Ingevity Explores Strategic Alternatives for Industrial Specialties; Preliminary 2024 Results Impress

Ingevity Corporation (NYSE: NGVT) has announced plans to explore strategic alternatives for its Performance Chemicals Industrial Specialties product line and North Charleston CTO refinery. The company is considering divesting portions of its North Charleston site, including pine chemical-based chemistries serving various industrial markets. This strategic review excludes the higher-growth Road Technologies product line and certain lignin-based products. Ingevity also released preliminary 2024 financial results, showcasing a strong performance.

The strategic review process includes all Industrial Specialties pine chemical-based chemistries that serve the paper chemical, rubber, adhesive, oilfield, lubricants, and industrial intermediate end-use markets. Additionally, the North Charleston, South Carolina, crude tall oil refinery is part of this strategic review. Ingevity's management team and board are committed to taking aggressive action to deliver more shareholder value, as stated by interim president and CEO Luis Fernandez-Moreno.

Ingevity's preliminary 2024 financial results are impressive, with net sales expected to reach approximately $1.40 billion, Adjusted EBITDA of approximately $360 million, and free cash flow exceeding $40 million. The company's expectations for Adjusted EBITDA in 2025 do not include any potential impact from the exploration of strategic alternatives announced today. Ingevity's full year 2024 Net sales are expected to be approximately $1.40 billion, with Adjusted EBITDA of approximately $360 million.

The sequential EBITDA margin improvement in the Performance Chemicals segment during H2 2024 can be attributed to several factors, including portfolio repositioning, operational optimization, pricing strategies, and reduced raw material cost volatility. Ingevity's strategic initiative to divest the lower-margin Industrial Specialties product line and focus on higher-growth and higher-margin opportunities, such as the Road Technologies segment, contributed to the margin improvement. The company's actions to optimize its manufacturing network, including the closure of the Crossett, Arkansas, facility and the consolidation of oleo-based chemical refining with existing crude tall oil refining at the North Charleston, South Carolina, facility, led to significant cost savings. The successful implementation of pricing strategies and the company's commitment to working with customers to minimize disruption and maintain a broader portfolio of products also contributed to the EBITDA margin improvement.

In summary, Ingevity's plans to explore strategic alternatives for its Industrial Specialties product line and North Charleston CTO refinery, along with its impressive preliminary 2024 financial results, demonstrate the company's commitment to maximizing shareholder value and improving its earnings and cash flow profile. The strategic review process and the company's focus on higher-growth and higher-margin opportunities position Ingevity for long-term success.