Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | May 01, 2018 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 | |
Entity Registrant Name | Ingevity Corp | |
Entity Central Index Key | 1,653,477 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common stock, shares outstanding | 42,090,143 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Income Statement [Abstract] | ||
Net sales | $ 235.2 | $ 218.5 |
Cost of sales | 150.1 | 147.8 |
Gross profit | 85.1 | 70.7 |
Selling, general and administrative expenses | 26.5 | 26 |
Research and technical expenses | 5 | 5.1 |
Separation costs | 0 | 0.3 |
Restructuring and other (income) charges, net | (0.6) | 2.3 |
Acquisition-related costs | 3.8 | 0 |
Other (income) expense, net | (1.2) | (0.3) |
Interest expense, net | 6.1 | 3.3 |
Income (loss) before income taxes | 45.5 | 34 |
Provision (benefit) for income taxes | 9.7 | 11 |
Net income (loss) | 35.8 | 23 |
Less: Net income (loss) attributable to noncontrolling interest | 5 | 4 |
Net income (loss) attributable to Ingevity stockholders | $ 30.8 | $ 19 |
Per share data | ||
Basic earnings (loss) per share attributable to Ingevity Corporation (usd per share) | $ 0.73 | $ 0.45 |
Diluted earnings (loss) per share attributable to Ingevity Corporation (usd per share) | $ 0.72 | $ 0.45 |
Condensed Consolidated Stateme3
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Statement of Comprehensive Income [Abstract] | ||
Net income (loss) | $ 35.8 | $ 23 |
Other comprehensive income (loss), net of tax: | ||
Foreign currency translation adjustment | 3.9 | 1.9 |
Derivative instruments: | ||
Unrealized gain (loss), net of tax of zero and zero | 0.1 | 0 |
Reclassifications of deferred derivative instruments (gain) loss, included in net income (loss), net of tax of zero and zero | 0 | 0 |
Total derivative instruments, net of tax of zero and zero | 0.1 | 0 |
Other comprehensive income (loss), net of tax of zero and zero | 4 | 1.9 |
Comprehensive income (loss) | 39.8 | 24.9 |
Less: Comprehensive income (loss) attributable to noncontrolling interest | 5 | 4 |
Comprehensive income (loss) attributable to Ingevity stockholders | $ 34.8 | $ 20.9 |
Condensed Consolidated Stateme4
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) (Parenthetical) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Statement of Comprehensive Income [Abstract] | ||
Unrealized gain (loss), tax | $ 0 | $ 0 |
Reclassifications of deferred derivative instruments (gain) loss, included in net income (loss), tax | 0 | 0 |
Total derivative instruments, tax | 0 | 0 |
Other comprehensive income (loss), tax | $ 0 | $ 0 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Millions | Mar. 31, 2018 | Dec. 31, 2017 |
Assets | ||
Cash and cash equivalents | $ 55 | $ 87.9 |
Accounts receivable, net of allowance of $0.3 million at March 31, 2018 and $0.4 million at December 31, 2017 | 130.4 | 100 |
Inventories, net | 192.1 | 160 |
Prepaid and other current assets | 23.2 | 20.8 |
Current assets | 400.7 | 368.7 |
Property, plant and equipment, net | 483.1 | 438.5 |
Goodwill | 129.4 | 12.4 |
Other intangibles, net | 134.5 | 4.9 |
Deferred income taxes | 4.1 | 3.4 |
Restricted investment | 71.3 | 71.3 |
Other assets | 31.2 | 30.4 |
Total Assets | 1,254.3 | 929.6 |
Liabilities and equity | ||
Accounts payable | 91.8 | 83.1 |
Accrued expenses | 19.7 | 20 |
Accrued payroll and employee benefits | 15.9 | 39.2 |
Current maturities of long-term debt | 14.1 | 9.4 |
Income taxes payable | 8.6 | 1.5 |
Current liabilities | 150.1 | 153.2 |
Long-term debt including capital lease obligations | 733.9 | 444 |
Deferred income taxes | 42.8 | 41.3 |
Other liabilities | 14.5 | 13.2 |
Total Liabilities | 941.3 | 651.7 |
Commitments and contingencies (Note 15) | ||
Equity | ||
Preferred stock (par value $0.01 per share; 50,000,000 shares authorized; zero issued and outstanding at March 31, 2018 and December 31, 2017) | 0 | 0 |
Common stock (par value $0.01 per share; 300,000,000 shares authorized; 42,270,529 and 42,208,973 issued; 42,096,413 and 42,089,103 outstanding at March 31, 2018 and December 31, 2017) | 0.4 | 0.4 |
Additional paid-in capital | 143.3 | 140.1 |
Retained earnings | 175.2 | 142.8 |
Accumulated other comprehensive loss | (7.7) | (11.7) |
Treasury stock, common stock, at cost (174,116 shares at March 31, 2018; 119,870 shares at December 31, 2017) | (11.9) | (7.7) |
Total Ingevity stockholders' equity | 299.3 | 263.9 |
Noncontrolling interest | 13.7 | 14 |
Total Equity | 313 | 277.9 |
Total Liabilities and equity | $ 1,254.3 | $ 929.6 |
Condensed Consolidated Balance6
Condensed Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Millions | Mar. 31, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 0.3 | $ 0.4 |
Preferred stock, par value (usd per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (shares) | 50,000,000 | 50,000,000 |
Preferred stock, shares issued (shares) | 0 | 0 |
Preferred stock, shares outstanding (shares) | 0 | 0 |
Common stock, par value (usd per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (shares) | 300,000,000 | 300,000,000 |
Common stock, shares issued (shares) | 42,270,529 | 42,208,973 |
Common stock shares outstanding (shares) | 42,096,413 | 42,089,103 |
Treasury shares (in shares) | 174,116 | 119,870 |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | ||
Cash provided by (used in) operating activities: | |||
Net income (loss) | $ 35.8 | $ 23 | |
Adjustments to reconcile net income (loss) to cash provided by operating activities: | |||
Depreciation and amortization | 11.5 | 10.3 | |
Deferred income taxes | 0.6 | 3.3 | |
Disposal/impairment of assets | 0 | 0.1 | |
Restructuring and other (income) charges, net | (0.6) | 2.3 | |
Share-based compensation | 3.1 | 2.4 | |
Pension and other postretirement expense | 0.4 | 0.3 | |
Other non-cash items | 2.1 | 2.3 | |
Changes in operating assets and liabilities: | |||
Accounts receivable, net | (13.4) | (17) | |
Inventories, net | (23.1) | (8.3) | |
Prepaid and other currents assets | 1.6 | 0.1 | |
Accounts payable | 8.9 | (1.8) | |
Accrued expenses | (1.6) | (2.2) | |
Accrued payroll and employee benefit costs | (23.4) | (9.1) | |
Income taxes | 8 | 2.7 | |
Restructuring and other spending | (0.1) | (3.1) | |
Changes in other operating assets and liabilities, net | (0.1) | 1.2 | |
Net cash provided by operating activities | 9.7 | 6.5 | |
Cash provided by (used in) investing activities: | |||
Capital expenditures | (13.3) | (10.7) | |
Payments for acquired businesses, net of cash acquired | (315) | 0 | |
Proceeds from disposition of assets | 0.6 | 0 | |
Restricted investment | 0 | (0.5) | |
Net investment in equity securities | 0.3 | (2.1) | |
Other investing activities, net | 0 | (3) | |
Net cash provided by (used in) investing activities | (327.4) | (16.3) | |
Cash provided by (used in) financing activities: | |||
Net borrowings under our revolving credit facility | 0 | 13.1 | |
Proceeds from long-term borrowings | 300 | 0 | |
Debt issuance costs | (5.7) | 0 | |
Proceeds and withholdings from share-based compensation plans, net | (1.5) | (0.5) | |
Proceeds and withholdings from share-based compensation plans, net | 0.5 | 0 | |
Repurchases of common stock under publicly announced plan | (3.1) | 0 | |
Noncontrolling interest distributions | (5.3) | (2.6) | |
Net cash provided by (used in) financing activities | 284.9 | 10 | |
Increase (decrease) in cash, cash equivalents and restricted cash | (32.8) | 0.2 | |
Effect of exchange rate changes on cash | (0.1) | 0.3 | |
Change in cash, cash equivalents and restricted cash | (32.9) | 0.5 | |
Cash, cash equivalents and restricted cash at beginning of period | 87.9 | 30.5 | |
Cash, cash equivalents and restricted cash at end of period | [1] | 55 | 31 |
Supplemental cash flow information: | |||
Cash paid for interest, net of capitalized interest | 6 | 5.5 | |
Cash paid for taxes, net of refunds | 0.3 | 4.8 | |
Purchases of property, plant and equipment in accounts payable | $ 3.8 | $ 1.6 | |
[1] | Includes restricted cash of $0.0 million and one million three hundred thousand and cash and cash equivalents of $55.0 million and $29.7 million |
Condensed Consolidated Stateme8
Condensed Consolidated Statements of Cash Flows (Unaudited) (Parentheticals) - USD ($) | Mar. 31, 2018 | Mar. 31, 2017 |
Statement of Cash Flows [Abstract] | ||
Restricted cash and cash equivalents | $ 0 | $ 1,300,000 |
Cash and cash equivalents | $ 55,000,000 | $ 29,700,000 |
Background
Background | 3 Months Ended |
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Background | Background Ingevity Corporation ("Ingevity," "the company," "we," "us" or "our") is a leading global manufacturer of specialty chemicals and high performance activated carbon materials. We provide innovative solutions to meet our customers’ unique and demanding requirements through proprietary formulated products. We report in two business segments, Performance Materials and Performance Chemicals. Our Performance Materials segment consists of our automotive technologies and process purifications product families. Automotive technologies produces automotive carbon products used in gasoline vapor emission control systems in cars, trucks, motorcycles and boats. Process purifications produces a number of activated carbon products for food, water, beverage and chemical purification applications. Our Performance Chemicals segment consists of our pavement technologies, oilfield technologies and industrial specialties product families. Ingevity’s Performance Chemical products serve as critical inputs used in a variety of high performance applications, including asphalt paving, oil exploration and production, printing inks, adhesives, agrochemicals, and lubricants. |
Basis of Consolidation and Pres
Basis of Consolidation and Presentation | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Basis of Consolidation and Presentation | Basis of Consolidation and Presentation In all periods presented within these Condensed Consolidated Financial Statements, all intercompany accounts and transactions have been eliminated. The Condensed Consolidated Financial Statements include the accounts of Ingevity and subsidiaries in which a controlling interest is maintained. If Ingevity's ownership is less than 100 percent, the outside stockholders' interests are shown as noncontrolling interest. In all periods presented, the noncontrolling interest reported within the Condensed Consolidated Financial Statements represents the 30 percent ownership interest held by a third party U.S.-based company in our consolidated Purification Cellutions LLC legal entity. Purification Cellutions LLC is the legal entity that owns the technology associated with, and manufactures, our structured honeycomb products within our Performance Materials segment. These Condensed Consolidated Financial Statements have not been audited. However, in the opinion of management, all normal recurring adjustments necessary to state fairly the financial position and the results of operations for the interim periods presented have been made. These Condensed Consolidated Financial Statements have been prepared on the basis of accounting principles and practices generally accepted in the United States (“GAAP”) applied consistently with those used in the preparation of the Annual Consolidated Financial Statements for the years ended December 31, 2017 , 2016 and 2015 , collectively referred to as the “Annual Consolidated Financial Statements” included in our Annual Report on Form 10-K for the year ended December 31, 2017 (the "2017 Annual Report"). Certain information and footnote disclosures normally included in our Annual Consolidated Financial Statements presented in accordance with GAAP have been condensed or omitted. The consolidated results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. The accompanying Condensed Consolidated Financial Statements should be read in conjunction with the Annual Consolidated Financial Statements and notes thereto included in the 2017 Annual Report. Certain prior year amounts have been reclassified to conform with the current year's presentation. |
New accounting guidance
New accounting guidance | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
