Ingevity Q2 Earnings Call Highlights

Strong second-quarter performance: Excluding the divested Road Markings business, sales rose 5%, while adjusted EBITDA increased 14% to $115 million and margins expanded to 36.6%. Adjusted diluted EPS reached $1.74. 2026 outlook raised: Ingevity now expects adjusted EBITDA of $380 million–$400 million, adjusted EPS of $5.00–$5.45, and free cash flow of $220 million–$245 million. Portfolio and capital allocation progress: The company completed the Road Markings divestiture, advanced strategic alternatives for Advanced Polymer Technologies, repurchased $35 million of shares, and reduced net leverage to 2.5 times.

Ingevity NYSE: NGVT reported second-quarter 2026 results marked by higher adjusted earnings, margin expansion and progress on its portfolio simplification efforts, as the company raised its full-year adjusted EBITDA and earnings-per-share outlook. Chief Executive Officer and President Dave Li said sales excluding the divested Road Markings product line increased 5% from the prior-year period, with growth across the company’s three operating segments. Adjusted EBITDA rose nearly 14%, while adjusted EBITDA margin expanded to 36.6%. Reported quarterly sales were $314 million, down 5% because of the April 15 sale of the Road Markings business. Adjusted EBITDA increased 14% to $115 million, and adjusted diluted earnings per share rose to $1.74, supported by operating performance, lower interest expense and a reduced share count, Chief Financial Officer Phil Platt said.

Ingevity completed the sale of its Road Markings product line during the quarter, following the earlier divestiture of its Industrial Specialties business. Li said the transactions are intended to improve the company’s portfolio quality and concentrate resources on higher-return opportunities. The company also said its strategic alternatives process for Advanced Polymer Technologies, or APT, has entered an advanced stage. Li said management’s priority is to achieve the best result for shareholders, while the company’s guidance continues to include APT and assumes no proceeds from a potential transaction. Ingevity repurchased $35 million of shares during the quarter and had about $211 million remaining under its current authorization. The company said it remains ahead of pace toward its previously announced commitment to repurchase $300 million of shares by the end of 2027. Free cash flow excluding a litigation settlement payment was about $89 million, or $2.52 per share. Capital expenditures totaled approximately $10 million. Trailing 12-month adjusted EBITDA reached about $403 million, and net leverage improved to 2.5 times, reaching the upper end of the company’s stated target range.

Performance Materials posted sales of $161 million, up 4% from a year earlier, driven by higher volumes, product mix and annual pricing actions. Segment EBITDA increased 6% to $86 million, and EBITDA margin expanded to 53.6%. Li said a shift in consumer buying habits toward hybrid vehicles has supported the segment. Hybrid vehicles use Ingevity’s more advanced carbon solutions and generate a higher-value product mix, he said. Platt said the company expects Performance Materials’ full-year EBITDA margin to be in the mid-50% range, implying some pressure in the second half compared with the first half. The company expects plant utilization to normalize during the remainder of the year as auto production is projected to decline and Ingevity completes planned maintenance outages at two Performance Materials facilities. Platt said those outages had already been included in the company’s previous outlook. Ingevity also disclosed its first municipal water-treatmen...