NORTH CHARLESTON, SC , July 24, 2019 (Press Release) -
- Net sales of $352.8 million were up 14.3% versus the prior year quarter’s sales of $308.6 million
- Net income of $56.8 million was up 8.8% versus net income in the prior year quarter of $52.2 million; net income as a percentage of sales was 16.1%, compared to 16.9% in the prior year quarter; diluted earnings per share were $1.34 compared to $1.10
- Adjusted earnings of $57.5 million were up 21.8% versus adjusted earnings in the prior year quarter of $47.2 million; diluted adjusted earnings per share were $1.36 versus $1.11 in the prior year quarter
- Adjusted EBITDA of $108.3 million were up 21.1% compared to second quarter 2018 adjusted EBITDA of $89.4 million; adjusted EBITDA margin of 30.7% increased 170 basis points versus second quarter 2018
- Company maintains fiscal year 2019 guidance for sales from between $1.30 billion and $1.36 billion and adjusted EBITDA from between $390 million and $410 million
Ingevity Corporation today reported second quarter net sales of $352.8 million, representing an increase of 14.3% versus $308.6 million in the prior year’s second quarter. Net income of $56.8 million, increased 8.8% versus $52.2 million in the previous year’s quarter. Ingevity’s second quarter net income margin was 16.1% versus 16.9% in the second quarter of 2018. The second quarter diluted earnings per share were $1.34 compared to $1.10 in the prior year period.
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Adjusted earnings of $57.5 million were up 21.8% versus prior year quarter of $47.2 million. Diluted adjusted earnings per share were $1.36 excluding certain items of $0.02 per share which are primarily costs related to the acquisition of the Capa® caprolactone business from Perstorp Holding AB. This compares to adjusted earnings per share of $1.11 in the prior year quarter. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $108.3 million were up 21.1% versus second quarter 2018 adjusted EBITDA of $89.4 million. Adjusted EBITDA margin of 30.7% was up 170 basis points from the prior year’s second quarter adjusted EBITDA margin of 29.0%.
“Our second quarter results reflect the benefits of our combined inorganic and organic growth strategy,” said Michael Wilson, Ingevity’s president and CEO. “In the face of softening macroeconomic conditions – particularly in industrial demand – we delivered strong revenue growth. What’s more, our continued strategic focus on driving earnings growth and margin accretion manifested itself in the quarter as we posted a 21% increase in EBITDA on a 14% increase in revenues. For the second consecutive quarter, we achieved an adjusted EBITDA margin of more than 30%.”
Second quarter 2019 sales in the Performance Chemicals segment were $229.7 million, up $17.2 million, or 8.1%, versus the second quarter 2018. Segment EBITDA were $59.0 million, up $12.3 million, or 26.3%, versus the prior year quarter segment EBITDA. Segment EBITDA margin rose 370 basis points to 25.7%.
Wilson stated that the addition of the engineered polymers product line – formed through the acquisition of the Capa caprolactone business – was the largest contributor to the sales increase. “While the engineered polymers products added significantly to our reported results, sales were below the prior year’s pro forma period due to market conditions. Nonetheless, we remain excited about the long-term potential for growth in this business,” he said.
Wilson said that sales to oilfield applications increased slightly based on strength in drilling markets. Sales to pavement technologies applications were down slightly as growth in North America was slowed by weather conditions – despite our customers’ strong project backlog – and sales overseas were down. Sales decreased in industrial specialties applications due to soft demand and Ingevity’s actions to transition to higher-margin opportunities.
According to Wilson, EBITDA in the segment benefitted from increases in volumes and price and mix, but were partially offset by slightly higher production costs.
Second quarter 2019 sales in the Performance Materials segment were $123.1 million, up $27.0 million, or 28.1%, versus the second quarter 2018. Segment EBITDA were $49.3 million, up $6.6 million, or 15.5%, versus the prior year segment EBITDA. Segment EBITDA margin decreased 440 basis points to 40.0%.
“Strongly accelerated sales to automotive customers in China propelled record revenue growth in our Performance Materials segment as automakers implement the nationwide China 6 gasoline vapor emission control standards,” said Wilson. “In addition, we are continuing to see strong growth in sales of our patented ‘honeycomb’ scrubber products used by automotive customers to comply with U.S. Tier 3/LEV III requirements.” Wilson also stated that the company is seeing significant increases in Europe driven primarily by the European Union’s Euro 6d standard.
Wilson said that EBITDA in the segment increased due to strong volume increases, and price and mix, but were partially offset by the consumption of higher cost inventory associated with the Zhuhai, China, plant scale-up; plant spending related to planned maintenance outages at several facilities; and by legal expenses associated with protecting intellectual property.
Ingevity maintained its fiscal year 2019 guidance for sales from between $1.30 billion and $1.36 billion and adjusted EBITDA from between $390 million and $410 million.
“We remain focused on executing against our strategy to drive enhanced margins and profitability,” Wilson said. “As such, we remain confident in our guidance for sales and earnings for the year.”
Ingevity: Purify, Protect and Enhance
Ingevity provides specialty chemicals, high-performance carbon materials and engineered polymers 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, coatings, elastomers, bio-plastics 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 1,750 people. The company is traded on the New York Stock Exchange.