Ingevity Corporation — Third Quarter 2026 Earnings Summary

Financial Performance

• Net sales for the quarter were $305.1 million, an 8% decrease year-over-year; excluding the divested Road Markings line, sales increased 2%.
• Net income from continuing operations was $51.1 million ($1.46 diluted EPS), compared to $40.8 million ($1.10 diluted EPS) in the prior year.
• Adjusted earnings from continuing operations were $56.7 million ($1.63 adjusted diluted EPS), up from $48.3 million ($1.31 adjusted diluted EPS) in the prior year.
• Adjusted EBITDA from continuing operations was $108.0 million, a $2.4 million decrease from the prior year; adjusted EBITDA margin expanded 230 basis points to 35.4%.
• Operating cash flow was $99.2 million, a $30.5 million decrease from the prior year.
• Free cash flow was $85.5 million, a $32.3 million decrease from the prior year, driven by $21 million of working capital benefits in the prior year period from divested businesses.
• Net leverage remained at 2.5 times, consistent with the second quarter and down from 2.7 times in the prior-year period.

Guidance and Future Outlook

• Full-year 2026 adjusted EBITDA outlook narrowed to a range of $385 million to $395 million, maintaining the midpoint of the prior range.
• Full-year 2026 net sales expected to be approximately $1.1 billion.
• Full-year 2026 diluted adjusted EPS guidance is $5.25 to $5.45.
• Full-year 2026 free cash flow is expected to be between $220 million and $230 million, excluding the $113.2 million litigation settlement payment made in the second quarter.
• The company intends to maintain net leverage within a long-term target range of 2.0 to 2.5 times.
• The timing of an announced agreement for the sale of Advanced Polymer Technologies may extend into early 2027.

Business Segments and Product Lines

• Performance Materials: Net sales were $154.1 million, nearly flat year-over-year. Segment EBITDA was $83.4 million, essentially flat, with a margin of 54.1%. Growth was driven by resilient North American automotive demand (hybrid vehicle trends) and higher non-auto filtration sales, offset by lower volumes in China and Europe.
• Pavement Technologies: Net sales decreased 24% to $106.0 million due to the April 15, 2026, divestiture of the Road Markings product line; excluding Road Markings, sales were nearly flat. Segment EBITDA was $19.6 million, down $7.3 million, with a margin of 18.5%. Results were pressured by higher asphalt costs, softer demand, and retention of dis-synergy costs.
• Advanced Polymer Technologies: Net sales increased 18% to $45.0 million, driven by higher pricing and favorable product mix. Segment EBITDA increased $0.7 million to $11.7 million, though the margin decreased 280 basis points to 26.0% as pricing surcharges recovered input costs without adding incremental margin.
• Corporate and Other: Expenses were $6.7 million, an improvement of $1.1 million from the prior year.
• Divestitures: The Road Markings product line was sold on April 15, 2026. The company continues to advance the sale of the Advanced Polymer Technologies segment.

Market and Competitive Landscape

• North American automotive demand remains resilient, supported by consumer preference for hybrid vehicles.
• Global demand is described as mixed, with softer demand in China and Europe affecting Performance Materials volumes.
• Pavement Technologies faces pressure from crude oil inflation driving persistently higher asphalt costs, which increases project costs for customers and limits sales growth.
• Filtration investments in talent, technology, and commercial capabilities are translating into customer adoption and tangible growth.

Risks and Challenges

• Higher input and logistics costs in Pavement Technologies and Advanced Polymer Technologies.
• Retention of dis-synergy costs largely due to the Road Markings divestiture.
• Potential delays in the sale of Advanced Polymer Technologies extending into early 2027.
• Forward-looking statements note risks including global economic conditions, inflation, geopolitical conflicts, trade tensions, raw material supply constraints, and regulatory changes.

Management Commentary and Tone

• President and CEO Dave Li stated results reflect "disciplined execution across the portfolio amid a mixed global demand environment."
• Management expressed confidence in the long-term value of the business despite current pressures in Pavement Technologies.
• Management is "particularly encouraged" by progress in filtration, viewing it as a potential meaningful contributor to future growth and profitability.
• The narrowing of the full-year adjusted EBITDA guidance reflects increased visibility and confidence entering the final quarter.

Other Key Points

• Share repurchases totaled approximately $39 million in the third quarter at a weighted average price of $71.45 per share, bringing year-to-date repurchases to approximately $125 million.
• Approximately $172 million of capacity remains under the current share repurchase authorization.
• Capital expenditures increased approximately $2 million to $14 million for the quarter.
• The company will host a live webcast on November 5, 2026, at 10:00 a.m. Eastern to discuss results.
• The 2026 outlook includes full-year results for Advanced Polymer Technologies but excludes the divested Industrial Specialties product line and Road Markings.