Ingevity Corporation (NGVT) Earnings

Management highlights

• Completed sale of Ozark Materials Roadmarkings product line to PPG for ~$65 million on April 15th. • Divested North Charleston CTO Refinery and majority of industrial specialties product line for ~$93 million net proceeds. • Achieved 4% sales growth and industry-leading EBITDA margin approaching 36% in Q1. • Performance materials delivered growth in net sales, segment EBITDA, and margin driven by price increases and shift in consumer preference to hybrids. • APT introduced surcharges in April to offset higher costs related to Middle East conflict. • Accelerated share repurchases by ~$52 million in Q1 ahead of plan.

Guidance

• Reaffirming previous guidance from February earnings call. • 2026 adjusted EPS expected $4.70 - $5.20, sales $1.05 - $1.15 billion, adjusted EBITDA $370 - $395 million. • Exclusion of road markings expected to lift performance chemicals margin to high teens. • Expect to reach and maintain target leverage ratio of 2 - 2.5 times in 2026. • On track to complete $300 million of share repurchases through 2027. • Sale process for APT progressing well, expected to conclude before end of 2026.

Segment performance

Performance materials: Sales of $155 million, 6% higher than Q1 2025. Segment EBITDA increased 10% to $92 million, margin 59% (vs 57% prior year). Performance chemicals (excluding divested industrial specialties): Segment sales comparable to prior year. Pavement technology sales flat (gains in price/mix offset by lower volumes). Road markings sales declined 10% due to competitive pressure. Segment EBITDA declined $5 million, margin 1%. APT: Sales grew 5% supported by favorable foreign exchange. Segment EBITDA $7.6 million, margin 17.2%, meaningfully lower than prior year due to lower plant utilization.

Risks & headwinds

• Global volatility and uncertainty could impact business performance. • Macro-economic uncertainty may affect demand. • Competition in advanced polymer technologies could continue to pressure results. • Middle East conflict could lead to higher raw material and energy costs. • Uncertainty around the sale process of APT could impact outcomes.

Analyst Q&A

• Q: Just to start with you, you mentioned that hybrids are driving growth or helping growth for activated carbon-reinforced materials. I was wondering if that's exclusively a North American thing or if there is some, if it's broader than that, if you're seeing increased hybrid sales elsewhere where they're outpacing EVs in other regions in the world like Europe and Asia.

  A: As you mentioned, the shift to hybrids is a positive for Ingevity, and I think it really, just because of the smaller engine sizes, it requires more advanced carbon content from us. We're definitely seeing that shift in North America where the adoption of pure EVs has modulated, but I would expect that to be a trend that we see globally. I think even in places like China, the adoption of pure EVs has also moderated as those government subsidies have gone down. So I think hybrids are going to be a bigger and bigger part of the picture, and I think longer term, obviously, that's a positive for us, just requiring more uh advanced content from us

• Q: you mentioned that building up some inventory but that was in response to potentially some some planned outages but I was wondering if you're going to keep inventories elevated just because of ongoing volatility maybe some issues with higher logistic costs higher raw material costs if that's going to kind of change your your short-term Outlook for what you do with working capital

  A: No, I think what you would expect is our inventory to drop back down after those planned outages in Q2. I'd say in general, Dan, obviously there's a lot of uncertainty from a macroeconomic perspective. But we feel like maybe with the exception of APT that we're pretty well insulated. And so although we're watching the situation monitoring closely, we feel like we're pretty well insulated

• Q: I was wondering if you could address or maybe give us a little more color on what you're underlying assumptions are for inflation across each of your businesses, and number two, what's your ability to price through all of those are? I think my understanding is that a lot of your performance materials pricing is fixed, and I'm wondering if that's impacting your ability to be flexible or put things in place like surcharges

  A: Yeah, if I heard your question, you were a little bit soft. Was it talking about inflation and our ability to flex pricing in our different businesses? Is that right? That's right, yes. Right. So a few things just to highlight. We mentioned that we went through with our typical annual pricing increases in PM, and I think those were successful, and I think they obviously reflect the value that we bring and obviously the close customer relationships and the trust that we've built with that customer base over time. We did mention that we're putting in place some surcharges, particularly in APT, to offset some of the energy and logistics pricing or cost increases that we've seen. I think we have some flexibility in the business, but obviously we want to manage that closely. Phil, what else would you? Yeah, the only other thing is we have seen some small raw material price inflation As Dave mentioned, we've been able to pass that along to customers and surcharges. We have seen some small upticks in logistics costs, but again, we expect and have been successful in being able to pass those along. And I think, John, in general, you know, obviously we're a global company, but having a very strong focus in the U.S. market, producing in the U.S. as well, I think has been a benefit to us, especially in this environment

• Q: I was wondering if you could also talk a little bit more about the APT sales process, how much progress you've made there, number one. And number two, if your overall expectations or if the most recent tone from potential buyers has shifted or changed at all over the last quarter, especially with the market volatility that's out there

  A: Yeah, thanks for the question. You know, again, it's part of our broader portfolio transformation. We've been pleased with the progress that we announced. Two divestitures, one that closed earlier this quarter or in January, and then one that was a sign-in close of road markings. And then the remaining business that we've talked about divesting is APT. We're encouraged with the progress there, so we continue to advance that transaction. We've had strong interest, and we continue to be confident that we'll announce something before the end of the year

• Q: So you noted volume growth in Asia in APC, but in past quarters you said you've been facing competitive pressure, specifically in China. Has that changed at all or have other positive tailwinds more than outweighed that

  A: Yeah, what we saw this quarter and the trend continues to, we continue to see that trend in early part of Q2 is our competitors in Asia are actually pretty impacted by the Middle East conflict. And so we've been able to step in and provide volume in the shadow of that. So taking advantage of what's happening in that region of the world to supply those customers. And Abigail, just to remind you, obviously APT was coming off a pretty prolonged period of demand weakness. So we are starting to see some of that come back. And as Phil mentioned, some of those costs and supply chain challenges have impacted of our Asian competitors a bit more, so we're the beneficiary of that

• Q: Can you just give us an idea of the size of the EBITDA impact of the planned turnaround next quarter

  A: Yeah, you can see it in the bridge. It's, what, 5.3 on the bridge, but it's actually around closer to $6 million of an impact this quarter of a benefit that we expect to reverse in next quarter as an outage is occurring