Ingevity reports fourth quarter and full year 2023 financial results
Fourth Quarter (comparisons versus prior year period):
-
Net sales of
$371.7 million decreased 3.1% -
Net loss of
$116.8 million and diluted loss per share of$3.23 , including restructuring charges of$107.5 million ; adjusted earnings of$7.8 million and diluted adjusted earnings per share (EPS) of$0.21 -
Adjusted EBITDA of
$61.8 million and adjusted EBITDA margin of 16.6% -
Accelerated the repositioning of the Performance Chemicals segment including the shutdown of the
DeRidder, Louisiana , crude tall oil (CTO) refinery completed in early February of 2024 with the remaining assets to be shut down during the first half of the year - Implemented significant cost savings actions
Full Year (comparisons versus prior year period):
-
Net sales of
$1.69 billion increased 1.4% -
Net loss of
$5.4 million and diluted loss per share of$0.15 , including restructuring charges of$145.3 million ; adjusted earnings of$144.7 million and diluted adjusted EPS of$3.94 -
Adjusted EBITDA of
$396.8 million and adjusted EBITDA margin of 23.5% -
Share repurchases of
$92.1 million -
Operating cash flow of
$205.1 million with free cash flow of$95.3 million
Guidance:
Company announces full year 2024 guidance for sales between
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.
Fourth quarter (Q4) net sales of
Full year (FY) net sales of
“2023 was a record year for Performance Materials driven by increased global auto production and the growing popularity of hybrid electric vehicles, and the Road Technologies business line posted another strong year as the team’s strategic focus on expanding technology adoption keeps driving steady growth,” said
Performance Materials
Sales in Performance Materials were up 15% for Q4 at
“Performance Materials was firing on all cylinders delivering record sales and segment EBITDA for the year, reflecting the staying power of this segment and the rebound of global auto production from 2020 lows. We are encouraged to see consumer preferences trending towards hybrid vehicles and the stability of internal combustion engine demand. Our technology helps enable the transition to electric vehicles while protecting the environment, and based on recent comments from OEMs, the transition may take longer than previously thought, which will benefit
Advanced Polymer Technologies
Sales in the Advanced Polymer Technologies segment were
“The Advanced Polymer Technologies team achieved record segment EBITDA for the year and significantly improved the segment’s profitability even as they faced lower demand in end markets such as footwear and industrial equipment. As we move into 2024, they will remain focused on increasing the use of our technology in areas like bioplastics, which continue to see growing adoption in end markets like apparel, agricultural chemicals, and consumer packaging, while maintaining the improved margin profile achieved last year,” said Fortson.
Performance Chemicals
Sales in the Performance Chemicals segment were
“2023 was the tale of two business lines for Performance Chemicals,” said Fortson. “Our Road Technologies business line had a record year as they integrated road markings into their portfolio and grew our legacy pavement business. In our Industrial Specialties business line, the team faced prolonged demand weakness and saw unprecedented increases in CTO costs but they pushed price to help offset these increases. We continue to make progress in using alternative oleo feedstocks to reduce our reliance on CTO and offer a more diverse product portfolio for use in higher margin, less cyclical end markets.”
Liquidity/Other
Full year operating cash flow was
Full Year 2024 Guidance
