NGVT - Earnings call transcript Q4 2020

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Operator

Greetings and welcome to Ingevity's Fourth Quarter and Year-end Earnings webcast and conference call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Jack Maurer, Senior Vice President, Public Affairs and Investor Relations. Please go ahead, sir.

Jack Maurer

Thank you, Brad. everyone. morning, Good fourth call. Ingevity's full XXXX year Welcome quarter conference earnings to and Earlier onto a of posted this we morning, presentation our the website. section Investors

you so If download during haven't already so, would you done the call. this can you encourage file follow along I to

it can find Events Presentations. visiting by You under ir.ingevity.com &

statements disclaimer Slide to financial comparable and undertakes or to financial publicly and cause statements. our you'll this that in our results who viewing projections the factors available also our release from this Form Form pane Relevant into for, forward-looking supplement, not no to slides measures. call. are materially of today's and GAAP our number of of be measures Ingevity Investor deck, non-GAAP non-GAAP can our release webcast, be this that intended section may these financial release found after and statements On that could our reflect X Relations call, events during which SEC revision participants to our reconciliations Throughout comparable obligation may For in earnings logged we or refer actual contained to these any included circumstances date measures are of visible call should to Definitions and substitute to GAAP on website. them our see to made measures, call the occurring the including update recent XX-K and are to the are differ filings, in contain in online earnings forward-looking download. the most earnings forward-looking XX-Q.

Innovation CEO President Performance and President Mike Chemicals; Smith, Woodcock; Analysis President of Interim Ripple, and me today Officer; of Our agenda is CFO, and Slide Bill on Vice are and and Financial Erik Hamilton, Growth President Planning John Treasury. Ed Chief Performance Fortson, Materials; With and X.

performance Mike growth X.X our First, review and key of in provide for John discuss segments. will John on current and status. will year. review Erik full some on comment some quarter the the Bill update Ed will financial innovation. Ingevity of highlights will strategy. our the will accomplishments and and our an areas focus comment two XXXX on

review over our turn our Fortson. With CEO, John guidance. that, will I'll outlook the XXXX and to Lastly, call John

John Fortson

Good Jack. We joining Thanks, interest your Ingevity. everyone. Thank morning, you us. for in appreciate continued

year to turn for X, you the excellent note delivered Slide highlights we If full quarter. some results. you'll fourth quarter Overall, and

quarter compared conditions. sales million, in and and Our previous the businesses year's fourth were continued strong the by were economic and quarter impacts COVID-XX. quarter shift of to SUV despite Canada. fourth truck resilient despite the X% to a and production Revenues highly in were favorable challenging automotive the when U.S $XXX up China, driven results in Ingevity's

growth increases in offset benefited slight partially and have revenues We from for economic from the North to and which by also Engineered reduced EBITDA and were XX% quarter. earnings, up by million, oilfield American These ink sales markets, With international in were $XXX paving printing sales. affected the Polymers adjusted were positives environment. previous sales, of highly the weakened COVID respect almost all year's paving in

benefit we that cost place. actions We continue in the to from put reduction midyear

adjusted which is holding board. XX%, fourth as to across fourth are And a for record. our well margins Our up the rose the result, margin quarter a EBITDA quarter

operating operating range our both between and productively generated management. our leverage returns as excellent out target to capital to manufacturing our we strong over in They This over thank X.Xx. our work constraints and safe the navigated and to a reduce million Ingevity to team we in performance work quarter, the downs COVID figured X.XXx, employees. how us the of I the of especially on their enabled of year ups for our us to environment. segments, all despite last working $XXX the everyone Xx which want For due to

a Our performance to efforts is across the this company. quarter the employees testament of these

turn quarter call the over And I'll at of Chemicals. fourth see results If Smith. you this point, Slide the Performance you'll to to Mike? X, turn Mike

Mike Smith

Thanks, John.

Chemicals impacted solid a but segment million, benefited Polymers down third to the still In given almost segment results paving Performance quarter down the slightly, due that we global circumstances. sales fourth Overall, COVID economic in period. weakened Our environment continues XXXX. for were be year Engineered to the improved however, quarter, were prior activity and by X% $XXX robust drove from versus

lower applications in were and North in America what more were for in bio volumes Europe year, decreased to specialties demand sales slower Sales and end-use modestly. offset Sales equipment, to industrial and was applications. America plastics partially essentially pricing Engineered rosin such slightly paper down tall in demand than weakness in prior the was payment and up a mentioned, This China, and Latin rubber products and to is Polymers up by were technology adhesives oil fatty I for slightly, inks, acid. sales XX% as chemicals, improved than industrial As Paving applications automotive sterols. period. other products applications for printing strengthening improved for due continued and while

during for to rosin we months, a trials gum of improving in supply/demand our has continue potential We applications agricultural progressing, positive number and our business customers. X price entering positive see that export sustainable increased stage of technologies last agricultural a field XX% ultra-solve with major chemicals dynamics, are ultra-stick are our the encouraged the signal where Also, dynamics. Chinese over

are year. sustainable products customers our sales In XX% XXXX, of We zero in to these the made highly products, converting from in free. essentially the inks our also prior represented strong progress formaldehyde ink which phenol and in new

Chemicals continue and activity. we to the said, to Oilfield fourth in was price improved geography Performance the mix. quarter the North benefits. XXXX. business due the currency North work count some versus $XX fourth in to sales of in fourth and This in volumes Additionally, wins the as weakness lower reflect customers see exchange continue was the quarter China down quarter to American segment Technology XX% down year Hughes, East offset Middle plant in foreign Baker partially by were rig prior the to at to million, EBITDA end XX% American According we of quarter versus throughput That drilling this the diversify

for continue the call our With Materials. We in higher which holding good to the full and respectively that, quarter, in of our review to EBITDA control at I'll and Performance results generate mix turn a resulted margin year. Ed over of costs profitability XX% products, to Woodcock XX% the the fourth adjusted

