x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
|
47-4027764
|
(State of other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
5255 Virginia Avenue
|
||
North Charleston, South Carolina 29406
|
||
(Address of principal executive offices) (Zip code)
|
Large Accelerated Filer
x
|
|
Accelerated Filer
o
|
|
|
|
Non-Accelerated Filer
o
|
|
Smaller reporting company
o
|
|
|
|
|
|
Emerging growth company
o
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Common Stock ($0.01 par value)
|
NGVT
|
New York Stock Exchange
|
|
Page No.
|
|||
|
||||
|
||||
|
||||
|
||||
|
||||
|
Three Months Ended March 31,
|
||||||
In millions, except per share data
|
2019
|
|
2018
|
||||
Net sales
|
$
|
276.8
|
|
|
$
|
235.2
|
|
Cost of sales
|
179.7
|
|
|
150.1
|
|
||
Gross profit
|
97.1
|
|
|
85.1
|
|
||
Selling, general and administrative expenses
|
39.1
|
|
|
26.5
|
|
||
Research and technical expenses
|
5.1
|
|
|
5.0
|
|
||
Restructuring and other (income) charges, net
|
—
|
|
|
(0.6
|
)
|
||
Acquisition-related costs
|
22.8
|
|
|
3.8
|
|
||
Other (income) expense, net
|
(3.7
|
)
|
|
(1.2
|
)
|
||
Interest expense, net
|
11.1
|
|
|
6.1
|
|
||
Income (loss) before income taxes
|
22.7
|
|
|
45.5
|
|
||
Provision (benefit) for income taxes
|
—
|
|
|
9.7
|
|
||
Net income (loss)
|
22.7
|
|
|
35.8
|
|
||
Less: Net income (loss) attributable to noncontrolling interests
|
—
|
|
|
5.0
|
|
||
Net income (loss) attributable to Ingevity stockholders
|
$
|
22.7
|
|
|
$
|
30.8
|
|
|
|
|
|
||||
Per share data
|
|
|
|
||||
Basic earnings (loss) per share attributable to Ingevity stockholders
|
$
|
0.54
|
|
|
$
|
0.73
|
|
Diluted earnings (loss) per share attributable to Ingevity stockholders
|
$
|
0.54
|
|
|
$
|
0.72
|
|
|
Three Months Ended March 31,
|
||||||
In millions
|
2019
|
|
2018
|
||||
Net income (loss)
|
$
|
22.7
|
|
|
$
|
35.8
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
||||
Foreign currency translation adjustment
|
9.4
|
|
|
3.9
|
|
||
Derivative instruments:
|
|
|
|
||||
Unrealized gain (loss), net of tax provision (benefit) of zero and zero
|
0.1
|
|
|
0.1
|
|
||
Reclassifications of deferred derivative instruments (gain) loss, included in net income (loss), net of tax (provision) benefit of ($0.1) and zero
|
(0.4
|
)
|
|
—
|
|
||
Total derivative instruments, net of tax provision (benefit) of $0.1 and zero
|
(0.3
|
)
|
|
0.1
|
|
||
|
|
|
|
||||
Other comprehensive income (loss), net of tax provision (benefit) of $0.1 and zero
|
9.1
|
|
|
4.0
|
|
||
Comprehensive income (loss)
|
31.8
|
|
|
39.8
|
|
||
Less: Comprehensive income (loss) attributable to noncontrolling interests
|
—
|
|
|
5.0
|
|
||
Comprehensive income (loss) attributable to Ingevity stockholders
|
$
|
31.8
|
|
|
$
|
34.8
|
|
In millions, except share and par value data
|
March 31, 2019
|
|
December 31, 2018
|
||||
Assets
|
(Unaudited)
|
|
|
||||
Cash and cash equivalents
|
$
|
38.4
|
|
|
$
|
77.5
|
|
Accounts receivable
, net of allowance of $0.4 million at March 31, 2019 and
December 31, 2018, respectively
|
151.0
|
|
|
118.9
|
|
||
Inventories, net
|
229.3
|
|
|
191.4
|
|
||
Prepaid and other current assets
|
36.3
|
|
|
34.9
|
|
||
Current assets
|
455.0
|
|
|
422.7
|
|
||
Property, plant and equipment, net
|
628.5
|
|
|
523.8
|
|
||
Operating lease assets, net
|
59.7
|
|
|
—
|
|
||
Goodwill
|
431.6
|
|
|
130.7
|
|
||
Other intangibles, net
|
414.9
|
|
|
125.6
|
|
||
Deferred income taxes
|
3.4
|
|
|
2.9
|
|
||
Restricted investment
|
71.7
|
|
|
71.2
|
|
||
Other assets
|
42.4
|
|
|
38.3
|
|
||
Total Assets
|
$
|
2,107.2
|
|
|
$
|
1,315.2
|
|
Liabilities
|
|
|
|
||||
Accounts payable
|
$
|
119.8
|
|
|
$
|
92.9
|
|
Accrued expenses
|
26.1
|
|
|
36.7
|
|
||
Accrued payroll and employee benefits
|
16.0
|
|
|
42.0
|
|
||
Current operating lease liabilities
|
17.9
|
|
|
—
|
|
||
Notes payable and current maturities of long-term debt
|
18.0
|
|
|
11.2
|
|
||
Income taxes payable
|
0.5
|
|
|
0.5
|
|
||
Current liabilities
|
198.3
|
|
|
183.3
|
|
||
Long-term debt including finance lease obligations
|
1,403.2
|
|
|
741.2
|
|
||
Noncurrent operating lease liabilities
|
42.0
|
|
|
—
|
|
||
Deferred income taxes
|
85.6
|
|
|
36.9
|
|
||
Other liabilities
|
19.4
|
|
|
15.1
|
|
||
Total Liabilities
|
1,748.5
|
|
|
976.5
|
|
||
Commitments and contingencies
(Note 15)
|
|
|
|
|
|
||
Equity
|
|
|
|
||||
Preferred stock
(par value $0.01 per share; 50,000,000 shares authorized; zero issued and outstanding at March 31, 2019 and December 31, 2018)
|
—
|
|
|
—
|
|
||
Common stock
(par value $0.01 per share; 300,000,000 shares authorized; 42,659,316 and 42,331,913 issued; 41,823,723 and 41,693,261 outstanding at March 31, 2019 and December 31, 2018)
|
0.4
|
|
|
0.4
|
|
||
Additional paid-in capital
|
103.8
|
|
|
98.3
|
|
||
Retained earnings
|
336.2
|
|
|
313.5
|
|
||
Accumulated other comprehensive income (loss)
|
(8.6
|
)
|
|
(17.7
|
)
|
||
Treasury stock, common stock, at cost
(835,593 shares at March 31, 2019; 638,652 shares at December 31, 2018)
|
(73.1
|
)
|
|
(55.8
|
)
|
||
Total Equity
|
358.7
|
|
|
338.7
|
|
||
Total Liabilities and Equity
|
$
|
2,107.2
|
|
|
$
|
1,315.2
|
|
In millions
|
Balance at December 31, 2018
|
|
Adjustments
|
|
Balance at January 1, 2019
|
||||||
Assets
|
|
|
|
|
|
||||||
Prepaid and other current assets
|
$
|
34.9
|
|
|
$
|
(0.2
|
)
|
(1)
|
$
|
34.7
|
|
Operating lease assets, net
|
—
|
|
|
64.6
|
|
(2)
|
64.6
|
|
|||
Liabilities
|
|
|
|
|
|
||||||
Current operating lease liabilities
|
—
|
|
|
18.4
|
|
(3)
|
18.4
|
|
|||
Noncurrent operating lease liabilities
|
—
|
|
|
46.0
|
|
(4)
|
46.0
|
|
|||
_______________
|
|||||||||||
(1) Represents prepaid rent reclassified to operating lease assets.
