Ingevity (NGVT) 7 Aug 222022 Q2 Earnings call transcript

Company Profile

Participants

John Nypaver	Treasurer and IR
John Fortson	President and CEO
Mary Hall	CFO
Ed Woodcock	President, Performance Materials
Rich White	President, Industrial Specialties and Pavement Technologies
Erik Ripple	Chief Growth and Innovation Officer
Vincent Anderson	Stifel
Jon Tanwanteng	CJS Securities
Paretosh Misra	Berenberg
Mike Sison	Wells Fargo
Daniel Rizzo	Jefferies
Isaac Sellhausen	Oppenheimer
Chris Kapsch	Loop Capital Markets
Vincent Anderson	Stifel

Call transcript

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Operator

Good morning. My name is Brika, and I'll be your conference operator for today. At this time, I would like to welcome everyone to the Ingevity Second Quarter 2022 Earnings Call and Webcast. [Operator Instructions] I would now like to hand over to John Nypaver, Treasurer and Investor Relations.

You may begin your conference.

John Nypaver

Brika. you, Thank welcome and Second XXXX Quarter Good to Call. Earnings morning, Ingevity's presentation we to Investors morning, this on follow posted discussion. use Early can a our you site today's that on Events be ir.ingevity.com, can found & It Presentations. under are we call, for, to measures not this throughout intended measures. may supplement, Also to GAAP non-GAAP refer financial which comparable substitute financial Form reconciliations our these to and release Definitions XX-K. earnings measures also GAAP non-GAAP are of our comparable measures and in in are included of the events statements We earnings performance projections, may our actual release. in and statements we may and those future make are events further materially differ and these during also future company caution forward-looking regarding projections results that call, or described as from this financial you just

Our X. on agenda is Slide

Mary Materials; Ed President Pavement Our speakers today Rich are and Technologies. John Industrial CEO; our of Woodcock, Hall, Fortson, Specialties Performance President and our of White, and CFO; President

Performance Steve Steve In with off financial will of his Ed quarter, and will co-lead, on our growth recent Engineered for discuss discuss the of X Chief behalf results consolidated Chemicals Officer, Erik and Innovation Mary will including John addition, start investments. segment and comments. our for review Hulme, Growth the follow for Materials. second will Rich, the Performance review Ed And President, and then announcements. performance quarter. Chemicals entire the Performance some segment. highlights will Hulme, available Ripple, of be a our Rich Polymers; questions with will us

that, to conclude Finally, you, our With John. with John over outlook XXXX. for will

John Fortson

morning, good Thanks, and everyone. John,

exciting investments earnings our addition today's X saw that call. announced last on you As in we to night, we'll discuss release,

more investments. quarterly time on results, will and then X growth First, our Ed on and we'll spend color Rich our some provide

also to Q&A. of plenty for We time want leave

So started. let's get

all-time and quarter world topped our customers team demand long, us. may did enhance logistics reflects am on the from higher I it. our businesses hearing second all for the continuing our growing company. businesses of work for the revenue first that managing while quarter our protect you and last around revenue was as Slide record input in of not to our purify, last costs. across call record for X, their that an the Turning remember That products proud This

teams commercial our and in markets. to stay continue we the to Our provider close ensure choice our are of customers

Our team materials us then paying competitive a have differentiator supply This can tirelessly is dividends is we to customer ensure this need goods our works focus finished and keep for producing our chain in we the the to customers. and to deliver on environment.

X first the history want the forefront the record operations to this our safety months company. our as of do, The of public in and we Safety also is a represent on congratulate phenomenal have team we delivered achievement. I at year everything best

can read transactions. Last which about May, ESG is in important available more X website. report progress in our we You announced our released night, our on sustainability

headquartered current our producer division customer serve X strategy a in us, consistent The develops core The acquire product including and dedicated will relationships, match The with also the is expertise is a our ISO-compliant. shipping materials, businesses, of first has believe thermoplastics, its U.S. for the important as with is growth, acquisition Materials commitment business stable our the customers great and innovation. partnering is markings, Ozark Ozark the in drive transaction and to its on in best-in-class Ingevity: received our Ingevity. technology-focused located other fleet a facilities states it of ISO vehicles Ozark with customer the a across are growth with platform to to thermoplastic builds quality and adhesive waterborne and leading Materials extends the Ozark pursue times. pavement paints for with the indicators Greenville, Ozark Materials, Ozark includes leadership. to rosin-based agreement at our our Ozark to And facility serve consistent position safety, of as are in pavement a our value-creating of logistics preformed strong These traffic X certification, Greenville a marking applications. Alabama. and we Like industry, of leading portfolio it and technologies in for our pavement growing future. in strengths pavement construction strategic transaction

designed performance vehicles. that also materials the announce excited Based batteries Nexeon investment an silicon-based improve leading Nexeon to are in produces lithium-ion company the of in Limited. We a technology to anode U.K. electric is for

