- Ingevity delivers strong fourth quarter results driven by
continued recovery of global automotive production, an increase in
demand for engineered polymers, and ongoing global paving
activity
- Gross margins accrete despite COVID-19 economic
environment
- Company announces fiscal year 2021 guidance for sales between
$1.25 billion and $1.30 billion and adjusted EBITDA between $400
million and $420 million
FOURTH QUARTER (comparisons versus prior year)
- Net sales of $325.6 million were up 7.3%
- Net income of $50.8 million was up 14.7%; net income margin was
15.6%, up 100 basis points
- Adjusted EBITDA of $110.9 million were up 21.7%; adjusted
EBITDA margin of 34.1%, up 410 basis points
- Operating cash flow of $153.3 million up 79.3%; free cash flow
of $122.2 million up 142.0%
FULL YEAR (comparisons versus prior year)
- Net sales of $1.216 billion were down 5.9% reflecting
across-the-board COVID-weakened demand
- Net income of $186.2 million was up 1.4%; net income margin was
15.3%, up 110 basis points
- Adjusted EBITDA of $397.9 million were up 0.2%; adjusted EBITDA
margin of 32.7%, up 200 basis points
- Operating cash flow of $352.4 million up 27.8%; free cash flow
of $270.3 million up 68.0%
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 fourth quarter and full year 2020.
“We finished the year strongly and delivered solid fourth
quarter results,” said John Fortson, president and CEO. “Our
businesses were resilient despite challenging conditions. Strong
automotive production and sales in China and a highly favorable
shift to trucks and SUVs in the U.S. and Canada were significant
tailwinds. In addition, we benefitted from promising increases in
sales of engineered polymers and slight growth in North American
paving sales.”
Strength in automotive, engineered polymer and North American
pavement product sales was partially offset by reduced revenues in
the oilfield and printing inks markets, and international pavement
sales, all of which were highly affected by the COVID-weakened
economic environment.
“The cost-reduction actions we took midyear are continuing to
benefit our profitability,” Fortson said. “Our fourth quarter
adjusted EBITDA margin rose solidly and was a fourth quarter
record.” The company generated excellent free cash flow in the
quarter due to improved performance and strong working capital
management.
Fourth quarter net sales of $325.6 million were up 7.3% versus
the prior year fourth quarter. Net income of $50.8 million
increased 14.7% and net income margin of 15.6% was up from 14.6% in
the prior year. Fourth quarter diluted earnings per share were
$1.23 compared to $1.05 in the prior year period. Fourth quarter
operating cash flow of $153.3 million increased 79.3% from the
prior year period.
Adjusted earnings of $55.1 million were up 18.5% versus the
prior year quarter. Diluted adjusted earnings per share were $1.33,
which exclude, net of tax, $0.10 related primarily to restructuring
and other charges, net, recognized during the quarter. This
compares to diluted adjusted earnings per share of $1.10 in the
prior year quarter. Adjusted EBITDA of $110.9 million were up 21.7%
versus the fourth quarter 2019. Adjusted EBITDA margin of 34.1% was
up 410 basis points from the prior year’s fourth quarter.
Full year 2020 net sales of $1.216 million were down 5.9% versus
the prior year. Net income of $186.2 million increased 1.4% and net
income margin of 15.3% was up from 14.2% in the prior year. The
full year diluted earnings per share were $4.48 compared to $4.35
in the prior year.
Adjusted earnings of $202.6 million were down 1.5% versus the
prior year. Diluted adjusted earnings per share were $4.88, which
exclude, net of tax, $0.40 related primarily to restructuring and
other charges, net, recognized during the year. This compares to
diluted adjusted earnings per share of $4.93 in the prior year.
Adjusted EBITDA of $397.9 million were up 2.4% versus 2019.
Adjusted EBITDA margin of 32.7% was up 200 basis points from the
prior year.
Performance Chemicals
“In Performance Chemicals, sales in engineered polymers rose
solidly versus the prior year quarter,” said Fortson. “This was
offset by sharp reductions in oilfield technologies applications
and smaller decreases in industrial specialties and paving
applications.”