|
|||||||||||
(2) Represents capitalization of operating lease assets and straight-line rent accrual.
|
|||||||||||
(3) Represents recognition of the current portion of operating lease liabilities.
|
|||||||||||
(4) Represents recognition of the noncurrent operating lease liabilities.
|
Preliminary Purchase Price Allocation
|
||||
In millions
|
Weighted Average Amortization Period
|
Fair Value
|
||
Cash and cash equivalents
|
|
$
|
0.7
|
|
Accounts receivable, net
|
|
15.7
|
|
|
Inventories
(1)
|
|
21.7
|
|
|
Prepaid and other current assets
|
|
1.3
|
|
|
Property, plant and equipment
|
|
88.8
|
|
|
Intangible assets
(2)
|
|
|
||
Customer relationships
|
17 years
|
159.0
|
|
|
Developed technology
|
12 years
|
64.8
|
|
|
Brands
|
Indefinite
|
67.0
|
|
|
Non-compete agreement
|
3 years
|
0.5
|
|
|
Goodwill
(3)
|
|
295.4
|
|
|
Other assets
|
|
1.3
|
|
|
Total fair value of assets acquired
|
|
$
|
716.2
|
|
Accounts payable
|
|
13.6
|
|
|
Accrued expenses
|
|
2.2
|
|
|
Long-term debt
|
|
113.1
|
|
|
Deferred income taxes
|
|
47.9
|
|
|
Total fair value of liabilities assumed
|
|
$
|
176.8
|
|
Cash and restricted cash acquired
(4)
|
1.5
|
|
||
Total cash paid, less cash and restricted cash acquired
|
$
|
537.9
|
|
|
_______________
|
||||
(1) Fair value of finished good inventories acquired included a step-up in the value of approximately $8.4 million, all of which was expensed in the three months ended March 31, 2019. The expense is included in "Cost of sales" on the condensed consolidated statement of operations. Inventories are accounted for on a first-in, first-out basis of accounting.
|
||||
(2) The aggregate amortization expense was $1.9 million for the three months ended March 31, 2019. Estimated amortization expense is as follows: 2019 - $13.1 million, 2020 - $14.9 million, 2021 - $14.9 million, 2022 - $14.8 million and 2023 - $14.8 million.
|
||||
(3) Goodwill consists of estimated future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. See Note 9 for further information regarding our allocation of goodwill among our reportable segments. None of the acquired goodwill will be deductible for income tax purposes.
|
||||
(4) Cash and cash equivalents and restricted cash were $0.7 million and $0.8 million, respectively, at closing. Restricted cash is included in "Prepaid and other current assets" on the consolidated balance sheet.
|
Purchase Price Allocation
|
||||
In millions
|
Weighted Average Amortization Period
|
Fair Value
|
||
Accounts receivable
|
|
$
|
16.2
|
|
Inventories
(1)
|
|
9.4
|
|
|
Property, plant and equipment
|
|
39.3
|
|
|
Intangible assets
(2)
|
|
|
||
Patents
|
12 years
|
1.9
|
|
|
Non-compete agreement
|
3 years
|
2.2
|
|
|
Customer relationships
|
11 years
|
129.0
|
|
|
Goodwill
(3)
|
|
118.7
|
|
|
Other assets
|
|
0.1
|
|
|
Total fair value of assets acquired
|
|
316.8
|
|
|
Accounts payable
|
|
0.8
|
|
|
Accrued expenses
|
|
0.5
|
|
|
Total fair value of liabilities assumed
|
|
$
|
1.3
|
|
Total cash paid
|
$
|
315.5
|
|
|
_______________
|
||||
(1) Fair value of finished goods inventories acquired included a step-up in the value of approximately $1.4 million, of which $0.8 million was expensed in the three months ended March 31, 2018. The expense is included in "Cost of sales" on the consolidated statement of operations.
|
||||
(2) The aggregate amortization expense for the three months ended March 31, 2019 and 2018 was $3.2 million and $0.7 million, respectively. Estimated amortization expense is as follows: 2019 - $12.7 million, 2020 - $12.7 million, 2021 - $12.0 million, 2022 - $11.8 million, and 2023 - $11.8 million.
|
||||
(3) Goodwill largely consists of expected cost synergies and economies of scale resulting from the business combination. We expect the full amount to be deductible for income tax purposes.
|
|
Three Months Ended March 31,
|
||||||
In millions
|
2019
|
|
2018
|
||||
Net sales
|
$
|
294.5
|
|
|
$
|
301.9
|
|
Income (loss) before income taxes
|
53.5
|
|
|
59.2
|
|
||
Diluted earnings (loss) per share attributable to Ingevity stockholders
|
$
|
1.14
|
|
|
$
|
0.98
|
|
In millions
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Automotive Technologies product line
|
$
|
99.7
|
|
|
$
|
85.9
|
|
Process Purification product line
|
9.4
|
|
|
9.6
|
|
||
Performance Materials segment
|
$
|
109.1
|
|
|
$
|
95.5
|
|
Oilfield Technologies product line
|
29.2
|
|
|
22.4
|
|
||
Pavement Technologies product line
|
18.5
|
|
|
18.5
|
|
||
Industrial Specialties product line
|
95.8
|
|
|
98.8
|
|
||
Engineered Polymers product line
(1)
|
24.2
|
|
|
—
|
|
||
Performance Chemicals segment
|
$
|
167.7
|
|
|
$
|
139.7
|
|
|
|
|
|
||||
Net sales
|
$
|
276.8
|
|
|
$
|
235.2
|
|
_______________
|
|||||||
(1) Engineered Polymers product line was acquired on February 13, 2019; see Note 4 for more information.
|
In millions
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
North America
|
$
|
171.7
|
|
|
$
|
154.7
|
|
Asia Pacific
|
49.1
|
|
|
34.0
|
|
||
Europe, Middle East and Africa
|
51.2
|
|
|
40.4
|
|
||
South America
|
4.8
|
|
|
6.1
|
|
||
Net sales
|
$
|
276.8
|
|
|
$
|
235.2
|
|
In millions
|
Contract Asset
(1)
|
||||||
|
March 31, 2019
|
|
March 31, 2018
|
||||
Beginning balance
|
$
|
5.1
|
|
|
$
|
4.4
|
|
Contract asset additions
|
4.7
|
|
|
2.2
|
|
||
Reclassification to accounts receivable, billed to customers
|
(4.5
|
)
|
|
(2.3
|
)
|
||
Ending balance
|
$
|
5.3
|
|
|
$
|
4.3
|
|
_______________
|
|
|
|||||
(1) Included within "Prepaid and other current assets" on the condensed consolidated balance sheet.