Ed Woodcock

Thanks, Mike.

and XX% hard segment continue production automotive record China, in pipeline. still towards revenues million. up X, favorable refill industry sales Strong gasoline were to shift to Canada working As trucks the emission a at you for a is tailwind $XXX can see the the vapor control The on Slide and in be SUVs our a for vehicle solutions. and U.S and inventory

records canisters, of since and SUVs was As vehicle mix and April multiple in evaporative With cars of and hit quarter, This team of to contributed at continues mix remains has face versus compounded U.S record vehicles into each in strong used to declined scrubbers trucks essentially to our high honeycomb part ongoing Canada. we in hard, in continue larger sales vehicle U.S duty fourth for honeycombs. emissions dealer for North vehicle the quarterly and X% the at rise relatively of truck and flat light and vehicle and by The production SUV month quarter they systems. in has a Canada meet to lots, our as shortage regulatory trended quarter, and May inventory favorable set demand, Waynesboro, refill for monthly the U.S Georgia control these standards the will X%. previous is of and XX% slightly OEMs estimate work by XXXX continues a and and In as semiconductor this production strong demand XXXX. global vehicle of new XXXX. December. have since honeycombs X-year lows This chip American Canada typically response, been the increase The the second their the and with U.S to facility sales struggle

carbon a increases sales May December continue for our respectively. of and we yet October team also at since data and set record Production and November a be in shows The posted. addition, X% data vehicle In production volume activated XX%, vehicles has post sales available monthly to record both December. and year-over-year facility sum China Zhuhai The set monthly quarterly up in also XXXX. production for of sales products. to our

Europe While data in production down there yet the region quarter, in is available X%. were sales no for the quarterly fourth

country. capacity fourth This for increased high margin up saw the high across mix completes by leveraged carbon almost upgrades we reduced in and of capacity Europe a and replacements XX%, to premium a October, XXX variable debottlenecking benefited to in XX% effectively in equipment improvement EBITDA legal at additional to XX%. meet structure, were following In plant expansion completed kiln that I'll price X addition John. Segment that increased pelletized to period. production These continue completed activity outage points call have at project our our the intellectual the expenses segment this that At ahead turn to back Also Segment expect slow during kiln our Covington, we facility. defend record significant point, at prior to property. low cost versus replacement schedule. facility EBITDA China Virginia last capacity products days Zhuhai year an and XX% quarter, the the million, us demand helping of We basis volumes our a from upgrades. global the strong our to We slightly. $XX four

John Fortson

Ed. Thanks,

take Slide a XXXX. like to If X, Ingevity's I'd you in turn accomplishments to highlight to moment

of Throughout our we our guidance. results, even of quickly that moved outstanding our year EBITDA cash Ingevity to done with this getting generated of were XX% the the on free initial generated We of that course our and were develop XXXX performance, At costs, year, strong end emphasis pre-COVID future, the of greater reduced what our and EBITDA of we innovation, just is revenues the organic the and are to work of financial guidance got year. million. adjusted fundamentally pre-COVID adjusted we place growth XX% started. $XXX Besides have initial proud and flow

a and rate X-year an favorable advantage facility. able amending were million interest fixed interest take while of also environment our we a of $XXX X.XXX%, securing by bond rate Additionally, at credit to extending

shares. back impressive million in our solid as bought to of back Both in a net our business also this delivered ratio. We debt I an segments mentioned year. earlier, performance $XX And tumultuous us targeted brings

of sales in payment overall the by America the mixed in replacement drove bolstered was demand, results Engineered monomer overseas. U.K our successfully Performance plastics, face in We to segment Our Polymers North Chemicals and production at sales completed COVID customers but expanded Warrington, the weakened delivered of technology and facility. glassware project bio

yet revenue is automotive Materials to the team another very and back to record at the Performance firsthand in as meet can I Waynesboro delivered tell from adapted incredible and demand. the earnings team Our then you of segment global snap strong year experience, decline, hard production. working

Our necessary teams completing capital great those projects at in the in colleagues and Zhuhai did work facilities.

ended long-term have combustion optimistic electric term electric for vehicles the term electric battery emphasizing of are that use created electric estimates the electrics. vehicles, hybrids. In Performance to vehicles. pure credit of Materials battery and vehicle they consumption vehicles growth hybrid battery proclamations vehicles the a of electric We XXXX, OEMs electric vehicles with focus part closure, of battery pure vehicles. battery registrations share electric rates in Xx and and electric hybrids new battery vehicles about vehicles. in both the in requirements, continue plug NEV in of to low OEMs Europe, vehicles a includes thus China of hybrid which electric is the of lessen lot and their be internal fuel adoption to pure almost Recent plug hybrid are electric confusion and greater Full typically segment. NEV hybrid their growth use exceeding around And of market pertaining very of favor full in that allowing on engines, to outpaced hybrids as and our or year vehicles The reduce potential

place a we the for growth, automotive maximizing approach result. growth to our time We will study long customer but other greater carbon products, remain strategy. are rolled increase a from As in committed strategy potential emphasis Ingevity And centricity to an margin legacy revenues minute, and this our both convinced, we high other applications. innovation our as reenergized significantly we and high as organic from on But of data a IHS also runway and will expect vision growth and application further our we X.X, out Erik products. discuss for over sources, and all have to sustainability,

to make and adsorbed or progress commercializing We natural continue our gas developing ANG in technology.

