Ingevity (NGVT) Q4 2023 earnings summary

Executive summary

• FY net sales rose 1.4% to $1,692.1 million; adjusted EBITDA fell 12.3% to $396.8 million amid higher CTO costs and weaker industrial demand.

• Performance Materials delivered record FY sales and EBITDA, while Road Technologies achieved record sales; Performance Chemicals repositioning and restructuring actions set up a transition year in 2024.

Financial highlights

• Q4 net sales were $371.7 million, down 3.1% YoY; adjusted EBITDA was $61.8 million versus $74.3 million, and diluted adjusted EPS was $0.21 versus $0.57.

• Q4 GAAP net loss was $116.8 million; FY GAAP net loss was $5.4 million, while adjusted earnings were $144.7 million for FY.

• FY diluted adjusted EPS was $3.94 versus $6.01; adjusted EBITDA was $396.8 million versus $452.6 million.

• Adjusted gross margin was 25.9% in Q4 versus 32.2%, and 33.1% for FY versus 38.1%.

Outlook and guidance

• 2024 revenue guidance is $1.40–$1.55 billion; adjusted EBITDA is $365–$390 million, capex is $90–$110 million, free cash flow is above $75 million, and net debt ratio is ~3.0x.

• Revenue guidance excludes anticipated excess CTO resales; adjusted EBITDA excludes estimated $30–$80 million CTO resale losses reflected in GAAP Other (income) expense, net.

• Guidance assumes CTO prices consistent with H2 2023 and ~$300 million lower revenue from Performance Chemicals repositioning; 2024 is expected to be a transition year for the segment.

• Potential upside includes stronger demand, faster hybrid adoption, lower input costs and higher infrastructure spending; risks include lower auto production, APT competition and slower oleo-based product adoption.