Nexeon activated carbon in that our commitment performance. jointly technology use develop investment includes vehicles to to will a electric Our battery enhance for

have characteristics vehicle can the battery long this carbon entry exciting used electric market. a for the be applications, variety performance as in high we of As of one particularly into an our activated stated, our carbon growing and is value-add point

significant market very of our grows, to carbon. a our transactions on execute source for investments. this Nexeon growth demand be As and These could ability demonstrate volume identify

maximizing support our We balance resources growth. shareholder value strong and are utilizing to and committed sheet to

Mike in consolidated contributors service Michael bring X spin, and to the turn of I'll who With thank a Slocum board. board you and our to to his new turn for Wright, saw to been that, board the our on since announced long-term be strategy. over advancing We both Mary discuss the I to changes to retiring. will some years Fitzpatrick, Mary, call experience over few key want our has is board results. board to our directors. our we made great of of as We Shon members, Before days whom it ago, added William

Mary Hall

John. to Please Slide turn Thanks, X.

at remains was products, continued to just quarter the input successful record for the were inflated year-over-year. market revenue over our growing teams price As company, mentioned, a to our John and during in recoup for second increases costs demand driving XX% End the rise quarter. strong that

networks. to frankly, and, optimized work needs. dogged do customer great the delays continue in logistics Their navigating various creativity and teams persistence to congestion and meet our chain supply the Our delivery ability in

to to volumes basis declined the This within was decline primarily Ed attributed Performance material while from to profit revenue points. shift year-over-year, due was Performance while raw was compression to mix gross purification, in also discuss; XXX Rich mix will from and Materials margin the gross particularly Our shift due Performance review. Chemicals availability automotive Materials each was lower compression nearly plant downtime, compression Chemicals. to that which due some Polymers Engineered margin and up in to our margin will segment X% Performance about in Materials carbon process Performance margin primarily

Core to in Chemicals Performance as year-over-year due was of year, compared Materials XX% grew as percentage China. depreciation a in excludes of was to this total revenue QX, SG&A, lower down was which bit XX% and lower sales last represented dollars due sales. Chemicals primarily Performance as primarily addition, auto but up costs, production In amortization, revenues labor-related a to XX% X%, Performance total about in while higher

and our EBITDA last is of over Our $XXX.X second-highest adjusted line million, adjusted quarterly diluted our strong $X.XX EPS year. top drove versus of growth up XX%

you flow stable free Turning can cash our good sales positive trajectory, see generation leverage. and to Slide X,

in we in see had of of using been repurchases. cash shares. $XXX million spending for share we've capital X.X million can around You years about the the million that few to our return board last active to also By to cash the QX, allocation used repurchase $XX shareholders, end flow year-to-date our authorization $XXX chart strong outstanding free approximately bottom-right million

our last to the So authorization $XXX week, Board million. up to refreshed repurchases allow

more it's for and Materials strategic to expected and to the QX; to purchase revenue Financially, is on earnings. color in $XXX the immediately XXXX, it million, QX. give business price is of business expected Turning you will transactions Ozark and mentioned, hopefully, be that accretive million the early with that $XXX will John to XX%, we close in EBITDA approximately adjusted fit. approximately margins this estimate contribute of Rich

to in Ingevity in speak was is a As Limited, cash gives end John investment minority in to as markets a using interest hand. strategic automated million our their Nexeon investment Nexeon completed well a carbon. mentioned, on board. which our This investment July The the Nexeon seat $XX Ed diversify on investment for as will

continue expect we area, credit back still to borrowings upsized will cash to ratio We mid- fund our debt-to-adjusted allocation summary, repurchases. leverage Xx financial share the including cash X.Xx EBITDA within acquisition be of the range recently and free mix expect allow also In X for Initially, net our allowing but to in within we revolving while Ozark us flow. we solid to high-Xx generation strong to results free our deliver target Materials be a capital close, flow to with expect cash months will facility. of post from our choices, other and XX

supporting a turn returning over Rich shareholders capital to debt color enables results. our our that discipline Our Performance a organic inorganic on strategy and And growth managing it while to us more cash commercial execute segment initiatives I'll on for now financial Chemicals level. includes allocation to and prudent to and balanced

Rich White

and Thank you, hello, Mary, everyone.