to continuing collaboratively work validate other and this with are and which natural trucks duty to medium for are partners technology gas We utilities, for OEMs batteries light constrained.

the or And with of this where our a represent an further We RNG technology areas of as AMG as environmental a renewable role. enhancing increasing are way can trucks the natural play benefits. indicates the announcement of number developing even they're recent from that Amazon owners market purchasing part fleet gas of natural a gas its system

the published and programs. to to gas strides XXth to the position increasing and into continuing leverage Evotherm rating Jones organic our the outlining to of drive future. first global the continue in our the significant percentile benefits Index, in products. Sustainability importance Nuchar reports reduction on all moved growth make EcoVadis Proudly Silver our a level of ourselves We Lastly, from sustainability the while to better in Dow of implementation greenhouse two we inclusion and diversity our maintained also sustainability

Slide X.X enterprise how particular, and drive X, look drive XXXX to like In will our closer and I'd look excellence to and grow in Ingevity to like what take profitability. a to Turning at business value increase maximize beyond. we will

grow that discuss we what Our enterprise big six by will will on call initiatives the Erik next. focusing

automotive other and margin beyond high leveraging our carbon markets. we expertise have activated towards material performance industry eye an First,

we've vapors. and the AMG automotive long trucks, of begun history technologies to in already leverage our expertise With light duty the capture for technical our release commercialization strong of and

to transportation leveraging innovative storage as technologies provide biomethane. this such and further of We in the are adsorption expertise areas capture

antimicrobials, drug health antivirals are like time release delivery. Additionally, looking we applications at human and

and alternative from in are material products derivatives beyond optimize and refineries focused new the markets. sources our manufacturing also expand We of use on to our CTO, assets, raw feedstocks our the diversify end adjacent our

continue Erik market One on is to expected will to of these these grow of initiatives. is both detail biofuels, which provide more rapidly.

materials testing We are alternate now.

such applications. committed we markets use in diverse exploring our end to and as the rosins polymeric and of Third, remain adhesives, expanding other

Additionally, growth Engineered we continued drive plan to in Polymers.

in are needs One such the our addition In products, and derivatized to of capitalize capital biodegradable need our high and uniquely customer utensils we suited thermoplastics focus carbon to trends compostable where plastic home on solve be composted margin to facility. bags is market growing products, our fully enabled plastic break and will on challenges. cap for or solutions industrial into favorable or down water trend dioxide an and at

these X doubled of fact, last In have the from years. our revenues each over products

we in from application. continue quarter, will we this in on both by also We I am to seeing are focus encouraged what Engineered Polymers the growth fourth begun as XXXX. but have

our customers our believe solve carbon opportunity with continue differentiated chemistry. work their a as problem to have to that we footprints, to We decrease

benefit initiative have begun underway. program recognizing product products embark our by certification on also experts. lines well of of And at to by an renewable nature our Our significant aggressive we evaluate XXXX the is third-party the to aimed societal

agricultural and a remain continue we become our exist our increased Lastly, and beginning. top To driving We worldwide. maximizing company keep and pavement, we working EBITDA truly by will markets. end, in a quartile overseas as brand intend sales our to and Increasing international our steadily opportunities oilfield is ROIC. customer chemical global measured increasing presence presence chemicals Particular to by the strategically commitment just will experience. margin efficiency to specialty this

Our on SAP progress track. continues digital transformation S/X to

the streamline expenses our and to team focused optimize from benefit supply reduce chain to efforts operations. logistics, continue also of We

begin we been efforts these have critical. XXXX As

strategy focus allocation on share balance investments, a growth reduction debt capital and opportunistic of will Our repurchases.

we returned in have debt a provides allocations. and We will that disciplined to us which take to approach continue our range target capital additional to flexibility,

now find turn initiatives Our more repurchases to we that our attractive. specifically in discuss in over will quarter to some I'll of the values fourth we at shares detail. should more buy the Erik growth call indicate

Erik Ripple

on Thanks, areas provide Ingevity our part innovation Slide On focus will I'd team as help John, that drive X, X.X. of growth update and for good an value some to like morning. and

reenergized mentioned biomethane, interested several purification, of to and both farms our innovation. earlier, focused We of our dedicated the biomethane effort biomethane innovative established approach months. expand we activated wastewater the drivers our in we main John technologies behind highlight this opportunities and have As can and today activated expertise. strategy to RNG, pleased we're further innovation agriculture three To team or provide one municipal growth initiatives transport the approach In carbon, by the adsorptive the landfills, are a human over end, primarily last believe in natural we the use field facilities, to of treatment the storage see carbon health. from a handling To capture is to renewable this lead areas to and gas and developed of emerging leverage of that the gas.

participate unique further We are Ingevity. relationships drive developing in external that for models to will growth business

provides COVID-XX Next, delivery. of chemistries surface including mitigate bacteria attractive technologies, viruses medical points carbon health and field that some and the release applications functionality entry for to leveraging to human drug time and Ingevity, our like adding emerging

killing and and extensive testing feedstocks most just plants alternative our two market where better tallow our understand of legacy evaluating being a Our areas we completed Today, we manufacturing exist focus facilities, biofuels. to the attractive in commercially our are uses the optimize for of and technology critical have alternative feedstocks input soy airborne Ingevity. opportunities are order used and expanded carbon is applications. will to already CTO the drive COVID activated as on In into of

sustainable from renewable range to diesel. global for a selling CTO manufacturing precursors. segment growing suitable the in our Ingevity, fuel our has biofuels more This fuels, of to capabilities other upgrade options transition to products participate like well as or fast Lastly, fossil feedstocks Ingevity leveraging including positions chemistry us full