New accounting guidance | New accounting guidance In February 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2018-02 "Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from AOCI." This ASU provides for the reclassification of the effect of remeasuring deferred tax balances related to items within accumulated other comprehensive income to retained earnings resulting from the provisions of the December 22, 2017 U.S. Tax Cuts and Jobs Act (the "U.S. Tax Reform"). We early adopted this new ASU in the fourth quarter of 2017 and as a result, we reclassified $0.3 million from AOCI to retained earnings. In August 2017, the FASB issued ASU 2017-12 "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities" that amends the hedge accounting recognition and presentation requirements under hedge accounting. The new standard will make more financial and non-financial hedging strategies eligible for hedge accounting, amends the presentation and disclosure requirements, and simplifies how companies assess effectiveness. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those years, and early adoption is permitted. We early adopted this new ASU during the fourth quarter of 2017. The impact of adoption did not have a material effect on our Condensed Consolidated Financial Statements and related disclosures. In May 2017, the FASB issued ASU 2017-09 "Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting," which provided clarity on which changes to the terms or conditions of share-based payment awards require an entity to apply the modification accounting provisions required in Topic 718. We have early adopted this new standard during our second quarter of 2017. The impact of adoption did not have a material effect on our Condensed Consolidated Financial Statements and related disclosures. In March 2017, the FASB issued ASU 2017-07 "Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost." The amendment in this new standard requires the service cost component to be presented separate from the other components of net benefit cost. Service cost will be presented with other employee compensation costs within operations. The other components of net benefit cost, such as interest cost, amortization of prior service cost, and gains or losses, are required to be separately presented outside of operations, if income or loss from operations is presented. Of the components of net periodic benefit cost, only the service cost component will be eligible for asset capitalization. We have early adopted this new standard during our first quarter of 2017 on a retrospective basis. The adoption of this new guidance had no impact on our Condensed Consolidated Financial Statements and related disclosures. In January 2017, the FASB issued ASU 2017-04 "Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment," which amends and simplifies the accounting standard for goodwill impairment. The new standard removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount a reporting unit’s carrying value exceeds its fair value, limited to the total amount of goodwill allocated to that reporting unit. The new standard is effective for annual and any interim impairment tests for periods beginning after December 15, 2019, and early adoption is permitted for any impairment tests performed after January 1, 2017. The Company adopted this standard on January 1, 2018. This new guidance did not have a material impact on our Condensed Consolidated Financial Statements and related disclosures. In January 2017, the FASB issued ASU No. 2017-01, "Business Combinations (Topic 805): Clarifying the Definition of a Business." The new guidance narrows the existing definition of a business and provides a framework for evaluating whether a transaction should be accounted for as an acquisition (or disposal) of assets or a business. The guidance requires an entity to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets; if so, the set of transferred assets and activities (collectively, the "set") is not a business. To be considered a business, the set would need to include an input and a substantive process that together significantly contribute to the ability to create outputs, as defined by the ASU. The guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those annual reporting periods, and should be applied prospectively. We adopted this standard on January 1, 2018. We have utilized this new guidance in our accounting for the Georgia Pacific's Pine Chemical Business acquisition; refer to Note 4 for more information. The adoption of this new guidance did not have a material impact on our Condensed Consolidated Financial Statements. In August 2016, the FASB issued final amendments to clarify how entities should classify certain cash receipts and cash payments in ASU 2016-15 "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments." The new guidance clarifies the classification on the statement of cash flows of certain cash receipts and disbursements such as distributions received from equity method investees, proceeds from settlement of insurance claims, and proceeds from the settlement of corporate-owned life insurance policies. The new standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those years. The Company adopted this standard on January 1, 2018. This new guidance did not have a material impact on our Condensed Consolidated Financial Statements and related disclosures. In February 2016, the FASB issued ASU 2016-02 "Leases (Topic 842)." Under the new guidance, lessees will be required to recognize for all leases (with the exception of short-term leases) a lease liability, which is a lessee's obligation to make lease payments arising from a lease, measured on a discounted basis and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We are in the process of evaluating the impact of this guidance on our Condensed Consolidated Financial Statements and related disclosures, including identifying and analyzing all contracts that contain a lease. As a lessee, the majority of our leases under existing guidance are classified as operating leases and therefore not recorded on the balance sheet but are recorded in the statement of earnings as expense as incurred. Upon adoption of the new guidance, we may be required to record the vast majority of these operating leases on the balance sheet as a right-of-use asset and a lease liability. The timing of expense recognition and classification in the statement of earnings could change based on the classification of leases as either operating or financing; however, we have not completed our evaluation to determine to what extent. In May 2014, the FASB issued ASU 2014-09 “Revenue from Contracts with Customers (Topic 606)” which supersedes both the revenue recognition requirement to ASC 605 “Revenue Recognition” and most industry-specific guidance. The core principle of the new standard (ASC 606) is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. An entity must also disclose sufficient information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative information about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. In 2016 and 2017, the FASB issued several ASUs that provided additional clarity on numerous topics as well as providing technical corrections to the original ASU 2014-09. We adopted this new standard on January 1, 2018, utilizing the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. See below for the effect of this adoption on our Condensed Consolidated Financial Statements. The majority of our sales revenue remains unchanged by ASC 606 and continues to be recognized when products are shipped from our manufacturing and warehousing facilities, which represents the point at which control is transferred to the customer. For certain limited contracts, where we are producing goods with no alternative use and for which we have an enforceable right to payment for performance completed to date, we are recognizing revenue as goods are manufactured, rather than when they are shipped as previously done under ASC 605. The cumulative effect of the changes made to our condensed consolidated balance sheet on January 1, 2018, due to the adoption of ASC 606, were as follows: In millions Balance at December 31, 2017 Adjustments Balance at January 1, 2018 Assets Accounts receivable, net of allowance $ 100.0 $ 0.3 $ 100.3 Inventories, net 160.0 (2.4 ) 157.6 Prepaid and other current assets 20.8 5.1 25.9 Liabilities Accrued expenses 20.0 0.9 20.9 Deferred income taxes 41.3 0.5 41.8 Equity Retained earnings $ 142.8 $ 1.6 $ 144.4 In accordance with ASC 606, the disclosure of the impact of adoption on our condensed consolidated statement of operations and balance sheet were as follows: Three months ended March 31, 2018 In millions As reported Balances without Adoption of ASC 606 Effect of Change Higher/(Lower) Net sales $ 235.2 $ 235.3 $ (0.1 ) Cost of sales 150.1 150.6 (0.5 ) Provision (benefit) for income taxes 9.7 9.6 0.1 Net income (loss) $ 35.8 35.5 $ 0.3 March 31, 2018 In millions As reported Balances without Adoption of ASC 606 Effect of Change Higher/(Lower) Assets Accounts receivable, net of allowance $ 130.4 $ 130.1 $ 0.3 Inventories, net 192.1 194.0 (1.9 ) Prepaid and other current assets 23.2 18.3 4.9 Liabilities Accrued expenses 19.7 18.8 0.9 Deferred income taxes 42.8 42.7 0.1 Equity Retained earnings $ 175.2 $ 172.9 $ 2.3 All other issued but not yet effective accounting pronouncements are not expected to have a material impact on our Condensed Consolidated Financial Statements. |
Acquisition
Acquisition | 3 Months Ended |
Mar. 31, 2018 | |
Business Combinations [Abstract] | |
Acquisition | Acquisition Georgia Pacific's Pine Chemical Business On August 22, 2017, we entered into an Asset Purchase Agreement (the "Purchase Agreement") with Georgia-Pacific Chemicals LLC, Georgia-Pacific LLC (together with Georgia-Pacific Chemicals LLC, "GP") and Ingevity Arkansas, LLC, a wholly-owned subsidiary of Ingevity, to purchase substantially all the assets primarily used in GP's pine chemical business (the "Pine Chemical Business"), including assets and facilities related to tall oil fractionation operations and the production or modification of tall oil fatty acids, tall oil rosins, rosin derivatives and formulated products (the "Acquisition"). On March 8, 2018 (the "Acquisition Date"), pursuant to the terms and conditions set forth in the Purchase Agreement, we completed the Acquisition for an aggregate preliminary purchase price of $315.0 million , which includes an adjustment for working capital. This is subject to further adjustments based on a final assessment of working capital and other items as of the closing date. The Acquisition was primarily funded with the net proceeds from the $300.0 million senior notes issued on January 24, 2018. The Acquisition is being integrated into our Performance Chemicals segment and has been included within our results of operations since the Acquisition Date. In addition, at the closing of the Acquisition, the Company and GP entered into a 20-year, market-based crude tall oil (CTO) supply contract with certain of Georgia-Pacific’s paper mill operations. The Acquisition contributed Net sales and Income before income taxes of $4.8 million and $0.3 million , respectively, to the consolidated operating results of Ingevity for the period from March 8, 2018 through March 31, 2018. Preliminary Purchase Price Allocation The Acquisition has been accounted for under the business combinations accounting guidance, and as such we have applied acquisition accounting. Acquisition accounting requires, among other things, that assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date. The aggregate preliminary purchase price noted above was allocated to the major categories of assets acquired and liabilities assumed based upon their estimated fair values at the Acquisition Date using primarily Level 2 and Level 3 inputs. These Level 2 and Level 3 valuation inputs include an estimate of future cash flows and discount rates. Additionally, estimated fair values are based, in part, upon outside appraisals for certain assets, including specifically-identified intangible assets. The allocation of the purchase price to the assets acquired and liabilities assumed, including the residual amount allocated to goodwill, is based upon preliminary information and is subject to change within the measurement period (up to one year from the Acquisition Date) as additional information concerning final asset and liability valuations is obtained. The primary areas of the preliminary purchase price allocation that are not yet finalized relate to the fair value of inventories, property, plant and equipment, and intangible assets. During the measurement period, if new information is obtained about facts and circumstances that existed as of the Acquisition Date that, if known, would have resulted in revised estimated values of those assets or liabilities as of that date, we will revise the preliminary purchase price allocation. The effect of measurement period adjustments to the estimated fair values will be reflected as if the adjustments had been completed on the Acquisition Date. The impact of all changes that do not qualify as measurement period adjustments will be included in current period earnings. The following table summarizes the consideration paid for the Acquisition and the amounts of the assets acquired and liabilities assumed as of the Acquisition Date, which have been allocated on a preliminary basis. Preliminary Purchase Price Allocation In millions Weighted Average Amortization Period Fair Value Accounts receivable $ 16.2 Inventories (1) 9.6 Property, plant and equipment 40.3 Intangible assets (2) Patents 12 years 1.9 Customer relationships 11 years 129.0 Goodwill (3) 117.0 Other assets 2.3 Total fair value of assets acquired 316.3 Accounts payable 0.8 Accrued expenses 0.5 Total fair value of liabilities assumed $ 1.3 Total cash paid $ 315.0 _______________ (1) Fair value of finished good inventories acquired included a step-up in the value of approximately $1.4 million, of which $0.8 million was expensed in the three months ended March 31, 2018 and included in "Cost of sales" on the condensed consolidated statement of operations. (2) The aggregate amortization expense was approximately $0.7 million for the three months ended March 31, 2018. Estimated amortization expense is as follows: 2018 - $9.7 million, 2019 - $12.0 million, 2020 - $12.0 million, 2021 - $11.9 million, and 2022 - $11.8 million. (3) Goodwill largely consists of expected cost synergies and economies of scale resulting from the business combination. We expect the full amount to be deductible for income tax purposes. Unaudited Pro Forma Financial Information The following unaudited pro forma results of operations assume that the Acquisition occurred at the beginning of the periods presented. These unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of what the actual results of operations would have been if the Acquisition had occurred at the beginning of the periods presented, nor are they indicative of future results of operations. The pro forma results presented below are adjusted for the removal of acquisition and other related costs of $4.6 million and zero for the three months ended March 31, 2018 and 2017, respectively. Three Months Ended March 31, In millions 2018 2017 Net sales $ 255.4 $ 242.8 Income (loss) before income taxes 50.2 32.1 Diluted earnings (loss) per share attributable to Ingevity stockholders 0.81 0.42 Acquisition-related costs Costs incurred to complete and integrate the Acquisition into our Performance Chemicals segment are expensed as incurred and recorded to Acquisition-related costs on our condensed consolidated statement of operations. During the three months ended March 31, 2018 and 2017, $3.8 million and zero , respectively of Acquisition-related costs were recognized. These costs represent transaction costs, legal fees and professional third-party service fees. |
Revenues
Revenues | 3 Months Ended |