X, solid in demand necessary Specialties. particularly Slide we're the Industrial on end raw price were Engineered related year's keep our continued to market record experiencing with to materials revenue cost significant and pace the and Performance segment prior quarter increases growth Chemicals versus Turning These energy, improvement, saw and to Polymers logistics. increases

Segment see quarter-over-quarter strong to up continue lines. million. were our business $XXX across sales of all XX% We demand to

largely growing had quarter, energy. versus business almost Polymers help revenue year. second prior particularly, was price and, inflation Engineered our due logistics to Steve, raw materials, necessary for in Speaking a to increases solid offset This XX% with

the strong specific inability continue unplanned our was weakness materials. our source in meet to to due all demand by lines, customers customer to to demand constrained inability partners some resulting materials. provide In and isolated the strategic consistently temporary raw see from downtime markets of our the product quarter, We energy to of with ability raw across most

the of Given year, disruption. demand further we has believe created half position, this barring Capa our pent-up should benefit for second products, that market which our the

QX. DeRidder expansion and expect polyol sales We and excited late project it up are running be about early August, capacity very in commercial QX, with to our

be Industrial prior available our growth and lubricants this versus As adhesives, QX up were and another for up prior in quarter, Specialties averaging year oilfield Sales of with quarter. over year. all had year Q&A. record versus mentioned businesses earlier, growth Steve double-digit XX% sales XX% versus will

direct price gains Technologies of Pavement inflationary success offset in higher-value was we help mix a a to team's derivatized in QX, our result on markets. our sales primarily record maintain by key focusing volumes these These able are had market due this to with to optimizing increases XX%. costs, product of While segments. were

price of Chemicals Americas. While EBITDA much increase did of season the this in volume of was in some timing full the prior implement constraints pricing actions, XX% down we our increases, points, EBITDA Paving volumes. quarter, year driven million Performance throughput. up is plant $XX we growth versus to by was basis while segment was impacting XXX improved of swing, volumes QX the chain almost most with which lower supply in and attribute margin

on in to Ed for discuss Our would team Performance thank work. I margins turn of Materials. focused call Chemicals half excellent continued year. improving over second the the our maintaining remains the now team like I'll entire and to to Performance their

Ed Woodcock

Thanks, Rich.

see shutdowns May helping auto activated of proud impact were production COVID-related down, Performance As to our to versus of automotive segment on global $XXX.X our XXXX, purification compared you keep production. rates, ability results. deliver to reflecting utilization pivot planned X.X% sales Slide team's quarter. quarter to the of plants of and near cascading prior down we down Sales in markets are negative solid vehicle running Materials our on the the the second global products China's and #X, impact the April carbon million, at of year's to can quickly process were With

as of out about we We see second encouraging are the China. news optimistic year, half the of

being vehicles For tax internal at XX%, well. vehicles level. reliance continued during example, our introduction the a OEMs internal shutdowns incentives reducing throughout dedication limits multiple announced also and on as impacting saw cities engine China these China to plate reducing tax well we team thank constrained has auto-related significant the increased purchase government, vehicles chain automotive major particularly, announced of have as a time. License government combustion to China their effects with on engine supply some purchase combustion central challenging further COVID-related I incentives by further neighboring for by are production, were their countries. the parts the of supplies Asia-Pacific. China China, ripple for near want OEMs in for of incentives levels the X in the some tax all production and, our in to Outside production vehicle such the due sales global on auto Parts as of

were to able carbon. down segment negatively were as continued May period of year higher, value prior was In April our constraints increased to differentiated of production XX% saw that North million, and shutdowns to on some sales. X.X% American primary driver more to Segment versus capture was increase production, process chip and shifted volume estimate carbon China prices was $XX.X production auto volume. were global from we higher-margin volumes automotive While vehicle effects purification the auto year margin light we have North XX.X%, carbon up EBITDA as activated sales Process quarter. highly as we our Segment EBITDA our the versus carbon, up, on lower of mix negative automotive supply our purification product sales. the in QX prior impact was in on America, impacting the in

that have batteries of charging of to that performance, we as in to the earlier, footprint parts value are better times in partnering or are Nexeon driving in silicon with is Turning the in different market. are business mentioned anode as electric anodes. in anode are part drive the range on today's They in and to a but to focusing Materials emerging including as battery to as the in the and leaders a the strategic the working X technology expand others space. on John shortening thrilled gain our they vehicle focus markets chain, extending Nexeon X market electric lot participants and are to vehicle battery of graphite investing that of Slide compared to be unique a Performance X, our There X