Here, innovative participate explore we've business invest. also developed external other we to can and/or models in partnerships which

form that we continuing now our progress provide on a and the updates Hamilton can our and to financial As position. efforts. pipeline opportunities our impact growth. our diverse will of to turn the you Bill to future of regular the build forward look I'll see, discuss over of robust call We to foundation

Bill Hamilton

Slide summary, on financial briefly Thanks, our XX. find you'll Erik. I'll now discuss which

in Before I position. purposeful strength to summary reflects A see financial with XXXX. ability The has the a levels our less Capa attention our to numbers, fact acquisition clearly our been draw this I'd achieved healthy debt cash dive after strong net you efforts flow, to the like return to targeted than of overall able into the even on economic environment. amidst execution challenging slide were a to XX numerous months team made testament generate that we to and our the is

bond at the XXX term and revenue was Our borrowing $XXX.X X.X%. the of million. the and as in and respectively, rate notes senior XXXX, average Net was December LIBOR The on our rate approximately million revolver end remains X.XX%. XX our weighted fixed X.XXX% issued basis quarter remains and loan $XX for borrowing The October of points. X.X%, was rate at industrial January resultant rate XXXX plus interest at fixed debt

which quarter the from debt the to sequential Trade X.XXx. net $XXX third which sales. was the ratio when XX% was is of for decreased down X.XXx, capital previous quarter Our working sharply it million, is from quarter

moving on working working capital remain forward. of prepare focused paving half we we season, spikes as the typically our the for capital during year, optimal maintaining While first

our to with be stated we repurchased shares, XX repurchases. million XXXX total we repurchases quarter, earlier continue million. In XXXX, of will XX As to the we bringing in opportunistic share

our remaining share million on XXX.X authorization. have repurchase We current

which available information Additional our we file the expect XX-K, I'll be over week. to next will to now back John. turn Form in call

John Fortson

sales Bill. $XXX and $X.XX outlook guidance fiscal On guidance billion I'd announced $X.X between between like Slide our and and XXXX and Thanks, We've million review billion XX, year $XXX to adjusted million. EBITDA XXXX. for our for

potential transportation Our impacts COVID-XX guidance modes continued economic due performance worldwide. pressure despite to the on reflects uncertainty global growth tightness trade across around XXXX's and versus from

pretty uncertainty speak the as environment we While a of good lot business feels remains. today,

weakness improved paper Performance the will be printing On side, inks conditions chemicals. Chemicals slightly anticipate offset we merchant for rosin. and in by These

and dispersants. and We growth Polymers, agricultural project mix weakness from demand continued technology should benefit lastly, the technologies growth warm demand thermoplastics. In We to Evotherm continued on expect also expect for oilfield expect based for we adoption. in we strong industry. moderate chemical payment do paving increased Engineered in backlogs see And

Materials, pipeline. adopted we due the efforts to For the the standards any growth regulatory of refill to will industry occur deliver largely globally. revenue This absence vehicle significant Performance double-digit segment growth being expect despite inventory continued to

adjust X% closely. million the are as would $XX the in translate to $X about changes, auto extent to situation of the our We shortage. quarter will of million recent in revenue the to result auto in the an expect chip to back first production the we we impact watching global half of a we industry This which necessary. impact up semiconductor year. in data, the make To to Based Ingevity, most on as a perspective the expect

spend the expect We to SUVs and expand, be at for and million litigation to for year. will $XX around our demand expected as continue trucks

to activated between transformation continued Major $XXX our project, carbon million. digital spend include we an in innovation capital capital. SAP/SX and of facility, HANA million In XXXX Virginia Covington, spend we growth the capital and and terms the $XXX plan expansion -- expenditures, of in projects increase

stabilized $XXX expect be levels, capital flow at and million. working year spending to capital in increase the for cash With above free the we or

X.X challenging the execution We macroeconomic we through great to flexible keep believe are the and XXXX, business performance the between yes, In be ratio a as performance capital opportunities incredibly continue and we and XXXX. this our We demonstrated pleased our with debt we to expenditures. unprecedented our deeply execute in continue and in for times EBITDA ahead. global strong to Overall, results fourth in ability uncertainty, deliver our to to increased team's from X.Xx the and XXXX amidst year. to quarter and reenergized we standpoint, in expect drive in Xx our the will These also consistent will any acquisition. conditions Ingevity on adjusted strength ability of net be despite

Given we optimistic XXXX. year guidance, of meeting and our both in about remain record track maintaining the for our both confidence and guidance

creation we're the believe long-term. value for also well-positioned in We

company, leading a our market in specialty global a our technical Combined in the we and ability chemicals management we to in and opportunities front of team, sheet the our our continue As leverage expertise of the strong balance with us. soundness strategy, customers. experienced benefit believe of to execute on

Before to call, the the another I'm we of series pleased half share that preparing XXXX. are the in webinar midst end of from first we

We the topics will in and timing on coming the provide additional months. information

I come. to So and our for X,XXX employees advantage work of efforts distinct the a more us. competitive worldwide. expect are They In closing, appreciate

call the We to hope strongly open long-term Ingevity. point, we questions. the and At operator, for will potential to continue believe our this our in enthusiasm very we company, you share for

Operator

comes from with Our question. today first Instructions] Markets. McNulty proceed of question Capital John your Please [Operator BMO