“Our Performance Materials segment and Road Technologies business line have good momentum from last year and are positioned for strong growth going into 2024, and we have taken significant steps to accelerate the repositioning of our Performance Chemicals segment and reduce costs,” said Fortson. “Uncertainties do remain, particularly around the global industrial recovery which would primarily impact APT and Industrial Specialties, but we are committed to maximizing Ingevity’s profitability. While 2024 will be a transitional year for Performance Chemicals as we complete the execution of our repositioning strategy, we will continue to focus on higher-growth end markets like bioplastics in APT and expect another year of strong results in Performance Materials,” said
Additional Information
The company will host a live webcast on
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,
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,” “guidance,” “believes,” “anticipates” or similar expressions. Forward‑looking statements may include, without limitation, anticipated timing, charges and costs of the closure of our
Condensed Consolidated Statements of Operations (Unaudited) |
|||||||||||||||
|
Three Months Ended |
|
Twelve Months Ended |
||||||||||||
In millions, except per share data |
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
Net sales |
$ |
371.7 |
|
|
$ |
383.6 |
|
|
$ |
1,692.1 |
|
|
$ |
1,668.3 |
|
Cost of sales |
|
312.2 |
|
|
|
278.2 |
|
|
|
1,220.2 |
|
|
|
1,098.2 |
|
Gross profit |
|
59.5 |
|
|
|
105.4 |
|
|
|
471.9 |
|
|
|
570.1 |
|
Selling, general, and administrative expenses |
|
43.4 |
|
|
|
55.9 |
|
|
|
183.7 |
|
|
|
198.8 |
|
Research and technical expenses |
|
7.2 |
|
|
|
7.2 |
|
|
|
31.8 |
|
|
|
30.3 |
|
Restructuring and other (income) charges, net |
|
120.8 |
|
|
|
3.2 |
|
|
|
170.2 |
|
|
|
13.8 |
|
Acquisition-related costs |
|
(0.2 |
) |
|
|
3.1 |
|
|
|
3.6 |
|
|
|
5.0 |
|
Other (income) expense, net |
|
19.6 |
|
|
|
(0.7 |
) |
|
|
5.7 |
|
|
|
(1.7 |
) |
Interest expense, net |
|
22.7 |
|
|
|
17.0 |
|
|
|
87.0 |
|
|
|
54.3 |
|
Income (loss) before income taxes |
|
(154.0 |
) |
|
|
19.7 |
|
|
|
(10.1 |
) |
|
|
269.6 |
|
Provision (benefit) for income taxes |
|
(37.2 |
) |
|
|
4.1 |
|
|
|
(4.7 |
) |
|
|
58.0 |
|
Net income (loss) |
$ |
(116.8 |
) |
|
$ |
15.6 |
|
|
$ |
(5.4 |
) |
|
$ |
211.6 |
|
|
|
|
|
|
|
|
|
||||||||
Per share data |
|
|
|
|
|
|
|
||||||||
Basic earnings (loss) per share |
$ |
(3.23 |
) |
|
$ |
0.42 |
|
|
$ |
(0.15 |
) |
|
$ |
5.54 |
|
Diluted earnings (loss) per share |
$ |
(3.23 |
) |
|
$ |
0.41 |
|
|
$ |
(0.15 |
) |
|
$ |
5.50 |
|
Weighted average shares outstanding |
|
|
|
|
|
|
|
||||||||
Basic |
|
36.2 |
|
|
|
37.4 |
|
|
|
36.5 |
|
|
|
38.2 |
|
Diluted |
|
36.2 |
|
|
|
37.7 |
|
|
|
36.5 |
|
|
|
38.5 |
|
Segment Operating Results (Unaudited) |
|||||||||||||||
|
Three Months Ended |
|
Twelve Months Ended |
||||||||||||
In millions |
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
Net sales |
|
|
|
|
|
|
|
||||||||
Performance Materials |
$ |
152.8 |
|
|
$ |
132.8 |
|
|
$ |
586.0 |
|
|
$ |
548.5 |
|
Performance Chemicals |
|
176.5 |
|
|
|
191.2 |
|
|
|
902.1 |
|
|
|
875.1 |
|
Pavement Technologies product line |
|
53.4 |
|
|
|
47.3 |
|
|
|
369.8 |
|
|
|
241.3 |
|
Industrial Specialties product line |
|
123.1 |
|
|
|
143.9 |
|
|
|
532.3 |
|
|
|
633.8 |
|
Advanced Polymer Technologies |
|
42.4 |
|
|
|
59.6 |
|
|
|
204.0 |
|
|
|
244.7 |
|
Total net sales |
$ |
371.7 |
|
|
$ |
383.6 |
|
|
$ |
1,692.1 |
|
|
$ |
1,668.3 |
|
|
|
|
|
|
|
|
|
||||||||
Segment EBITDA (1) |
|
|
|
|
|
|
|
||||||||
Performance Materials |
$ |
78.1 |
|
|
$ |
57.5 |
|
|
$ |
286.6 |
|
|
$ |
252.2 |
|
Performance Chemicals |
|
(24.2 |
) |
|
|
2.2 |
|
|
|
65.7 |
|
|
|
160.4 |
|
Advanced Polymer Technologies |
|
7.9 |
|
|
|
14.6 |
|
|
|
44.5 |
|
|
|
40.0 |
|
Total segment EBITDA (1) |
