Ingevity Corporation — Third Quarter 2026 Earnings Summary

Financial Performance:

• Net sales for the third quarter of 2026 were $305.1 million, an 8% decrease from the prior year; excluding the divested Road Markings product line, sales increased 2%.
• Net income from continuing operations was $51.1 million ($1.46 per diluted share), compared to $40.8 million ($1.10 per diluted share) in the prior year.
• Adjusted earnings from continuing operations were $56.7 million ($1.63 per diluted share), compared to $48.3 million ($1.31 per diluted share) in the prior year.
• Adjusted EBITDA from continuing operations was $108.0 million, a decrease of $2.4 million from the prior year, with an adjusted EBITDA margin of 35.4% (an expansion of 230 basis points).
• Operating cash flow was $99.2 million, a decrease of $30.5 million versus the prior year.
• Free cash flow was $85.5 million, a decrease of $32.3 million, driven by $21 million of working capital benefits in the prior year period from divested businesses.
• Capital expenditures increased approximately $2 million to $14 million for the quarter.
• 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 are expected to be approximately $1.1 billion.
• Full-year 2026 diluted adjusted EPS is expected to be $5.25 to $5.45.
• Full-year 2026 free cash flow is now 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 leverage within its long-term target range of 2.0 to 2.5 times and return capital to shareholders.

Business Segments and Product Lines:

• Performance Materials: Net sales remained nearly flat at $154.1 million. Segment EBITDA was $83.4 million, essentially flat to the prior year, 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 and higher SG&A.
• Pavement Technologies: Net sales decreased 24% to $106.0 million, primarily due to the April 15, 2026, divestiture of the Road Markings product line. Excluding Road Markings, sales were nearly flat as higher prices offset softer demand. Segment EBITDA was $19.6 million, down $7.3 million, reflecting lower volumes, dis-synergy costs from the divestiture, and higher input/logistics costs. Margin was 18.5%.
• 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. Margin was 26.0%, down 280 basis points, as pricing surcharges recovered input costs but carried little incremental margin.
• Corporate and Other: Expenses were $6.7 million, an improvement of $1.1 million from the prior year.
• The company continues to advance the sale of Advanced Polymer Technologies, though the timing of an announced agreement may extend into early 2027.

Market and Competitive Landscape:

• Performance Materials benefited from resilient North American automotive demand and favorable hybrid vehicle trends.
• Pavement Technologies faced softer demand and persistently higher asphalt costs driven by crude oil inflation, which pressured customer project costs.
• Advanced Polymer Technologies delivered improved profitability on better pricing and product mix.
• The company noted progress in filtration, where investments in talent, technology, and commercial capabilities are translating into customer adoption.

Risks and Challenges:

• Higher input and logistics costs in Pavement Technologies and Advanced Polymer Technologies.
• Softer demand in Pavement Technologies and lower volumes in automotive applications in China and Europe for Performance Materials.
• Dis-synergy costs retained largely due to the divestiture of Road Markings.
• The outlook reflects continued cost pressures within Pavement Technologies.

Management Commentary and Tone:

• CEO Dave Li stated that third-quarter results reflect "disciplined execution across the portfolio amid a mixed global demand environment."
• Management expressed confidence in the long-term value of the business and increased visibility as they enter the final quarter of the year.
• Management noted they are "particularly encouraged" by progress in filtration, which strengthens confidence in its potential to become a meaningful contributor to growth and profitability.
• The narrowing of the full-year adjusted EBITDA guidance reflects increased visibility and confidence.

Other Key Points:

• Share repurchases totaled approximately $39 million during 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 available capacity remains under the company's current share repurchase authorization.
• The Road Markings product line was sold on April 15, 2026.
• A $113.2 million litigation settlement payment was made in the second quarter of 2026.
• The company operates from 17 locations worldwide and employs approximately 1,400 people.