John McNulty

Yes. Thanks some taking for morning. Good and on really solid really, congratulations my numbers. question

flat derivative to positives it a worse. maybe Chemicals that well. get may So on the marginally pricing higher. only as to kind up end markets in starting When look there's guide like sounds you're all merchant just starting camp push with a will the I you're question of I would handful the EBITDA that follow or like mean, be then at It be of offset better, positive And like to with negatives, it. you and -- to pricing like indicating of for -- what looking have the the and looks least looks be some guess that by more the couple Performance as certainly for first it business. at you be resin

-- guess, we that credence that is missing about I something whether So the it's gives there we're materials be should that gives a something or that to else more kind guide? thinking that little conservative raw else on of

John Fortson

for I question. Yes, look, Thanks it. John, the appreciate

do I businesses. across going mean, pricing posture in our material of remarks, of conservative But feels a taking see lot sitting parts prepared some a said to are I here. it the we're here as pressure raw we pretty We today. listen, good different sitting think

problems, are of freight We seeing a companies. industrial right, like lot

We the freeze are and that's transportation of global occurring. up stuck sort

big optimistic, be see but a knows I think plays to last back right? COVID balanced. resurgence. take kind to Everyone So year. out. we sitting but in it played want the don't So little We're it's sort what we feels work to Well, going how February. it we'll we're think a We of while out here spin through of up, expect good,

John McNulty

what Fair levels. the on normal do higher business I business? because etcetera. thinking margins be in kind And release a question a we the back guess for as a volatile margin you normal How Performance then side, guess about it. pretty Got we think I expect a to push of enough. your them see more should comment Materials view to increased content, when it Admittedly comes I to the margins that? this was there and this get seen around environment guidance, we've of is

John Fortson

which manner business basis, on the capital, levels, will what we're business to take from it remarks, you as ongoing alluded under long-term the for proud investors customer an and very going would know XXs, inventories is can't to we company appropriate to business XXXX for we in mean, it right. Ultimately, think performance. auto as show, expanding very under thing I we our a position pressure is do we're It in of more the to as Look, can back that are what looking, given a forward, -- kind needs, able chain. but to working away the got right, capital to mean, crack the efficiency, company I our margins the we as and come more extreme of business, want and a can I more really position, mid get not showed with levels little describe do, those to working in pressure, one company you -- its more were able margins if we when there's growth to I normalized we investing operate achievements run always in etcetera, forward I -- that due this we it's and meet on cushion, to something down macro that this is go of right. tight candidly our are control. don't to were have it's returns right? the to into issues when in have But down beyond normalized like we'd do that right. -- we we've show All and But to does that tried what can are

John McNulty

it. It one in can I sense. makes Maybe too. Got one last squeeze

I guess, now? about. I most Just can kind out growth stand it about was as Ingevity kind in are four frame to of guess, one excited I the of to all, being you on -- right you're that mean, of you excited that And guys does commercialization. X.X the through helpful walking first big closer one the ones to that you're help the initiatives, you maybe

John Fortson

go ahead. Well,

Mike Smith

closest most and excited Yes, is to one I would say we're renewable on gas one about, the that and the one commercialization. that on we're natural biomethane the

provides reasons, like lot industry. and and to we For business that leverage point good our a fits because activated with it into carbon it really of a get of

John Fortson

the side supply really the critical I with business also in one of the being a they're drive done been reformulate the to we to But sort doing fortunately is leveraged that historically regards to feedstocks would our some very, been about that's into diversify of our Chemicals the But facilities, our current as as few years, products. will in lot has tell excited mean, up alternate Performance products new developed, locked to agreements. I'm John, you work utilization long-term right. know. that of that a you guys has very through that well this to have last as It feedstocks, ability very, work material too, raw very also on move will be I

because were we lot of successes faces some And earlier it's pretty around that. stuff. there this exciting So had a in smiling here week,

-- stay I and want like are going and we this think progress when tuned, I as to uptake, how we're to will don't moving making over initiatives, more you're feel promise those of both hear but to from forward. So us.

John McNulty

for much Thanks very Great. color. the

Operator

question next from with Oppenheimer. proceed your question. Please Zaffino is Ian The of

Ian Zaffino

maybe upon want that build of question. Kind Hi. last to

AMG pilots side, the new has to the Any from AMG fleets should business? kind additional that news we the expect report going? of and on On how been what adopted in that

Ed Woodcock

or AMG in grow we QX Yes. the vehicles opportunities renewable talking for that use have early that about We've carbon a to Ian, own around the I be have number negative as Ed. about combination fire. little the And to are has The to U.S. natural got us. is converted basically that in A vehicles we fuel pathway be continue going we our then we and through, them our a platform. feel question. a intensity. the with fleet that's use demonstration of of a the that irons for that great talk to come coverage is this that to RNG that'll I think Great QX And that gas us is that can only one

Ian Zaffino

as in and guess, just be ship production? are And as there. to line be we what the sort sense would with at I -- to Or in Thanks. line the going to are to going thanks. this other question or I just Okay, OEMs vehicle end, more? happens side, Is on be shipments very a get push more on restocking of now. Just and guess shipments are a is the trying there's of their seeing your there inventories very, right OEM then what far low you're the --

Ed Woodcock

and talked then see chips was saw Yes, some are the about, all to adding then as impact we you vehicles Obviously, they expect vehicles and in. as some sure and chips the the and GM to in component QX. the OEMs maybe in working press whether chips, QX, as storing do suppliers there interesting come get Not it, in hard an that producing as can. their many the they release, to they John and are without

So -- demand put vehicles, though that not on the that's us finished. completed they're for being is even

production to stopping production they can So as and other well, pipeline of that that optimize so at I OEMs some versus the would solely see their vehicle refilling start expect vehicles.