|
|
|
In millions
|
Level 1
(1)
|
|
Level 2
(2)
|
|
Level 3
(3)
|
|
Total
|
||||||||
March 31, 2019
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Equity securities
(4)
|
$
|
0.4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.4
|
|
Commodity hedging
(4)
|
—
|
|
|
0.1
|
|
|
—
|
|
|
0.1
|
|
||||
Deferred compensation plan investments
(5)
|
1.9
|
|
|
—
|
|
|
—
|
|
|
1.9
|
|
||||
Total assets
|
$
|
2.3
|
|
|
$
|
0.1
|
|
|
$
|
—
|
|
|
$
|
2.4
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Deferred compensation arrangement
(5)
|
$
|
5.4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5.4
|
|
Separation-related reimbursement awards
(6)
|
0.1
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
||||
Total liabilities
|
$
|
5.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5.5
|
|
December 31, 2018
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Equity securities
(4)
|
$
|
0.4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.4
|
|
Foreign currency hedging
(4)
|
—
|
|
|
0.2
|
|
|
—
|
|
|
0.2
|
|
||||
Commodity hedging
(4)
|
—
|
|
|
0.1
|
|
|
—
|
|
|
0.1
|
|
||||
Deferred compensation plan investments
(5)
|
1.3
|
|
|
—
|
|
|
—
|
|
|
1.3
|
|
||||
Total assets
|
$
|
1.7
|
|
|
$
|
0.3
|
|
|
$
|
—
|
|
|
$
|
2.0
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Deferred compensation arrangement
(5)
|
$
|
4.6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4.6
|
|
Separation-related reimbursement awards
(6)
|
0.1
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
||||
Foreign currency hedging
(7)
|
—
|
|
|
3.9
|
|
|
—
|
|
|
3.9
|
|
||||
Commodity hedging
(6)
|
—
|
|
|
0.1
|
|
|
—
|
|
|
0.1
|
|
||||
Total liabilities
|
$
|
4.7
|
|
|
$
|
4.0
|
|
|
$
|
—
|
|
|
$
|
8.7
|
|
(1)
|
Quoted prices in active markets for identical assets.
|
(2)
|
Quoted prices for similar assets and liabilities in active markets.
|
(3)
|
Significant unobservable inputs.
|
(4)
|
Included within "Prepaid and other current assets" on the condensed consolidated balance sheet.
|
(5)
|
Consists of a deferred compensation arrangement, through which we hold various investment securities, recognized on our balance sheets. Both the asset and liability are recorded at fair value, and are included within "Other assets" and "Other liabilities" on the condensed consolidated balance sheets, respectively.
|
(6)
|
Included within "Accrued expenses" on the condensed consolidated balance sheet.
|
(7)
|
At December 31, 2018, this amount represented a non-designated foreign currency derivative associated with the purchase price of our acquisition of the Caprolactone Business, which was settled at the closing of the acquisition for a loss of
$16.6 million
. The expense recognized during the three months ended
March 31, 2019
was
$12.7 million
. See Note 4 for more information.
|
In millions
|
March 31, 2019
|
|
December 31, 2018
|
||||
Raw materials
|
$
|
41.3
|
|
|
$
|
36.5
|
|
Production materials, stores and supplies
|
20.1
|
|
|
17.5
|
|
||
Finished and in-process goods
|
177.4
|
|
|
144.7
|
|
||
Subtotal
|
238.8
|
|
|
198.7
|
|
||
Less: excess of cost over LIFO cost
|
(9.5
|
)
|
|
(7.3
|
)
|
||
Inventories, net
|
$
|
229.3
|
|
|
$
|
191.4
|
|
In millions
|
March 31, 2019
|
|
December 31, 2018
|
||||
Machinery and equipment
|
$
|
929.9
|
|
|
$
|
857.2
|
|
Buildings and leasehold improvements
|
118.6
|
|
|
113.1
|
|
||
Land and land improvements
|
19.6
|
|
|
19.6
|
|
||
Construction in progress
|
107.8
|
|
|
71.2
|
|
||
Total cost
|
1,175.9
|
|
|
1,061.1
|
|
||
Less: accumulated depreciation
|
(547.4
|
)
|
|
(537.3
|
)
|
||
Property, plant and equipment, net
(1)
|
$
|
628.5
|
|
|
$
|
523.8
|
|
(1)
|
This includes finance leases related to machinery and equipment at our Wickliffe, Kentucky facility of
$69.2 million
and
$69.2 million
, and net book value of
$6.6 million
and
$6.7 million
at
March 31, 2019
, and
December 31, 2018
, respectively. This also includes finance leases related to our Waynesboro, Georgia manufacturing facility for (a) machinery and equipment of
$9.3 million
and
$6.5 million
and net book value of
$8.5 million
and
$6.0 million
, (b) construction in progress of
$14.1 million
and
$13.7 million
and (c) buildings and leasehold improvements of
$0.1 million
and
$0.1 million
at
March 31, 2019
, and
December 31, 2018
, respectively. Amortization expense associated with these capital leases is included within depreciation expense. The payments remaining under these capital leases obligations are included within Note 16.
|
|
Operating Segments
|
|
|
||||||||
In millions
|
Performance Chemicals
|
|
Performance Materials
|
|
Total
|
||||||
December 31, 2018
|
$
|
126.4
|
|
|
$
|
4.3
|
|
|
$
|
130.7
|
|
Acquisitions
(1)
|
295.4
|
|
|
—
|
|
|
295.4
|
|
|||
Foreign currency translation
|
5.5
|
|
|
—
|
|
|
5.5
|
|
|||
March 31, 2019
|
$
|
427.3
|
|
|
$
|
4.3
|
|
|
$
|
431.6
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
In millions
|
Gross
|
|
Accumulated amortization
|
|
Net
|
|
Gross
|
|
Accumulated amortization
|
|
Net
|
||||||||||||
Intangible assets subject to amortization (finite-lived)
(1)
|
|||||||||||||||||||||||
Brands
(2)
|
$
|
11.4
|
|
|
$
|
9.8
|
|
|
$
|
1.6
|
|
|
$
|
11.4
|
|
|
$
|
9.8
|
|
|
$
|
1.6
|
|
Customer contracts and relationships
|
312.3
|
|
|
35.1
|
|
|
277.2
|
|
|
151.0
|
|
|
30.3
|
|
|
120.7
|
|
||||||
Developed technology
|
65.5
|
|
|
0.7
|
|
|
64.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Other
|
4.6
|
|
|
1.1
|
|
|
3.5
|
|
|
4.1
|
|
|
0.8
|
|
|
3.3
|
|
||||||
Total
|
$
|
393.8
|
|
|
$
|
46.7
|
|
|
$
|
347.1
|
|
|
$
|
166.5
|
|
|
$
|
40.9
|
|
|
$
|
125.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Intangible assets not subject to amortization (indefinite life)
(1)
|
|||||||||||||||||||||||
Brands
(2)
|
$
|
67.8
|
|
|
$
|
—
|
|
|
$
|
67.8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total
|
$
|
67.8
|
|
|
$
|
—
|
|
|
$
|
67.8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total Other intangibles, net
|
$
|
461.6
|
|
|
$
|
46.7
|
|
|
$
|
414.9
|
|
|
$
|
166.5
|
|
|
$
|
40.9
|
|
|
$
|
125.6
|
|
|
Three Months Ended March 31,
|
||||||
In millions
|
2019
|
|
2018
|
||||
Cost of sales
|
$
|
0.2
|
|
|
$
|
0.3
|
|
Selling, general and administrative expenses
|
5.3
|
|
|
1.0
|
|
||
Total amortization expense
(1)
|
$
|
5.5
|
|
|
$
|
1.3
|
|
|
March 31, 2019
|
|
|
|
|
||||||
In millions, except percentages
|
Interest rate
|
|
Maturity date
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
Revolving Credit Facility
(1)
|
3.75%
|
|
2023
|
|
$
|
293.1
|
|
|
$
|
—
|
|
Term Loan Facilities
|
3.49%
|
|
2022-2023
|
|
750.0
|
|
|
375.0
|
|
||
Senior Notes
|
4.50%
|
|
2026
|
|
300.0
|
|
|
300.0
|
|
||
Finance lease obligations
|
7.67%
|
|
2027
|
|
80.0
|
|
|
80.0
|
|
||
Other
|
4.95%
|
|
2019-2021
|
|
6.2
|
|
|
3.9
|
|
||
Total debt including finance lease obligations
|
|
|
|
|
1,429.3
|
|
|
758.9
|
|
||
Less: debt issuance costs
|
|
|
|
|
8.1
|
|
|
6.5
|
|
||
Total debt including finance lease obligations, net of debt issuance costs
|
|
|
|
|
1,421.2
|
|
|
752.4
|
|
||
Less: debt maturing within one year
(2)
|
|
|
|
|
18.0
|
|
|
11.2
|
|
||
Long-term debt including finance lease obligations
|
|
|
|
|
$
|
1,403.2
|
|
|
$
|
741.2
|
|
(1)
|
Letters of credit outstanding under the revolving credit facility were
$1.9 million
and available funds under the facility were
$455.0 million
at
March 31, 2019
.