Quarterly sales for engineered polymers products were up more
than 10% due to improved demand in industrial equipment,
bioplastics and automotive applications. Sales to pavement
technologies applications were slightly lower than the prior year
in what is a seasonally slower period. Paving in North America was
up slightly while the company’s sales in China, Latin America,
Europe, the Middle East and Africa were down modestly. Sales
decreased in industrial specialties applications due to continued
demand weakness for printing inks and other applications like
rubber and sterols. This was partially offset by strengthening
volumes for rosin products in adhesives and paper chemicals and
improved pricing for tall oil fatty acid. Additionally, sales to
oilfield technologies customers continued to reflect weakness in
North American drilling activity.
Fourth quarter 2020 sales in the Performance Chemicals segment
were $164.9 million, down 5.9% versus the fourth quarter 2019.
Segment EBITDA were $26.6 million, down 17.9% versus the prior year
quarter due to lower volumes and price/mix. This was partially
offset by improved plant throughput and some foreign currency
exchange benefits. Segment EBITDA margin declined 240 basis points
to 16.1%.
Full year 2020 sales in the Performance Chemicals segment were
$706.1 million, down 12.0% versus 2019. Segment EBITDA were $148.7
million, down 19.0% versus the prior year. Segment EBITDA margin
declined 180 basis points to 21.1%.
Performance Materials
“Strong automotive production and sales in China and a highly
favorable shift to trucks and SUVs in the U.S. and Canada continue
to be significant tailwinds for our activated carbon solutions for
gasoline vapor emission control,” said Fortson. “In the U.S. and
Canada, sales of our ‘honeycomb’ scrubbers are strong as automakers
complete implementation of the U.S. Environmental Protection
Agency’s Tier 3 standards. Our scrubber plant in Waynesboro,
Georgia, continues to set new production records. In addition, U.S.
vehicle inventories remain at 9-year lows and the U.S./Canada shift
to light trucks and SUVs set a monthly record of 79% in
December.”
Sales in China for the October to November period were up as
auto sales and production have both continued to post monthly
year-over-year increases since May 2020. December data for China is
not yet available. The company’s carbon production facility in
Zhuhai, China, also set a monthly production record in
December.
Fourth quarter 2020 sales in the Performance Materials segment
were a record $160.7 million, up 25.4% versus the fourth quarter
2019. Segment EBITDA were $84.3 million, up 43.6% versus the prior
year period due to the sharp increase in volume and a strong
increase in price/mix. While the segment saw the benefit of its low
variable cost structure, the quarter also included reduced legal
expenses to defend its intellectual property. Segment EBITDA margin
increased 670 basis points to 52.5%.
Full year 2020 sales in the Performance Materials segment were
$510.0 million, up 4.0% versus 2019. Segment EBITDA were $249.2
million, up 16.8% versus the prior year. Segment EBITDA margin
increased 540 basis points to 48.9%.
Outlook
Ingevity announced its fiscal year 2021 guidance to sales
between $1.25 billion and $1.30 billion and adjusted EBITDA between
$400 million and $420 million. Free cash flow will be at or above
$200 million.
“Our guidance reflects growth versus 2020’s performance despite
economic pressure from COVID-19,” said Fortson.
For the Performance Chemicals segment, the company expects
revenues and segment adjusted EBITDA to be flat to up slightly. “We
anticipate moderate growth in demand for pavement technologies and
engineered polymers based on strong paving project backlog,
continued Evotherm® warm mix technology adoption and increased
demand for thermoplastics,” said Fortson. Increased demand for
merchant rosin is also expected. These increases will be partially
offset by continued demand weakness in oilfield technologies.
“We expect our Performance Materials segment to deliver
double-digit revenue growth,” he said. Ingevity anticipates the
growth in this segment due to continued industry efforts to refill
the vehicle inventory pipeline and despite the absence of any
significant new gasoline vapor emission control regulations. EBITDA
margins will likely return to more historical levels as the
industry returns to a more normalized production pace.
“Overall, despite challenging global macroeconomic conditions,
we will deliver strong results in 2021,” said Fortson. “2020 was a
challenging year but it demonstrated our ability to be flexible and
drive performance through consistent execution, and that’s
something we’ll continue into 2021.”
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 asphalt paving, oil
exploration and production, agrochemicals, adhesives, lubricants,
publication inks, coatings, elastomers, bioplastics 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 (NYSE: NGVT).