$ |
61.8 |
|
|
$ |
74.3 |
|
|
$ |
396.8 |
|
|
$ |
452.6 |
|
|
|
|
|
|
|
|
|
||||||||
Interest expense, net |
|
(22.7 |
) |
|
|
(17.0 |
) |
|
|
(87.0 |
) |
|
|
(54.3 |
) |
(Provision) benefit for income taxes |
|
37.2 |
|
|
|
(4.1 |
) |
|
|
4.7 |
|
|
|
(58.0 |
) |
Depreciation and amortization - Performance Materials |
|
(9.6 |
) |
|
|
(9.4 |
) |
|
|
(38.3 |
) |
|
|
(36.1 |
) |
Depreciation and amortization - Performance Chemicals |
|
(13.2 |
) |
|
|
(13.7 |
) |
|
|
(53.2 |
) |
|
|
(43.1 |
) |
Depreciation and amortization - Advanced Polymer Technologies |
|
(7.9 |
) |
|
|
(7.1 |
) |
|
|
(31.3 |
) |
|
|
(29.6 |
) |
Restructuring and other income (charges), net (2)(3) |
|
(140.5 |
) |
|
|
(3.2 |
) |
|
|
(189.9 |
) |
|
|
(13.8 |
) |
Acquisition and other-related costs (2)(4) |
|
0.1 |
|
|
|
(4.0 |
) |
|
|
(4.5 |
) |
|
|
(5.9 |
) |
Loss on CTO resales (2)(5) |
|
(22.0 |
) |
|
|
— |
|
|
|
(22.0 |
) |
|
|
— |
|
Gain on sale of strategic investment (2)(6) |
|
— |
|
|
|
— |
|
|
|
19.3 |
|
|
|
— |
|
Pension and postretirement settlement and curtailment (charges) income, net (2)(7) |
|
— |
|
|
|
(0.2 |
) |
|
|
— |
|
|
|
(0.2 |
) |
Net income (loss) |
$ |
(116.8 |
) |
|
$ |
15.6 |
|
|
$ |
(5.4 |
) |
|
$ |
211.6 |
|
_______________ |
||
(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 net sales 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 associated with corporate debt facilities, interest income, income taxes, depreciation, amortization, restructuring and other income (charges), net, including inventory lower of cost or market charges ("LCM") associated with restructuring actions, acquisition and other-related income (costs), litigation verdict charges, gain on sale of strategic investments, loss on CTO resales, pension and postretirement settlement and curtailment income (charges), net. |
|
(2) |
For more information on these charges, refer to the Reconciliation of Adjusted Earnings table on page 7. |
|
(3) |
The table below provides an allocation of these charges between our three reportable segments to provide investors, potential investors, securities analysts and others with the information, should they choose, to apply such (income) charges to each respective reportable segment for which the charges relate. |
|
Three Months Ended
|
|
Twelve Months Ended
|
||||||||
In millions |
2023 |
|
2022 |
|
2023 |
|
2022 |
||||
Performance Materials |
$ |
1.6 |
|
$ |
1.1 |
|
$ |
9.0 |
|
$ |
4.8 |
Performance Chemicals |
|
124.5 |
|
|
1.6 |
|
|
164.2 |
|
|
7.0 |
Advanced Polymer Technologies |
|
14.4 |
|
|
0.5 |
|
|
16.7 |
|
|
2.0 |
Restructuring and other (income) charges, net |
$ |
140.5 |
|
$ |
3.2 |
|
$ |
189.9 |
|
$ |
13.8 |
(4) |
The table below provides an allocation of these charges between our three reportable segments to provide investors, potential investors, securities analysts and others with the information, should they choose, to apply such (income) charges to each respective reportable segment for which the charges relate. |
|
Three Months Ended
|
|
Twelve Months Ended
|
|||||||||
In millions |
2023 |
|
2022 |
|
2023 |
|
2022 |
|||||
Performance Materials |
$ |
— |
|
|
$ |
0.3 |
|
$ |
— |
|
$ |
0.3 |
Performance Chemicals |
|
(0.1 |
) |
|
|
3.7 |
|
|
4.5 |
|
|
5.6 |
Advanced Polymer Technologies |
|
— |
|
|
|
— |
|
|
— |
|
|
— |
Acquisition and other-related (income) costs |
$ |
(0.1 |
) |
|
$ |
4.0 |
|
$ |
4.5 |
|
$ |
5.9 |
(5) |
For three and twelve months ended |
|
(6) |
For twelve months ended |
|
(7) |
For three and twelve months ended |
Condensed Consolidated Balance Sheets (Unaudited) |
|||||
|
|
||||
In millions |
2023 |
|
2022 |
||
Assets |
|
|
|
||
Cash and cash equivalents |
$ |
95.9 |
|
$ |
76.7 |
Accounts receivable, net |
|
182.0 |
|
|
224.8 |
Inventories, net |
|
308.8 |
|
|
335.0 |
