Ingevity Q2 Earnings Call Highlights

Ingevity (NYSE:NGVT) reported second-quarter 2026 results marked by higher adjusted earnings, margin expansion and progress on its portfolio simplification efforts, as the company raised its full-year adjusted EBITDA and earnings-per-share outlook.

Chief Executive Officer and President Dave Li said sales excluding the divested Road Markings product line increased 5% from the prior-year period, with growth across the company’s three operating segments. Adjusted EBITDA rose nearly 14%, while adjusted EBITDA margin expanded to 36.6%.

Reported quarterly sales were $314 million, down 5% because of the April 15 sale of the Road Markings business. Adjusted EBITDA increased 14% to $115 million, and adjusted diluted earnings per share rose to $1.74, supported by operating performance, lower interest expense and a reduced share count, Chief Financial Officer Phil Platt said.

Portfolio actions and capital allocation

Ingevity completed the sale of its Road Markings product line during the quarter, following the earlier divestiture of its Industrial Specialties business. Li said the transactions are intended to improve the company’s portfolio quality and concentrate resources on higher-return opportunities.

The company also said its strategic alternatives process for Advanced Polymer Technologies, or APT, has entered an Advanced stage. Li said management’s priority is to achieve the best result for shareholders, while the company’s guidance continues to include APT and assumes no proceeds from a potential transaction.

Ingevity repurchased $35 million of shares during the quarter and had about $211 million remaining under its current authorization. The company said it remains ahead of pace toward its previously announced commitment to repurchase $300 million of shares by the end of 2027.

Free cash flow excluding a litigation settlement payment was about $89 million, or $2.52 per share. Capital expenditures totaled approximately $10 million. Trailing 12-month adjusted EBITDA reached about $403 million, and net leverage improved to 2.5 times, reaching the upper end of the company’s stated target range.

Performance Materials benefits from hybrid demand

Performance Materials posted sales of $161 million, up 4% from a year earlier, driven by higher volumes, product mix and annual pricing actions. Segment EBITDA increased 6% to $86 million, and EBITDA margin expanded to 53.6%.

Li said a shift in consumer buying habits toward hybrid vehicles has supported the segment. Hybrid vehicles use Ingevity’s more advanced carbon solutions and generate a higher-value product mix, he said. Platt said the company expects Performance Materials’ full-year EBITDA margin to be in the mid-50% range, implying some pressure in the second half compared with the first half.

The company expects plant utilization to normalize during the remainder of the year as auto production is projected to decline and Ingevity completes planned maintenance outages at two Performance Materials facilities. Platt said those outages had already been included in the company’s previous outlook.

Ingevity also disclosed its first municipal water-treatment contract for PFAS filtration. Li said the company was selected based on technological differentiation rather than being the lowest bidder. He said the activated carbon technology offers an easier drop-in solution, lower cost and performance in removing larger PFAS molecules. The company views filtration as an early-stage but potentially meaningful long-term growth opportunity.

Pavement and polymer businesses improve

The former Performance Chemicals segment was renamed Pavement Technologies following the Road Markings sale. Reported segment sales declined 22% because of the divestiture, but sales excluding Road Markings rose 3%, aided by pricing and volume gains in North America.

Segment EBITDA declined $3.4 million, largely reflecting the absence of about $6 million in Road Markings earnings included in the prior-year quarter. Excluding the divestiture, both sales and EBITDA increased year over year, while EBITDA margin rose 300 basis points to 24.4%.

Higher asphalt prices contributed to weaker demand and project delays in China and South America, according to management. Li said asphalt prices had risen nearly 50% amid higher oil prices, with the effects more pronounced internationally than in North America. He added that Evotherm, the company’s warm-mix asphalt additive, grew 8% year over year.

Advanced Polymer Technologies reported a 14% increase in sales to $49 million, driven by pricing surcharges and a more favorable mix of higher-value derivative products. Segment EBITDA rose to $11 million from $2 million a year earlier, and EBITDA margin improved to 22.7%.

Platt attributed the improvement to product mix, higher plant utilization and the absence of operational downtime tied to a boiler installation project in 2025. The business also benefited from competitor supply disruptions connected to the Middle East conflict that began late in the first quarter. Li said those supply-related benefits have normalized and that the business does not have meaningful seasonality.

Company raises 2026 outlook

Based on first-half execution and results, Ingevity raised its full-year outlook. The company now expects adjusted EBITDA of $380 million to $400 million and adjusted earnings per share of $5.00 to $5.45.

Ingevity also raised the lower end of its free-cash-flow outlook, now expecting $220 million to $245 million. The company said stronger earnings are being partly offset by higher inventory levels needed to support automotive customers amid demand strength and seasonal pavement inventory building.

Li said the company is continuing to advance growth opportunities in filtration, warm-mix asphalt technologies and energy storage while maintaining its focus on debt reduction, share repurchases and organic investments.

About Ingevity (NYSE:NGVT)

Ingevity Corporation, traded as NGVT, is a specialty chemicals and performance materials company headquartered in North Charleston, South Carolina. The company operates two primary business units: Performance Chemicals and Performance Materials. The Performance Chemicals segment produces and markets specialty chemicals derived largely from wood and other natural feedstocks, including rosin acids, tall oil fatty acids and esters, as well as specialty petroleum resins. These products serve a broad range of industries, including paper, adhesives, coatings, oilfield drilling and consumer goods.

The Performance Materials segment develops and manufactures activated carbon products and composites for applications such as automotive emissions control, industrial air and water purification, and spill containment.

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