Mar. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Revenues | Revenues On January 1, 2018, we adopted ASC 606 using the modified retrospective method applied to contracts not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under ASC 605. See Note 3 for more information on the adoption of ASC 606 and its impact on our Condensed Consolidated Financial Statements. Ingevity's operating segments are (i) Performance Materials and (ii) Performance Chemicals. Our Performance Materials segment consists of our automotive technologies and process purifications product lines. Performance Materials manufactures products in the form of powder, granular, extruded pellets or structured honeycombs and activated carbon sheets. Automotive technologies products are sold into the gasoline vapor emission control markets within the automotive industry while process purifications products are sold into the food, water, beverage, air emissions control, corrosion protection, odor reduction and chemical purification industries. Our Performance Chemicals segment consists of our pavement technologies, oilfield technologies and industrial specialties product lines. Performance Chemicals manufactures products derived from crude tall oil and lignin extracted from the kraft paper making process. Performance Chemicals products serve as critical inputs used in a variety of high performance applications, including asphalt paving (pavement technologies product line), oil exploration and production (oilfield technologies product line), printing inks, adhesives, agrochemicals, and lubricants (industrial specialties product line). Net sales in both of our reportable segments are based on the sale of manufactured products. Net sales are recognized when obligations under the terms of a contract with our customer are satisfied; generally, this occurs with the transfer of control of our products. Since net sales are derived from product sales only, we have disaggregated our net sales by our product lines within each reportable segment. Net sales are measured as the amount of consideration we expect to receive in exchange for transferring goods. Sales, value add, and other taxes we collect concurrent with revenue-producing activities are excluded from revenue. Additionally, sales returns and allowances are not a normal practice in the industry and are not significant. Certain customers may receive cash-based incentives, including discounts and volume rebates, which are accounted for as variable consideration and included in net sales. Incidental items immaterial in the context of the contract are recognized as expense. We recognize the cost for freight and shipping when control of the product has transferred to the customer as an expense in "Cost of sales" on the condensed consolidated statement of operations. Although very rare, from time to time we incur expenses to obtain a sales contract. In these cases, because these costs are for orders fulfilled in one year or less, we expense these costs as they are incurred. Because the period between when we transfer a promised good to a customer and when the customer pays for that good will be one year or less, we elect not to adjust the promised amount of consideration for the effects of any significant financing component. Disaggregation of Revenue The following tables present our Net sales disaggregated by product line and geography. In millions Three months ended March 31, 2018 Automotive Technologies product line $ 85.9 Process Purification product line 9.6 Performance Materials segment $ 95.5 Oilfield Technologies product line 22.4 Industrial Specialties product line 98.8 Pavement Technologies product line 18.5 Performance Chemicals segment $ 139.7 Consolidated Net sales $ 235.2 The following table presents our Net sales disaggregated by geography, based on the delivery address of our customer. In millions Three months ended March 31, 2018 North America $ 154.7 Asia Pacific 34.0 Europe, Middle East and Africa 40.4 South America 6.1 Consolidated Net Sales $ 235.2 Contract Balances The following table provides information about contract assets and contract liabilities from contracts with customers. The contract assets primarily relate to our rights to consideration for products produced but not billed at the reporting date on contracts with certain customers. The contract assets are recognized as accounts receivables when the rights become unconditional and the customer has been billed. Contract liabilities represent obligations to transfer goods to a customer for which we have received consideration from our customer. For all periods presented we had no contract liabilities. In millions Contract Asset January 1, 2018 (1) $ 4.4 Reclassification to accounts receivable, billed to customers (2.3 ) Contract asset additions 2.2 March 31, 2018 (1) $ 4.3 _______________ (1) Included within "Prepaid and other current assets" on the condensed consolidated balance sheet. |
Fair value measurements
Fair value measurements | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair value measurements | Fair Value Measurements Financial Instruments and Risk Management Ingevity’s operations are exposed to market risks, such as changes in foreign currency exchange rates and commodity prices due to transactions denominated in a variety of foreign currencies and purchases of certain commoditized raw materials and inputs. Changes in these rates and prices may have an impact on Ingevity’s future cash flow and earnings. To mitigate these market risks and their effects, we enter into derivative financial instruments which are governed by policies, procedures and internal processes set forth by our Board of Directors. Our risk management program also addresses counterparty credit risk by selecting only major financial institutions with investment grade ratings. Once the derivative financial instrument is entered into, we continuously monitor the financial institutions’ credit ratings and our credit risk exposure held by the financial institution. When appropriate, we reallocate exposures across multiple financial institutions to limit credit risk. If a counterparty fails to fulfill its performance obligations under the derivative financial instrument, then Ingevity is exposed to credit risk equal to the fair value of the financial instrument. Derivative assets and liabilities are reported on a net basis by counterparty, to the extent governed by master netting agreements, in the consolidated balance sheets. Due to our proactive mitigation of these potential credit risk we anticipate performance by our counterparties to these contracts and therefore no material loss is expected. Foreign Currency Exchange Risk Management We manufacture and sell our products in several countries throughout the world and, thus, we are exposed to changes in foreign currency exchange rates. To manage the volatility relating to these exposures, we net the exposures on a consolidated basis to take advantage of natural offsets. To manage the remaining exposure, from time to time, we utilize forward currency exchange contracts and zero cost collar option contracts to minimize the volatility to earnings and cash flows resulting from the effect of fluctuating foreign currency exchange rates on export sales denominated in foreign currencies (principally the euro). These contracts are generally designated as cash flow hedges. We began our foreign currency exchange risk hedging program in July 2017 and therefore prior to that time we had no derivative financial instruments designated to foreign currency exchange risk. As of March 31, 2018 we had no forward currency exchange contracts or zero cost collar option contracts outstanding. Commodity Price Risk Management Certain energy sources used by the Company, are subject to price volatility caused by weather, supply and demand conditions, economic variables and other unpredictable factors. This volatility is primarily related to the market pricing of natural gas. To mitigate expected fluctuations in market prices and the volatility to earnings and cash flow resulting from changes to pricing of natural gas purchases, from time to time, we will enter into swap contracts and zero cost collar option contracts and designate these contracts as cash flow hedges. We began our commodity price risk hedging program in December 2017 and therefore prior to this date we had no derivative financial instruments designated to hedge commodity price risk. As of March 31, 2018 , we had 1.8 million and 1.1 million mmBTUS (millions of British Thermal Units) in aggregate notional volume of outstanding natural gas commodity swap contracts and zero cost collar option contracts, respectively, designated as cash flow hedges. As of March 31, 2018 , open commodity contracts hedge forecasted transactions until February 26, 2019. The fair value of the outstanding designated natural gas commodity hedge contracts as of March 31, 2018 was less than $0.1 million . Fair-Value Measurements We have categorized our assets and liabilities that are recorded at fair value, based on the priority of the inputs to the valuation technique, into a three-level fair-value hierarchy. The fair-value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure the assets and liabilities fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair-value measurement of the instrument. The following information is presented for assets and liabilities that are recorded in the condensed consolidated balance sheets at fair value measured on a recurring basis. There were no transfers of assets and liabilities that are recorded at fair value between Level 1 and Level 2 during the period reported. There were no non-recurring fair value measurements in the condensed consolidated balance sheets as of March 31, 2018 or December 31, 2017 . In millions Level 1 (1) Level 2 (2) Level 3 (3) Total March 31, 2018 Assets: Equity securities (4) 1.5 — — 1.5 Total assets $ 1.5 $ — $ — $ 1.5 Liabilities: Deferred compensation arrangement (5) 3.7 — — 3.7 Separation-related reimbursement awards (6) 0.7 — — 0.7 Total liabilities $ 4.4 $ — $ — $ 4.4 December 31, 2017 Assets: Equity investments (4) 1.8 — — — 1.8 Total assets $ 1.8 $ — $ — $ 1.8 Liabilities: Deferred compensation arrangement (5) 2.0 — — 2.0 Separation-related reimbursement awards (6) 0.9 — — 0.9 Total liabilities $ 2.9 $ — $ — $ 2.9 ______________ (1) Quoted prices in active markets for identical assets. (2) Quoted prices for similar assets and liabilities in active markets. (3) Significant unobservable inputs. (4) Included within "Prepaid and other current assets" on the condensed consolidated balance sheet. (5) Included within "Other liabilities" on the condensed consolidated balance sheet. (6) Included within "Accrued expenses" on the condensed consolidated balance sheet. The expense recognized during the three months ended March 31, 2018 was zero . At March 31, 2018 , the book value of capital lease obligations was $80.0 million and the fair value was $90.7 million . The fair value of our capital lease obligations is based on the period-end quoted market prices for the obligations, using Level 1 inputs. The carrying amount of our variable interest rate long-term debt is $360.9 million as of March 31, 2018 . The carrying value is a reasonable estimate of the fair value of the outstanding debt based on the variable interest rate of the debt. At March 31, 2018 , the book value of our fixed rate debt, the Senior Notes, was $300.0 million , and the fair value was $290.2 million , based on Level 1 inputs. At March 31, 2018 , the book value of our restricted investment was $71.3 million , and the fair value was $67.6 million , based on Level 1 inputs. The carrying value of our financial instruments: cash and cash equivalents, accounts receivable, other receivables, other payables and accrued liabilities approximate their fair values due to the short-term nature of these financial instruments. |
Inventories, net
Inventories, net | 3 Months Ended |
Mar. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Inventories, net | Inventories, net In millions March 31, 2018 December 31, 2017 Raw materials $ 40.5 $ 40.1 Production materials, stores and supplies 16.0 13.4 Finished and in-process goods 143.1 114.3 Subtotal 199.6 167.8 Less: excess of cost over LIFO cost (7.5 ) (7.8 ) Inventories, net $ 192.1 $ 160.0 |
Property, plant and equipment,
Property, plant and equipment, net | 3 Months Ended |
Mar. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property, plant and equipment, net | Property, plant and equipment, net In millions March 31, 2018 December 31, 2017 Machinery and equipment $ 830.3 $ 792.5 Buildings and leasehold equipment 119.0 115.0 Land and land improvements 20.0 18.0 Construction in progress 38.2 35.8 Total cost 1,007.5 961.3 Less: accumulated depreciation (524.4 ) (522.8 ) Property, plant and equipment, net $ 483.1 $ 438.5 |
Goodwill and other intangible a
Goodwill and other intangible assets, net | 3 Months Ended |
Mar. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and other intangible assets | Goodwill and other intangible assets, net Operating Segments In millions Performance Chemicals Performance Materials Total December 31, 2017 $ 8.1 $ 4.3 $ 12.4 Acquisitions (1) 117.0 — 117.0 Foreign currency translation — — — March 31, 2018 $ 125.1 $ 4.3 $ 129.4 _______________ (1) See Note 4 for more information. March 31, 2018 . All of our other intangible assets, net are related to the Performance Chemicals operating segment. The following table summarizes intangible assets: March 31, 2018 December 31, 2017 In millions Gross carrying amount Accumulated amortization Net Gross carrying amount Accumulated amortization Net Brands (1) $ 13.9 $ 11.9 $ 2.0 $ 13.9 $ 11.8 $ 2.1 Patents (2) 1.9 — 1.9 — — — Customer contracts and relationships (2) 157.2 26.6 130.6 28.2 25.4 2.8 Other intangibles, net $ 173.0 $ 38.5 $ 134.5 $ 42.1 $ 37.2 $ 4.9 _______________ (1) Represents trademarks, trade names and know-how. (2) See Note 4 for more information. The amortization expense related to our intangible assets in the table above is shown in the table below. Three Months Ended March 31, In millions 2018 2017 Cost of sales $ 0.3 $ 0.3 Selling, general and administrative 1.0 0.3 Total amortization expense $ 1.3 $ 0.6 Based on the current carrying values of intangible assets, estimated pre-tax amortization expense for the next five years is as follows: 2018 - $11.5 million , 2019 - $13.5 million , 2020 - $12.5 million , 2021 - $12.2 million and 2022 - $12.2 million . The estimated pre-tax amortization expense may fluctuate due to changes in foreign currency. |