Prepaid and other current assets |
|
71.9 |
|
|
46.8 |
Current assets |
|
658.6 |
|
|
683.3 |
Property, plant, and equipment, net |
|
762.2 |
|
|
798.6 |
|
|
527.5 |
|
|
518.5 |
Other intangibles, net |
|
336.1 |
|
|
404.8 |
Restricted investment |
|
79.1 |
|
|
78.0 |
Strategic investments |
|
99.2 |
|
|
109.8 |
Other assets |
|
160.6 |
|
|
143.5 |
Total Assets |
$ |
2,623.3 |
|
$ |
2,736.5 |
|
|
|
|
||
Liabilities |
|
|
|
||
Accounts payable |
$ |
158.4 |
|
$ |
174.8 |
Accrued expenses |
|
72.3 |
|
|
54.4 |
Notes payable and current maturities of long-term debt |
|
84.4 |
|
|
0.9 |
Other current liabilities |
|
47.8 |
|
|
73.4 |
Current liabilities |
|
362.9 |
|
|
303.5 |
Long-term debt including finance lease obligations |
|
1,382.8 |
|
|
1,472.5 |
Deferred income taxes |
|
70.9 |
|
|
106.5 |
Other liabilities |
|
175.3 |
|
|
155.7 |
Total Liabilities |
|
1,991.9 |
|
|
2,038.2 |
Equity |
|
631.4 |
|
|
698.3 |
Total Liabilities and Equity |
$ |
2,623.3 |
|
$ |
2,736.5 |
Condensed Consolidated Statements of Cash Flows (Unaudited) |
|||||||||||||||
|
Three Months Ended |
|
Twelve Months Ended |
||||||||||||
In millions |
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
Cash provided by (used in) operating activities: |
|
|
|
|
|
|
|
||||||||
Net income (loss) |
$ |
(116.8 |
) |
|
$ |
15.6 |
|
|
$ |
(5.4 |
) |
|
$ |
211.6 |
|
Adjustments to reconcile net income (loss) to cash provided by operating activities: |
|
|
|
|
|
|
|
||||||||
Depreciation and amortization |
|
30.7 |
|
|
|
30.2 |
|
|
|
122.8 |
|
|
|
108.8 |
|
Gain on sale of strategic investment |
|
— |
|
|
|
— |
|
|
|
(19.3 |
) |
|
|
— |
|
Restructuring and other (income) charges, net |
|
120.8 |
|
|
|
3.2 |
|
|
|
170.2 |
|
|
|
13.8 |
|
Other non-cash items |
|
33.5 |
|
|
|
21.8 |
|
|
|
99.5 |
|
|
|
59.5 |
|
Changes in other operating assets and liabilities, net |
|
(23.6 |
) |
|
|
27.7 |
|
|
|
(162.7 |
) |
|
|
(80.3 |
) |
Net cash provided by (used in) operating activities |
$ |
44.6 |
|
|
$ |
98.5 |
|
|
$ |
205.1 |
|
|
$ |
313.4 |
|
Cash provided by (used in) investing activities: |
|
|
|
|
|
|
|
||||||||
Capital expenditures |
$ |
(29.2 |
) |
|
$ |
(49.2 |
) |
|
$ |
(109.8 |
) |
|
$ |
(142.5 |
) |
Payments for acquired businesses, net of cash acquired |
|
— |
|
|
|
(344.5 |
) |
|
|
— |
|
|
|
(344.5 |
) |
Proceeds from sale of strategic investment |
|
— |
|
|
|
— |
|
|
|
31.5 |
|
|
|
— |
|
Net investment hedge settlement |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
14.7 |
|
Purchase of strategic investments |
|
— |
|
|
|
(14.6 |
) |
|
|
(2.4 |
) |
|
|
(77.4 |
) |
Other investing activities, net |
|
8.2 |
|
|
|
1.1 |
|
|
|
3.4 |
|
|
|
(2.2 |
) |
Net cash provided by (used in) investing activities |
$ |
(21.0 |
) |
|
$ |
(407.2 |
) |
|
$ |
(77.3 |
) |
|
$ |
(551.9 |
) |
Cash provided by (used in) financing activities: |
|
|
|
|
|
|
|
||||||||
Proceeds from revolving credit facility and other borrowings |
$ |
136.8 |
|
|
$ |
376.7 |
|
|
$ |
376.3 |
|
|
$ |
1,164.7 |
|
Payments on revolving credit facility |
|
(142.8 |
) |
|
|
(57.7 |
) |
|
|
(382.9 |
) |
|
|
(336.7 |
) |
Payments on long-term borrowings |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(628.1 |
) |
Debt issuance costs |
|
(0.4 |
) |
|
|
— |
|
|
|
(0.4 |
) |
|
|
(3.0 |
) |
Debt repayment costs |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(3.8 |
) |
Financing lease obligations, net |
|
(0.1 |
) |
|
|
(0.5 |
) |
|
|
(0.7 |
) |
|
|
(0.9 |
) |
Tax payments related to withholdings on vested equity awards |
|
— |
|
|
|
— |
|
|
|
(4.8 |
) |
|
|
(2.2 |
) |
Proceeds and withholdings from share-based compensation plans, net |
|
— |
|
|
|
1.3 |
|
|
|
4.7 |
|
|
|
4.1 |
|
Repurchases of common stock under publicly announced plan |
|
— |
|
|
|
(6.0 |
) |
|
|
(92.1 |
) |
|
|
(145.2 |
) |
