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Mar 31, 2023
Ingevity Q1 2023 Earnings Report
Reported a mixed first quarter, with sales up but net income down due to various factors.
Key Takeaways
Ingevity's first quarter 2023 results showed a slight increase in net sales, but a decrease in net income and adjusted EBITDA. The company faced challenges including a slow start in China, customer destocking, and rising raw material costs, but saw strong performance in certain segments and regions.
Net sales increased by 2.6% to $392.6 million, driven by pricing and the Ozark acquisition, but offset by lower volumes.
Net income decreased by 17% to $50.7 million, with diluted EPS down 13% to $1.35, impacted by lower operating earnings and increased expenses.
Adjusted EBITDA decreased by 13% to $103.9 million with adjusted EBITDA margin of 26.5%, due to gross margin pressure from lower volumes and increased costs.
The company adjusted its full year 2023 guidance to sales between $1.75 billion and $1.95 billion, and adjusted EBITDA between $450 million and $480 million.
Revenue by Segment
Forward Guidance
Ingevity adjusted its full year 2023 guidance due to recent market softness and the possibility of a recession. They anticipate a strong year in APT and Performance Materials as the China market recovers and automotive production increases, as well as strength in Pavement Technologies. Results in Industrial Specialties are expected to be challenged.
Positive Outlook
- Expecting a strong year in APT as the China market recovers.
- Expecting a strong year in Performance Materials as automotive production picks up.
- Expecting strength in Pavement Technologies business.
- China recovery will positively impact Performance Materials.
- Increase in vehicle production in both the U.S. and Europe will positively impact Performance Materials.
Challenges Ahead
- Results in Industrial Specialties to be challenged by elevated CTO costs.
- Results in Industrial Specialties to be challenged by the pace of the AFA transition and product adoption.
- Recent market softness may impact results.
Revenue & Expenses
Visualization of income flow from segment revenue to net income
Historical Earnings Impact
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Avg. Return Before/After Earnings
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