Debt including capital lease ob
Debt including capital lease obligations | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Debt including capital lease obligations | Debt including capital lease obligations Current and long-term debt including capital lease obligations consisted of the following: March 31, 2018 In millions Interest rate Maturity date March 31, 2018 December 31, 2017 Revolving credit facility (1) 3.13% 2022 $ — $ — Term loan facility 3.13% 2022 375.0 375.0 Senior notes 4.50% 2026 300.0 — Capital lease obligations 7.67% 2027 80.0 80.0 Total debt including capital lease obligations 755.0 455.0 Less: debt issuance costs 7.0 1.6 Total debt including capital lease obligations, net of debt issuance costs 748.0 453.4 Less: debt maturing within one year (2) 14.1 9.4 Long-term debt including capital lease obligations $ 733.9 $ 444.0 ______________ (1) Letters of credit outstanding under the revolving credit facility were $1.8 million and available funds under the facility were $548.2 million at March 31, 2018 . (2) Debt maturing within one year is included in "Current maturities of long-term debt" on the condensed consolidated balance sheets. 2018 Senior Notes On January 24, 2018, we issued $300.0 million aggregate principal amount of 4.50 percent senior unsecured notes due 2026 (the “Notes”). The Notes were issued pursuant to an indenture dated as of January 24, 2018 (the “Indenture”), by and among Ingevity, the subsidiary guarantors party thereto and U.S. Bank National Association, as trustee. The Notes were offered and sold only to qualified institutional buyers pursuant to Rule 144A and to certain non-U.S. persons in transactions outside the United States pursuant to Regulation S under the Securities Act of 1933, as amended (the “Securities Act”). The Notes have not been registered under the Securities Act or any state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state laws. The net proceeds from the sale of the Notes, after deducting deferred financing fees and expenses of $5.7 million , were approximately $294.3 million . Interest payments on the Notes are due semiannually in arrears on February 1st and August 1st of each year, beginning on August 1, 2018, at a rate of 4.50 percent per year. The Notes will mature on February 1, 2026. Financial Covenants The Indenture contains certain customary covenants (including covenants limiting Ingevity and our restricted subsidiaries’ ability to grant or permit liens on certain property securing debt, declare or pay dividends, make distributions on or repurchase or redeem capital stock, make investments in unrestricted subsidiaries, engage in sale and lease-back transactions, and engage in a consolidation or merger, or sell, transfer or otherwise dispose of all or substantially all of the assets of our and our restricted subsidiaries, taken as a whole) and events of default (subject in certain cases to customary exceptions, as well as grace and cure periods). The occurrence of an event of default under the Indenture could result in the acceleration of the Notes and could cause a cross-default that could result in the acceleration of other indebtedness of Ingevity and our subsidiaries. The revolving credit facility and term loan facility ("Facilities") include financial covenants requiring Ingevity to maintain on a consolidated basis a maximum total leverage ratio of 4.00 to 1.00 (which may be increased to 4.50 to 1.00 under certain circumstances) and a minimum interest coverage ratio of 3.00 to 1.00. We were in compliance with all covenants at March 31, 2018 . |
Equity
Equity | 3 Months Ended |
Mar. 31, 2018 | |
Equity [Abstract] | |
Equity | Equity Ingevity Stockholders' Common Stock In millions, except per share data Shares Amount Additional paid in capital Retained earnings Accumulated other comprehensive income (loss) Treasury stock Noncontrolling interest Total Balance at December 31, 2017 42,209 $ 0.4 $ 140.1 $ 142.8 $ (11.7 ) $ (7.7 ) $ 14.0 $ 277.9 Net income (loss) — — — 30.8 — — 5.0 35.8 Other comprehensive income (loss) — — — — 4.0 — — 4.0 Common stock issued 56 — — — — — — — Exercise of stock options, net 5 — 0.1 — — — — 0.1 Tax payments related to vested restricted stock units — — — — — (1.5 ) — (1.5 ) Share repurchase program — — — — — (3.1 ) — (3.1 ) Noncontrolling interest distributions — — — — — — (5.3 ) (5.3 ) Share-based compensation plans — — 3.1 — — 0.4 — 3.5 Adoption of ASC 606 — — — 1.6 — — — 1.6 Balance at March 31, 2018 42,270 $ 0.4 $ 143.3 $ 175.2 $ (7.7 ) $ (11.9 ) $ 13.7 $ 313.0 Noncontrolling interest In millions 2018 2017 Balance at beginning of period $ 14.0 $ 7.6 Net income (loss) attributable to noncontrolling interest 5.0 4.0 Noncontrolling interest distributions (5.3 ) (2.6 ) Balance at end of period $ 13.7 $ 9.0 Share Repurchases On February 20, 2017, our Board of Directors authorized the repurchase of up to $100 million of our common stock. The repurchase program does not include a specific timetable or price targets and may be suspended or terminated at any time. Shares may be purchased through open market or privately negotiated transactions at the discretion of management based on its evaluation of prevailing market conditions and other factors. During the three months ended March 31, 2018 , we repurchased 41,300 shares of our common stock at a weighted average cost per share of $75.01 . At March 31, 2018 , $90.3 million remained unused under our Board-authorized repurchase program. We record shares of common stock repurchased at cost as treasury stock, resulting in a reduction of stockholders’ equity in the condensed consolidated balance sheets. When the treasury shares are contributed under our employee benefit plans or issued for option exercises, we use a first-in, first-out (“FIFO”) method for determining cost. The difference between the cost of the shares and the market price at the time of contribution to an employee benefit plan is added to or deducted from the related capital in excess of par value of common stock. |
Retirement Plans
Retirement Plans | 3 Months Ended |
Mar. 31, 2018 | |
Postemployment Benefits [Abstract] | |
Retirement Plans | Retirement Plans The following table summarizes the components of net periodic benefit cost (income) for our defined benefit pension plans: Three months ended March 31, Pensions Other Benefits (in millions) 2018 2017 2018 2017 Components of net periodic benefit cost (income): Service cost (1) $ 0.4 $ 0.3 $ — $ — Interest cost (2) 0.2 0.2 — — Expected return on plan assets (2) (0.2 ) (0.2 ) — — Net periodic benefit cost (income) $ 0.4 $ 0.3 $ — $ — _______________ (1) Included in "Cost of sales" on the condensed consolidated statements of operations. (2) Included in "Other (income) expense, net" on the condensed consolidated statements of operations. We did not make any voluntary cash contributions to our Union Hourly defined benefit pension plan in the three months ended March 31, 2018 . There are no required cash contributions to our Union Hourly defined benefit pension plan in 2018 , and we currently have no plans to make any voluntary cash contributions in 2018 . |
Restructuring and other (income
Restructuring and other (income) charges, net | 3 Months Ended |
Mar. 31, 2018 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and other (income) charges, net | Restructuring and other (income) charges, net We continually perform strategic reviews and assess the return on our operations which sometimes results in a plan to restructure the business. The cost and benefit of these strategic restructuring initiatives are recorded as restructuring and other (income) charges, net in our condensed consolidated statements of operations. These costs are excluded from our operating segment results. We record an accrual for severance and other non-recurring costs under the provisions of the relevant accounting guidance. Additionally, in some restructuring plans write-downs of long-lived assets may occur. Two types of assets are impacted: assets to be disposed of by sale and assets to be abandoned. Assets to be disposed of by sale are measured at the lower of carrying amount or estimated net proceeds from the sale. Assets to be abandoned with no remaining future service potential are written down to amounts expected to be recovered. The useful life of assets to be abandoned that have a remaining future service potential are adjusted and depreciation is recorded over the adjusted useful life. Below provides detail of the Restructuring and other (income) charges, net incurred. Detail on the restructuring charges and asset disposal activities is provided below. Three Months Ended March 31, In millions 2018 2017 Restructuring and other (income) charges, net Gain on sale of assets and businesses $ (0.6 ) $ — Severance and other employee-related costs (1) — 1.3 Other (income) charges, net (2) — 1.0 Total restructuring and other (income) charges, net $ (0.6 ) $ 2.3 _______________ (1) Represents severance and employee benefit charges. Income represents adjustments to previously recorded severance and employee benefits. (2) Primarily represents costs associated with rental payments, contract terminations, and other miscellaneous exit costs. Other Income primarily represents favorable developments on previously recorded exit costs as recoveries associated with restructuring activities. 2018 activities In February 2018, we sold assets from the Performance Chemicals derivatives operations in Duque De Caxias, Rio de Janeiro, Brazil. These assets were part of a facility that was closed as a result of a restructuring event in 2016. As a result of this sale, we recorded $0.6 million as a gain on sale of assets in the three months ended March 31, 2018 . 2017 activities In January 2017, we initiated a reorganization to streamline our leadership team, flatten the organization and reduce costs. As a result of this reorganization, we recorded $1.3 million , in severance and other employee-related costs in the three months ended March 31, 2017 . During the three months ended March 31, 2017 , we also recorded $1.0 million of additional miscellaneous exit costs primarily associated with the exit of our Performance Chemicals' manufacturing operations in Palmeira, Santa Catarina, Brazil which began in the fourth quarter of 2016. Roll forward of Restructuring Reserves The following table shows a roll forward of restructuring reserves that will result in cash spending. Balance at Change in Cash Balance at In millions 12/31/2017 (1) Reserve (2) Payments Other (3) 3/31/2018 (1) Restructuring Reserves $ 0.2 — (0.1 ) — $ 0.1 _______________ (1) Included in "Accrued Expenses" on the condensed consolidated balance sheets. (2) Includes severance and other employee-related costs, exited leases, contract terminations and other miscellaneous exit costs. Any asset write-downs including accelerated depreciation and impairment charges are not included in the above table. (3) Primarily foreign currency translation adjustments. |
Income taxes
Income taxes | 3 Months Ended |
Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes For the three months ended March 31, 2018 and 2017 , the effective tax rates, including discrete items, were as follows: Three Months Ended March 31, 2018 2017 Effective tax rate 21.3 % 32.4 % We determine our interim tax provision using an Estimated Annual Effective Tax Rate methodology (“EAETR”). The EAETR is applied to the year-to-date ordinary income, exclusive of discrete items. The tax effects of discrete items are then included to arrive at the total reported interim tax provision. The determination of the EAETR is based upon a number of estimates, including the estimated annual pre-tax ordinary income in each tax jurisdiction in which we operate. As our projections of ordinary income change throughout the year, the EAETR will change period-to-period. The tax effects of discrete items are recognized in the tax provision in the period they occur. Depending on various factors, such as the item’s significance in relation to total income and the rate of tax applicable in the jurisdiction to which it relates, discrete items in any quarter may materially impact the reported effective tax rate. As a global enterprise, our tax expense may be impacted by changes in tax rates or laws, the finalization of tax audits and reviews, as well as other factors. As such, there may be significant volatility in interim tax provisions. The below table provides a reconciliation between our reported effective tax rates and the EAETR. Three Months Ended March 31, 2018 2017 In millions, except percentages Before tax Tax Effective tax rate % impact Before tax Tax Effective tax rate % impact Consolidated operations $ 45.5 $ 9.7 21.3 % $ 34.0 $ 11.0 32.4 % Discrete items: Separation costs — — 0.3 0.1 Restructuring and other (income) charges, net (0.6 ) — 2.3 0.6 Acquisition and other related costs (1) 4.6 1.1 — — Results of legal entities with full valuation allowances (2) — — 1.8 — Other tax only discrete items — (0.2 ) — 0.2 Total discrete items 4.0 0.9 4.4 0.9 Consolidated operations, before discrete items $ 49.5 $ 10.6 $ 38.4 $ 11.9 Quarterly effect of changes in the EAETR (3) 21.4 % 31.0 % _______________ (1) Charges primarily relate to legal and professional fees and inventory step-up amortization incurred associated with the acquisition of the Pine Chemical Business. The legal and professional fees of $3.8 million and the inventory step-up amortization of $0.8 million are included in "Acquisition-related costs" and "Cost of sales" on the condensed consolidated statement of operations, respectively. (2) Legal entities within the consolidated results of Ingevity with full valuation allowances are treated discretely for income tax purposes. (3) Decrease in EAETR for the three months ended March 31, 2018, as compared to March 31, 2017, is primarily due to the effect of U.S. Tax Reform, which was enacted in December 2017. On December 22, 2017, Staff Accounting Bulletin No. 118 ("SAB 118") was issued to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of U.S. Tax Reform. In accordance with SAB 118, we determined that the $24.5 million of the provisional deferred tax expense recorded in connection with the re-measurement of certain deferred tax assets and liabilities and current tax expense recorded in connection with any other provisions of U.S. Tax Reform were reasonable estimates at December 31, 2017. In the three months ended March 31, 2018, no additional adjustments were recorded in relation to the re-measurement of certain deferred tax assets and liabilities and minimal current tax expense was recorded in connection with other provisions of U.S. Tax Reform. Additional work may be necessary as the U.S. Treasury Department, the IRS, or other standard setting bodies interpret or issue new guidance on how the provisions of U.S. Tax Reform should be applied that may be different from our interpretation as of the date of this filing. Any subsequent adjustment to these amounts will be recorded to current tax expense in the period when the analysis is complete. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and contingencies | Commitments and contingencies Legal Proceedings We are, from time to time, involved in routine litigation incidental to our operations. None of the litigation in which we are currently involved, individually or in the aggregate, is material to our consolidated financial condition, liquidity or results of operations nor are we aware of any material pending or contemplated proceedings. |