battery. wood-based A lithium-ion limited by is swell has the activated tendency our silicon anode incorporated damage to known test carbon While the results technology, application. mitigating silicon with substrate to cells parameters, Nexeon XXx Nexeon's for while internal versus batteries a storage to the higher enables sustainable lithium-ion with working provide impact the the working of carbons already swelling. in are in to its activated levels composite capacity started silicon of up and silicon. them develop with the of this promising carbon energy test battery, been we use and silicon-activated exceeding as are be potentially and of graphite, showing now negative a We to patented to the Ingevity's effectively commercialize

developing decade. in coming us significant commercial future partner automotive will strive track acquisition of aggressive excited Ozark. excellent they and Our I'll meet for are meeting Nexeon industry collaboration call record our this about view we the standards of long few rigorous their we rapidly to with as to quality and long-term tremendous scale can middle this make back This how the our to as a Rich any next volumes of we volumes an goals. evolve the over goal market. discuss turn impact and But opportunity, years,

Rich White

Thanks, Ed.

on Ingevity Slides the diversification of taking the Chemicals year. it and end of exercise the position coatings, close on to of our part with highway to our Ozark. corporations; technologies family will like This on Technologies transaction of QX transaction for expand. Ozark a XX, the Ozark traffic about customers; allows On and of comments and as of this in Slide thermoplastic a to to strategic mentioned was downstream estimated adhesives, which Ingevity; already I the and provides that leverage are Ingevity. expect serve pavement output business. capabilities grow. XX mostly preformed minutes you key is the more a business, of is Mary. our market. rationale, market John, spend specific growth On and would We thermoplastics product a be the both with and through segments; provide provides the respective full of year's expect expands and rationale Ozark summary on the to playing order certainly that John billion. As over pavement overview of our an transaction segments of work we industry, which in platform culmination about business is strengths in excited of by the is that overview we and strategic XX, you is the both we The transaction, and focused in of X industry to already unique build becoming the to it toward current a this comprised the will strengthens couple The X we and a an feel and moves profile; foundation industry, highlighted marking Ozark a worth which by for the offerings fit logistics to why Slide marketing the a areas: Performance for on in strategic undertook of Pavement role believe of the and details respect with closer leader on is XX of industry, which the on core and further each the margin strong industry in further $X.X paint in see paving a North American opportunity an

that we you'll believe spread business a go the across have with fleet As Alabama, chemical coatings Ingevity in retroreflectivity is is past, provides the each versus oil well fit with If we why applications used of the located the Ingevity. in technologies. tall third-party in to business see service unique Ozark resistance as roughly final alternative X thermoplastic as and headquartered also employees had slide, specializes is we a enhanced of and strategically XXX in increased Materials' facilities. Greenville, rosin trucks and discussed customers. They Ozark

will captive benefits business. also wonderful can team Ozark Ozark. product has The we a previously and Ozark be network about It provides end have the marketplace. in the expect leveraging pavement The the technology. and will in-house access us a development, increased brand the that we that broad of business our our Ingevity job on done with to The currently the same platform discussed our expertise rosin. front for keep capability further said of the expand help use have We spending on with government

have we our and the there opportunity and of further close expansion strengths early, once still post be for the will common value we leverage then ownership. capture to opportunity combined While believe margin had

look call and transaction remarks. to to that, are turn Ozark the and John excited to to over back the this the Materials discuss certainly We guidance I'll welcome year. to closing Ingevity team With forward later closing

John Fortson

Thanks, Rich. With reiterating the are our XX. appear production. year of quarter we from strong we End markets recovery another across all on our us, the half second behind guidance businesses, and healthy benefit Slide expect to of of auto the in

expect of growth a Polymers. we to reacceleration Additionally, see Engineered in

above have of the our high stay seen EBITDA. and revenue year if And the on signs recession both of guidance for finish businesses our We a or not we end in even trajectory, at yet. should we this

are we year. the conservative half markets the by believe happen are second carefully many that the follow However, monitoring Those of nature. in know we a us and recession who recognize may

into we our weaken. and that begin a to So guidance, demand we factoring prepared company are we see if will be as

Human our from that who I continuing professionally turn Resorts. talent Host & I best Christine commitment Stunyo, and has Ingevity to helping experience, Before Christine employees and month our personally. to new a Chief for both it than wanted drawing we Resources over in XX she inclusion, have equity last more instrumental us joined be diversity, to and Hotels to the Q&A, will develop Officer, years' mention and

Christine. that, team, questions. her the have to your With thrilled are take Operator? leadership we'll We welcome, and on

