Sign in

You're signed outSign in or to get full access.

IC

Ingevity Corp (NGVT)·Q2 2025 Earnings Summary

Executive Summary

  • Adjusted EPS $1.39 beat consensus $1.16; Adjusted EBITDA $110.0M beat $105.3M, while revenue $365.1M missed $378.7M consensus; GAAP loss ($146.5M; -$4.02) driven by a non-cash $183.8M goodwill impairment in APT . Values marked with * are from S&P Global.*
  • Raised FY25 adjusted EBITDA guidance low-end to $390–$415M (from $380–$415M) and maintained sales at $1.25–$1.40B; on the call, raised FY25 free cash flow guidance to $230–$260M, citing margin strength and improved North America auto outlook .
  • Performance Materials delivered a 50.1% segment EBITDA margin; Performance Chemicals EBITDA improved to $32.0M on mix and raw material cost tailwinds; APT EBITDA fell to $0.9M amid tariffs and a planned U.K. outage .
  • Management emphasized an “inflection point,” execution excellence, deleveraging to 3.0x net debt/EBITDA, and advanced-stage divestiture of Industrial Specialties/CTO refinery as a near-term catalyst .

What Went Well and What Went Wrong

What Went Well

  • Adjusted profitability outperformed: Adjusted EBITDA grew 9% to $110.0M and margin expanded 420 bps to 30.1% on PC repositioning (better mix, lower CTO costs) .
  • Performance Materials resilience: 50.1% segment EBITDA margin despite regional volume pressure; sustained pricing reflects “highly engineered activated carbon” value proposition .
  • Deleveraging and cash generation: OCF $79.0M; FCF $66.8M; net leverage improved to 3.0x; management raised FY25 FCF guide to $230–$260M .
  • Quote: “Our strong profitability, robust free cash flow and improved leverage…strength and resilience of our business model.” — CEO David Li .

What Went Wrong

  • Top-line softness: Net sales fell 7% YoY to $365.1M; PM (-2%), PC (-10%), APT (-10%) with weather (Road Technologies) and tariff-related demand impacts (APT; Europe) .
  • GAAP optics: Reported net loss ($146.5M) and -40.1% net income margin driven by $183.8M non-cash goodwill impairment at APT; highlights ongoing industrial and tariff uncertainties .
  • APT execution headwinds: Planned extended boiler outage (~$5.5M impact), price concessions, and weakened footwear/apparel/auto demand; EBITDA fell to ~$1M and FY25 margin guide cut to 15–20% .

Financial Results

Sequential Trend vs Estimates

MetricQ4 2024Q1 2025Q2 2025 ActualQ2 2025 Consensus*
Revenue ($USD Millions)$298.8 $284.0 $365.1 $378.7*
Diluted Adjusted EPS ($USD)$0.95 $0.99 $1.39 $1.16*
Adjusted EBITDA ($USD Millions)$80.6 $91.3 $110.0 $105.3*
Adjusted EBITDA Margin (%)27.0% 32.1% 30.1% —
Net Income (Loss) ($USD Millions)$16.6 $20.5 ($146.5) —
Net Income Margin (%)5.6% 7.2% (40.1%) —

Note: Q2 revenue missed; adjusted EPS and EBITDA beat. Values marked with * are from S&P Global.

Year-over-Year (Q2 2025 vs Q2 2024)

MetricQ2 2024Q2 2025 ActualQ2 2025 Consensus*
Revenue ($USD Millions)$390.6 $365.1 $378.7*
Diluted Adjusted EPS ($USD)$1.01 $1.39 $1.16*
Adjusted EBITDA ($USD Millions)$101.3 $110.0 $105.3*
Adjusted EBITDA Margin (%)25.9% 30.1% —

Segment Breakdown (Q2 2025 vs Q2 2024)

SegmentQ2 2024 Net Sales ($M)Q2 2025 Net Sales ($M)Q2 2024 EBITDA ($M)Q2 2025 EBITDA ($M)
Performance Materials157.2 153.9 82.2 77.1
Performance Chemicals185.5 167.9 9.3 32.0
Road Technologies (sub of PC)129.1 119.5 ——
Industrial Specialties (sub of PC)56.4 48.4 ——
Advanced Polymer Technologies47.9 43.3 9.8 0.9

KPIs

KPIQ4 2024Q1 2025Q2 2025
Operating Cash Flow ($M)$64.5 $25.4 $79.0
Free Cash Flow ($M)$39.6 $15.4 $66.8
Capital Expenditure ($M)$24.9 $10.0 $12.2
Net Leverage (Net debt/EBITDA)3.5x 3.3x 3.0x
Cash & Equivalents ($M)$68.0 $71.5 $76.9

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Sales ($B)FY 2025$1.25–$1.40 $1.25–$1.40 Maintained
Adjusted EBITDA ($M)FY 2025$380–$415 $390–$415 Raised low-end
Free Cash Flow ($M)FY 2025$220–$260 $230–$260 Raised midpoint
Performance Materials EBITDA Margin (%)FY 2025—“above 50%” Affirmed high margin
Performance Chemicals EBITDA Margin (%)FY 2025—“high single digits to low double digits; H2 similar to H1” Raised segment margin outlook
Advanced Polymer Technologies RevenueFY 2025—Down mid-to-high single digits Lower
Advanced Polymer Technologies EBITDA Margin (%)FY 2025—15–20% Lower
CapEx ($M)FY 2025—$50–$70 Maintained/lowered structurally