John Fortson

we’re QX. the actually perspective, running as is, in production time extent, some But internally, we To and get disconnect point to Ian, really is in of because to replenished sort helpful -- the were this tight. We an production see auto our of what need inventory operational our recorded from right? going sort of is probably really, you're little a bit

Ian Zaffino

Okay, very great. you much. Thank

Operator

Vincent question Stifel. with question. The your is next Please of from proceed Anderson

Vincent Anderson

and thanks Yes, morning. good

oil availability in stacking lot what of and you we to amount online looks inclined the here to yet? like it's for a for want certified are see feedstock So capacity you up doing RIN diesel intensity unpack. with that Have that start carbon we a U.S. vegetable bio to renewable getting interesting later. coming the a it to gap a California get discussions of prices, have can definitely TOFA agree customers in carbon to not generation, When along far sooner score things the than that started and calculated in Or as feedstock already potential really credits?

John Fortson

Yes.

having We with are absolutely those several conversations customers.

Mike Smith

just on TOFA. comment add on to the And

our Europe. registered the into supply have to facilities in market biofuel We certified and

that's that will be believe, we sort application biofuels, So part outlet for valuable going time, to our increasingly end that TOFA become an and of market of focus. over

Vincent Anderson

to feedstock pricing current you Excellent. ahead in biodiesel where But into today, sell pin is. up be TOFA of think down economics going against that would kind mix the be out getting Or a market where you And the there, Thank this at exactly prices of the could you it you. tough might market stack when as is if it future? about levels, their impact? positive it's

Mike Smith

Yes.

our other mix TOFA point, a that that some to when year But move compared So look to market for believe -- at such for into probably industrial we the this in some significant us currently of not serve over really standpoint. the from two, moving TOFA will or that out increase demand it's we'd needle the be impact export positive pricing a that opportunities space. next if we we comes that it

Vincent Anderson

that more alternative existing feedstocks, you I carbon opportunities just or thought. the Excellent. And processing? low intensity could When -- think feedstocks, additional pulp referenced stump as one, low following chain value if like left biodiesel processing chain, lignin you mentioned sneak I but into there some are in alternative maybe getting

Mike Smith

side, lot on. some that as that far is goes potential technology That's focus on our feed and think as there and pulp that's area our current and that But assets eventually and suit assets sort our much as are putting could that derivatization better -- for that a always something some not pyrolysis technology, as technology provide. not putting of market not We an the market. There that the team can end of we that plant focus both are we are really on. options our lignin really well

Vincent Anderson

Excellent. very Thank much. you

Operator

The next question Jon Securities. Tanwanteng with Please is proceed questions. of from your CJS

Jon Tanwanteng

on taking you've maybe Good update My -- for the and whatever -- competitive Thanks in the avenues on morning, an environment had materials you're in? the update give business business can gentlemen. first taking given an questions. the is that my one situation you in that you're legal

Bill Hamilton

that, end the that that's the day, the competitive kind of we past issue of into in technology. marketplace been with of the as legal auto the same a BASF sector. years. environment do with competitor we in relative land couple China. we Outside roughly have of entrance has is for of the it Obviously, the for the see But competing competitors the a to have at their Yes, lay

Jon Tanwanteng

Okay, a great. question for Maybe John.

there your targets repurchases your And opportunity target actively level, a it's that the of you that do is a there you if Now lot leverage of latter, down there? Are is how M&A? playing out? share or preference see out for to engaged? Are

John Fortson

gives a things flexibility, right? know it as mutually Well, I of see with exclusive. lot don't certainly Jon, don't I these you, us

I ability while a right also feel we’ve leverage shares making comfortable concurrently within that thing to need ratio or the be think like buying to maintain do. the and back it's if the we are growth our we investments

going I I are we there. look they're to think different at opportunities. mean, to of continue So lots out

some us at offensive of in and we our the of as to, looking as you and sit, ago, will flash we position are, there We flash and be leverage timing I or But where of a the involve feel and we concern a we put growing we different a behind avenues backwards had we terms where to back acquisition, from ago etcetera was are part company, were like and a we potentially that alluded of year of year -- lot forward in business have investments. a around value. a X.X, maximizing as the to Capa that think

Jon Tanwanteng

an content maybe go even you're SUV for a or terms Can in and kind of give growth I back Got If [indiscernible] could a time. just topic and plays you into terms dollar us a one have of that it. in these the how an maybe more future? the has seeing what you days, that indication has or hybrid units just to hybrid how of much SUV

Ed Woodcock

Yes. This It's is on regions. Ed. the determined really

European $X a and on canisters -- you're think looking a of $XX or spread, of as at of with maybe larger vehicle. of big level additional to think U.S., the us, $X it's you content $X and use a of somewhere some vehicle. content a a for content If in it And a China, between cost content. scrubbers, $XX

John Fortson

trucks. We like big

Jon Tanwanteng

it. much, Got you Thank guys. very

Ed Woodcock

right. All

Operator

The question. next proceed your question Please of Jefferies. is from Daniel Rizzo with

Daniel Rizzo

guys. morning, Good

is Chinese recovery? price just You it by is supply if was mentioned improvement rebound that Chinese? supply said a economic there's in demand of you XX% just during because favorability. reduced that's Or rosin because and wondering being a the in demand I gum it what is was

Mike Smith

gone overall production China. and of a inventory built now They down. primarily Yes, reduction up. has and of been a of That has system, lot in in worked Chinese it's rosin have supply that's -- the inventory gum supply out

steady that, market, more we've more much got, level. tightening reasonably is and now acceptable up I'd supply improving rebound and it modestly that with coming line the which to making say, maybe in is So a price imbalanced getting that more but demand,

Daniel Rizzo

Okay.