|
(2)
|
Debt maturing within one year is included in "Notes payable and current maturities of long-term debt" on the condensed consolidated balance sheets.
|
|
Ingevity Stockholders'
|
|
|
|
|
|||||||||||||||||||||||||
|
Common Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
In millions, except per share data in thousands
|
Shares
|
|
Amount
|
|
Additional paid in capital
|
|
Retained earnings
|
|
Accumulated
other comprehensive income (loss) |
|
Treasury stock
|
|
Noncontrolling interest
|
|
Total Equity
|
|||||||||||||||
Balance at December 31, 2018
|
42,332
|
|
|
$
|
0.4
|
|
|
$
|
98.3
|
|
|
$
|
313.5
|
|
|
$
|
(17.7
|
)
|
|
$
|
(55.8
|
)
|
|
$
|
—
|
|
|
$
|
338.7
|
|
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
22.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
22.7
|
|
|||||||
Other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9.1
|
|
|
—
|
|
|
—
|
|
|
9.1
|
|
|||||||
Common stock issued
|
276
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Exercise of stock options, net
|
51
|
|
|
—
|
|
|
1.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.4
|
|
|||||||
Tax payments related to vested restricted stock units
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(14.3
|
)
|
|
—
|
|
|
(14.3
|
)
|
|||||||
Share repurchase program
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3.3
|
)
|
|
—
|
|
|
(3.3
|
)
|
|||||||
Share-based compensation plans
|
—
|
|
|
—
|
|
|
4.1
|
|
|
—
|
|
|
—
|
|
|
0.3
|
|
|
—
|
|
|
4.4
|
|
|||||||
Balance at March 31, 2019
|
42,659
|
|
|
$
|
0.4
|
|
|
$
|
103.8
|
|
|
$
|
336.2
|
|
|
$
|
(8.6
|
)
|
|
$
|
(73.1
|
)
|
|
$
|
—
|
|
|
$
|
358.7
|
|
|
Ingevity Stockholders'
|
|
|
|
|
|||||||||||||||||||||||||
|
Common Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
In millions, except per share data in thousands
|
Shares
|
|
Amount
|
|
Additional paid in capital
|
|
Retained earnings
|
|
Accumulated other comprehensive income (loss)
|
|
Treasury stock
|
|
Noncontrolling interest
|
|
Total Equity
|
|||||||||||||||
Balance at December 31, 2017
|
42,209
|
|
|
$
|
0.4
|
|
|
$
|
140.1
|
|
|
$
|
142.8
|
|
|
$
|
(11.7
|
)
|
|
$
|
(7.7
|
)
|
|
$
|
14.0
|
|
|
$
|
277.9
|
|
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
30.8
|
|
|
—
|
|
|
—
|
|
|
5.0
|
|
|
35.8
|
|
|||||||
Other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4.0
|
|
|
—
|
|
|
—
|
|
|
4.0
|
|
|||||||
Common stock issued
|
56
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Exercise of stock options, net
|
5
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|||||||
Tax payments related to vested restricted stock units
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.5
|
)
|
|
—
|
|
|
(1.5
|
)
|
|||||||
Share repurchase program
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3.1
|
)
|
|
—
|
|
|
(3.1
|
)
|
|||||||
Noncontrolling interest distributions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5.3
|
)
|
|
(5.3
|
)
|
|||||||
Share-based compensation plans
|
—
|
|
|
—
|
|
|
3.1
|
|
|
—
|
|
|
—
|
|
|
0.4
|
|
|
—
|
|
|
3.5
|
|
|||||||
Adoption of ASC 606
|
—
|
|
|
—
|
|
|
—
|
|
|
1.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.6
|
|
|||||||
Balance at March 31, 2018
|
42,270
|
|
|
$
|
0.4
|
|
|
$
|
143.3
|
|
|
$
|
175.2
|
|
|
$
|
(7.7
|
)
|
|
$
|
(11.9
|
)
|
|
$
|
13.7
|
|
|
$
|
313.0
|
|
In millions
|
Foreign currency adjustments
|
|
Derivative Instruments
|
|
Pension and other postretirement benefits
|
|
Total
|
||||||||
Accumulated other comprehensive income (loss), net of tax at December 31, 2018
|
$
|
(16.4
|
)
|
|
$
|
0.4
|
|
|
$
|
(1.7
|
)
|
|
$
|
(17.7
|
)
|
2019 Activity
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income (loss) before reclassifications
|
9.4
|
|
|
0.1
|
|
|
—
|
|
|
9.5
|
|
||||
Amounts reclassified from accumulated other comprehensive income (loss)
|
—
|
|
|
(0.4
|
)
|
|
—
|
|
|
(0.4
|
)
|
||||
Accumulated other comprehensive income (loss), net of tax at March 31, 2019
|
$
|
(7.0
|
)
|
|
$
|
0.1
|
|
|
$
|
(1.7
|
)
|
|
$
|
(8.6
|
)
|
|
|
|
|
|
|
|
|
||||||||
|
Foreign currency adjustments
|
|
Derivative Instruments
|
|
Pension and other postretirement benefits
|
|
Total
|
||||||||
Accumulated other comprehensive income (loss), net of tax at December 31, 2017
|
$
|
(10.1
|
)
|
|
$
|
—
|
|
|
$
|
(1.6
|
)
|
|
$
|
(11.7
|
)
|
2018 Activity
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income (loss) before reclassifications
|
3.9
|
|
|
0.1
|
|
|
—
|
|
|
4.0
|
|
||||
Amounts reclassified from accumulated other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Accumulated other comprehensive income (loss), net of tax at March 31, 2018
|
$
|
(6.2
|
)
|
|
$
|
0.1
|
|
|
$
|
(1.6
|
)
|
|
$
|
(7.7
|
)
|
|
Three Months Ended March 31,
|
||||||||||||||
|
Pensions
|
|
Other Benefits
|
||||||||||||
In millions
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Components of net periodic benefit cost (income):
|
|
|
|
|
|
|
|
||||||||
Service cost
(1)
|
$
|
0.3
|
|
|
$
|
0.4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest cost
(2)
|
0.3
|
|
|
0.2
|
|
|
—
|
|
|
—
|
|
||||
Expected return on plan assets
(2)
|
(0.3
|
)
|
|
(0.2
|
)
|
|
—
|
|
|
—
|
|
||||
Amortization of net actuarial and other (gain) loss
(2)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net periodic benefit cost (income)
|
$
|
0.3
|
|
|
$
|
0.4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(1)
|
Amounts are recorded to "Cost of sales" on our condensed consolidated statements of operations consistent with the employee compensation costs that participate in the plan.
|
(2)
|
Amounts are recorded to "Other (income) expense, net" on our condensed consolidated statements of operations.