Other financing activities, net |
|
— |
|
|
|
(0.8 |
) |
|
|
— |
|
|
|
(0.8 |
) |
Net cash provided by (used in) financing activities |
$ |
(6.5 |
) |
|
$ |
313.0 |
|
|
$ |
(99.9 |
) |
|
$ |
48.1 |
|
Increase (decrease) in cash, cash equivalents, and restricted cash |
|
17.1 |
|
|
|
4.3 |
|
|
|
27.9 |
|
|
|
(190.4 |
) |
Effect of exchange rate changes on cash |
|
2.7 |
|
|
|
2.6 |
|
|
|
(0.3 |
) |
|
|
(6.0 |
) |
Change in cash, cash equivalents, and restricted cash |
|
19.8 |
|
|
|
6.9 |
|
|
|
27.6 |
|
|
|
(196.4 |
) |
Cash, cash equivalents, and restricted cash at beginning of period |
|
92.1 |
|
|
|
77.4 |
|
|
|
84.3 |
|
|
|
280.7 |
|
Cash, cash equivalents, and restricted cash at end of period (1) |
$ |
111.9 |
|
|
$ |
84.3 |
|
|
$ |
111.9 |
|
|
$ |
84.3 |
|
|
|
|
|
|
|
|
|
||||||||
(1) Includes restricted cash of |
|||||||||||||||
|
|
|
|
|
|
|
|
||||||||
Supplemental cash flow information: |
|
|
|
|
|
|
|
||||||||
Cash paid for interest, net of capitalized interest |
$ |
24.8 |
|
|
$ |
18.9 |
|
|
$ |
82.7 |
|
|
$ |
54.8 |
|
Cash paid for income taxes, net of refunds |
|
1.8 |
|
|
|
12.2 |
|
|
|
29.7 |
|
|
|
54.8 |
|
Purchases of property, plant and equipment in accounts payable |
|
(3.3 |
) |
|
|
(0.2 |
) |
|
|
2.8 |
|
|
|
4.9 |
|
Leased assets obtained in exchange for new finance lease liabilities |
|
— |
|
|
|
— |
|
|
|
0.2 |
|
|
|
— |
|
Leased assets obtained in exchange for new operating lease liabilities |
|
3.1 |
|
|
|
14.5 |
|
|
|
29.1 |
|
|
|
23.7 |
|
Non-GAAP Financial Measures
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, liquidity measures, and projected future results.
Adjusted earnings (loss) is defined as net income (loss) plus restructuring and other (income) charges, net, including inventory lower of cost or market charges associated with restructuring actions, acquisition and other-related (income) costs, pension and postretirement settlement and curtailment (income) charges, loss on CTO resales, gain on sale of strategic investments, debt refinancing fees, litigation verdict 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 diluted earnings (loss) per common share plus restructuring and other (income) charges, net, including inventory lower of cost or market charges associated with restructuring actions, per share, acquisition and other-related (income) costs per share, pension and postretirement settlement and curtailment (income) charges per share, loss on CTO resales per share, gain on sale of strategic investment per share, debt refinancing fees per share, litigation verdict charge per share, and the income tax expense (benefit) per share on those items, less the provision (benefit) from certain discrete tax items per share.
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, including inventory lower of cost or market charges associated with restructuring actions, acquisition and other-related (income) costs, litigation verdict charges, gain on sale of strategic investment, loss on CTO resales, and 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 the sum of net cash provided by (used in) the following items: 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 including finance lease obligations less the sum of cash and cash equivalents, restricted cash associated with our new market tax credit financing arrangement, and restricted investment associated with certain finance lease obligations, excluding the allowance for credit losses on held-to-maturity debt securities held within the restricted investment.
Net Debt Ratio is defined as Net Debt divided by the last twelve months Adjusted EBITDA, inclusive of acquisition-related pro forma adjustments.
GAAP Reconciliation of 2024 Adjusted EBITDA Guidance
A reconciliation of net income to adjusted EBITDA as projected for 2024 is not provided.