we away was Okay. mean from could years Is intellectual And far away? then property. just wondering provide this are a color. on how I resolution? your I the if still litigation you surrounding

Ed Woodcock

issues. easily got aspects year We’ve of another and go with the suits Yes. our legal to various

wouldn't early -- XXXX. late it say, to in I resolved expect So let's until, be QX

Daniel Rizzo

All much. right. Thank you very

Operator

proceed your from with is Fargo. question. question of next Wells The Mike Please Sison

Richard Garchitorena

Garchitorena Richard on is for This Mike.

on that demand EV much just wondering Materials, And higher improvement well? as into how is also year. of I price. lower incorporated just from Performance growth have hybrid volume demand this question for that versus is First expectations your double-digit or on revenue was coming you

Ed Woodcock

materially to the this for in put that to going continue impact this standpoint, will year, favorable. Yes, affect year. every is Volume going From we think to business. do year price be continue any is price/mix for we and to EV historically I don't a

refilling lots QX the all chip early very was that still China of think little those or impact QX. lost having OEMs with the dealer should Obviously, the of year, lost volume in globally and volume need return. global dealer you was was it that some on issue, lots. If If are in inventory over the but that a to start muted position

will basis that we So good feel of on do have increase a we an annual produced. vehicles year-over-year

Richard Garchitorena

going is renewables Any this of you toward manufacturing on that mix, increase? in then into to terms CapEx that facilities? plants? going your much And my R&D How expense existing the any? if incorporating to of Great. this initiative. then is are the use year to have existing And follow-up Or retrofit

John Fortson

around the we much those of we be think be greenfield kind it as that's it something $XX materialize to most to to be of not doing of spend So enter I we to capital what these that we initiatives. way. course right? are of variable capital oriented mean and the on, an to going you call, -- expect It spend we're going not not going to could the at are I we depending to sort M&A to our these million are as it's would markets, that tell strategy little it, guide, I thing sort it the I and on of investing it is to the mean, whether you when you going use either of CapEx be than I investments right right would doing be favorable shy higher. an it's maybe that year. do. that lower. would appropriate look is more little mean these of a some until to we're return. I of related get it's manufacturing But do going efficient unless some type or that growth a to terms time spend -- over facilities facilities in obviously, goal going the could existing it But Well, spend possible. could of can believe in It

So …

Richard Garchitorena

you. Thank good. Sounds

Operator

is of Paretosh question Please next The from Misra question. Berenberg. your proceed with

Paretosh Misra

Good you. a your on specifications that any the industry? more different and selling of kind you're provide technology? -- is morning. working the the color some same? Can or Or carbon capacity? capture butane process you Is such activated that to as carbon different activated there Thank changes existing is this there to might pretty Specifically, automotive carbon product applications to what you need make much

Erik Ripple

to once we're No, you automobile for carbon, applies a catch the features use throw being is coconut and we again our The our so as catch-and-release and can that this carbon really be carbon so it where is over have that's like throw call opportunity, and not other or and important don't it coal-based carbons activated thrown that’s used away well of away. over aspect away, one carbon, to is the we it gas. of change capturing using business that that renewable attractive

in these transported again, carbon and you're to again. Ours that repeat over and where gas of landfill situations a pipeline can need that getting over a then you using exactly and be off process to capturing and used that's then over and that activated what over

the make for So It works we don't any changes perfectly have actually it. to to application.

Paretosh Misra

as the feedstock? for CTO And higher? biorefinery feedstocks? will a then if to reduce reliance think follow-up, business, you Thanks. adjustments your chemicals alternative CTO make need that, because Very go what's I wanting interesting. to sorry to as prices on missed that to And will but reason you these pine Is your in take

John Fortson

some ourselves feedstocks. that all facilities company right? like with current us opportunities there these right, sense I been This I of the may, modest some there's earlier, when renewable in We when where come opportunity, engineers look portfolio, our guess, raw make -- we be But have is our of have sell if I to you opportunity of we've different CTO, or our further reliant. make a or -- feedstocks. having because have because can of different industry, don't because been us. now product we've been by use feel facilities, work remarkable felt And and right? our have finite that always a really answer broadly, other our to for just mean, we nervous said we also industry, number business and a is feedstocks and we give of as it in But of and could and always one what or the Ingevity pulping there's make look investments of a with the this reformulate of around from we material, want in so investors for you right? full is look, plus shy sort will, fact So Paretosh, an to to at with smart, some capability to grow have an nature, that you some products the a of reliance what's derisking hard-working amount great, suppliers actually back, we that biofuels facilitate efficient. effectively Well, diversification past critical the other real on we real assets have more GDP going CTO a more have industry, investing in on of And is

Paretosh Misra

initiatives Right. to some more this these of learning forward Thanks, on year. John Thank you. and looking interesting

John Fortson

you. thank Yes,

Operator

is The Markets. Chris next question. of Please Kapsch from your Loop Capital question proceed with

Chris Kapsch

Thanks Curious Yes. about more you traction there on of morning. about so getting conditions? way Because And the questions. backdrop there? any the TOFA this outlet you're magnitude price for the obviously, Is my TOFA on curious Good success taking could increases. about, of really of is is function the extent curious a TOFA which have oilfield, for tight the being demand you're one getting you key supply pricing. elaborate weak. it I'm

So on that's Or from the some demand to ratcheting see, that's support on And Europe? biodiesel your the the but a in function diminishing not utilization just this system are supply tight pricing? industry is back case, the for to movement demand rates its if the you other supply? is it in TOFA starting the for players, of maybe

Mike Smith

Yes. Thanks, Chris.