For more information visit www.ingevity.com.
Additional Information
The company will host a live webcast on Thursday, February 11,
2021, at 10 a.m. (Eastern Time) to discuss fourth quarter and full
year 2020 fiscal results. The webcast can be accessed through the
investors section of Ingevity’s website, or via this link: Ingevity
Q4 2020 earnings webcast. You may also listen to the conference
call by dialing 877-407-2991 (inside the U.S.) or 201-389-0925
(outside the U.S.), at least 10 minutes prior to the start of the
event. 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 the investors
section of Ingevity’s website prior to the call. For those unable
to join the live event, a replay of the webcast will be available
beginning at approximately 2 p.m. (Eastern Time) on February 11,
2021, through March 11, 2021: Ingevity Q4 2020 earnings webcast
replay.
Use of Non-GAAP Financial Measures: This presentation
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.
Cautionary Statements About 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,” or similar expressions.
Forward-looking statements may include, without limitation,
expected financial positions, results of operations and cash flows;
financing plans; business strategies and expectations; operating
plans; impact of COVID-19; synergies and the potential benefits of
the acquisition of Perstorp Holding AB’s Capa® caprolactone
business (the “acquisition”); capital and other expenditures;
competitive positions; growth opportunities for existing products;
benefits from new technology and cost-reduction initiatives, plans
and objectives; 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; risks that
the expected benefits from the acquisition may not be realized or
will not be realized in the expected time period, the risk that the
acquired business will not be integrated successfully and the risk
of significant transaction costs and unknown or understated
liabilities; adverse effects of general economic and financial
conditions; risks related to international sales and operations;
impacts of currency exchange rates and currency devaluation;
compliance with U.S. and foreign regulations concerning our
operations outside the U.S.; changes in trade policy, including the
imposition of tariffs; adverse conditions in the global automotive
market or adoption of alternative and new technologies; competition
from producers of alternative products and new technologies, and
new or emerging competitors; competition from infringing
intellectual property activity; worldwide air quality standards; a
decrease in government infrastructure spending; the impact of
adverse conditions in cyclical end markets on demand for engineered
polymers products; declining volumes and downward pricing in the
printing inks market; the limited supply of or lack of access to
sufficient crude tall oil; a prolonged period of low energy prices;
the impact of the United Kingdom’s withdrawal from the European
Union; the provision of services by third parties at several
facilities; supply chain disruptions; natural disasters, such as
hurricanes, winter or tropical storms, earthquakes, tornados,
floods, fires; other unanticipated problems such as labor
difficulties, equipment failure or unscheduled maintenance and
repair; attracting and retaining key personnel; protection of
intellectual property and proprietary information; information
technology security breaches and other disruptions; complications
with designing and 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
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 under "Risk Factors" in our
Annual Report on Form 10-K and other periodic filings. These
forward-looking statements speak only 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 December
31,
Twelve Months Ended December
31,
In millions, except per share
data
2020
2019
2020
2019
Net sales
