Ingevity Reports 15% Revenue Decline, Net Loss in Q3 2024 Due to Restructuring Efforts and Market Challenges

Ingevity Corporation reported its financial results for the third quarter and the nine months ended September 30, 2024, revealing significant challenges in revenue and profitability compared to the previous fiscal period.

For the third quarter of 2024, Ingevity's net sales totaled $376.9 million, a decrease of 15% from $446.0 million in the same quarter of 2023. For the nine months ended September 30, 2024, net sales were $1,107.6 million, down 16% from $1,320.4 million in the prior year. The decline in revenue was primarily attributed to volume decreases in the Performance Chemicals segment, unfavorable weather impacting the Road Technologies product line, and weakness in certain industrial markets.

Gross profit for the third quarter remained stable at $129.9 million, while for the nine months, it decreased to $352.8 million from $412.4 million in the previous year. The company reported a net loss of $(107.2) million for the third quarter, compared to a profit of $25.2 million in the same period of 2023. For the nine months, the net loss was $(446.9) million, a stark contrast to the net income of $111.4 million reported in the prior year.

Ingevity's restructuring efforts, particularly in the Performance Chemicals segment, have led to significant charges. The company announced expected aggregate charges of approximately $350 million associated with the repositioning strategy, which includes the permanent closure of the CTO refinery and the DeRidder Plant. This repositioning aims to improve profitability and reduce exposure to lower-margin markets, affecting about 45% of historical annualized net sales in the industrial specialties product line. The workforce has been reduced by 23%, with a 40% reduction in the Performance Chemicals segment.

The company also recorded a non-cash goodwill impairment charge of $349.1 million for the Performance Chemicals reporting unit, reflecting lower volume and profitability expectations. As of September 30, 2024, Ingevity's cash and cash equivalents totaled $135.5 million, with undrawn capacity under its revolving credit facility at $244.4 million.

In terms of operational efficiency, Ingevity has realized cash savings of approximately $60 million for the nine months ended September 30, 2024, from its repositioning actions. However, the company continues to face challenges, particularly in the Performance Chemicals segment, which is expected to negatively impact net sales and financial condition during the transition period.