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Ingevity to Lower Costs in Response to Coronavirus Outbreak

Zacks Equity Research

Ingevity Corporation NGVT has announced certain cost-reduction measures to realign its cost structure in response to lower demand for some of its products due to the coronavirus outbreak.

Per management, the cost-reduction initiative is expected to strengthen the performance of Ingevity in the future.

The company stated that it will streamline manufacturing processes, and lower spending on services and consultants. Moreover, Ingevity noted that it will lower some benefits for salaried employees as well as reduce and restructure headcount through an early retirement program, and other job cuts.

The programs are anticipated to reduce cost of goods sold as well as selling, general & administrative costs. Per Ingevity, in the long run, the measures along with focused execution will likely make it more efficient and profitable. Notably, many of the measures taken by the company are permanent and hence are expected to offer a leaner cost basis in the future.

Further, the company stated that the cost-reduction measures will allow it to stay within the revised guidance range set out in its earnings release for the first quarter of 2020.

Ingevity also stated that it will record pre-tax charges in its second-quarter 2020 results as part of the restructuring.  

Shares of the company have lost 35.9% in the past year against the industry’s rise of 42.1%.

 

 

Ingevity, in April, said that it expects sales for 2020 to be between $1.1 billion and $1.2 billion. It also anticipates adjusted EBITDA of $310-$350 million for the year.

Moreover, the company anticipates a revenue decline of 25-30% year over year for the second quarter. Also, it expects a decline in adjusted EBITDA of 35-40% year over year for the second quarter.

Ingevity Corporation Price and Consensus

 

Ingevity Corporation Price and Consensus
Ingevity Corporation Price and Consensus

Ingevity Corporation price-consensus-chart | Ingevity Corporation Quote

Zacks Rank & Stocks to Consider

The company currently carries a Zacks Rank #3 (Hold).

Some better-ranked companies in the basic materials space are Agnico Eagle Mines Limited AEM, Equinox Gold Corp. EQX and Newmont Corporation NEM.

Agnico Eagle currently sports a Zacks Rank #1 (Strong Buy) and has a projected earnings growth rate of 75.3% for 2020. The company’s shares have gained 37.7% in a year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Equinox Gold has a projected earnings growth rate of 65.5% for 2020. It currently has a Zacks Rank #2 (Buy). The company’s shares have rallied 58% in a year.

Newmont has a projected earnings growth rate of 82.6% for the current year. The company’s shares have rallied around 74% in a year. It currently has a Zacks Rank #2.

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Newmont Corporation (NEM) : Free Stock Analysis Report
 
Agnico Eagle Mines Limited (AEM) : Free Stock Analysis Report
 
Ingevity Corporation (NGVT) : Free Stock Analysis Report
 
Equinox Gold Corp. (EQX) : Free Stock Analysis Report
 
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