Segment information
Segment information | 3 Months Ended |
Mar. 31, 2018 | |
Segment Reporting [Abstract] | |
Segment information | Segment information Three Months Ended March 31, In millions 2018 2017 Net sales Performance Materials $ 95.5 $ 83.4 Performance Chemicals 139.7 135.1 Total net sales (1) 235.2 218.5 Segment operating profit (2) Performance Materials 36.9 29.5 Performance Chemicals 18.7 10.4 Total segment operating profit (1) 55.6 39.9 Separation costs — (0.3 ) Restructuring and other income (charges), net (3) 0.6 (2.3 ) Acquisition and other related costs (4) (4.6 ) — Interest expense, net (6.1 ) (3.3 ) (Provision) benefit for income taxes (9.7 ) (11.0 ) Net (income) loss attributable to noncontrolling interest (5.0 ) (4.0 ) Net income (loss) attributable to Ingevity stockholders $ 30.8 $ 19.0 _______________ (1) Relates to external customers only, all intersegment sales and related profit have been eliminated in consolidation. (2) Segment operating profit is defined as segment revenue less segment operating expenses (segment operating expenses consist of costs of sales, selling, general and administrative expenses and other (income) expense, net). We have excluded the following items from segment operating profit: interest expense associated with corporate debt facilities, income taxes, gains (or losses) on divestitures of businesses, restructuring and other (income) charges, separation costs, acquisition and other related costs and net income (loss) attributable to noncontrolling interest. (3) For the three months ended March 31, 2018 , the income related to Performance Chemicals was $0.6 million . For the three months ended March 31, 2017 , the charges related to Performance Chemicals were $2.3 million . (4) Charges associated with the Acquisition and integration of the Pine Chemical Business. See below for more detail on the charges incurred and Note 4 within these Condensed Consolidated Financial Statements for more information. Three Months Ended March 31, In millions 2018 2017 Legal and professional service fees (1) $ 3.8 $ — Inventory fair value step-up amortization (2) 0.8 — Acquisition and other related costs $ 4.6 $ — _______________ (1) Included within "Acquisition and other related costs" on the condensed consolidated statement of operations. (2) Included within "Cost of sales" on the condensed consolidated statement of operations. |
Earnings (loss) per share
Earnings (loss) per share | 3 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share [Abstract] | |
Earnings (loss) per share | Earnings (loss) per share Basic earnings (loss) per share is computed by dividing net income (loss) attributable to Ingevity stockholders for the period by the weighted average number of common shares outstanding during the period. The weighted average number of common shares outstanding for basic and diluted earnings (loss) per share for the three months ended March 31, 2018 and 2017 , was based on the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share is computed by dividing net income (loss) for the period by the weighted average number of shares of common stock and potentially dilutive common stock outstanding for the period. The calculation of diluted net income per share excludes all anti-dilutive common shares. Three Months Ended March 31, In millions (except share and per share data) 2018 2017 Net income (loss) attributable to Ingevity stockholders $ 30.8 $ 19.0 Basic and Diluted earnings (loss) per share Basic earnings (loss) per share attributable to Ingevity stockholders $ 0.73 $ 0.45 Diluted earnings (loss) per share attributable to Ingevity stockholders 0.72 0.45 Shares (in thousands) Weighted average number of common stock outstanding - Basic 42,091 42,127 Weighted average additional shares assuming conversion of potential common stock 510 249 Shares - diluted basis 42,601 42,376 The following average number of potential common shares were antidilutive and, therefore, were not included in the diluted earnings per share calculation: Three Months Ended March 31, In thousands 2018 2017 Average number of potential common shares - antidilutive 40 59 |
Basis of Consolidation and Pr26
Basis of Consolidation and Presentation (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
New accounting guidance | New accounting guidance In February 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2018-02 "Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from AOCI." This ASU provides for the reclassification of the effect of remeasuring deferred tax balances related to items within accumulated other comprehensive income to retained earnings resulting from the provisions of the December 22, 2017 U.S. Tax Cuts and Jobs Act (the "U.S. Tax Reform"). We early adopted this new ASU in the fourth quarter of 2017 and as a result, we reclassified $0.3 million from AOCI to retained earnings. In August 2017, the FASB issued ASU 2017-12 "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities" that amends the hedge accounting recognition and presentation requirements under hedge accounting. The new standard will make more financial and non-financial hedging strategies eligible for hedge accounting, amends the presentation and disclosure requirements, and simplifies how companies assess effectiveness. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those years, and early adoption is permitted. We early adopted this new ASU during the fourth quarter of 2017. The impact of adoption did not have a material effect on our Condensed Consolidated Financial Statements and related disclosures. In May 2017, the FASB issued ASU 2017-09 "Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting," which provided clarity on which changes to the terms or conditions of share-based payment awards require an entity to apply the modification accounting provisions required in Topic 718. We have early adopted this new standard during our second quarter of 2017. The impact of adoption did not have a material effect on our Condensed Consolidated Financial Statements and related disclosures. In March 2017, the FASB issued ASU 2017-07 "Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost." The amendment in this new standard requires the service cost component to be presented separate from the other components of net benefit cost. Service cost will be presented with other employee compensation costs within operations. The other components of net benefit cost, such as interest cost, amortization of prior service cost, and gains or losses, are required to be separately presented outside of operations, if income or loss from operations is presented. Of the components of net periodic benefit cost, only the service cost component will be eligible for asset capitalization. We have early adopted this new standard during our first quarter of 2017 on a retrospective basis. The adoption of this new guidance had no impact on our Condensed Consolidated Financial Statements and related disclosures. In January 2017, the FASB issued ASU 2017-04 "Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment," which amends and simplifies the accounting standard for goodwill impairment. The new standard removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount a reporting unit’s carrying value exceeds its fair value, limited to the total amount of goodwill allocated to that reporting unit. The new standard is effective for annual and any interim impairment tests for periods beginning after December 15, 2019, and early adoption is permitted for any impairment tests performed after January 1, 2017. The Company adopted this standard on January 1, 2018. This new guidance did not have a material impact on our Condensed Consolidated Financial Statements and related disclosures. In January 2017, the FASB issued ASU No. 2017-01, "Business Combinations (Topic 805): Clarifying the Definition of a Business." The new guidance narrows the existing definition of a business and provides a framework for evaluating whether a transaction should be accounted for as an acquisition (or disposal) of assets or a business. The guidance requires an entity to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets; if so, the set of transferred assets and activities (collectively, the "set") is not a business. To be considered a business, the set would need to include an input and a substantive process that together significantly contribute to the ability to create outputs, as defined by the ASU. The guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those annual reporting periods, and should be applied prospectively. We adopted this standard on January 1, 2018. We have utilized this new guidance in our accounting for the Georgia Pacific's Pine Chemical Business acquisition; refer to Note 4 for more information. The adoption of this new guidance did not have a material impact on our Condensed Consolidated Financial Statements. In August 2016, the FASB issued final amendments to clarify how entities should classify certain cash receipts and cash payments in ASU 2016-15 "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments." The new guidance clarifies the classification on the statement of cash flows of certain cash receipts and disbursements such as distributions received from equity method investees, proceeds from settlement of insurance claims, and proceeds from the settlement of corporate-owned life insurance policies. The new standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those years. The Company adopted this standard on January 1, 2018. This new guidance did not have a material impact on our Condensed Consolidated Financial Statements and related disclosures. In February 2016, the FASB issued ASU 2016-02 "Leases (Topic 842)." Under the new guidance, lessees will be required to recognize for all leases (with the exception of short-term leases) a lease liability, which is a lessee's obligation to make lease payments arising from a lease, measured on a discounted basis and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We are in the process of evaluating the impact of this guidance on our Condensed Consolidated Financial Statements and related disclosures, including identifying and analyzing all contracts that contain a lease. As a lessee, the majority of our leases under existing guidance are classified as operating leases and therefore not recorded on the balance sheet but are recorded in the statement of earnings as expense as incurred. Upon adoption of the new guidance, we may be required to record the vast majority of these operating leases on the balance sheet as a right-of-use asset and a lease liability. The timing of expense recognition and classification in the statement of earnings could change based on the classification of leases as either operating or financing; however, we have not completed our evaluation to determine to what extent. In May 2014, the FASB issued ASU 2014-09 “Revenue from Contracts with Customers (Topic 606)” which supersedes both the revenue recognition requirement to ASC 605 “Revenue Recognition” and most industry-specific guidance. The core principle of the new standard (ASC 606) is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. An entity must also disclose sufficient information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative information about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. In 2016 and 2017, the FASB issued several ASUs that provided additional clarity on numerous topics as well as providing technical corrections to the original ASU 2014-09. We adopted this new standard on January 1, 2018, utilizing the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. See below for the effect of this adoption on our Condensed Consolidated Financial Statements. The majority of our sales revenue remains unchanged by ASC 606 and continues to be recognized when products are shipped from our manufacturing and warehousing facilities, which represents the point at which control is transferred to the customer. |
Income tax | We determine our interim tax provision using an Estimated Annual Effective Tax Rate methodology (“EAETR”). The EAETR is applied to the year-to-date ordinary income, exclusive of discrete items. The tax effects of discrete items are then included to arrive at the total reported interim tax provision. The determination of the EAETR is based upon a number of estimates, including the estimated annual pre-tax ordinary income in each tax jurisdiction in which we operate. As our projections of ordinary income change throughout the year, the EAETR will change period-to-period. The tax effects of discrete items are recognized in the tax provision in the period they occur. Depending on various factors, such as the item’s significance in relation to total income and the rate of tax applicable in the jurisdiction to which it relates, discrete items in any quarter may materially impact the reported effective tax rate. As a global enterprise, our tax expense may be impacted by changes in tax rates or laws, the finalization of tax audits and reviews, as well as other factors. As such, there may be significant volatility in interim tax provisions. |