Operator

comes Stifel. line first Anderson of Your from Vincent Instructions] the [Operator question of

Vincent Anderson

revenue density throw share just I sell hundreds look this just could compared low what claiming is definitely for per blessing on economics, line coming on today what back-of-the-envelope be be out looking carbon that to to question you versus of a am the of this I of tens of at kind per-vehicle but kind energy of and looking dollars dollars might for thinking get your of premature, your out multiples current at on some at and is I'm that, business? the vehicle, product in based that ICEs. Ingevity not I'm Nexeon numbers I but electric math know of normal if

Erik Ripple

the Erik Ripple. the this lot headed is of right upon depends is math That for direction. vehicle. Vincent, A size of it battery the the in

vehicle XXX. And that's so a range that smaller XX with kilowatts Tesla truck to can from a

And up would are get The certainly XXX that is the talk the so vehicle we're today. vehicle. multiples of a what of But to to we $XX if kind selling on you getting on you you range size, a about. in that $XXX certainly, average see

John Fortson

obviously, will combustion business internal The market. as that slow, the look are technology reality, you There's we work be as Nexeon in the script, to correct commercialized But complement be our lot because at take demand we a said automobile us and us. enter opportunity though, great about this market at it and pretty we a that years demand might on for mean, as significant but exposure Vincent, our it's depending that provides are and this gets. for But industry, right? that develop I volumes is accelerate, share our very we're here, will hopeful it a very could portfolio several look, sort to this excited of the

Vincent Anderson

Part the to is very give they to more specialty pavement that, move to Ozark, already incorporate opportunity into there then a Sure. business? over a large any on of Maybe the an your magnitude That's customer markings? polyols you maybe were the just could turning Like, of And of there pavement B detail acquisition? your helpful. markings to also just rosin that Ingevity more the is opportunity prior to into

Rich White

this Ozark business. only a some us into our there Vince, extension few years that our of into now, customer been we we extension going market. see for a has but for see opportunities do some that rosins of for rosin be will

Vincent Anderson

here. quick in In along of the environment? the lines the here a out Great. one just last else price Capa, one, of trading thinking down learning And first high how could about resistant what been? for you sensitivity has such product potentially a of if ask for caprolactone. and just I'll time I turn demand customers maybe I'm give are that that inflation Or demand somebody

John Fortson

issues I this scoped rest to think, end The issue. need it's substitute, well, say market the in back QX don't out. out quarter we an expect can pricing to some, some a application, had issues. for to So I the We kinks of or with but don't sit, behind materials, versus They raw hard you Europe, slow of appreciate right? that, to scope growth slower seem there really year one at inefficiencies have robust. already to demand right? very, et to it's is them. that operational cetera. and is things operational We from the underway. that remains very over it product see nice where due kind the and the I we site, was imagine issues the reacceleration I the some pressure product worked But The look, that sort of as -- get the in And want of in where for about very, once

Operator

Your next Securities. Jon from CJS question from Tanwanteng comes

Jon Tanwanteng

adoption to if is they agreements have first you to that product. additional And design do to wins one very seem My And them scenarios, do successful? support second, support all? they Do or facilities are Nexeon. offtake first interesting of they have on a build have potential

Erik Ripple

process volume relative a as the multiples large and moving volume a that. our and So future takes very to in automotive carbon your industry, to vehicle, OEMs have expand anticipate is that they first X to need in several then, to prepared if we on but do several a and they available do that. process in the sell of agreements that we'll have the They're question, be that, qualification, customers. they the And secondly, facilities And the earlier down we for pathway them. to signed years successfully for facilities supply are questions, from offtake that's there's of purification to have the our with

John Fortson

Wickliffe some to will period we some -- John, work do do We several might help years to would be but this, some and it help this might But out. Wickliffe at work be, out. at debottlenecking facilitate some

Ed Woodcock

product U.K., made them. is what great that products the and the they've previously. a it is And This to we had tested we have in that success they've sent with

needs. can obviously, already their And our product product to we're that have meet objective our so is all we that most ultimately, meet to their And a thrilled needs. of get of

Jon Tanwanteng

Got sounds on for year, does you exciting. very in include that EBITDA That second is potential Ozark. you XX% That it? next margin My before just question that Or it. any have synergies of noncore part, lease the into get with like seems is that plan within the guess for I company? business to a logistics the It that? there. second what bit a thing have

John Fortson

no there's synergies involved, right? So

Mary Hall

No synergies…

John Fortson

quantify the get In our by Day. refine we Investor mean right? as and obviously -- the I we'll to we time ownership and given, we've we that will hopefully numbers work of and And there's those, take that, we anticipate the company, lots opportunities. of