$
325.6
$
303.4
$
1,216.1
$
1,292.9
Cost of sales
198.2
192.4
750.6
810.9
Gross profit
127.4
111.0
465.5
482.0
Selling, general and administrative
expenses
41.5
40.8
149.4
163.1
Research and technical expenses
5.8
4.7
22.6
19.7
Restructuring and other (income) charges,
net
5.2
(0.2)
18.5
1.8
Acquisition-related costs
0.1
2.0
1.8
26.9
Other (income) expense, net
(4.0)
(2.0)
(4.1)
(4.3)
Interest expense, net
12.4
10.6
42.2
46.9
Income (loss) before income taxes
66.4
55.1
235.1
227.9
Provision (benefit) for income taxes
15.6
10.8
48.9
44.2
Net income (loss)
$
50.8
$
44.3
$
186.2
$
183.7
Per share data
Basic earnings (loss) per share
$
1.24
$
1.06
$
4.51
$
4.39
Diluted earnings (loss) per share
$
1.23
$
1.05
$
4.48
$
4.35
Weighted average shares
outstanding
Basic
41.1
41.8
41.3
41.8
Diluted
41.4
42.2
41.5
42.2
INGEVITY CORPORATION
Segment Operating Results
(Unaudited)
Three Months Ended December
31,
Twelve Months Ended December
31,
In millions
2020
2019
2020
2019
Net sales
Performance Materials
$
160.7
$
128.2
$
510.0
$
490.6
Automotive Technologies product line
153.2
120.8
477.7
454.9
Process Purification product line
7.5
7.4
32.3
35.7
Performance Chemicals
$
164.9
$
175.2
$
706.1
$
802.3
Oilfield Technologies product line
17.2
24.9
75.6
111.4
Pavement Technologies product line
29.7
30.4
186.8
183.3
Industrial Specialties product line
83.5
88.7
316.0
385.5
Engineered Polymers product line(1)
34.5
31.2
127.7
122.1
Total net sales
$
325.6
$
303.4
$
1,216.1
$
1,292.9
Segment EBITDA (2)
Performance Materials
$
84.3
$
58.7
$
249.2
$
213.4
Performance Chemicals
26.6
32.4
148.7
183.5
Total segment EBITDA (2)
$
110.9
$
91.1
$
397.9
$
396.9
Interest expense, net
(12.4)
(10.6)
(42.2)
(46.9)
(Provision) benefit for income taxes
(15.6)
(10.8)
(48.9)
(44.2)
Depreciation and amortization -
Performance Materials
(8.7)
(6.6)
(31.2)
(24.2)
Depreciation and amortization -
Performance Chemicals
(18.0)
(17.0)
(69.0)
(60.8)
Pension and postretirement settlement and
curtailment (charges) income, net
(0.1)
—
(0.1)
—
Restructuring and other income (charges),
net (3)
(5.2)
0.2
(18.5)
(1.8)
Acquisition and other-related costs
(4)
(0.1)
(2.0)
(1.8)
(35.3)
Net income (loss)
$
50.8
$
44.3
$
186.2
$
183.7
_________________
(1) Engineered Polymers product line was
acquired on February 13, 2019.
(2) 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, other (income)
expense, net, excluding depreciation and amortization). We have
excluded the following items from segment EBITDA: interest expense
associated with corporate debt facilities, income taxes,
depreciation, amortization, restructuring and other (income)
charges, acquisition and other related costs, pension and
postretirement settlement and curtailment (income) charges.
(3) For the three and twelve months ended
December 31, 2020, charges of $2.0 million and $7.4 million relate
to the Performance Material segment, respectively, and charges of
$3.2 million and $11.1 million relate the Performance Chemicals
segment. For the three and twelve months ended December 31, 2019,
all charges relate to the Performance Chemicals segment.
(4) Costs incurred to complete and
integrate the GP Pine Chemical business and Perstorp Capa business
into our Performance Chemicals segment are expensed as incurred on
our condensed consolidated statements of operations. The following
table summarizes the costs incurred associated with these combined
activities.
Three Months Ended December,
31
Twelve Months Ended December
31,
In millions
2020
2019
2020
2019
Legal and professional service fees
$
0.1
$
2.0
$
1.8
$
14.2
Loss on hedging purchase price
—
—
—
12.7
Acquisition-related costs
$
0.1
$
2.0
$
1.8
$
26.9
Inventory fair value step-up amortization
(1)
—
—
—
8.4
Acquisition and other-related
costs
$
0.1
$
2.0
$
1.8
$
35.3
_________________
(1) Included within "Cost of sales" on the
condensed consolidated statements of operations.