New accounting guidance (Tables
New accounting guidance (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Schedule of New Accounting Pronouncements and Changes in Accounting Principles | The cumulative effect of the changes made to our condensed consolidated balance sheet on January 1, 2018, due to the adoption of ASC 606, were as follows: In millions Balance at December 31, 2017 Adjustments Balance at January 1, 2018 Assets Accounts receivable, net of allowance $ 100.0 $ 0.3 $ 100.3 Inventories, net 160.0 (2.4 ) 157.6 Prepaid and other current assets 20.8 5.1 25.9 Liabilities Accrued expenses 20.0 0.9 20.9 Deferred income taxes 41.3 0.5 41.8 Equity Retained earnings $ 142.8 $ 1.6 $ 144.4 |
Acquisition (Tables)
Acquisition (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Business Combinations [Abstract] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table summarizes the consideration paid for the Acquisition and the amounts of the assets acquired and liabilities assumed as of the Acquisition Date, which have been allocated on a preliminary basis. Preliminary Purchase Price Allocation In millions Weighted Average Amortization Period Fair Value Accounts receivable $ 16.2 Inventories (1) 9.6 Property, plant and equipment 40.3 Intangible assets (2) Patents 12 years 1.9 Customer relationships 11 years 129.0 Goodwill (3) 117.0 Other assets 2.3 Total fair value of assets acquired 316.3 Accounts payable 0.8 Accrued expenses 0.5 Total fair value of liabilities assumed $ 1.3 Total cash paid $ 315.0 _______________ (1) Fair value of finished good inventories acquired included a step-up in the value of approximately $1.4 million, of which $0.8 million was expensed in the three months ended March 31, 2018 and included in "Cost of sales" on the condensed consolidated statement of operations. (2) The aggregate amortization expense was approximately $0.7 million for the three months ended March 31, 2018. Estimated amortization expense is as follows: 2018 - $9.7 million, 2019 - $12.0 million, 2020 - $12.0 million, 2021 - $11.9 million, and 2022 - $11.8 million. (3) Goodwill largely consists of expected cost synergies and economies of scale resulting from the business combination. We expect the full amount to be deductible for income tax purposes. |
Business Acquisition, Pro Forma Information | Three Months Ended March 31, In millions 2018 2017 Net sales $ 255.4 $ 242.8 Income (loss) before income taxes 50.2 32.1 Diluted earnings (loss) per share attributable to Ingevity stockholders 0.81 0.42 |
Revenues (Tables)
Revenues (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | The following tables present our Net sales disaggregated by product line and geography. In millions Three months ended March 31, 2018 Automotive Technologies product line $ 85.9 Process Purification product line 9.6 Performance Materials segment $ 95.5 Oilfield Technologies product line 22.4 Industrial Specialties product line 98.8 Pavement Technologies product line 18.5 Performance Chemicals segment $ 139.7 Consolidated Net sales $ 235.2 The following table presents our Net sales disaggregated by geography, based on the delivery address of our customer. In millions Three months ended March 31, 2018 North America $ 154.7 Asia Pacific 34.0 Europe, Middle East and Africa 40.4 South America 6.1 Consolidated Net Sales $ 235.2 |
Contract with Customer, Asset and Liability | In millions Contract Asset January 1, 2018 (1) $ 4.4 Reclassification to accounts receivable, billed to customers (2.3 ) Contract asset additions 2.2 March 31, 2018 (1) $ 4.3 _______________ (1) Included within "Prepaid and other current assets" on the condensed consolidated balance sheet. |
Fair value measurements (Tables
Fair value measurements (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements, Recurring | The following information is presented for assets and liabilities that are recorded in the condensed consolidated balance sheets at fair value measured on a recurring basis. There were no transfers of assets and liabilities that are recorded at fair value between Level 1 and Level 2 during the period reported. There were no non-recurring fair value measurements in the condensed consolidated balance sheets as of March 31, 2018 or December 31, 2017 . In millions Level 1 (1) Level 2 (2) Level 3 (3) Total March 31, 2018 Assets: Equity securities (4) 1.5 — — 1.5 Total assets $ 1.5 $ — $ — $ 1.5 Liabilities: Deferred compensation arrangement (5) 3.7 — — 3.7 Separation-related reimbursement awards (6) 0.7 — — 0.7 Total liabilities $ 4.4 $ — $ — $ 4.4 December 31, 2017 Assets: Equity investments (4) 1.8 — — — 1.8 Total assets $ 1.8 $ — $ — $ 1.8 Liabilities: Deferred compensation arrangement (5) 2.0 — — 2.0 Separation-related reimbursement awards (6) 0.9 — — 0.9 Total liabilities $ 2.9 $ — $ — $ 2.9 ______________ (1) Quoted prices in active markets for identical assets. (2) Quoted prices for similar assets and liabilities in active markets. (3) Significant unobservable inputs. (4) Included within "Prepaid and other current assets" on the condensed consolidated balance sheet. (5) Included within "Other liabilities" on the condensed consolidated balance sheet. (6) Included within "Accrued expenses" on the condensed consolidated balance sheet. The expense recognized during the three months ended March 31, 2018 was zero . |
Inventories, net (Tables)
Inventories, net (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | In millions March 31, 2018 December 31, 2017 Raw materials $ 40.5 $ 40.1 Production materials, stores and supplies 16.0 13.4 Finished and in-process goods 143.1 114.3 Subtotal 199.6 167.8 Less: excess of cost over LIFO cost (7.5 ) (7.8 ) Inventories, net $ 192.1 $ 160.0 |
Property, plant and equipment32
Property, plant and equipment, net (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | In millions March 31, 2018 December 31, 2017 Machinery and equipment $ 830.3 $ 792.5 Buildings and leasehold equipment 119.0 115.0 Land and land improvements 20.0 18.0 Construction in progress 38.2 35.8 Total cost 1,007.5 961.3 Less: accumulated depreciation (524.4 ) (522.8 ) Property, plant and equipment, net $ 483.1 $ 438.5 |
Goodwill and other intangible33
Goodwill and other intangible assets, net (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | Operating Segments In millions Performance Chemicals Performance Materials Total December 31, 2017 $ 8.1 $ 4.3 $ 12.4 Acquisitions (1) 117.0 — 117.0 Foreign currency translation — — — March 31, 2018 $ 125.1 $ 4.3 $ 129.4 _______________ (1) See Note 4 for more information. |
Schedule of Finite-Lived Intangible Assets | All of our other intangible assets, net are related to the Performance Chemicals operating segment. The following table summarizes intangible assets: March 31, 2018 December 31, 2017 In millions Gross carrying amount Accumulated amortization Net Gross carrying amount Accumulated amortization Net Brands (1) $ 13.9 $ 11.9 $ 2.0 $ 13.9 $ 11.8 $ 2.1 Patents (2) 1.9 — 1.9 — — — Customer contracts and relationships (2) 157.2 26.6 130.6 28.2 25.4 2.8 Other intangibles, net $ 173.0 $ 38.5 $ 134.5 $ 42.1 $ 37.2 $ 4.9 _______________ (1) Represents trademarks, trade names and know-how. (2) See Note 4 for more information. |
Finite-lived Intangible Assets Amortization Expense | The amortization expense related to our intangible assets in the table above is shown in the table below. Three Months Ended March 31, In millions 2018 2017 Cost of sales $ 0.3 $ 0.3 Selling, general and administrative 1.0 0.3 Total amortization expense $ 1.3 $ 0.6 |
Debt including capital lease 34
Debt including capital lease obligations (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt Instruments | Current and long-term debt including capital lease obligations consisted of the following: March 31, 2018 In millions Interest rate Maturity date March 31, 2018 December 31, 2017 Revolving credit facility (1) 3.13% 2022 $ — $ — Term loan facility 3.13% 2022 375.0 375.0 Senior notes 4.50% 2026 300.0 — Capital lease obligations 7.67% 2027 80.0 80.0 Total debt including capital lease obligations 755.0 455.0 Less: debt issuance costs 7.0 1.6 Total debt including capital lease obligations, net of debt issuance costs 748.0 453.4 Less: debt maturing within one year (2) 14.1 9.4 Long-term debt including capital lease obligations $ 733.9 $ 444.0 ______________ (1) Letters of credit outstanding under the revolving credit facility were $1.8 million and available funds under the facility were $548.2 million at March 31, 2018 . (2) Debt maturing within one year is included in "Current maturities of long-term debt" on the condensed consolidated balance sheets. |
Equity (Tables)
Equity (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Equity [Abstract] | |
Schedule of Stockholders' Equity | Ingevity Stockholders' Common Stock In millions, except per share data Shares Amount Additional paid in capital Retained earnings Accumulated other comprehensive income (loss) Treasury stock Noncontrolling interest Total Balance at December 31, 2017 42,209 $ 0.4 $ 140.1 $ 142.8 $ (11.7 ) $ (7.7 ) $ 14.0 $ 277.9 Net income (loss) — — — 30.8 — — 5.0 35.8 Other comprehensive income (loss) — — — — 4.0 — — 4.0 Common stock issued 56 — — — — — — — Exercise of stock options, net 5 — 0.1 — — — — 0.1 Tax payments related to vested restricted stock units — — — — — (1.5 ) — (1.5 ) Share repurchase program — — — — — (3.1 ) — (3.1 ) Noncontrolling interest distributions — — — — — — (5.3 ) (5.3 ) Share-based compensation plans — — 3.1 — — 0.4 — 3.5 Adoption of ASC 606 — — — 1.6 — — — 1.6 Balance at March 31, 2018 42,270 $ 0.4 $ 143.3 $ 175.2 $ (7.7 ) $ (11.9 ) $ 13.7 $ 313.0 Noncontrolling interest In millions 2018 2017 Balance at beginning of period $ 14.0 $ 7.6 Net income (loss) attributable to noncontrolling interest 5.0 4.0 Noncontrolling interest distributions (5.3 ) (2.6 ) Balance at end of period $ 13.7 $ 9.0 |
Retirement Plans (Tables)
Retirement Plans (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Postemployment Benefits [Abstract] | |
Schedule of Defined Benefit Plans Disclosures | The following table summarizes the components of net periodic benefit cost (income) for our defined benefit pension plans: Three months ended March 31, Pensions Other Benefits (in millions) 2018 2017 2018 2017 Components of net periodic benefit cost (income): Service cost (1) $ 0.4 $ 0.3 $ — $ — Interest cost (2) 0.2 0.2 — — Expected return on plan assets (2) (0.2 ) (0.2 ) — — Net periodic benefit cost (income) $ 0.4 $ 0.3 $ — $ — _______________ (1) Included in "Cost of sales" on the condensed consolidated statements of operations. (2) Included in "Other (income) expense, net" on the condensed consolidated statements of operations. |
Restructuring and other (inco37
Restructuring and other (income) charges, net (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Related Costs | The following table shows a roll forward of restructuring reserves that will result in cash spending. Balance at Change in Cash Balance at In millions 12/31/2017 (1) Reserve (2) Payments Other (3) 3/31/2018 (1) Restructuring Reserves $ 0.2 — (0.1 ) — $ 0.1 _______________ (1) Included in "Accrued Expenses" on the condensed consolidated balance sheets. (2) Includes severance and other employee-related costs, exited leases, contract terminations and other miscellaneous exit costs. Any asset write-downs including accelerated depreciation and impairment charges are not included in the above table. (3) Primarily foreign currency translation adjustments. Detail on the restructuring charges and asset disposal activities is provided below. Three Months Ended March 31, In millions 2018 2017 Restructuring and other (income) charges, net Gain on sale of assets and businesses $ (0.6 ) $ — Severance and other employee-related costs (1) — 1.3 Other (income) charges, net (2) — 1.0 Total restructuring and other (income) charges, net $ (0.6 ) $ 2.3 _______________ (1) Represents severance and employee benefit charges. Income represents adjustments to previously recorded severance and employee benefits. (2) Primarily represents costs associated with rental payments, contract terminations, and other miscellaneous exit costs. Other Income primarily represents favorable developments on previously recorded exit costs as recoveries associated with restructuring activities. |
Income taxes (Tables)
Income taxes (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of Effective Income Tax Rate Reconciliation | For the three months ended March 31, 2018 and 2017 , the effective tax rates, including discrete items, were as follows: Three Months Ended March 31, 2018 2017 Effective tax rate 21.3 % 32.4 % The below table provides a reconciliation between our reported effective tax rates and the EAETR. Three Months Ended March 31, 2018 2017 In millions, except percentages Before tax Tax Effective tax rate % impact Before tax Tax Effective tax rate % impact Consolidated operations $ 45.5 $ 9.7 21.3 % $ 34.0 $ 11.0 32.4 % Discrete items: Separation costs — — 0.3 0.1 Restructuring and other (income) charges, net (0.6 ) — 2.3 0.6 Acquisition and other related costs (1) 4.6 1.1 — — Results of legal entities with full valuation allowances (2) — — 1.8 — Other tax only discrete items — (0.2 ) — 0.2 Total discrete items 4.0 0.9 4.4 0.9 Consolidated operations, before discrete items $ 49.5 $ 10.6 $ 38.4 $ 11.9 Quarterly effect of changes in the EAETR (3) 21.4 % 31.0 % _______________ (1) Charges primarily relate to legal and professional fees and inventory step-up amortization incurred associated with the acquisition of the Pine Chemical Business. The legal and professional fees of $3.8 million and the inventory step-up amortization of $0.8 million are included in "Acquisition-related costs" and "Cost of sales" on the condensed consolidated statement of operations, respectively. (2) Legal entities within the consolidated results of Ingevity with full valuation allowances are treated discretely for income tax purposes. (3) Decrease in EAETR for the three months ended March 31, 2018, as compared to March 31, 2017, is primarily due to the effect of U.S. Tax Reform, which was enacted in December 2017. |
