EBITDA divided by Net sales.
Free Cash Flow is defined as net cash
provided by operating activities less capital expenditures.
Net Debt is defined as the sum of
notes payable, short-term debt, current maturities of long-term
debt and long-term debt less the sum of cash and cash equivalents,
restricted cash associated with our New Market Tax Credit financing
arrangement, and restricted investment.
Net Debt Ratio is defined as Net Debt
divided by last twelve months Adjusted EBITDA, inclusive of
acquisition-related pro forma adjustments.
Ingevity also uses the above financial measures as the primary
measures of profitability used by managers of the business. In
addition, Ingevity believes Adjusted EBITDA and Adjusted EBITDA
Margin are useful measures because they exclude the effects of
financing and investment activities as well as non-operating
activities.
GAAP Reconciliation of 2022 Adjusted EBITDA
Guidance
A reconciliation of net income to adjusted EBITDA as projected
for 2022 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 further restructuring and other income (charges),
net; additional acquisition and other-related costs; litigation
verdict charges; debt refinancing fees; additional pension and
postretirement settlement and curtailment (income) charges; and
revisions due to legislative tax rate changes. 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) and Diluted Earnings (Loss) Per Share (GAAP) to
Adjusted Earnings (Loss) (Non-GAAP) and Diluted Adjusted Earnings
(Loss) Per Share (Non-GAAP)
Three Months Ended September
30,
Nine Months Ended September
30,
In millions, except per share data
(unaudited)
2022
2021
2022
2021
Net income (loss) (GAAP)
$
75.4
$
(4.2
)
$
196.0
$
88.8
Restructuring and other (income) charges,
net
3.3
4.1
10.6
12.3
Acquisition and other-related costs
1.9
0.2
1.9
0.9
Debt refinancing fees (1)
—
—
5.1
—
Litigation verdict charge
—
85.0
—
85.0
For the three months ended September 30,
2021, all potentially dilutive common shares were included in the
calculation of diluted earnings (loss) per share as we had adjusted
earnings for the period. Tax effect on items above
(1.2
)
(20.7
)
(4.1
)
(22.7
)
Certain discrete tax provision (benefit)
(2)
—
—
0.4
14.3
Adjusted earnings (loss)
(Non-GAAP)
$
79.4
$
64.4
$
209.9
$
178.6
Diluted earnings (loss) per common
share (GAAP)
$
1.98
$
(0.11
)
$
5.06
$
2.21
Restructuring and other (income) charges,
net
0.09
0.10
0.27
0.30
Acquisition and other-related costs
0.05
0.01
0.05
0.02
Debt refinancing fees
—
—
0.13
—
Litigation verdict charge
—
2.14
—
2.11
Tax effect on items above
(0.03
)
(0.52
)
(0.10
)
(0.56
)
Certain discrete tax provision
(benefit)
—
—
0.01
0.36
Diluted adjusted earnings (loss) per
share (Non-GAAP)
$
2.09
$
1.62
$
5.42
$
4.44
Weighted average common shares outstanding
- Diluted (3)
38.1
39.8
38.7
40.2
_______________
(1)
Represents the acceleration of deferred
financing fees, debt extinguishment premium paid and other fees
incurred related to our senior note redemption, term loan
repayment, revolving credit facility amendment, and termination of
certain interest rate swaps during the second quarter of 2022.
Management believes excluding these items assists investors,
potential investors, securities analysts, and others in
understanding the continuing operating results thereby providing
useful supplemental information about operational
performance.
(2)
Represents certain discrete tax items such
as excess tax benefits on stock compensation and impacts of
legislative tax rate changes. Management believes excluding these
discrete tax items assists investors, potential investors,
securities analysts, and others in understanding the tax provision
and the effective tax rate related to continuing operating results
thereby providing useful supplemental information about operational
performance.
(3)
For the three months ended September 30,
2021, all potentially dilutive common shares were included in the
calculation of diluted earnings (loss) per share as we had adjusted
earnings for the period.
Reconciliation of Net Income
(Loss) (GAAP) to Adjusted EBITDA (Non-GAAP)
Three Months Ended September
30,
Nine Months Ended September
30,
In millions, except percentages
(unaudited)
2022
2021
2022
2021
Net income (loss) (GAAP)
$
75.4
$
(4.2
)
$
196.0
$
88.8
Provision (benefit) for income taxes
20.4
(4.8
)
53.9
37.7
Interest expense, net
11.5
11.6
37.3
36.2
Depreciation and amortization
25.7
27.6
78.6
81.7
Restructuring and other (income) charges,
net
3.3
4.1
10.6
12.3
Acquisition and other-related costs
1.9
0.2
1.9
0.9
Litigation verdict charge
—
85.0
—
85.0
Adjusted EBITDA (Non-GAAP)
$
138.2
$
119.5
$
378.3
$
342.6
Net sales
$
482.0
$
376.8
$
1,284.7
$
1,055.5
Net income (loss) margin
15.6
%
(1.1
)%
15.3
%
8.4
%
Adjusted EBITDA margin
28.7
%
31.7
%
29.4
%
32.5
%
Calculation of Free Cash Flow
(Non-GAAP)
Three Months Ended September
30,
Nine Months Ended September
30,
In millions (unaudited)
2022
2021
2022
2021
Cash Flow from Operations
$
100.1
$
100.1
$
214.9
$
217.0
Less: Capital Expenditures
36.1
25.5
93.3
66.4
Free Cash Flow
$
64.0
$
74.6
$
121.6
$
150.6
Calculation of Net Debt Ratio
(Non-GAAP)
In millions, except ratios
(unaudited)
September 30, 2022
Notes payable and current maturities of
long-term debt
$
0.9
Long-term debt including finance lease
obligations
1,153.2
Debt issuance costs
6.7
Total Debt
1,160.8
Less:
Cash and cash equivalents (1)
72.6
Restricted investment
77.5
Net Debt
$
1,010.7
Net Debt Ratio (Non GAAP)
Adjusted EBITDA (2)
Twelve months ended December 31, 2021
$
422.2
Nine months ended September 30, 2021
(342.6
)
Nine months ended September 30, 2022
378.3
Adjusted EBITDA - last twelve months (LTM)
as of September 30, 2022
$
457.9
Net debt ratio (Non GAAP)
2.2x
_______________
(1)
Includes $0.3 million of Restricted Cash
related to the New Market Tax Credit arrangement as described in
our 2020 Form 10-K.
(2)
Refer to the Reconciliation of Net Income
(GAAP) to Adjusted EBITDA (Non-GAAP) schedule for the
reconciliation to the most comparable GAAP financial
measure.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221102005957/en/
Caroline Monahan 843-740-2068 media@ingevity.com
Investors: John Nypaver 843-740-2002
investors@ingevity.com
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