Reconciliation of Non-GAAP Financial Measures |
|||||||||||||||
Reconciliation of Net Income (Loss) (GAAP) to Adjusted Earnings (Loss) (Non-GAAP) and Reconciliation of Diluted Earnings (Loss) per Common Share (GAAP) to Diluted Adjusted Earnings per Share (Non-GAAP) |
|||||||||||||||
|
Three Months Ended |
|
Twelve Months Ended |
||||||||||||
In millions, except per share data (unaudited) |
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
Net income (loss) (GAAP) |
$ |
(116.8 |
) |
|
$ |
15.6 |
|
|
$ |
(5.4 |
) |
|
$ |
211.6 |
|
Restructuring and other (income) charges, net (1) |
|
140.5 |
|
|
|
3.2 |
|
|
|
189.9 |
|
|
|
13.8 |
|
Acquisition and other-related costs (2) |
|
(0.1 |
) |
|
|
4.0 |
|
|
|
4.5 |
|
|
|
5.9 |
|
Pension and postretirement settlement and curtailment (income) charges (3) |
|
— |
|
|
|
0.2 |
|
|
|
— |
|
|
|
0.2 |
|
Loss on CTO resales (4) |
|
22.0 |
|
|
|
— |
|
|
|
22.0 |
|
|
|
— |
|
Gain on sale of strategic investment (5) |
|
— |
|
|
|
— |
|
|
|
(19.3 |
) |
|
|
— |
|
Debt refinancing fees (6) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
5.1 |
|
Tax effect on items above (7) |
|
(38.3 |
) |
|
|
(1.8 |
) |
|
|
(46.4 |
) |
|
|
(5.9 |
) |
Certain discrete tax provision (benefit) (8) |
|
0.5 |
|
|
|
0.3 |
|
|
|
(0.6 |
) |
|
|
0.7 |
|
Adjusted earnings (loss) (Non-GAAP) |
$ |
7.8 |
|
|
$ |
21.5 |
|
|
$ |
144.7 |
|
|
$ |
231.4 |
|
|
|
|
|
|
|
|
|
||||||||
Diluted earnings (loss) per common share (GAAP) |
$ |
(3.23 |
) |
|
$ |
0.41 |
|
|
$ |
(0.15 |
) |
|
$ |
5.50 |
|
Restructuring and other (income) charges |
|
3.86 |
|
|
|
0.08 |
|
|
|
5.17 |
|
|
|
0.36 |
|
Acquisition and other-related costs |
|
— |
|
|
|
0.10 |
|
|
|
0.12 |
|
|
|
0.14 |
|
Pension and postretirement settlement and curtailment (income) charges |
|
— |
|
|
|
0.01 |
|
|
|
— |
|
|
|
0.01 |
|
Loss on CTO resales |
|
0.61 |
|
|
|
— |
|
|
|
0.60 |
|
|
|
— |
|
Gain on sale of strategic investment |
|
— |
|
|
|
— |
|
|
|
(0.52 |
) |
|
|
— |
|
Debt refinancing fees |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.13 |
|
Tax effect on items above |
|
(1.04 |
) |
|
|
(0.04 |
) |
|
|
(1.26 |
) |
|
|
(0.15 |
) |
Certain discrete tax provision (benefit) |
|
0.01 |
|
|
|
0.01 |
|
|
|
(0.02 |
) |
|
|
0.02 |
|
Diluted adjusted earnings (loss) per share (Non-GAAP) |
$ |
0.21 |
|
|
$ |
0.57 |
|
|
$ |
3.94 |
|
|
$ |
6.01 |
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding - Diluted (9) |
|
36.4 |
|
|
|
37.7 |
|
|
|
36.7 |
|
|
|
38.5 |
|
___________ |
||
(1) |
We regularly perform strategic reviews and assess the return on our operations, which sometimes results in a plan to restructure the business. These costs are excluded from our reportable segment results; details of which are included in the table below. For the details of these costs between our reportable segments, see Segment Operating Results on page 2. |
|
Three Months Ended
|
|
Twelve Months Ended
|
||||||||
In millions |
2023 |
|
2022 |
|
2023 |
|
2022 |
||||
Work force reductions and other |
$ |
0.9 |
|
$ |
— |
|
$ |
12.5 |
|
$ |
— |
Performance Chemicals' repositioning |
|
113.1 |
|
|
— |
|
|
113.1 |
|
|
— |
Restructuring charges (1) |
$ |
114.0 |
|
$ |
— |
|
$ |
125.6 |
|
$ |
— |
Alternative feedstock transition |
|
3.7 |
|
|
— |
|
|
22.1 |
|
|
— |
|
|
2.1 |
|
|
— |
|
|
14.8 |
|
|
— |
Business transformation costs |
|
1.0 |
|
|
3.2 |
|
|
7.7 |
|
|
13.8 |
Other (income) charges, net (1) |
$ |
6.8 |
|
$ |
3.2 |
|
$ |
44.6 |
|
$ |
13.8 |
Performance Chemicals' repositioning inventory charges (2) |
|
19.7 |
|
|
— |
|
|
19.7 |
|
|
— |
Restructuring and other (income) charges, net (3) |
$ |
140.5 |
|
$ |
3.2 |
|
$ |
189.9 |
|
$ |
13.8 |
_________________ |
||
(1) |
Amounts are recorded within Restructuring and other (income) charges, net on the condensed consolidated statement of operations. |
|
(2) |
Amounts are recorded within Cost of sales on the condensed consolidated statement of operations. |
|
(3) |
For information on our Workforce reductions and other, Alternative feedstock transition, |
Performance Chemicals’ repositioning:
On
During the three and twelve months ended