INGEVITY CORPORATION
Condensed Consolidated Balance
Sheets (Unaudited)
December 31,
In millions
2020
2019
Assets
Cash and cash equivalents
$
257.7
$
56.5
Accounts receivable, net
148.0
150.0
Inventories, net
189.0
212.5
Prepaid and other current assets
34.0
44.2
Current assets
628.7
463.2
Property, plant and equipment, net
703.6
664.7
Goodwill
445.3
436.4
Other intangibles, net
373.3
396.2
Restricted investment
73.6
72.6
Other assets
110.0
108.6
Total Assets
2,334.5
2,141.7
Liabilities
Accounts payable
$
104.2
$
99.1
Accrued expenses
46.6
33.3
Other current liabilities
72.6
83.1
Current liabilities
223.4
215.5
Long-term debt including finance lease
obligations
1,267.4
1,228.4
Deferred income taxes
111.8
100.3
Other liabilities
84.6
66.7
Total Liabilities
1,687.2
1,610.9
Equity
647.3
530.8
Total Liabilities and Equity
$
2,334.5
$
2,141.7
INGEVITY CORPORATION
Condensed Consolidated
Statements of Cash Flows (Unaudited)
Twelve Months Ended December
31,
In millions
2020
2019
Cash provided by (used in) operating
activities:
Net income (loss)
$
186.2
$
183.7
Adjustments to reconcile net income (loss)
to cash provided by operating activities:
Depreciation and amortization
100.2
85.0
Other non-cash items
57.3
62.2
Changes in operating assets and
liabilities, net of effect of acquisitions:
Changes in other operating assets and
liabilities, net
8.7
(55.2)
Net cash provided by (used in) operating
activities
352.4
275.7
Cash provided by (used in) investing
activities:
Capital expenditures
(82.1)
(114.8)
Finance lease expenditures
(23.8)
—
Payments for acquired businesses, net of
cash acquired
—
(537.9)
Other investing activities, net
(4.7)
(5.6)
Net cash provided by (used in) investing
activities
(110.6)
(658.3)
Cash provided by (used in) financing
activities:
Proceeds from revolving credit
facility
346.1
797.7
Proceeds from long-term borrowings
550.0
375.0
Payments on revolving credit facility
(477.3)
(666.4)
Payments on long-term borrowings
(389.1)
(122.5)
Debt issuance costs
(11.0)
(2.4)
Financing lease obligations, net
23.1
—
Borrowings (repayments) of notes payable
and other short-term borrowings, net
(4.4)
2.1
Tax payments related to withholdings on
vested equity awards
(3.2)
(14.3)
Proceeds and withholdings from share-based
compensation plans, net
3.6
4.1
Repurchases of common stock under publicly
announced plan
(88.0)
(6.4)
Other financing activities, net
—
2.3
Net cash provided by (used in) financing
activities
(50.2)
369.2
Increase (decrease) in cash, cash
equivalents, and restricted cash
191.6
(13.4)
Effect of exchange rate changes on
cash
2.2
0.2
Change in cash, cash equivalents, and
restricted cash
193.8
(13.2)
Cash, cash equivalents, and restricted
cash at beginning of period
64.6
77.8
Cash, cash equivalents, and restricted
cash at end of period (1)
$
258.4
$
64.6
(1) Includes restricted cash of $0.7
million and $8.1 million and cash and cash equivalents of $257.7
million and $56.5 million for the periods ended December 31, 2020
and 2019, 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
$
39.6
$
48.0
Cash paid for income taxes, net of
refunds
$
46.6
$
14.9
Purchases of property, plant and equipment
in accounts payable
$
2.7
$
7.6
Leased assets obtained in exchange for new
finance lease liabilities
$
23.8
$
—
Leased assets obtained in exchange for new
operating lease liabilities
$
27.2
$
5.3
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, 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 diluted earnings (loss) per common share
plus restructuring and other (income) charges, net per share,
acquisition and other-related costs per share, pension and
postretirement settlement and curtailment (income) charges per
share and the income tax expense (benefit) per share on those
items, less the per share tax provision (benefit) from certain
discrete tax items per share.
Adjusted EBITDA is defined as net
income (loss) plus provision (benefit) for income taxes, interest
expense, net, depreciation and amortization, restructuring and
other (income) charges, net, acquisition and other-related costs,
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 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 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 2021 Adjusted EBITDA
Guidance
A reconciliation of net income to adjusted EBITDA as projected
for 2021 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 in connection
with the acquisition of Perstorp Holding AB’s Capa caprolactone
business; additional pension and postretirement settlement and
curtailment (income) charges; and revisions due to future guidance
and assessment of U.S. tax reform. 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.