|
|
Three Months Ended March 31,
|
||||||
In millions
|
2019
|
|
2018
|
||||
Restructuring and other (income) charges, net
|
|
|
|
||||
Gain on sale of assets and businesses
|
$
|
—
|
|
|
$
|
(0.6
|
)
|
Total restructuring and other (income) charges, net
|
$
|
—
|
|
|
$
|
(0.6
|
)
|
|
Three Months Ended March 31,
|
||||
|
2019
|
|
2018
|
||
Effective tax rate
|
—
|
%
|
|
21.3
|
%
|
|
Three Months Ended March 31,
|
||||||||||||||||
|
2019
|
|
2018
|
||||||||||||||
In millions, except percentages
|
Before tax
|
Tax
|
Effective tax rate % impact
|
|
Before tax
|
Tax
|
Effective tax rate % impact
|
||||||||||
Consolidated operations
|
$
|
22.7
|
|
$
|
—
|
|
—
|
%
|
|
$
|
45.5
|
|
$
|
9.7
|
|
21.3
|
%
|
Discrete items:
|
|
|
|
|
|
|
|
||||||||||
Restructuring and other (income) charges, net
|
—
|
|
—
|
|
|
|
(0.6
|
)
|
—
|
|
|
||||||
Acquisition and other-related costs
(1)
|
31.2
|
|
5.3
|
|
|
|
4.6
|
|
1.1
|
|
|
||||||
Other tax only discrete items
|
—
|
|
6.7
|
|
|
|
—
|
|
(0.2
|
)
|
|
||||||
Total discrete items
|
31.2
|
|
12.0
|
|
|
|
4.0
|
|
0.9
|
|
|
||||||
Consolidated operations, before discrete items
|
$
|
53.9
|
|
$
|
12.0
|
|
|
|
$
|
49.5
|
|
$
|
10.6
|
|
|
||
Quarterly effect of changes in the EAETR
(2)
|
|
|
22.3
|
%
|
|
|
|
21.4
|
%
|
(1)
|
See Note 4 for more information on our acquisition and other-related costs.
|
(2)
|
Increase in EAETR for the
three
months ended
March 31, 2019
, as compared to
March 31, 2018
, is driven primarily by the 30 percent acquisition of our noncontrolling interest in Purifications Cellutions, LLC. ("PurCell") on August 1, 2018. PurCell, prior to the acquisition, was a limited liability company and was treated as a "pass-through" entity for tax purposes. Although we consolidated 100 percent of PurCell, only 70 percent of PurCell's earnings were included in the calculation of Ingevity's provision for income taxes as presented on the Condensed Consolidated Statement of Operations. Post-acquisition, 100 percent of the earnings of the entity are now included in the tax calculation which when combined with other factors including the impact of U.S. Tax Reform resulted in a slight increase to our effective tax rate.
|
Leased Asset Class
|
|
Expected Lease Term
|
Administrative offices
|
|
1 to 10 years
|
Manufacturing buildings
|
|
10 years
|
Manufacturing and office equipment
|
|
3 to 6 years
|
Warehousing and storage facilities
|
|
1 to 10 years
|
Vehicles
|
|
3 to 5 years
|
Rail cars
|
|
2 to 8 years
|
In millions
|
Financial Statement Caption
|
March 31, 2019
|
||
Assets
|
|
|
||
Operating lease assets, net
(1)
|
Operating lease assets, net
|
$
|
59.7
|
|
Finance lease assets, net
(2)
|
Property, plant, and equipment, net
|
29.3
|
|
|
Finance lease assets, net
(2)
|
Other assets, net
|
1.2
|
|
|
Total lease assets
|
|
$
|
90.2
|
|
Liabilities
|
|
|
||
Current
|
|
|
||
Operating lease liabilities
(3)
|
Current operating lease liabilities
|
$
|
17.9
|
|
Finance lease liabilities
|
Notes payable and current maturities of long-term debt
|
—
|
|
|
Noncurrent
|
|
|
||
Operating lease liabilities
|
Noncurrent operating lease liabilities
|
42.0
|
|
|
Finance lease liabilities
|
Long-term debt including finance lease obligations
|
80.0
|
|
|
Total lease liabilities
|
|
$
|
139.9
|
|
(2)
|
Finance lease assets are recorded net of accumulated amortization in Property, plant, and equipment, net and Other assets, net of
$63.4 million
and
$0.2 million
, as of
March 31, 2019
, respectively.
|
In millions
|
Financial Statement Caption
|
Three Months Ended March 31, 2019
|
||
Operating lease cost
(1)
|
Cost of sales
|
$
|
5.5
|
|
|
Selling, general, and administrative expenses
|
0.6
|
|
|
Finance lease cost
|
|
|
||
Amortization of leased assets
|
Cost of sales
|
$
|
0.4
|
|
Interest on lease liabilities
|
Interest expense, net
|
1.5
|
|
|
Net lease cost
(2)
|
|
$
|
8.0
|
|
|
March 31, 2019
|
||||||||||
In millions
|
Operating leases
|
|
Finance leases
|
|
Total
|
||||||
2019
|
$
|
15.8
|
|
|
$
|
3.1
|
|
|
$
|
18.9
|
|
2020
|
17.0
|
|
6.1
|
|
23.1
|
||||||
2021
|
13.2
|
|
6.1
|
|
19.3
|
||||||
2022
|
9.8
|
|
6.1
|
|
15.9
|
||||||
2023
|
6.0
|
|
6.1
|
|
12.1
|
||||||
2024 and thereafter
|
6.0
|
|
101.6
|
|
107.6
|
||||||
Total lease payments
|
$
|
67.8
|
|
|
$
|
129.1
|
|
|
$
|
196.9
|
|
Less: interest
|
7.9
|
|
49.1
|
|
57.0
|
||||||
Present value of lease liabilities
(1)
|
$
|
59.9
|
|
|
$
|
80.0
|
|
|
$
|
139.9
|
|
(1)
|
As of
March 31, 2019
, we have additional operating lease commitments that have not yet commenced of approximately
$33.9 million
for the relocation of our corporate headquarters. The lease is expected to commence in the first half of 2020 and the lease term is for
15 years
with two
5
year extensions.