Mary Hall

then close. And

that. So can do we to begin

John Fortson

But trucks, listen, a mean, a When as it's their it's acquisition. But them I separate have XX it entity already we facility. in fleet things part a opportunities logistics help at looking because move we're the it's it helps they of customer. bring right, that the the when business, of and bring maybe there. mean, listed I DeRidder, backhaul closes. around, But -- they support from product in sort our helps Louisiana back, of

that's logistics can going on not you're helpful as network. worried a this about. that type logistics company, support that what kind we're be if focusing across in having of be quite to environment, third-party So of But the business

Jon Tanwanteng

the a business, you -- in do sense Ozark the entire was growth And Understood. just what it. Got have historical for reference?

John Fortson

of sort it a sort getting sign up does a growth, it lot prepared see for Pretty is we right next and of job of I as think robust, to But But you great okay? what now track record GDP. has of it guys tailwinds of -- multiples we're it. we a a behind the with for They've the business strong done positioned have think of wave. we couple very

for just stand more. So by

Operator

Berenberg. Your Misra line Paretosh of the comes question next of from

Paretosh Misra

And on? growth there of they're For use is Nexeon, them? for specific near-term the million some for what $XX end the are working projects that proceeds any

Erik Ripple

we our activated in goal announced development of couple them with is as months. continuing press to an be of next action application. the That release, for the over our their carbon will near-term work So on the

couple little that's in have an just of to also approved to efforts of is we Relative and been of continue have their the product million to has We product made the full development that. announcement that production next a today Nexeon prepare the refinement that a for bit years. $XX to and

Paretosh Misra

product Chemicals project? Got on the it. development business? And Performance then the in can Any that you soy-based comment updates about

Rich White

still fatty brought excited capability very we've We're online. the alternative about that acid

last in product. As expect our on the the we We at facility you was record in And give that and is our tell for Crossett we and we customers running. numbers, don't and but end working are sales call, second that area in up continue us the about that are space. very mentioned quarter the of excited that growth to everything the that the is interested being team can

John Fortson

veg actually already oil Well, as on well. we're working another

of get see our being this platform, push beginning part again, beyond And products. but to a soy-based it product substitution as certified, takes we're to forward. So while a do going meaningful we

Rich White

business, in a applicable historical lubricant being merchant our from and just look our businesses. when standpoint, derivatization business And oilfield we it some not and our business pavement type at it's and in

really that that's about excited we're going on. work So

Paretosh Misra

that differentiated? your is much, just business? of because the change these follow-up, add kind selloff economics of in a some And commodities, quick quality product if the the does so Or recent of I not very could of that

John Fortson

pine the -- Well, one, our if of it a question, It characteristics. quality business, our chemical, does have does it's reasons. couple Paretosh, for performance will, a better good does legacy you a right? but change It complicated of

will, it has more because Scale, some in applications, right? So the then work, us. not color if customer it the valuable, there's very you Gardner it's -- it have to a is doesn't But where for doesn't better much positive odor. markets it's net-net, on the other But

this right? we applications, from this when we is that into put and it The can other other get other TOFA benefit So applications. derivatized run do we SOFA, take

of the out to scale to process business, this And So margin better. works it's as make we going continue double-whammy to sort get right? of profile and costs Rich a benefit, this take just

Operator

Fargo. from question of a have now Sison Mike We Wells

Mike Sison

transactions These great. look

So in of just Nexeon. quick terms questions

make not carbon I have getting activated the other EVs Your with well. I'm technology advantage base sort advantage into relative EVs? activated carbon others advantage a the talked of here know activated of is to But your as there using similar for to you make the some the an activated a about of have carbon. your there it's sure carbon Is players? an feedstock sort to if wood application. business,

Erik Ripple

the question. advantage There really for sustainable. is fact product This is absolutely our there. One is are is There Thanks the X. that Erik.