Reconciliation of Net Income
(Loss) (GAAP) to Adjusted Earnings (Loss) (Non-GAAP)
Three Months Ended
December 31,
Twelve Months Ended December
31,
In millions, except per share data
(unaudited)
2020
2019
2020
2019
Net income (loss) (GAAP)
$
50.8
$
44.3
$
186.2
$
183.7
Restructuring and other (income) charges,
net
5.2
(0.2)
18.5
1.8
Acquisition and other-related costs
0.1
2.0
1.8
35.3
Pension and postretirement settlement and
curtailment charges (income)
0.1
—
0.1
—
Tax effect on items above
(1.0)
(0.4)
(4.4)
(6.8)
Certain discrete tax provision (benefit)
1
(0.1)
0.8
0.4
(5.9)
Adjusted earnings (loss)
(Non-GAAP)
$
55.1
$
46.5
$
202.6
$
208.1
Diluted earnings (loss) per common
share (GAAP)
$
1.23
$
1.05
$
4.48
$
4.35
Restructuring and other (income)
charges
0.12
(0.01)
0.45
0.04
Acquisition and other-related costs
—
0.05
0.04
0.84
Pension and postretirement settlement and
curtailment charges (income)
—
—
—
—
Tax effect on items above
(0.02)
(0.01)
(0.10)
(0.16)
Certain discrete tax provision
(benefit)
—
0.02
0.01
(0.14)
Diluted adjusted earnings (loss) per
share (Non-GAAP)
$
1.33
$
1.10
$
4.88
$
4.93
Weighted average common shares outstanding
- Diluted
41.4
42.2
41.5
42.2
_______________
(1) Represents certain discrete tax items
such as excess tax benefits on stock compensation and impacts of
changes associated with U.S. Tax Reform. 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.
Reconciliation of Net Income
(Loss) (GAAP) to Adjusted EBITDA (Non-GAAP)
Three Months Ended
December 31,
Twelve Months Ended
December 31,
In millions, except percentages
(unaudited)
2020
2019
2020
2019
Net income (loss) (GAAP)
$
50.8
$
44.3
$
186.2
$
183.7
Provision (benefit) for income taxes
15.6
10.8
48.9
44.2
Interest expense, net
12.4
10.6
42.2
46.9
Depreciation and amortization
26.7
23.6
100.2
85.0
Restructuring and other (income) charges,
net
5.2
(0.2)
18.5
1.8
Acquisition and other-related costs
0.1
2.0
1.8
35.3
Pension and postretirement settlement and
curtailment charges (income), net
0.1
—
0.1
—
Adjusted EBITDA (Non-GAAP)
$
110.9
$
91.1
$
397.9
$
396.9
Net sales
$
325.6
$
303.4
$
1,216.1
$
1,292.9
Net income (loss) margin
15.6
%
14.6
%
15.3
%
14.2
%
Adjusted EBITDA margin
34.1
%
30.0
%
32.7
%
30.7
%
Calculation of Free Cash Flow
(Non-GAAP)
Three Months Ended
December 31,
Twelve Months Ended
December 31,
In millions (unaudited)
2020
2019
2020
2019
Net cash provided by (used in) operating
activities
$
153.3
$
85.5
352.4
275.7
Less: Capital expenditures
31.1
35.0
82.1
114.8
Free Cash Flow
$
122.2
$
50.5
$
270.3
$
160.9
Calculation of Total Debt to
Net Income (Loss) Ratio (GAAP) to
Net Debt to Adjusted EBITDA
Ratio (Non-GAAP)
In millions, except ratios
(unaudited)
December 31, 2020
Notes payable and current maturities of
long-term debt
26.0
Long-term debt including finance lease
obligations
1,267.4
Debt issuance costs
13.1
Total Debt
1,306.5
Less:
Cash and cash equivalents (1)
258.1
Restricted investment
73.6
Net Debt
974.8
Total Debt to Net income (loss) Ratio
(GAAP)
Net income (loss) - last twelve months
(LTM) as of December 31, 2020
$
186.2
Total debt to Net income (loss) ratio
(GAAP)
7.02x
Net Debt Ratio (Non GAAP)
Adjusted EBITDA - LTM as of December 31,
2020
397.9
Net debt ratio (Non GAAP)
2.45x
_______________
(1) Includes $0.4 million of Restricted
Cash related to the New Market Tax Credit financing transaction
which was entered into in November 2019.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210210005938/en/
Amy Chiconas 843-746-8197 amy.chiconas@ingevity.com
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