Segment information (Tables)
Segment information (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information | Three Months Ended March 31, In millions 2018 2017 Net sales Performance Materials $ 95.5 $ 83.4 Performance Chemicals 139.7 135.1 Total net sales (1) 235.2 218.5 Segment operating profit (2) Performance Materials 36.9 29.5 Performance Chemicals 18.7 10.4 Total segment operating profit (1) 55.6 39.9 Separation costs — (0.3 ) Restructuring and other income (charges), net (3) 0.6 (2.3 ) Acquisition and other related costs (4) (4.6 ) — Interest expense, net (6.1 ) (3.3 ) (Provision) benefit for income taxes (9.7 ) (11.0 ) Net (income) loss attributable to noncontrolling interest (5.0 ) (4.0 ) Net income (loss) attributable to Ingevity stockholders $ 30.8 $ 19.0 _______________ (1) Relates to external customers only, all intersegment sales and related profit have been eliminated in consolidation. (2) Segment operating profit is defined as segment revenue less segment operating expenses (segment operating expenses consist of costs of sales, selling, general and administrative expenses and other (income) expense, net). We have excluded the following items from segment operating profit: interest expense associated with corporate debt facilities, income taxes, gains (or losses) on divestitures of businesses, restructuring and other (income) charges, separation costs, acquisition and other related costs and net income (loss) attributable to noncontrolling interest. (3) For the three months ended March 31, 2018 , the income related to Performance Chemicals was $0.6 million . For the three months ended March 31, 2017 , the charges related to Performance Chemicals were $2.3 million . (4) Charges associated with the Acquisition and integration of the Pine Chemical Business. See below for more detail on the charges incurred and Note 4 within these Condensed Consolidated Financial Statements for more information. |
Business Acquisition, Integration, Restructuring and Other Related Costs | Three Months Ended March 31, In millions 2018 2017 Legal and professional service fees (1) $ 3.8 $ — Inventory fair value step-up amortization (2) 0.8 — Acquisition and other related costs $ 4.6 $ — _______________ (1) Included within "Acquisition and other related costs" on the condensed consolidated statement of operations. (2) Included within "Cost of sales" on the condensed consolidated statement of operations. |
Earnings (loss) per share (Tabl
Earnings (loss) per share (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | Three Months Ended March 31, In millions (except share and per share data) 2018 2017 Net income (loss) attributable to Ingevity stockholders $ 30.8 $ 19.0 Basic and Diluted earnings (loss) per share Basic earnings (loss) per share attributable to Ingevity stockholders $ 0.73 $ 0.45 Diluted earnings (loss) per share attributable to Ingevity stockholders 0.72 0.45 Shares (in thousands) Weighted average number of common stock outstanding - Basic 42,091 42,127 Weighted average additional shares assuming conversion of potential common stock 510 249 Shares - diluted basis 42,601 42,376 |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following average number of potential common shares were antidilutive and, therefore, were not included in the diluted earnings per share calculation: Three Months Ended March 31, In thousands 2018 2017 Average number of potential common shares - antidilutive 40 59 |
Background (Details)
Background (Details) | 3 Months Ended |
Mar. 31, 2018segment | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of business segments | 2 |
Basis of Consolidation and Pr42
Basis of Consolidation and Presentation - Narrative (Details) | Mar. 31, 2018 |
Purification Cellutions LLC | |
Other Ownership Interests [Line Items] | |
Ownership interest (percentage) | 30.00% |
New accounting guidance - Cumul
New accounting guidance - Cumulative effect of the changes (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 |
Assets | |||
Accounts receivable, net of allowance | $ 130.4 | $ 100.3 | $ 100 |
Inventories, net | 192.1 | 157.6 | 160 |
Prepaid and other current assets | 23.2 | 25.9 | 20.8 |
Liabilities | |||
Accrued expenses | 19.7 | 20.9 | 20 |
Deferred income taxes | 42.8 | 41.8 | 41.3 |
Equity | |||
Retained earnings | 175.2 | 144.4 | 142.8 |
Calculated under Revenue Guidance in Effect before Topic 606 | |||
Assets | |||
Accounts receivable, net of allowance | 130.1 | 100 | |
Inventories, net | 194 | 160 | |
Prepaid and other current assets | 18.3 | 20.8 | |
Liabilities | |||
Accrued expenses | 18.8 | 20 | |
Deferred income taxes | 42.7 | 41.3 | |
Equity | |||
Retained earnings | 172.9 | $ 142.8 | |
Accounting Standards Update 2014-09 | Difference between Revenue Guidance in Effect before and after Topic 606 | |||
Assets | |||
Accounts receivable, net of allowance | 0.3 | 0.3 | |
Inventories, net | (1.9) | (2.4) | |
Prepaid and other current assets | 4.9 | 5.1 | |
Liabilities | |||
Accrued expenses | 0.9 | 0.9 | |
Deferred income taxes | 0.1 | 0.5 | |
Equity | |||
Retained earnings | $ 2.3 | $ 1.6 |
New accounting guidance - Conde
New accounting guidance - Condensed consolidated statement of operations (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Net sales | $ 235.2 | $ 218.5 |
Cost of sales | 150.1 | 147.8 |
Provision (benefit) for income taxes | 9.7 | 11 |
Net income (loss) | 35.8 | $ 23 |
Balances without Adoption of ASC 606 | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Net sales | 235.3 | |
Cost of sales | 150.6 | |
Provision (benefit) for income taxes | 9.6 | |
Net income (loss) | 35.5 | |
Effect of Change Higher/(Lower) | Accounting Standards Update 2014-09 | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Net sales | (0.1) | |
Cost of sales | (0.5) | |
Provision (benefit) for income taxes | 0.1 | |
Net income (loss) | $ 0.3 |
New accounting guidance - Con45
New accounting guidance - Condensed consolidated balance sheet (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 |
Assets | |||
Accounts receivable, net of allowance | $ 130.4 | $ 100.3 | $ 100 |
Inventories, net | 192.1 | 157.6 | 160 |
Prepaid and other current assets | 23.2 | 25.9 | 20.8 |
Liabilities | |||
Accrued expenses | 19.7 | 20.9 | 20 |
Deferred income taxes | 42.8 | 41.8 | 41.3 |
Equity | |||
Retained earnings | 175.2 | 144.4 | 142.8 |
Calculated under Revenue Guidance in Effect before Topic 606 | |||
Assets | |||
Accounts receivable, net of allowance | 130.1 | 100 | |
Inventories, net | 194 | 160 | |
Prepaid and other current assets | 18.3 | 20.8 | |
Liabilities | |||
Accrued expenses | 18.8 | 20 | |
Deferred income taxes | 42.7 | 41.3 | |
Equity | |||
Retained earnings | 172.9 | $ 142.8 | |
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | |||
Assets | |||
Accounts receivable, net of allowance | 0.3 | 0.3 | |
Inventories, net | (1.9) | (2.4) | |
Prepaid and other current assets | 4.9 | 5.1 | |
Liabilities | |||
Accrued expenses | 0.9 | 0.9 | |
Deferred income taxes | 0.1 | 0.5 | |
Equity | |||
Retained earnings | $ 2.3 | $ 1.6 |
New accounting guidance (Narrat
New accounting guidance (Narrative) (Details) $ in Millions | Dec. 31, 2017USD ($) |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Adoption of accounting standard | $ 1.6 |
AOCI | Accounting Standards Update 2018-02 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Adoption of accounting standard | (3) |
Retained earnings | Accounting Standards Update 2018-02 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Adoption of accounting standard | $ 0.3 |
Acquisition (Details)
Acquisition (Details) - USD ($) | Mar. 08, 2018 | Mar. 31, 2018 | Mar. 31, 2018 | Mar. 31, 2017 | Jan. 24, 2018 |
Business Acquisition [Line Items] | |||||
Acquisition and other related costs | $ 4,600,000 | $ 0 | |||
Acquisition costs | $ 3,800,000 | $ 3,800,000 | $ 0 | ||
Georgia-Pacific Chemicals LLC | |||||
Business Acquisition [Line Items] | |||||
Total cash paid | $ 315,000,000 | ||||
Purchase price | $ 315,000,000 | ||||
Weighted average useful life | 20 years | ||||
Revenue since acquisition date | 4,800,000 | ||||
Earnings since acquisition date | $ 300,000 | ||||
Senior Notes | |||||
Business Acquisition [Line Items] | |||||
Face amount | $ 300,000,000 |
Acquisition (Schedule of Recogn
Acquisition (Schedule of Recognized Identified Assets Acquired and Liabilities Assumed) (Details) - USD ($) $ in Millions | Mar. 08, 2018 | Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 |
Business Acquisition [Line Items] | ||||
Goodwill | $ 129.4 | $ 12.4 | ||
Amortization expense | 1.3 | $ 0.6 | ||
2,018 | 11.5 | |||
2,019 | 13.5 | |||
2,020 | 12.5 | |||
2,021 | 12.2 | |||
2,022 | 12.2 | |||
Georgia-Pacific Chemicals LLC | ||||
Business Acquisition [Line Items] | ||||
Weighted average useful life | 20 years | |||
Accounts receivable | $ 16.2 | |||
Inventories | 9.6 | |||
Property, plant and equipment | 40.3 | |||
Goodwill | 117 | |||
Other assets | 2.3 | |||
Total fair value of assets acquired | 316.3 | |||
Accounts payable | 0.8 | |||
Accrued expenses | 0.5 | |||
Total fair value of liabilities assumed | 1.3 | |||
Total cash paid | 315 | |||
Inventory Step up | 1.4 | |||
Inventory Expense | 0.8 | |||
Amortization expense | 0.7 | |||
2,018 | 9.7 | |||
2,019 | 12 | |||
2,020 | 12 | |||
2,021 | 11.9 | |||
2,022 | $ 11.8 | |||
Patents | Georgia-Pacific Chemicals LLC | ||||
Business Acquisition [Line Items] | ||||
Weighted average useful life | 12 years | |||
Intangibles assets | 1.9 | |||
Customer contracts and relationships (2) | Georgia-Pacific Chemicals LLC | ||||
Business Acquisition [Line Items] | ||||
Weighted average useful life | 11 years | |||
Intangibles assets | $ 129 |
Acquisition (Business Acquisiti
Acquisition (Business Acquisition, Pro Forma Information) (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Business Combinations [Abstract] | ||
Net sales | $ 255.4 | $ 242.8 |
Income (loss) before income taxes | $ 50.2 | $ 32.1 |
Diluted earnings (loss) per share attributable to Ingevity stockholders (usd per share) | $ 0.81 | $ 0.42 |
Revenues - Revenue by segment (
Revenues - Revenue by segment (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Disaggregation of Revenue [Line Items] | |
Consolidated Net sales | $ 235.2 |
Performance Materials | |
Disaggregation of Revenue [Line Items] | |
Consolidated Net sales | 95.5 |
Performance Materials | Automotive Technologies product line | |
Disaggregation of Revenue [Line Items] | |
Consolidated Net sales | 85.9 |
Performance Materials | Process Purification product line | |
Disaggregation of Revenue [Line Items] | |
Consolidated Net sales | 9.6 |
Performance Chemicals | |
Disaggregation of Revenue [Line Items] | |
Consolidated Net sales | 139.7 |
Performance Chemicals | Oilfield Technologies product line | |
Disaggregation of Revenue [Line Items] | |
Consolidated Net sales | 22.4 |
Performance Chemicals | Industrial Specialties product line | |
Disaggregation of Revenue [Line Items] | |
Consolidated Net sales | 98.8 |
Performance Chemicals | Pavement Technologies product line | |
Disaggregation of Revenue [Line Items] | |
Consolidated Net sales | $ 18.5 |
Revenues - Revenue disaggregsat
Revenues - Revenue disaggregsated by geographic area (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Disaggregation of Revenue [Line Items] | |
Consolidated Net Sales | $ 235.2 |
North America | |
Disaggregation of Revenue [Line Items] | |
Consolidated Net Sales | 154.7 |
Asia Pacific | |
Disaggregation of Revenue [Line Items] | |
Consolidated Net Sales | 34 |
Europe, Middle East and Africa | |
Disaggregation of Revenue [Line Items] | |
Consolidated Net Sales | 40.4 |
South America | |
Disaggregation of Revenue [Line Items] | |
Consolidated Net Sales | $ 6.1 |
Revenues - Contract assets (Det
Revenues - Contract assets (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Dec. 31, 2017 | |
Change in Contract with Customer, Asset [Roll Forward] | ||
January 1, 2018 | $ 4,400,000 | |
Reclassification to accounts receivable, billed to customers | (2,300,000) | |
Contract asset additions | 2,200,000 | |
March 31, 2018 | 4,300,000 | |
Contract with customer, liability | $ 0 | $ 0 |
Fair value measurements - Narra
Fair value measurements - Narrative (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative, notional amount | $ 1,100,000 | |
Derivative, fair value, net | $ 100,000 | |
Level 1 to level 2 transfers | 0 | |
Long-term debt, gross | 755,000,000 | 455,000,000 |
Restricted investments | 71,300,000 | $ 71,300,000 |
Restricted investments, at fair value | 67,600,000 | |
Swap | Commodity Contract | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative, notional amount | 1,800,000 | |
Reported Value Measurement | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Capital lease obligations | 80,000,000 | |
Estimate of Fair Value Measurement | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Capital lease obligations | 90,700,000 | |
Variable Interest Rate | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term debt, gross | 360,900,000 | |
Senior Notes | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term debt, gross | 300,000,000 | |
Debt instrument, fair value disclosure | $ 290,200,000 |
Fair value measurements - Measu
Fair value measurements - Measured on a Recurring Basis (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Liabilities: | |||
Share-based compensation | $ 3.1 | $ 2.4 | |
Fair Value, Measurements, Recurring | |||
Assets: | |||
Investments | 1.5 | $ 1.8 | |
Total assets | 1.5 | 1.8 | |
Liabilities: | |||
Deferred compensation arrangement | 3.7 | 2 | |
Separation-related Reimbursement Awards | 0.7 | 0.9 | |
Total liabilities | 4.4 | 2.9 | |
Share-based compensation | 0 | ||
