Ingevity Plans to Sell Industrial Specialties and CTO Refinery

Ingevity Corporation is exploring strategic alternatives for the company’s Performance Chemicals Industrial Specialties line, including the potential divestiture of portions of its North Charleston facility.

Ingevity noted that the process includes all of its Industrial Specialties Pine Chemicals, which serve the paper chemicals, rubber, adhesives, oilfield, lubricants and industrial intermediates end-use markets, as well as its crude tall oil refinery in North Charleston, South Carolina. The process will not include the Performance Chemicals Road Technologies product line, nor certain lignin-based products currently reported in Ingevity’s Industrial Specialties line.

"Ingevity's management team and board of directors are committed to taking proactive actions to create additional value for shareholders," said Luis Fernandez-Moreno, Ingevity's interim president and CEO. "Over the past 15 months, we have taken a number of initiatives to improve business performance, particularly in our Performance Chemicals segment. These actions have already resulted in improved results, as evidenced by the sequential improvement in segment EBITDA margins achieved in the second half of 2024."

"Exiting the majority of our Industrial Specialties product lines will further strengthen the Performance Chemicals segment, allowing us to focus on higher growth and higher margin opportunities across our portfolio while improving the company's earnings and cash flow profile," continued Fernandez-Moreno. "In doing so, we will continue to provide exceptional service and support to our Industrial Specialties customers."

"We will continue to evaluate other products in the Ingevity portfolio and remain committed to taking appropriate actions, including ensuring our cost structure is aligned with our goal of becoming a specialty chemicals leader. We believe we will be well-positioned to deliver profitable growth and value creation beginning in 2025," said Fernandez-Moreno.

Ingevity can give no assurance that its strategic review will result in a transaction. The company expects to take action as quickly as possible and announce future direction by the end of the year and does not intend to disclose further developments unless it determines that further disclosure is appropriate.

On January 17, Ingevity announced preliminary unaudited financial results for fiscal 2024. These preliminary results are still pending completion of the company's fiscal year financial audit. The company expects net sales of approximately $1.4 billion, adjusted EBITDA of approximately $360 million, and free cash flow of more than $40 million.

"We are pleased to announce that our full year adjusted EBITDA is expected to be at the high end of our previous guidance and free cash flow will also significantly exceed previous guidance. This achievement is driven by the continued positive impact of the repositioning of our Performance Chemicals segment and the continued strong performance of our Performance Materials segment, which delivered another strong quarter. With this positive momentum, we are more confident in our ability to achieve slightly more than $400 million of adjusted EBITDA in 2025," said Fernandez-Moreno. "We will provide additional details on 2025 guidance during our fourth quarter and fiscal 2024 earnings call on February 19, 2025."

The company's expectations for 2025 Adjusted EBITDA do not include any potential impact from the exploration of strategic alternatives announced today.