And as so as all the batteries possible. battery manufacturers sustainable in their much want chemistry

as And is wood-based Ingevity with that using for some then second will batteries. cost able compared our activated carbon. company. be the alternatives faster the advantage of a cost to silicon a a in unique revenue to So our and gives to carbon expand grow advantage a advantage give Using their Nexeon

John Fortson

a… of sort also is - the of expansion the but wrong, [Indiscernible]

Erik Ripple

usage to Right. I general, scaffold carbon in the anode. mean silicon a of the activated that -- and as advantage - on the of is as expansion core a the control using

Mike Sison

players the And then companies, competing the competition a on the it deal world? could roll market growth? works curious of -- of continue And against follow-up you just still if Got Ozark like industry well a you that paint just that up to PPGs this I'm it. Materials. are is. out a and there's some Is this who is this lot smaller that add initial

Rich White

in regional where going of segments build which forward. upon, reason, for a market is we players Canada platform North a very be and regional mentioned, there that lot Mexico As of there can you in participate and could it America, this play a that are

John Fortson

the marketplaces, I of though. will compete lot geographies, Ennis mean, your in It Ennis the attractions Rich Flint Mike, described, But one you certain a against owned which which right, as PPG, Flint. pretty of of to. now to alluded a first is part what right, get to the operators across You're it's marketplace, is question. is fragmented by

pace us So over there's inorganically a for grow good good business at this time. organic opportunities to and

Operator

a Jefferies. We of from Rizzo now Daniel question have

Daniel Rizzo

If margins? roughly little Ozark EBITDA a the a compare does similar, lower? we Pavement margins, little how and talk Is to Technologies about higher, acquisition XX% the it that

John Fortson

right? better closer cetera, but sort we the where of as Pavement So sales to not it at et bring good to our Adhesives, as is improve idea our at are the sort integrate Technologies, we of it profile platform It force, work margin as into is and cetera. that to et

Daniel Rizzo

Okay.

Okay. out -- still expecting and pricing, kind are we expecting here And to Or things about mean, corresponding of think if still increases? plateauing are we with cost the some the and then but both? are know I missed we don't from price I if we even or with back appreciation half of I playing this, year

Mary Hall

peak logistics yet seen have We raw not materials costs. the in and

kind we see of you a the see if of you line, dampen So look bit. sequentially, will, QX, did the did we slope in if

So of the increases lower, still pace increasing. but was

begin expansion. cautious down, are little about we raws hopefully stabilizes yet. said not But we're logistics what and we've is get peaks to So Again, a seeing that hope that. trend and come we once costs we margin and could that again,

price So continuing we push through offset to rising increases are to the costs.

Daniel Rizzo

and how over, are in segments? costs the roll do If concessions different meaningful price when

John Fortson

to going out. find We're

Mary Hall

some find margin. we objective the to to with the but other back and have this most will expanding as begin to those of We'll right? to, give play, it expect mean, or out. we'll costs way, is When and on we hold we long screaming on the I chemical the kicking game price, would can trend companies as

John Fortson

of mix has some are right? number everything, better, much the -- market customers. us our we probably CTO and market We because and unfortunately lower-margin become, supplying stop and advantage prices, dynamic just the One is for jettisoned other have of going how we our have to is demand the had a rising have

that be belief the in are rolls, as we and today roll derivatized. when do if, that our should to customers and more we position So market selling we're the because is better a

Operator

have now Zaffino Oppenheimer. Ian from We

Isaac Sellhausen

Isaac Sellhausen is on for This Ian.

production second some you to provide China the of production the at into all I of the what and you levels third in of normal ramp through know up into on improvements the shutdowns. the quarter? seen side. insight Europe first you've second the assuming year? the have guess, I auto from guess sort expect to you material activity question, And First mentioned I seen fewer you customer in quarter half of Could year, the or either any, China end with half

Ed Woodcock

think, this I is issues. Ed, can I talk about the China

May happened April, it you If what the what look shows of at and in trend. June, kind

So was it June, like, XX%. in was April, And manufacturing X%. then was down XX%. down, May up vehicle

the had, problems pushed they swung full vehicles of of into have and through advantage the are the marketplace. so the they're basically generate they to And take back operating incentives that at through lot quarter a rates to being that

Isaac Sellhausen

million, And million sense. CapEx? makes guess, $XXX then I going along CapEx guidance Ozark That that Great. on projects was the that $XXX then of just the you sort be that? from to I able be investments And the guess, in any made briefly, to unchanged, within the to Okay. lay there would business are out with

John Fortson

And So some end an you've steer have I availability And relatively some numbers some these we've modest or get this has to expansion CapEx involved, just believe capital where of S-X then to on out, finish our with alternate the that polyol projects the right? the the because Truthfully, is not, to who But in to build it regards the we've too. might going material Arkansas, mean, with of got then, for stuff major look, work guidance us projects right? at lighter DeRidder, got maintaining Crossett, raw that we're got on steel is we to that work implementation acids. at. fatty

the any being capital that's where -- we're expenditure injected not injected near spending into Ozark. being anticipate in So capital We significant money. do the term