|
In millions
|
Operating leases
|
|
Finance leases
|
||||
2019
|
$
|
21.9
|
|
|
$
|
6.1
|
|
2020
|
17.2
|
|
|
6.1
|
|
||
2021
|
13.3
|
|
|
6.1
|
|
||
2022
|
9.7
|
|
|
6.1
|
|
||
2023
|
6.0
|
|
|
6.1
|
|
||
2024 and thereafter
|
5.9
|
|
|
101.5
|
|
||
Minimum lease payments
|
$
|
74.0
|
|
|
$
|
132.0
|
|
Less: interest
|
|
|
52.0
|
|
|||
Capital lease obligations
|
|
|
$
|
80.0
|
|
|
As of March 31, 2019
|
|
Weighted-average remaining lease term (years)
|
|
|
Operating leases
|
4.3
|
|
Finance leases
|
8.9
|
|
Weighted-average discount rate
|
|
|
Operating leases
|
5.66
|
%
|
Finance leases
|
7.67
|
%
|
In millions
|
Three Months Ended March 31, 2019
|
||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
||
Operating cash flows from operating leases
|
$
|
(6.1
|
)
|
Operating cash flows from finance leases
|
(3.1
|
)
|
|
Financing cash flows from finance leases
|
$
|
—
|
|
|
Three Months Ended March 31,
|
||||||
In millions
|
2019
|
|
2018
|
||||
Net sales
|
|
|
|
||||
Performance Materials
|
$
|
109.1
|
|
|
$
|
95.5
|
|
Performance Chemicals
|
167.7
|
|
|
139.7
|
|
||
Total net sales
(1)
|
$
|
276.8
|
|
|
$
|
235.2
|
|
|
|
|
|
||||
Segment EBITDA
(2)
|
|
|
|
||||
Performance Materials
|
$
|
51.2
|
|
|
$
|
42.2
|
|
Performance Chemicals
|
32.3
|
|
|
24.9
|
|
||
Total segment EBITDA
(2)
|
$
|
83.5
|
|
|
$
|
67.1
|
|
|
|
|
|
||||
Interest expense, net
|
(11.1
|
)
|
|
(6.1
|
)
|
||
(Provision) benefit for income taxes
|
—
|
|
|
(9.7
|
)
|
||
Depreciation and amortization - Performance Materials
|
(5.8
|
)
|
|
(5.3
|
)
|
||
Depreciation and amortization - Performance Chemicals
|
(12.7
|
)
|
|
(6.2
|
)
|
||
Restructuring and other income (charges), net
(3)
|
—
|
|
|
0.6
|
|
||
Acquisition and other related costs
(4)
|
(31.2
|
)
|
|
(4.6
|
)
|
||
Net (income) loss attributable to noncontrolling interests
|
—
|
|
|
(5.0
|
)
|
||
Net income (loss) attributable to Ingevity stockholders
|
$
|
22.7
|
|
|
$
|
30.8
|
|
(1)
|
Relates to external customers only, all intersegment sales and related profit have been eliminated in consolidation.
|
(2)
|
Segment EBITDA is the primary measure used by the Company's 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) charge.
|
(3)
|
Income (charges) for all periods presented related to our Performance Chemicals segment.
|
(4)
|
Charges associated with the acquisition and integration of the Caprolactone Business and Pine Chemical Business. See below for more detail on the charges incurred and Note 4 within these Condensed Consolidated Financial Statements for more information.
|
|
Three Months Ended March 31,
|
||||||
In millions, except share and per share data
|
2019
|
|
2018
|
||||
Net income (loss) attributable to Ingevity stockholders
|
$
|
22.7
|
|
|
$
|
30.8
|
|
|
|
|
|
||||
Basic and Diluted earnings (loss) per share
|
|
|
|
||||
Basic earnings (loss) per share attributable to Ingevity stockholders
|
$
|
0.54
|
|
|
$
|
0.73
|
|
Diluted earnings (loss) per share attributable to Ingevity stockholders
|
0.54
|
|
|
0.72
|
|
||
|
|
|
|
||||
Shares
(in thousands)
|
|
|
|
||||
Weighted average number of common shares outstanding - Basic
|
41,695
|
|
|
42,091
|
|
||
Weighted average additional shares assuming conversion of potential common shares
|
542
|
|
|
510
|
|
||
Shares - diluted basis
|
42,237
|
|
|
42,601
|
|
|
Three Months Ended March 31,
|
||||
In thousands
|
2019
|
|
2018
|
||
Average number of potential common shares - antidilutive
|
52
|
|
|
40
|
|
•
|
we are exposed to risks that the expected benefits from the acquisitions of Georgia Pacific's pine chemicals business ("Pine Chemical Acquisition") and of Perstorp Holding AB's caprolactone business ("Caprolactone Acquisition") may not be realized or will not be realized within the expected time period, the risk that the acquired businesses will not be integrated successfully, the risk of significant transaction costs and unknown or understated liabilities;
|
•
|
we may be adversely affected by general economic and financial conditions beyond our control;
|
•
|
we are exposed to risks related to our international sales and operations;
|
•
|
our reported results could be adversely affected by currency exchange rates and currency devaluation could impair our competitiveness;
|
•
|
our operations outside the U.S. require us to comply with a number of U.S. and foreign regulations, violations of which could have a material adverse effect on our financial condition and results of operations;
|
•
|
our engineered polymers product line may be adversely affected by Brexit;
|
•
|
we are dependent upon attracting and retaining key personnel;
|
•
|
adverse conditions in the global automotive market or adoption of alternative or new technologies may adversely affect demand for our automotive carbon products;
|
•
|
we face competition from producers of alternative products and new technologies, and new or emerging competitors;
|
•
|
we face competition from infringing intellectual property activity;
|
•
|
if increasingly more stringent air quality standards worldwide are not adopted, our growth could be impacted;
|
•
|
we may be adversely affected by a decrease in government infrastructure spending;
|
•
|
our printing inks business serves customers in a market that is facing declining volumes and downward pricing;
|
•
|
our Performance Chemicals segment is highly dependent on crude tall oil ("CTO") which is limited in supply;
|
•
|
lack of access to sufficient CTO would impact our ability to produce CTO-based products;
|
•
|
a prolonged period of low energy prices may materially impact our results of operations;
|
•
|
we are dependent upon third parties for the provision of certain critical operating services at several of our facilities;
|
•
|
the occurrence of a natural disaster, such as a hurricane, winter or tropical storm, earthquake, tornado, flood, fire or other matters such as labor difficulties (including work stoppages), equipment failure or unscheduled maintenance and repair, which could result in operational disruptions of varied duration;
|
•
|
from time to time we are called upon to protect our intellectual property rights and proprietary information though litigation and other means;
|
•
|
if we are unable to protect our intellectual property and other proprietary information we may lose significant competitive advantage;
|
•
|
information technology security breaches and other disruptions;
|
•
|
government policies and regulations, including, but not limited to, those affecting the environment, climate change, tariffs, tax policies and the chemicals industry; and
|
•
|
losses due to lawsuits arising out of environmental damage or personal injuries associated with chemical or other manufacturing processes.
|
|
Three Months Ended March 31,
|
||||||
In millions
|
2019
|
|
2018
|
||||
Net sales
|
$
|
276.8
|
|
|
$
|
235.2
|
|
Cost of sales
|
179.7
|
|
|
150.1
|
|
||
Gross profit
|
97.1
|
|
|
85.1
|
|
||
Selling, general and administrative expenses
|
39.1
|
|
|
26.5
|
|
||
Research and technical expenses
|
5.1
|
|
|
5.0
|
|
||
Restructuring and other (income) charges, net
|
—
|
|
|
(0.6
|
)
|
||
Acquisition-related costs
|
22.8
|
|
|
3.8
|
|
||
Other (income) expense, net
|
(3.7
|
)
|
|
(1.2
|
)
|
||
Interest expense, net
|
11.1
|
|
|
6.1
|
|
||
Income (loss) before income taxes
|
22.7
|
|
|
45.5
|
|
||
Provision (benefit) for income taxes
|
—
|
|
|
9.7
|
|
||
Net income (loss)
|
22.7
|
|
|
35.8
|
|
||
Less: Net income (loss) attributable to noncontrolling interest
|
—
|
|
|
5.0
|
|
||
Net income (loss) attributable to Ingevity stockholders
|
$
|
22.7
|
|
|
$
|
30.8
|
|
|
|
|
Percentage change vs. prior year
|
||||||||
In millions, except percentages
|
Net sales
|
|
Total change
|
|
Currency
effect |
|
Price/Mix
|
|
Volume
|
||
Three months ended March 31, 2019
|
$
|
276.8
|
|
|
18%
|
|
(1)%
|
|
5%
|
|
14%
|
|
Three Months Ended March 31,
|
||||||
In millions
|
2019
|
|
2018
|
||||
Foreign currency exchange (income) loss
|
$
|
(2.3
|
)
|
|
$
|
(0.8
|
)
|
Royalty and sundry (income) loss
|
(0.1
|
)
|
|
(0.2
|
)
|
||
Other (income) expense, net
|
(1.3
|
)
|
|
(0.2
|
)
|
||
Total Other (income) expense, net
|
$
|
(3.7
|
)
|
|
$
|
(1.2
|
)
|
|
Three Months Ended March 31,
|
||||||
In millions
|
2019
|
|
2018
|
||||
Interest expense on finance lease obligations
|
$
|
1.5
|
|
|
$
|
1.5
|
|
Interest expense on revolving credit and term loan facilities
(1)
|
7.2
|
|
|
3.1
|
|
||
Interest expense on senior notes
(1)
|
3.5
|
|
|
2.6
|
|
||
Interest income associated with our Restricted investment
|
(0.7
|
)
|
|
(0.5
|
)
|
||
Capitalized interest
|
(0.4
|
)
|
|
(0.2
|
)
|
||
Other interest expense, net
|
—
|
|
|
(0.4
|
)
|
||
Total Interest expense, net
|
$
|
11.1
|
|
|
$
|
6.1
|
|
(1)
|
See Note 10 within the Condensed Consolidated Financial Statements for more information.
