Ingevity Corp Q4 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Jon Tanwanteng - CJS Securities, Inc. - Analyst : Really nice quarter and pulling in the cost. Question on the pricing in the Performance Chemicals business. Are you already at the pricing that you expect to be at when the high price CTO inventory runs out or is there still a further leg down that you can take when that does come out and you can use a lower cost?

Question: Jon Tanwanteng - CJS Securities, Inc. - Analyst : Okay. So when you do run out of that inventory, you will see some improved profitability, but that should be -- you mentioned an offset to that and I was just wondering what the disconnect is.

Question: Jon Tanwanteng - CJS Securities, Inc. - Analyst : Okay, understood. And then secondly, could you just talk about the auto markets a little bit more? What are you seeing trends in Q1, especially in the terms of mix of hybrid versus EVs and how that will play out through the year?

Question: Daniel Rizzo - Jefferies, LLC - Analyst : Can you just put tariffs in perspective, both in terms of what your customers are saying in the near-term impacts and how it might affect order patterns?

Question: Daniel Rizzo - Jefferies, LLC - Analyst : Well, what your customers are saying about tariffs, about their near-term impacts and how it might affect order patterns.

Question: Daniel Rizzo - Jefferies, LLC - Analyst : Okay, thanks for that. And then just in terms of CapEx with the changes that are going on in reducing your footprint and stuff like that, I was just wondering of what you're projecting for 2025, how much of that is maintenance CapEx? And is there any, I mean, are you -- will you be spending it all on Performance Materials? Is that necessary or just how we should think about it going forward? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 19, 2025 / 3:00PM, NGVT.N - Q4 2024 Ingevity Corp Earnings Call

Question: John McNulty - BMO Capital Markets - Analyst : So just regarding some of the increased innovation spend in TM, can you help us to think about where that's going? I'm assuming some of it's toward the Nexeon platform, but can you help us to think about some of the investments that you're making there?

Question: John McNulty - BMO Capital Markets - Analyst : Okay, got it. No, I appreciate the color. And then the other question was just -- Mary, I think you said on the cash flow side, you're not assuming any improvements in 2025 on a working capital basis. I guess, why would that be if the CTO inventory is still sticky and you're going to work through it in the first and second quarter? Is there an offset that we should be thinking about or is that just a level of conservatism? I guess how should we be thinking about that?

Question: John McNulty - BMO Capital Markets - Analyst : Okay, but should we be thinking about the CTO inventory working itself through? Will that likely be at least somewhat of a tailwind or again, does it get offset by the growth maybe in the core business? I guess trying to size out how big is that CTO inventory that has to be worked through maybe.

Question: Abigail Eberts - Wells Fargo Securities, LLC - Analyst : So I see you're guiding for 50% EBITDA margins for Performance Materials in '25. How should we be thinking about Performance Materials margins longer term in a more volume growth-oriented environment given that you're expecting global auto production to be lower this year?

Question: Jon Tanwanteng - CJS Securities, Inc. - Analyst : I might have missed this if you said it earlier, but I was wondering if you could talk about the logistics of exploring alternatives for the industrial business. One, does that include the alternative fatty acids business; and two, how would you physically separate the business from the pavement business in the event you would find a buyer or something else just to explain how something like that would be structured?

Question: Jon Tanwanteng - CJS Securities, Inc. - Analyst : It does. I was wondering, have you spoken to outside parties who might be interested yet, or is this still an internal focus? Just figuring out what you can split or not split.