Ingevity Corporation (NYSE:NGVT) Q2 2018 Earnings Conference Call - Final Transcript

Jul 26, 2018 • 11:00 am ET

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Ingevity Corporation (NYSE:NGVT) Q2 2018 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Ingevity Second Quarter Earnings Conference Call. At this time all participants are in a listen-only mode. Latter we will conduct a question-and-answer session (Operator Instructions) I would like to let you know that today's conference is being recorded.

I will now turn the conference over to your host, VP of IR, Mr. Dan Gallagher. Please go ahead.

Executive
Dan Gallagher

Thank you, Trisha. Good morning, everyone. Welcome to Ingevity's second quarter 2018 Earnings Conference Call. Earlier this morning, we posted a presentation onto the Investor section of our website. If you haven't already done so, I would encourage you to download this file so you can follow along on the call. You can find it by visiting ir.ingevity.com under event and presentations.

On slide number 2 of that deck, you'll see our disclaimer that today's earnings call may contain forward-looking statements. (Forward-Looking Cautionary Statement)

Throughout the call, we may refer to non-GAAP financial measures, which are intended to supplement, not substitute for, comparable GAAP measures. Definitions of these non-GAAP financial measures and reconciliations to comparable GAAP financial measures are included in our earnings release and can be found on the Investor Relations section of our website.

Our agenda is on slide 3. With me today are Michael Wilson, President and CEO; John Fortson, EVP and CFO. First, Michael will comment on the highlights of the quarter and then review the performance of our two segments. He will also discuss new developments relevant to our Performance Materials segment. John will discuss our current financial status and our revised guidance. Then Michael will make some brief closing remarks before we open the line for questions. Mike Smith, President of Performance Chemicals; and Ed Woodcock, President of Performance Materials, will join the call for Q&A.

And with that, I'll turn it over to Michael.

Executive
Michael Wilson

Thanks Dan and good morning everyone. Thank you for joining us this morning and for your continued interest in Ingevity.

If you'll turn with me to slide number 4, you'll note some highlights of the quarter. As you can see, we drove an outstanding second quarter performance. Our strong organic growth has been augmented by the Georgia-Pacific pine chemicals acquisition and our profitability is being accelerated by excellent commercial and operational execution. Each of our businesses across all of our end use applications is delivering to or exceeding our expectations. Revenues in the first quarter were over $308 million, which is more than 18% higher when compared to the previous year's quarter. While volumes were by far the largest driver to the company's financial results, product price mix and strong productivity also continued to be solid contributors.

Adjusted EBITDA was over $89 million, up 33% versus the prior year's quarter. In addition to the revenue impacts, lower production costs predominantly in the form of lower crude tall oil, or CTO costs, aided our results. These positives were partially offset by higher freight costs and increased SG&A including research and technical expenses of