So and we've got traction on that in I is TOFA quite to pricing, would price say progress reasonable. increase X% XX%

is optimizing and For of we mix this demand is supply oilfield we because, not reduction look you're last as we the what at doing versus year. growing, have do overall the part, most it quarter first especially inferring, the are as year

having where So vegetable compete to in we gone significantly. essentially alternative markets are export pricing oils an quite industrial up opportunity has

to TOFA do increase that that utilizing those substitutes. fatty acids, change accordingly And ability acid overseas taking some and we of markets, versus the between price such are as other markets coatings to of advantage have fatty

Chris Kapsch

it. Got

So the -- were what rates based Thank volume alternatives a much? some pricing on that, based place crank provide Or -- to alternatives to out up on you opportunity more an some the Does headroom that bit? not to also if the you. it like your you have some utilization for at crank TOFA. so refineries sounds

Mike Smith

have of discussed I our on our refinery rosin run previously, focus think rates Yes. based we generally we as the Well, demand products.

is that straight then it profitable And we most of between take other essentially, it, will be the as as we move can healthy markets. rosin industrial other will profitable provide us TOFA the to and we fatty TOFA starting overseas acids. have marketplace. amount derivatized that So the long that we market, then selling profitable substitute the the demand into an sell markets of And lastly, and some different obviously and with TOFA markets that

Chris Kapsch

that also volume. I your growth with then opportunity initiative TOFA as And a come more Totally idea, end part nice guess makes could to up you get the extent opportunity TOR then to is additional the -- that of markets with sense.

on such very developments TOR can be? So update the of timeline just on alternatives much. I'm you would -- what Thank you just for

Mike Smith

our products, substitute Well, an demand always in we lots opportunity for sustainable adhesives. We applications. is ongoing to of seeking as and promote think in a TOR Thanks. that are especially there different hydrocarbon-based

use of rosin market, some actually sand oil have proppants coatings. for We markets, even such in other contain the seen that products as the and

safety the and are hydrocarbons, we so do its adhesives, and to continue applications then going push be use seek And always it like versus packaging sustainability positive attributes, for derivatives. striping to to whether of road TOR in the we broaden and

Chris Kapsch

you. Thank

Operator

proceed The next Vincent Anderson question Please with question. Stifel. is from your of

Vincent Anderson

thanks to for me here. of want of Yes, applications and as serve more for kind active these a today? really we some take this of -- grades I this couple pharmaceutical carrier an And antimicrobial and activated wanted carbon comments, your to find on humoring just unique applications. the to the using already or compound? Would carbon specifically hardwood go a can out X.X and carbon is specialty

Erik Ripple

carbons that the carrier. it of to compared other our about it's both what acting trying leverage a is carbon questions in secondly, market. to And functionality of is first, to your Yes as we're

Vincent Anderson

impressive. monomer basis trailing then something curious if derivatized right. of see That's back? That mix on larger for more is trailing mix that's or I if come could where might demand we product Capa. in if adjusted a that's great. quite on really All a And of normalized squeeze I'm just

Ed Woodcock

growth. a with polyols fact, also this enter got products. opportunities seeing for specialty sustainable. as across really seeing XX% We they we functional more very that applications much suite applications achieved the bioplastics. derivative in the as industrial are year, our even look with the think high before, very thermoplastics, the products we're biodegradable And are mentioned broad we a is growth based of on high that we've opportunity -- that where we've positive We've we if for are at polyurethane And

And So those fact, areas. could in of derivatized based very innovation over XX% time, product trade put is that behind the it I we portfolio further some higher-growth focus that on on and think even solid.

John Fortson

touch I … would on just Right.

So -- yes, go ahead.

John Fortson

the in No, to just we antiviral. go was guys little results really as is, because that's we're devices say don't mean to COVID are right? probably tell making now, our hugely right? point filters being mean characterize that we in sort they're value and we going material flex But and that is used of will even material. being we'll to killing you -- producing going mean, sold of the constrained, but these margin, be I I right what capacity wouldn't to sort things I opportunity we wouldn't commercially and I that don't I now overhype, devices, we product. are, production is to speak, I on them well, as are there's we that bit Waynesboro, like as know. filtration, antimicrobial our are as just back you as -- best, a -- the a huge highest highest I there seek

right I further characterize to probably results it wouldn't But it's So now. material little might a along than our appreciate. as you guys necessarily

Vincent Anderson

on question, perfectly. up teed that last going me but to myself was Capa told I And be my helpful. comments the that's No,

Just any but right, balance for system have about maybe two one more polyols, bolt-ons increase of to more. even the accelerate just bit maybe in thinking like the that success I given house polyols? or mean -- good, and a -- looking in just value the something to Capa given and a thought sheet you polyurethane pull is little commercialization further

Mike Smith

Yes.

Engineered sort part are acquisitions potentially downstream adjacent on the mix, bolt-on involves the Polymers adding of on products the of those to polyol the we Polymer the in for going table. it product sort of for Engineered are or lookout whether So business, profitable

business that as inorganically that in opportunities to that time the be of in we we growth foresee those that organic over hope continue as We evaluate successful to will business. and adding well success aspect the will

Vincent Anderson

very much. you luck this year. Thank right. Good All

John Fortson

Thank you.

Mike Smith

Thank you.

Operator

no are questions for at There I additional this like Maurer turn to remarks. closing back would time. to call Jack the

Jack Maurer

next for everyone quarter. talking outlook you you, morning. and positive Thank your with look forward very business remain time to Thank We you. this our again about long-term interest and

Operator

conference. today's concludes This

disconnect Thank you your participation. may for this time. lines at You your

Ingevity (NGVT) 12 Feb 212020 Q4 Earnings call transcript