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024 & Q1 2025)Current Period (Q2 2025)Trend
Tariffs/macroWidened FY25 guidance range given trade tensions; PC repositioning ongoing Tariff uncertainty pressured APT demand (Europe); PM softer in Europe/Asia, NA stronger Worsening for APT; mixed across regions
CTO/raw materialsTerminated excess CTO contract; high-cost CTO weighed on 2024; working through inventory High-cost CTO fully consumed; now at market rates $550–$600/ton; improved mix/cost Improving
Performance MaterialsRecord 2024; pricing/mix strength; >50% margins 50.1% margin; pricing intact; innovation investments Stable high margin
Performance ChemicalsRepositioning exits lower-margin markets; margins improved in H2’24/Q1’25 EBITDA up >3x YoY; margin near 20%; weather delayed paving then improved Improving
Advanced Polymer TechnologiesPricing concessions; weak industrial demand Demand weakened on indirect tariffs; planned outage; margin guide 15–20% Worsening near term
Portfolio optimizationExploring strategic alternatives for IS/CTO Sale process at advanced stage; update expected soon Accelerating
Technology/EV initiativesN/ANexeon partnership to use activated carbon in EV battery applications; “process purification” focus Building

Management Commentary

  • “Our strong profitability, robust free cash flow and improved leverage this quarter demonstrate our successful execution…driving sustainable growth and…best-in-class EBITDA margins.” — David Li, CEO .
  • “Adjusted gross margin improved 600 bps…adjusted EBITDA margin improved over 400 bps to 30.1%…we recorded a noncash goodwill impairment charge of $184M for APT” — Mary Hall, CFO .
  • “We completely consumed the high cost CTO inventory…now recording CTO purchases at market rates…around $550 to $600 per ton” — Mary Hall, CFO .
  • “We have reached an inflection point and are ready to start winning again…sale process…advanced stage…investor update later this year or early next” — David Li, CEO .

Q&A Highlights

  • Performance Chemicals margin cadence: H2 margins expected similar to H1; absence of high-cost CTO and typical Q3 paving strength support stability .
  • Free cash flow drivers: Improved earnings and inventory management; CapEx seasonal cadence; more “predictable cash flows” post-repositioning .
  • Strategic review/portfolio: Advanced-stage IS/CTO sale process; broader portfolio review underway with investor update planned .
  • Performance Materials pricing: Annual price increases sustained despite volume softness; reflects value of engineered activated carbon solution .
  • APT outlook: Indirect tariff impacts, competitive pricing concessions; new boilers to lower energy costs; FY guide down mid-to-high single-digit revenue with 15–20% EBITDA margin .

Estimates Context

  • Q2 2025 vs consensus: Revenue $365.1M vs $378.7M* (miss); Adjusted EPS $1.39 vs $1.16* (beat); Adjusted EBITDA $110.0M vs $105.3M* (beat). Drivers: PC mix/cost improvements and PM margin resilience offset wet weather (Road Technologies) and tariff-driven APT demand weakness . Values marked with * are from S&P Global.
  • Q1 2025 actuals vs consensus: Revenue $284.0M vs $285.5M*; Adjusted EBITDA $91.3M vs $80.3M*; Adjusted EPS $0.99 vs $0.74* — prior momentum reinforced Q2 margin delivery . Values from S&P Global.*
  • FY 2025 consensus: Sales $1.256B*, Adjusted EBITDA $392.7M*, Primary EPS $4.54*; company guide now $1.25–$1.40B and $390–$415M, suggesting potential upward EPS revisions if margin trajectory persists . Values from S&P Global.*

Values marked with * are retrieved from S&P Global.

Key Takeaways for Investors

  • Mixed print with quality: Despite a revenue miss, the quarter delivered margin and EPS/EBITDA beats; GAAP optics reflect a non-cash APT impairment rather than cash or core margin deterioration .
  • Guidance up on margins/auto: Low-end EBITDA guide raised to $390–$415M; FCF guide lifted to $230–$260M; PM margins expected >50%, PC margins upgraded to high-single/low-double digits .
  • PC repositioning working: Exit of lower-margin end markets and lower CTO costs are flowing through; near-term Road Technologies volume hinges on weather completion, but June/July momentum was strong .
  • APT remains the swing factor: Tariff-driven demand uncertainty and recent outage depress near-term results; watch for stabilization of European demand and benefits from boiler upgrade .
  • Deleveraging and cash discipline: Net leverage at 3.0x with visibility to <2.8x by year-end; improved OCF/FCF provide optionality for buybacks once within target leverage .
  • Portfolio catalyst: IS/CTO sale process at advanced stage; a divestiture would reduce volatility and improve corporate margin/FCF profile; subsequent Q3 agreement with Mainstream Pine underscores trajectory .
  • Near-term trading: Expect the narrative to favor margin durability and guidance raises over revenue volatility; stock could react to portfolio updates and confirmation of PM >50% margin and PC margin stability .
S&P Global disclaimer: Consensus estimate values (marked with *) are retrieved from S&P Global.