Mary Hall

too. financial the looking the at might be you And CapEx number chart, on

it's we're through the is half it our of that, second year, like as the CapEx If But you well. considering that looks year. part in the lighter. trajectory spent coming does get of Most normal double our in halfway of

John Fortson

as larger, is not to expand on Nexeon other distant actually philosophical, variant, you of markets we like to it that carbon them, Just more a good. our things but variant, too will, ability the offer that is a into one about of but availability work carbon a for helps, we if

extent, a capacity expand some as derisker, to use that other to important. but capacity we you for have we support So do opportunity That's to it's because things. were longer-term if a the to we will, that see answer, them, as

Operator

Kapsch Loop now Markets. Capital from We Chris have

Chris Kapsch

I you in different Just parse Chemicals. it pricing a prior on to follow-up discussions on a Really, but Performance this the earnings raws, want about touched progression in way. versus slightly

of being more is predominant than in even via costs more slowed, pronounced that still inflation the the inflation CTO? the if the is And as TOR? COGS those passing in energy of contributor you terms just curious derivatives? mentioned, that, of pricing, pace terms of and there as products the just the then across pretty TOFA in in has is Just dynamic if comparable the component same, Or it along various vis-à-vis wondering

Mary Hall

the in just there out the called a what But escapes PC, if lower that plant of and in COGS, sometimes that attention the is throughput in you're thing on is number. looking One impact is one volume comment start at. EBITDA me that's bar. for volumes impact waterfall Let with on revenue that

of materials, raw volumes, mentioned. than waterfalls, the is expected we're on up. But red, COGS when you associated plant that's costs at also throughput, drivers these, main lower these looking So where additional numbers the shows segment related big as to

So part that the it number, does you And COGS wasn't really question. I inflate about will, somewhat. if restate? sure then Could your you of other

Chris Kapsch

curious. just So

better You're TOFA pricing I'm the board? lines in other is as able product in is pass the if those Or across comparable words, the pricing it that of complex is by TOR? to pricing through, presumably. costs, along justified higher get other? just Or one that and comparable material versus partly in mix curious is to ability to it raw

Rich White

question. good a That's

year getting justify to price earlier. CTO we're be expect majority business our just condition that previously. CTO and more produce You spot forward, reasons prices. has obtain that to to for we in, as basis, in we that for And right? the will on both the this contracted, TOFA But the us spot that products look have able to discussed to CTO to mentioned CTO necessary we inflate we've on our the get CTO of the based going continue been that TOR have all able on we is being and current a said, price inflated. That CTO, So

Mary Hall

leverage But then it we more okay, the then costs through it versus TOFA pass TOR? we're so CTO, as do the TOR? better Or I second same? part in of is is, those have for the we about TOFA and price to paying his And question, more, the understood able are on

Rich White

as mentioned same better to from sales, the on. sales more derivative we earlier, economics type the away of type the get John about because, It's which we moved merchant

Chris Kapsch

the just with as any That's as just to the what currently recently to And a rosin? you an maybe follow-up, provide could gum or dynamic color. is context industry helpful rosin alternative pine-based

Rich White

above it versus price QX, but currently tracking a gum that its it's current shows you the the for [indiscernible] good what a the when early out we're long harvest of in data Recent know, we've than was season. XXXX. been time. rosin was question. XX% in all Certainly, from has middle dropped as That's at come still that pricing bit has a the And greater low Chinese

still price than we is was lower trending it rosin talked. when last gum high, Chinese So

John Fortson

where sure it's going. Not

Rich White

Not we'll rest it's our on keep got of more eye sure out going. We've know and to as year. we it, build where the the

Operator

Vincent from follow-up Anderson of a have question Stifel. now We

Vincent Anderson

just to Mike's for back go I wanted some clarification. earlier question to

footprint not and about environmental differentiators the world? it pore in your your Are You Nexeon as relevant that battery is is of ability sizes unique. doing that with historically, talked those size control or But what carbon your the your applications. mentioned to pore other mix you've in as and carbon's blended

Erik Ripple

Nexeon, us That's to size it's gives is to a pore that our control partner it's the Erik. and good Vincent, a and but be ability factor a carbon for key with of unique really question, this position our great them. a

going be that with forward. that's we'll them, So working of the aspects one important

Ed Woodcock

scale be add, as to to able do that well. I'd ultimately And at important is

Operator

further questions the We line. no have on

So I'd closing some like to for hand it to John back remarks.

John Nypaver

with Ingevity, That Appreciate your again quarter. interest everyone. talk call. you and our you, in Thank concludes we'll next

Operator

have now your for you Thank and That does today's joining. may conclude day, disconnect you line. call. Please a all lovely

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