The Performance Chemicals' repositioning, when combined with earlier targeted workforce reduction initiatives, during 2023 resulted in the reduction of
(2) |
Charges represent (gains) losses incurred to complete and integrate acquisitions and other strategic investments. Charges may include the expensing of the inventory fair value step-up resulting from the application of purchase accounting for acquisitions and certain legal and professional fees associated with the completion of acquisitions and strategic investments. For the details of these costs between our reportable segments, see Segment Operating Results on page 2. |
|
Three Months Ended
|
|
Twelve Months Ended
|
|||||||||
In millions |
2023 |
|
2022 |
|
2023 |
|
2022 |
|||||
Legal and professional service fees |
$ |
(0.2 |
) |
|
$ |
3.1 |
|
$ |
3.6 |
|
$ |
5.0 |
Acquisition-related (income) costs |
$ |
(0.2 |
) |
|
$ |
3.1 |
|
$ |
3.6 |
|
$ |
5.0 |
Inventory fair value step-up amortization (1) |
|
0.1 |
|
|
|
0.9 |
|
|
0.9 |
|
|
0.9 |
Acquisition and other-related (income) charges |
$ |
(0.1 |
) |
|
$ |
4.0 |
|
$ |
4.5 |
|
$ |
5.9 |
_________________ |
||||||||||||
(1) Included in Cost of sales on the condensed consolidated statement of operations. |
(3) |
Our pension and postretirement settlement and curtailment charges (income) are related to the acceleration of prior service costs, as a result of a reduction in the number of participants within the Union Hourly defined benefit pension plan. These are excluded from our segment results because we consider these costs to be outside our operational performance. We continue to include the service cost, amortization of prior service cost, interest costs, expected return on plan assets, and amortized actual gains and losses in our segment EBITDA. |
|
(4) |
Due to the DeRidder Plant closure, as noted in footnote 1 above, and the corresponding reduced CTO refining capacity, we may be obligated, under an existing CTO supply contract, to purchase CTO through 2025 at amounts in excess of required CTO volumes. We intend to manage our CTO volumes by reselling excess volumes (herein referred to as "CTO resales") in the open market, which, based on what we believe to be market rates today, may result in a loss of |
|
Our Performance Chemicals reportable segment is in the business of producing, primarily from CTO-based feedstocks, derivative specialty chemicals for sale to third-party customers. As a result of the Performance Chemicals’ repositioning, we are selling excess CTO volumes, which is outside of the ordinary course of business, that is, not a normal ongoing part of our operations and not core to our business. The excess CTO volumes, calculated as the volume directly attributable to reduced CTO refining capacity as defined under the contractual terms of the CTO supply contract, on hand at period end will be valued at the lower of cost or expected selling price, less costs to sell. Volumes on hand at period end and any pending CTO resale receivables will be recorded to Other current assets on the condensed consolidated balance sheet. Any liabilities associated with the purchases of the excess CTO volumes will be recorded to Accrued expenses on the condensed consolidated balance sheet. We will recognize the net gains or losses associated with the CTO resale activities within Other (income) expenses, net on the condensed consolidated statement of operations. Since these CTO resale activities are directly attributable to the Performance Chemicals’ repositioning, that is, they do not represent normal, recurring expenses necessary to operate our business, we have excluded the CTO resale (income) charges for the purposes of calculating our non-GAAP financial performance measures. |
||
(5) |
We exclude gains and losses from sales of strategic investments from our segment results, as well as our non-GAAP financial measures, because we do not consider such gains or losses to be directly associated with the operational performance of the segment. We believe that the inclusion of such gains or losses, would impair the factors and trends affecting the historical financial performance of our reportable segments. We continue to include undistributed earnings or loss, distributions, amortization or accretion of basis differences, and other-than-temporary impairments for equity method investments that we believe are directly attributable to the operational performance of such investments, in our reportable segment results. |
