Ingevity (NYSE: NGVT) reported Q4 EPS of $1.10, $0.10 better than the analyst estimate of $1.00. Revenue for the quarter came in at $303.4 million versus the consensus estimate of $305.49 million.

FOURTH QUARTER

• Net sales of $303.4 million were up 8.9% versus the prior year quarter’s sales of $278.6 million
• Net income of $44.3 million was up 5.2% versus net income in the prior year quarter of $42.1 million; net income as a percentage of sales of 14.6% was down 50 basis points versus the prior year quarter; diluted earnings per share were $1.05 compared to $0.99
• Adjusted earnings of $46.5 million were up 2.6% versus adjusted earnings in the prior year quarter of $45.3 million; diluted adjusted earnings per share were $1.10 versus $1.07 in the prior year quarter
• Adjusted EBITDA of $91.1 million were up 24.3% compared to fourth quarter 2018 adjusted EBITDA of $73.3 million; adjusted EBITDA margin of 30.0% increased 370 basis points versus fourth quarter 2018
• Operating cash flow was $85.5 million which was flat to prior year quarter; free cash flow in the quarter increased 4.6% to $50.5 million versus the prior year quarter

GUIDANCE:

Ingevity sees FY2020 revenue of $1.3-1.35 billion, versus the consensus of $1.37 billion.

• Adjusted EBITDA between $400 million and $420 million.
• Free cash flow will be between $200 million and $220 million.

“Our guidance reflects little to no improvement in the global macroeconomic environment, yet assumes limited impacts from the coronavirus in China, which remains unknown,” said Wilson.

“That said, we expect our Performance Materials segment to deliver double-digit revenue growth and accretion in adjusted EBITDA margins,” he said. Moreover, Wilson also noted that the recent initial determination made by an administrative law judge for the U.S. International Trade Commission denying Ingevity’s request to ban MAHLE’s importation of patent-infringing activated carbon has no impact on the outlook for the company’s Performance Materials segment in 2020. Wilson said that the company will discuss its overarching strategy to build on its leading position in gasoline vapor emissions control applications on the conference call scheduled for later this morning.

For the Performance Chemicals segment, the company expects revenues to be flat to down slightly. Engineered polymers will deliver solid growth due to new product and innovation projects in the pipeline and pavement technologies will see continued solid growth driven by adoption of our Evotherm® warm mix technology and global expansion. This growth will likely be offset by continued pressure in industrial specialties and oilfield applications. “We anticipate that Performance Chemicals segment adjusted EBITDA margins will be flat to down modestly for the year,” said Wilson.

“Overall, despite challenging global macroeconomic conditions, we will deliver strong results in 2020,” said Wilson. “Earnings growth and accreting margins, coupled with lower capital demands, will result in substantially higher free cash flow. Any improvement to the global industrial economy would serve as a welcome tailwind.”

For earnings history and earnings-related data on Ingevity (NGVT) click here.