Ingevity (NYSE: NGVT) reported Q2 EPS of $0.63, $0.03 better than the analyst estimate of $0.60. Revenue for the quarter came in at $270.6 million versus the consensus estimate of $256.3 million.

• Ingevity delivers results in line with special, one-time second quarter guidance driven by cost reduction actions and strong execution
• Company reaffirms fiscal year 2020 guidance of sales between $1.10 billion and $1.20 billion and adjusted EBITDA between $310 million and $350 million
• Cost reduction initiatives bolster second quarter profitability, and will save the company $35 million in 2020 and $12 million annually going forward
• Net sales of $270.6 million were down 23.3% versus the prior year quarter as a result of weakened demand, particularly in the automotive industry, driven by the economic impacts of COVID-19
• Operating cash flow of $48.9 million; free cash flow of $33.9 million

“Ingevity delivered second quarter financial results in line with the special, one-time guidance we provided at the end of the first quarter,” said Rick Kelson, Ingevity’s chairman of the board, and interim president and CEO. “While we experienced a sharp decline in volumes attributable to the economic impact of the coronavirus, or COVID-19, our team remained focused and drove cost reductions that were able to partially bolster adjusted EBITDA.” He added that the company generated operating cash flow of $48.9 million, which translated to solid free cash flow of $33.9 million.

Kelson said that the downturn in automotive sales and production in North America and Europe during the quarter significantly reduced revenues for its automotive activated carbon products. This was partially offset by an upturn in demand for similar products in China. He also pointed to reduced demand in industrial specialties applications – such as printing inks – and volatility in the oilfield drilling and production industry as other drivers of the revenue decline.

“As a countermeasure, we took strong steps toward reducing costs across the corporation,” said Kelson. “We implemented initiatives that will save us $35 million this year and will result in annualized savings of $12 million going forward.”

GUIDANCE:

Ingevity sees FY2020 revenue of $1.1-1.2 billion, versus the consensus of $1.14 billion.

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