Fair Value, Measurements, Recurring | Level 1 | |||
Assets: | |||
Investments | 1.5 | 1.8 | |
Total assets | 1.5 | 1.8 | |
Liabilities: | |||
Deferred compensation arrangement | 3.7 | 2 | |
Separation-related Reimbursement Awards | 0.7 | 0.9 | |
Total liabilities | $ 4.4 | $ 2.9 |
Inventories, net (Details)
Inventories, net (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 |
Inventory, Net | |||
Raw materials | $ 40.5 | $ 40.1 | |
Production materials, stores and supplies | 16 | 13.4 | |
Finished and in-process goods | 143.1 | 114.3 | |
Subtotal | 199.6 | 167.8 | |
Less: excess of cost over LIFO cost | (7.5) | (7.8) | |
Inventories, net | $ 192.1 | $ 157.6 | $ 160 |
Property, plant and equipment56
Property, plant and equipment, net (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Dec. 31, 2017 |
Property, Plant and Equipment | ||
Total cost | $ 1,007.5 | $ 961.3 |
Less: accumulated depreciation | (524.4) | (522.8) |
Property, plant and equipment, net | 483.1 | 438.5 |
Machinery and equipment | ||
Property, Plant and Equipment | ||
Total cost | 830.3 | 792.5 |
Buildings and leasehold equipment | ||
Property, Plant and Equipment | ||
Total cost | 119 | 115 |
Land and land improvements | ||
Property, Plant and Equipment | ||
Total cost | 20 | 18 |
Construction in progress | ||
Property, Plant and Equipment | ||
Total cost | $ 38.2 | $ 35.8 |
Goodwill and other intangible57
Goodwill and other intangible assets, net - Carrying Amount (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Goodwill | |
Goodwill, beginning balance | $ 12.4 |
Acquisitions1 | 117 |
Foreign currency translation | 0 |
Goodwill, ending balance | 129.4 |
Performance Chemicals | |
Goodwill | |
Goodwill, beginning balance | 8.1 |
Acquisitions1 | 117 |
Foreign currency translation | 0 |
Goodwill, ending balance | 125.1 |
Performance Materials | |
Goodwill | |
Goodwill, beginning balance | 4.3 |
Acquisitions1 | 0 |
Foreign currency translation | 0 |
Goodwill, ending balance | $ 4.3 |
Goodwill and other intangible58
Goodwill and other intangible assets, net - Intangible Assets (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Dec. 31, 2017 |
Finite-Lived Intangible Assets, Net | ||
Net | $ 134.5 | $ 4.9 |
Performance Chemicals | ||
Finite-Lived Intangible Assets, Net | ||
Gross carrying amount | 173 | 42.1 |
Accumulated amortization | 38.5 | 37.2 |
Net | 134.5 | 4.9 |
Performance Chemicals | Brands | ||
Finite-Lived Intangible Assets, Net | ||
Gross carrying amount | 13.9 | 13.9 |
Accumulated amortization | 11.9 | 11.8 |
Net | 2 | 2.1 |
Performance Chemicals | Patents | ||
Finite-Lived Intangible Assets, Net | ||
Gross carrying amount | 1.9 | 0 |
Accumulated amortization | 0 | 0 |
Net | 1.9 | 0 |
Performance Chemicals | Customer contracts and relationships (2) | ||
Finite-Lived Intangible Assets, Net | ||
Gross carrying amount | 157.2 | 28.2 |
Accumulated amortization | 26.6 | 25.4 |
Net | $ 130.6 | $ 2.8 |
Goodwill and other intangible59
Goodwill and other intangible assets, net - Amortization (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Finite-Lived Intangible Assets [Line Items] | ||
Amortization expense | $ 1.3 | $ 0.6 |
Cost of sales | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization expense | 0.3 | 0.3 |
Selling, general and administrative expenses | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization expense | $ 1 | $ 0.3 |
Goodwill and other intangible60
Goodwill and other intangible assets, net - Maturity (Details) $ in Millions | Mar. 31, 2018USD ($) |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity | |
2,018 | $ 11.5 |
2,019 | 13.5 |
2,020 | 12.5 |
2,021 | 12.2 |
2,022 | $ 12.2 |
Debt including capital lease 61
Debt including capital lease obligations - Long-term Debt Including Capital Lease Obligations (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Dec. 31, 2017 |
Line of Credit Facility | ||
Long-term debt, gross | $ 755 | $ 455 |
Less: debt issuance costs | 7 | 1.6 |
Total debt including capital lease obligations, net of debt issuance costs | 748 | 453.4 |
Less: debt maturing within one year (2) | 14.1 | 9.4 |
Long-term debt including capital lease obligations | $ 733.9 | 444 |
Revolving Credit Facility | ||
Line of Credit Facility | ||
Interest Rate | 3.13% | |
Long-term debt, gross | $ 0 | 0 |
Letters of credit outstanding | 1.8 | |
Available under the facility | $ 548.2 | |
Term loan facility | ||
Line of Credit Facility | ||
Interest Rate | 3.13% | |
Long-term debt, gross | $ 375 | 375 |
Senior notes | ||
Line of Credit Facility | ||
Interest Rate | 4.50% | |
Long-term debt, gross | 0 | |
Capital lease obligations | ||
Line of Credit Facility | ||
Interest Rate | 7.67% | |
Long-term debt, gross | $ 80 | $ 80 |
Debt including capital lease 62
Debt including capital lease obligations - Narrative (Details) $ in Millions | Jan. 24, 2018USD ($) | Mar. 31, 2018 |
Senior notes | ||
Line of Credit Facility | ||
Principal amount | $ 300 | |
Stated interest rate | 4.50% | |
Deferred finance costs | $ 5.7 | |
Proceeds from debt, net of issuance costs | $ 294.3 | |
Revolving Credit Facility | ||
Line of Credit Facility | ||
Leverage ratio | 4 | |
Leverage ratio potential increase | 4.5 | |
Leverage ratio, interest | 3 |
Equity - Rollforward (Details)
Equity - Rollforward (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Increase (Decrease) in Stockholders' Equity | |||
Beginning balance, shares | 42,089,103 | ||
Beginning balance, value | $ 277.9 | ||
Net income (loss) | 35.8 | $ 23 | |
Other comprehensive income (loss) | 4 | ||
Exercise of stock options, net | 0.1 | ||
Tax payments related to vested restricted stock units | (1.5) | ||
Share repurchase program | (3.1) | ||
Share-based compensation plans | (5.3) | $ (2.6) | |
Share-based compensation plans | $ 3.5 | ||
Adoption of accounting standard | $ 1.6 | ||
Ending balance, shares | 42,096,413 | ||
Ending balance, shares, value | $ 313 | ||
Common Stock | |||
Increase (Decrease) in Stockholders' Equity | |||
Beginning balance, shares | 42,209,000 | ||
Beginning balance, value | $ 0.4 | ||
Common stock issued (shares) | 56,000 | ||
Common stock issued | $ 0 | ||
Exercise of stock options, net (shares) | 5,000 | ||
Exercise of stock options, net | $ 0 | ||
Ending balance, shares | 42,270,000 | ||
Ending balance, shares, value | $ 0.4 | ||
Additional paid in capital | |||
Increase (Decrease) in Stockholders' Equity | |||
Beginning balance, value | 140.1 | ||
Exercise of stock options, net | 0.1 | ||
Share-based compensation plans | 3.1 | ||
Ending balance, shares, value | 143.3 | ||
Retained earnings | |||
Increase (Decrease) in Stockholders' Equity | |||
Beginning balance, value | 142.8 | ||
Net income (loss) | 30.8 | ||
Ending balance, shares, value | 175.2 | ||
Accumulated other comprehensive income (loss) | |||
Increase (Decrease) in Stockholders' Equity | |||
Beginning balance, value | (11.7) | ||
Other comprehensive income (loss) | 4 | ||
Ending balance, shares, value | (7.7) | ||
Treasury stock | |||
Increase (Decrease) in Stockholders' Equity | |||
Beginning balance, value | (7.7) | ||
Tax payments related to vested restricted stock units | (1.5) | ||
Share repurchase program | (3.1) | ||
Share-based compensation plans | 0.4 | ||
Ending balance, shares, value | (11.9) | ||
Noncontrolling interest | |||
Increase (Decrease) in Stockholders' Equity | |||
Beginning balance, value | 14 | ||
Net income (loss) | 5 | ||
Share-based compensation plans | (5.3) | ||
Ending balance, shares, value | $ 13.7 |
Equity - Noncontrolling Interes
Equity - Noncontrolling Interest (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Noncontrolling Interest | ||
Balance at beginning of period | $ 14 | $ 7.6 |
Net income (loss) attributable to noncontrolling interest | 5 | 4 |
Share-based compensation plans | (5.3) | (2.6) |
Balance at end of period | $ 13.7 | $ 9 |
Equity - Share Repurchases (Det
Equity - Share Repurchases (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Feb. 20, 2017 | |
Equity [Abstract] | ||
Common stock amount authorized to be repurchased | $ 100,000,000 | |
Shares repurchased during period (in shares) | 41,300 | |
Weighted average cost per share (in dollars per share) | $ 75.01 | |
Amount remained unused under repurchase program | $ 90,300,000 |
Retirement Plans - Summary of C
Retirement Plans - Summary of Components of Net Periodic Benefit Cost (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Pensions | ||
Defined Benefit Plan, Net Periodic Benefit Cost (Credit) [Abstract] | ||
Service cost | $ 0.4 | $ 0.3 |
Interest cost | 0.2 | 0.2 |
Expected return on plan assets | (0.2) | (0.2) |
Net periodic benefit cost (income) | 0.4 | 0.3 |
Other Benefits | ||
Defined Benefit Plan, Net Periodic Benefit Cost (Credit) [Abstract] | ||
Service cost | 0 | 0 |
Interest cost | 0 | 0 |
Expected return on plan assets | 0 | 0 |
Net periodic benefit cost (income) | $ 0 | $ 0 |
Restructuring and other (inco67
Restructuring and other (income) charges, net - Restructuring (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | |
Feb. 28, 2018 | Mar. 31, 2018 | Mar. 31, 2017 | |
Restructuring and Related Activities [Abstract] | |||
Gain on sale of assets and businesses | $ (0.6) | $ (0.6) | $ 0 |
Severance and other employee-related costs | 0 | 1.3 | |
Other (income) charges, net | 0 | 1 | |
Total restructuring and other (income) charges, net | $ (0.6) | $ 2.3 |
Restructuring and other (inco68
Restructuring and other (income) charges, net - Narrative (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | |
Feb. 28, 2018 | Mar. 31, 2018 | Mar. 31, 2017 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations | |||
Gain on sale of assets and businesses | $ 0.6 | $ 0.6 | $ 0 |
Severance costs | $ 0 | 1.3 | |
Employee related severance cost | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations | |||
Severance costs | 1.3 | ||
Miscellaneous Exit Costs [Member] | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations | |||
Severance costs | $ 1 |
Restructuring and other (inco69
Restructuring and other (income) charges, net - Roll forward of Restructuring Reserve (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Restructuring Reserve | |
Restructuring reserve, beginning balance | $ 0.2 |
Change in reserve | 0 |
Cash payments | (0.1) |
Other | 0 |
Restructuring reserve, ending balance | $ 0.1 |
Income taxes - Effective tax ra
Income taxes - Effective tax rate (Details) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Effective Income Tax Rate Reconciliation, Percent | ||
Effective tax rate | 21.30% | 32.40% |
Income taxes - Narrative (Detai
Income taxes - Narrative (Details) $ in Millions | Dec. 31, 2017USD ($) |
Income Tax Disclosure [Abstract] | |
Anticipated decrease in unrecognized tax benefit | $ 24.5 |
Income taxes - Tax Reconciliati
Income taxes - Tax Reconciliation (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Before tax | ||
Income (loss) before income taxes | $ 45,500,000 | $ 34,000,000 |
Separation costs | 0 | 300,000 |
Restructuring and other (income) charges, net | (600,000) | 2,300,000 |
Acquisition and other related costs | 4,600,000 | 0 |
Results of legal entities with full valuation allowances | 0 | 1,800,000 |
Total discrete items | 4,000,000 | 4,400,000 |
Consolidated and combined operations, before discrete items | 49,500,000 | 38,400,000 |
Tax | ||
Tax | 9,700,000 | 11,000,000 |
Separation costs, tax | 0 | 100,000 |
Restructuring & other (income) charges, tax | 0 | 600,000 |
Acquisition costs, tax | 1,100,000 | 0 |
Other tax only discrete items | (200,000) | 200,000 |
Total discrete items, tax | 900,000 | 900,000 |
Combined operations, before discrete items, tax | $ 10,600,000 | $ 11,900,000 |
Effective tax rate | 21.30% | 32.40% |
EAETR | 21.40% | 31.00% |
Legal and professional service fees | $ 3,800,000 | $ 0 |
Inventory fair value step-up amortization | $ 800,000 | $ 0 |
Segment information (Details)
Segment information (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Segment Reporting Information, Profit (Loss) | ||
Net sales | $ 235,200,000 | $ 218,500,000 |
Segment operating profits | 55,600,000 | 39,900,000 |
Separation costs | 0 | (300,000) |
Restructuring and other (income) charges | 600,000 | (2,300,000) |
Acquisition and other related costs | (4,600,000) | 0 |
Interest expense, net | (6,100,000) | (3,300,000) |
(Provision) benefit for income taxes | (9,700,000) | (11,000,000) |
Net income (loss) attributable to noncontrolling interests | (5,000,000) | (4,000,000) |
Net income (loss) attributable to Ingevity stockholders | 30,800,000 | 19,000,000 |
Performance Materials | ||
Segment Reporting Information, Profit (Loss) | ||
Net sales | 95,500,000 | 83,400,000 |
Segment operating profits | 36,900,000 | 29,500,000 |
Performance Chemicals | ||
Segment Reporting Information, Profit (Loss) | ||
Net sales | 139,700,000 | 135,100,000 |
Segment operating profits | 18,700,000 | 10,400,000 |
Restructuring and other (income) charges, net | $ 600,000 | $ 2,300,000 |
Segment information (Acquisiton
Segment information (Acquisiton related costs) (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Segment Reporting [Abstract] | ||
Legal and professional service fees | $ 3,800,000 | $ 0 |
Inventory fair value step-up amortization | 800,000 | 0 |
Acquisition and other related costs | $ 4,600,000 | $ 0 |
Earnings (loss) per share - Ear
Earnings (loss) per share - Earnings per share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Earnings Per Share Reconciliation | ||
Net income attributable to the Company | $ 30.8 | $ 19 |
Per share data | ||
Basic earnings (loss) per share attributable to Ingevity stockholders (usd per share) | $ 0.73 | $ 0.45 |
Diluted earnings (loss) per share attributable to Ingevity stockholders (usd per share) | $ 0.72 | $ 0.45 |
Shares | ||
Weighted average number of common stock outstanding - Basic | 42,091 | 42,127 |
Weighted average additional shares assuming conversion of potential common stock | 510 | 249 |
Shares - diluted basis | 42,601 | 42,376 |
Earnings (loss) per share - Ant
Earnings (loss) per share - Antidilutive (Details) - shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Earnings Per Share [Abstract] | ||
Potentially anti-dilutive shares (shares) | 40 | 59 |