|
(6) |
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 period ended |
|
(7) |
Income tax impact of non-GAAP adjustments is the summation of the calculated income tax charge related to each pre-tax non-GAAP adjustment. The non-GAAP adjustments relate primarily to adjustments in |
|
(8) |
Represents certain discrete tax items such as excess tax benefits on stock compensation and impacts of legislative tax rate changes. |
|
(9) |
The weighted average number of shares outstanding used in diluted adjusted earnings per share computation (Non-GAAP) includes 0.2 million diluted shares. This number of shares differs from the weighted average number of shares outstanding used in diluted loss per share computations (GAAP) as we had a net loss for the three and twelve months ended |
Reconciliation of Net Income (Loss) (GAAP) to Adjusted EBITDA (Non-GAAP) |
|||||||||||||||
|
Three Months Ended |
|
Twelve Months Ended |
||||||||||||
In millions, except percentages (unaudited) |
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
Net income (loss) (GAAP) |
$ |
(116.8 |
) |
|
$ |
15.6 |
|
|
$ |
(5.4 |
) |
|
$ |
211.6 |
|
Interest expense, net |
|
22.7 |
|
|
|
17.0 |
|
|
|
87.0 |
|
|
|
54.3 |
|
Provision (benefit) for income taxes |
|
(37.2 |
) |
|
|
4.1 |
|
|
|
(4.7 |
) |
|
|
58.0 |
|
Depreciation and amortization |
|
30.7 |
|
|
|
30.2 |
|
|
|
122.8 |
|
|
|
108.8 |
|
Restructuring and other (income) charges, net (1) |
|
140.5 |
|
|
|
3.2 |
|
|
|
189.9 |
|
|
|
13.8 |
|
Acquisition and other-related (income) costs (1) |
|
(0.1 |
) |
|
|
4.0 |
|
|
|
4.5 |
|
|
|
5.9 |
|
Loss on CTO resales (1) |
|
22.0 |
|
|
|
— |
|
|
|
22.0 |
|
|
|
— |
|
Gain on sale of strategic investment (1) |
|
— |
|
|
|
— |
|
|
|
(19.3 |
) |
|
|
— |
|
Pension and postretirement settlement and curtailment charges (income) (1) |
|
— |
|
|
|
0.2 |
|
|
|
— |
|
|
|
0.2 |
|
Adjusted EBITDA (Non-GAAP) |
$ |
61.8 |
|
|
$ |
74.3 |
|
|
$ |
396.8 |
|
|
$ |
452.6 |
|
|
|
|
|
|
|
|
|
||||||||
Net sales |
$ |
371.7 |
|
|
$ |
383.6 |
|
|
$ |
1,692.1 |
|
|
$ |
1,668.3 |
|
Net income (loss) margin |
|
(31.4 |
)% |
|
|
4.1 |
% |
|
|
(0.3 |
)% |
|
|
12.7 |
% |
Adjusted EBITDA margin |
|
16.6 |
% |
|
|
19.4 |
% |
|
|
23.5 |
% |
|
|
27.1 |
% |
___________ |
||
(1) |
For more information on these charges, refer to the Reconciliation of Adjusted Earnings table on page 7. |
Calculation of Free Cash Flow (Non-GAAP) |
|||||||||||
|
Three Months Ended |
|
Twelve Months Ended |
||||||||
In millions (unaudited) |
2023 |
|
2022 |
|
2023 |
|
2022 |
||||
Net cash provided by (used in) operating activities |
$ |
44.6 |
|
$ |
98.5 |
|
$ |
205.1 |
|
$ |
313.4 |
Less: Capital expenditures |
|
29.2 |
|
|
49.2 |
|
|
109.8 |
|
|
142.5 |
Free Cash Flow (Non-GAAP) |
$ |
15.4 |
|
$ |
49.3 |
|
$ |
95.3 |
|
$ |
170.9 |
Calculation of Net Debt Ratio (Non-GAAP) |
||
In millions, except ratios (unaudited) |
|
|
Notes payable and current maturities of long-term debt |
$ |
84.4 |
Long-term debt including finance lease obligations |
|
1,382.8 |
Debt issuance costs |
|
5.3 |
Total Debt |
|
1,472.5 |
Less: |
|
|
Cash and cash equivalents (1) |
|
96.1 |
Restricted investment (2) |
|
79.3 |
Net Debt |
$ |
1,297.1 |
|
|
|
Net Debt Ratio (Non-GAAP) |
|
|
Adjusted EBITDA (Non-GAAP) (3) |
|
|
Adjusted EBITDA - last twelve months (LTM) as of |
$ |
396.8 |
Net debt ratio (Non-GAAP) |
3.3x |
_______________ |
||
(1) |
Includes |
|
(2) |
Our restricted investment is a trust managed in order to secure repayment of the finance lease obligation associated with Performance Materials' |
|
(3) |
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/20240221097281/en/
843-740-2068
media@ingevity.com
Investors:
843-740-2002
investors@ingevity.com
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