|
In millions
|
Three Months Ended March 31,
|
||||||
2019
|
|
2018
|
|||||
Automotive Technologies product line
|
$
|
99.7
|
|
|
$
|
85.9
|
|
Process Purifications product line
|
9.4
|
|
|
9.6
|
|
||
Total Performance Materials - Net sales
|
$
|
109.1
|
|
|
$
|
95.5
|
|
Segment EBITDA
|
$
|
51.2
|
|
|
$
|
42.2
|
|
|
Percentage change vs. prior year
|
||||||||||||||
Performance Materials
(In millions, except percentages)
|
Net sales
|
|
Total change
|
|
Currency
effect |
|
Price/Mix
|
|
Volume
|
||||||
Three months ended March 31, 2019
|
$
|
109.1
|
|
|
14
|
%
|
|
(1
|
)%
|
|
4
|
%
|
|
11
|
%
|
|
Three Months Ended March 31,
|
||||||
In millions
|
2019
|
|
2018
|
||||
Oilfield Technologies product line
|
$
|
29.2
|
|
|
$
|
22.4
|
|
Pavement Technologies product line
|
18.5
|
|
|
18.5
|
|
||
Industrial Specialties product line
|
95.8
|
|
|
98.8
|
|
||
Engineered Polymers product line
|
$
|
24.2
|
|
|
$
|
—
|
|
Total Performance Chemicals - Net sales
|
$
|
167.7
|
|
|
$
|
139.7
|
|
Segment EBITDA
|
$
|
32.3
|
|
|
$
|
24.9
|
|
|
Percentage change vs. prior year
|
||||||||||||||
Performance Chemicals
(In millions, except percentages)
|
Net sales
|
|
Total change
|
|
Currency
effect |
|
Price/Mix
|
|
Volume
|
||||||
Three months ended March 31, 2019
|
$
|
167.7
|
|
|
20
|
%
|
|
(1
|
)%
|
|
5
|
%
|
|
16
|
%
|
|
Three Months Ended March 31,
|
||||||
In millions
|
2019
|
|
2018
|
||||
Oilfield Technologies product line
|
$
|
29.2
|
|
|
$
|
27.0
|
|
Pavement Technologies product line
|
18.5
|
|
|
18.7
|
|
||
Industrial Specialties product line
|
95.8
|
|
|
114.2
|
|
||
Engineered Polymers product line
|
$
|
41.9
|
|
|
$
|
46.5
|
|
Pro Forma Combined Net Sales - Performance Chemicals
|
$
|
185.4
|
|
|
$
|
206.4
|
|
|
Percentage change vs. prior year
|
||||||||||||||
Performance Chemicals
(In millions, except percentages)
|
Pro Forma Combined Net sales
|
|
Total change
|
|
Currency
effect |
|
Price/Mix
|
|
Volume
|
||||||
Three months ended March 31, 2019
|
$
|
185.4
|
|
|
(10
|
)%
|
|
(1
|
)%
|
|
4
|
%
|
|
(13
|
)%
|
(1)
|
For the three months ended
March 31, 2019
, charges relate to the Caprolactone Acquisition and include legal and professional fees of
$10.1 million
and purchase price hedge adjustment of
$12.7 million
, both included in "Acquisition-related costs" on the condensed statement of operations, and inventory step-up amortization of
$8.4 million
, which is included in "Cost of sales" on the condensed consolidated statement of operations. For the three months ended March 31, 2018, charges relate to the Pine Chemical Acquisition and include legal and professional fees of
$3.8 million
and inventory step-up amortization of
$0.8 million
, which are included in "Acquisition-related costs" and "Cost of sales" on the condensed consolidated statement of operations, respectively.
|
|
Three Months Ended March 31,
|
||||||
In millions
|
2019
|
|
2018
|
||||
Net cash provided (used) by operating activities
|
$
|
(8.0
|
)
|
|
$
|
9.7
|
|
Net cash provided (used) by investing activities
|
(569.3
|
)
|
|
(327.4
|
)
|
||
Net cash provided (used) by financing activities
|
539.4
|
|
|
284.9
|
|
In millions
|
March 31, 2019
|
|
December 31, 2018
|
||||
Cash and cash equivalents
|
$
|
38.4
|
|
|
$
|
77.5
|
|
Accounts receivable, net
|
151.0
|
|
|
118.9
|
|
||
Inventories, net
|
229.3
|
|
|
191.4
|
|
||
Prepaid and other current assets
|
36.3
|
|
|
34.9
|
|
||
Total current assets
|
$
|
455.0
|
|
|
$
|
422.7
|
|
In millions
|
March 31, 2019
|
|
December 31, 2018
|
||||
Accounts payable
|
$
|
119.8
|
|
|
$
|
92.9
|
|
Accrued expenses
|
26.1
|
|
|
36.7
|
|
||
Accrued payroll and employee benefits
|
16.0
|
|
|
42.0
|
|
||
Current operating lease liabilities
|
17.9
|
|
|
—
|
|
||
Current maturities of long-term debt
|
18.0
|
|
|
11.2
|
|
||
Income taxes payable
|
0.5
|
|
|
0.5
|
|
||
Total current liabilities
|
$
|
198.3
|
|
|
$
|
183.3
|
|
Capital expenditure categories
|
Three Months Ended March 31,
|
||||||
In millions
|
2019
|
|
2018
|
||||
Maintenance
|
$
|
7.4
|
|
|
$
|
5.5
|
|
Safety, health and environment
|
2.1
|
|
|
0.8
|
|
||
Growth and cost improvement
|
18.6
|
|
|
7.0
|
|
||
Total capital expenditures
|
$
|
28.1
|
|
|
$
|
13.3
|
|
|
ISSUER PURCHASES OF SECURITIES
|
||||||||||||||||
|
|
|
|
|
Publicly Announced Program
|
||||||||||||
Period
|
Total Number of Shares Purchased
|
|
Average Price Paid Per Share
|
|
Cumulative Number of Shares Purchased
|
|
Total Dollar Amount Purchased
|
|
Maximum Dollar Value of Shares that May Yet be Purchased
|
||||||||
January 1-31, 2019
|
40,000
|
|
|
$
|
82.76
|
|
|
40,000
|
|
|
$
|
3,310,292
|
|
|
$
|
392,670,401
|
|
February 1-28, 2019
|
—
|
|
|
N/A
|
|
—
|
|
|
—
|
|
|
392,670,401
|
|
||||
March 1-31, 2019
|
—
|
|
|
N/A
|
|
—
|
|
|
—
|
|
|
392,670,401
|
|
||||
Total
|
40,000
|
|
|
$
|
82.76
|
|
|
40,000
|
|
|
$
|
3,310,292
|
|
|
$
|
392,670,401
|
|
Exhibit No.
|
Description of Exhibit
|
|
|
Second Amended and Restated Certificate of Incorporation of Ingevity Corporation (incorporated by reference to Exhibit 3.1 to Form 8-K (File No. 001-37586) filed April 25, 2019).
|
|
|
|
Amended and Restated Bylaws of Ingevity Corporation (incorporated by reference to Exhibit 3.2 to Form 8-K (File No. 001-37856) filed April 25, 2019).
|
|
|
|
Amendment No. 3, by and among Ingevity Corporation, Ingevity Holdings SPRL, the other loan parties party thereto, the lenders party thereto and Wells Fargo Bank, N.A., as administrative agent (incorporated by reference to Exhibit 10.1 to Form 8-K (File No. 001-37586) filed March 7, 2019).
|
|
|
|
Incremental Facility Agreement and Amendment No. 4, by and among Ingevity Corporation, Ingevity Holdings SPRL, the other loan parties party thereto, the lenders party thereto and Wells Fargo Bank, N.A., as administrative agent (incorporated by reference to Exhibit 10.2 to Form 8-K (File No. 001-37586) filed March 7, 2019).
|
|
|
|
Ingevity Corporation Non-Employee Director Compensation Policy.
|
|
|
|
Rule 13a-14(a)/15d-14(a) Certification of the Company’s Principal Executive Officer.
|
|
|
|
Rule 13a-14(a)/15d-14(a) Certification of the Company’s Principal Financial Officer.
|
|
|
|
Section 1350 Certification of the Company’s Principal Executive Officer. The information contained in this Exhibit shall not be deemed filed with the Securities and Exchange Commission nor incorporated by reference in any registration statement filed by the registrant under the Securities Act of 1933, as amended.
|
|
|
|
Section 1350 Certification of the Company’s Principal Financial Officer. The information contained in this Exhibit shall not be deemed filed with the Securities and Exchange Commission nor incorporated by reference in any registration statement filed by the registrant under the Securities Act of 1933, as amended.
|
|
|
|
101
|
Interactive Data File
|
INGEVITY CORPORATION
|
|
(Registrant)
|
|
|
|
By:
|
/S/ JOHN C. FORTSON
|
|
John C. Fortson
|
|
Executive Vice President, Chief Financial Officer & Treasurer
|
|
(Principal Financial Officer and Duly Authorized Officer)
|
1.
|
General
. The Non-Employee Director Compensation Policy (the “Policy”) as set forth herein provides for the compensation payable to the non-employee directors of Ingevity Corporation (the “Company”) certain elements of which were previously approved by the Company’s Board of Directors by Unanimous Written Consent on May 15, 2016, and ratified by the Compensation Committee of the Board of Directors of the Company on May 27, 2016. Capitalized but undefined terms used herein shall have the meanings provided for in the Ingevity Corporation 2016 Omnibus Incentive Plan or, as applicable, in any successor equity compensation plan approved by the shareholders of the Company (the “Plan”).
|
2.
|
Annual Retainer and Other Compensation
. Each member of the Board who is not or has not been employed by the Company or one of its subsidiaries (a “Non-Employee Director”) shall be entitled to an annual retainer as follows:
|
a.
|
The annual retainer fee for service on the Board shall be $85,000 (such amount the “Annual Retainer”) with $85,000 of the Annual Retainer payable at the Non-Employee’s direction 100% in either (i) fully vested deferred stock units (“DSUs”) (valued based on the Fair Market Value of the Common Stock on the date of grant) or (ii) cash. If no election is made, the Annual Retainer will be paid 100% in cash.
|
b.
|
The annual retainer fee for service as the Chair of the Board of Directors shall be $85,000, the annual retainer fee for service as the Chair of the Audit Committee shall be $20,000, the annual retainer fee for service as the Chair of the Compensation Committee shall be $15,000, and the annual retainer fee for service as the Chair of the Nominating and Governance Committee shall be $12,000 (“Other Compensation”). Other Compensation is payable at the Non-Employee’s direction 100% in either (i) fully vested DSUs (valued based on the Fair Market Value of the Common Stock on the date of grant or (ii) cash. If no election is made, the Other Compensation will be paid 100% in cash.
|
3.
|
Timing of Payment of Annual Retainer and Other Compensation
. The Annual Retainer and Other Compensation payable are intended to cover service from one annual meeting of the shareholders to the next and,
unless a deferral election is made as provided below
, shall be paid quarterly in advance on the first business day of each calendar quarter, without any requirement of additional Board action in connection therewith.
|
4.
|
Annual Stock Award
. Each Non-Employee Director shall also be entitled to receive an annual stock award under the Plan in the form of Restricted Stock Units (or “RSUs”) valued at $95,000 as of the close of business on the date of grant. RSUs are granted as of the next business day after the date of the Company’s annual shareholders meeting, without any requirement of additional Board action in connection therewith, and will vest on the first anniversary of the grant date. The RSUs shall be granted pursuant to terms and conditions set forth in a written agreement or form approved by the Compensation Committee of the Board. Unless a deferral election is made as provided below, the RSUs will be distributed in actual shares of Common Stock within thirty (30) days of vesting.
|
5.
|
Pro-ration
. A new (or terminating) Non-Employee Director who commences service after the annual meeting of shareholders (or who retires before the next annual meeting) shall be entitled to a pro-rated Annual Retainer, Other Compensation, if applicable, and annual RSU, all on the same basis as
|
6.
|
Deferral Election
. A Non-Employee Director may elect to receive DSUs in lieu of (i) his or her Annual Retainer, (ii) Other Compensation, and (iii) RSUs. Any DSUs that relate to a Non-Employee Director’s Annual Retainer, Other Compensation or RSUs shall be subject to the same vesting provisions as set forth in Section 2 above, or as set forth in the award terms and conditions. If the Non-Employee Director elects to receive DSUs, the units will be credited to a bookkeeping account under the Company’s Non-Employee Director Deferred Compensation Plan, where each unit will be equivalent in value to one share of Common Stock, and the units will not be distributed in actual shares of Common Stock, until the Non-Employee Director terminates his service from the Board, except as otherwise provided for in the award terms or the Plan.
|
7.
|
Effect of Other Plan Provisions.
All of the provisions of the Plan shall apply to the Awards granted automatically pursuant to this Policy.
|
8.
|
Policy Subject to Amendment, Modification and Termination.
This Policy may be amended, modified or terminated by the Compensation Committee of the Board in the future at its sole discretion. Without limiting the generality of the foregoing, the Board or the Compensation Committee hereby expressly reserves the authority to terminate this Policy during any year up and until the election of directors at a given annual meeting of shareholders.
|
1.
|
I have reviewed this report on Form 10-Q of Ingevity Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
May 2, 2019
|
|
|
|
|
By:
|
/S/ D. MICHAEL WILSON
|
|
D. Michael Wilson
|
|
President and Chief Executive Officer
|
1.
|
I have reviewed this report on Form 10-Q of Ingevity Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
May 2, 2019
|
|
|
|
|
By:
|
/S/ JOHN C. FORTSON
|
|
John C. Fortson
|
|
Executive Vice President, Chief Financial Officer & Treasurer
|
|
/S/ D. MICHAEL WILSON
|
D. Michael Wilson
|
President and Chief Executive Officer
|
|
/S/ JOHN C. FORTSON
|
John C. Fortson
|
Executive Vice President, Chief Financial Officer & Treasurer
|