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Ingevity's (NGVT) Earnings Beat Estimates in Q1, Sales Lag

Zacks Equity Research

Ingevity Corporation NGVT logged profits (attributable to stockholders) of $22.7 million or 54 cents per share in first-quarter 2019, down around 26% from $30.8 million or 72 cents a year ago. The bottom line in the reported quarter was hurt by acquisition costs.

Adjusted earnings per share for the quarter were 99 cents, up from 79 cents a year ago. The results surpassed the Zacks Consensus Estimate of 95 cents.

The company’s revenues rose roughly 18% year over year to $276.8 million in the quarter, but fell short of the Zacks Consensus Estimate of $278.4 million.

Adjusted EBITDA climbed roughly 24% year over year to $83.5 million in the quarter. The chemical maker gained from strong growth in its Performance Materials unit as well as better pricing and mix in its performance chemicals applications.

Ingevity Corporation Price, Consensus and EPS Surprise

 

Ingevity Corporation Price, Consensus and EPS Surprise

Ingevity Corporation price-consensus-eps-surprise-chart | Ingevity Corporation Quote

Segment Review

Revenues from the Performance Chemicals division climbed around 20% year over year to $167.7 million in the quarter. Revenues were driven by the addition of the engineered polymers product line through the acquisition of the Capa caprolactone business and sales growth in oilfield applications.

Revenues from the Performance Materials unit went up around 14% to $109.1 million. The growth was supported by sustained adoption of the company’s solutions geared to meet the U.S. EPA Tier 3 and California LEV III automotive emission regulations.

Balance Sheet

Ingevity ended the quarter with cash and cash equivalents of $38.4 million, down around 30% year over year. Long-term debt was $1,403.2 million, up around 91%.

Outlook

Ingevity reaffirmed its sales guidance of between $1.30 billion and $1.36 billion for 2019. It also backed its adjusted EBITDA guidance for the year in the band of $390-$410 million. The company is working to boost margins and profitability in its Performance Chemicals unit and integrate the acquired engineered polymers product line.

Price Performance

Shares of Ingevity have rallied 31.7% over a year, outperforming the industry’s 7.8% rise.



 

Zacks Rank and Stocks to Consider

Ingevity currently carries a Zacks Rank #4 (Sell).

Better-ranked stocks in the basic materials space include Sandstorm Gold Ltd. SAND, Flexible Solutions International Inc. FSI and Israel Chemicals Ltd. ICL.

Sandstorm Gold has an expected earnings growth rate of 200% for the current year and carries a Zacks Rank #1 (Strong Buy). The company’s shares have gained around 9% over the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Flexible Solutions has an expected earnings growth rate of 171.4% for the current year and carries a Zacks Rank #2 (Buy). Its shares have rallied roughly 108% in the past year.

Israel Chemicals has an expected earnings growth rate of 13.5% for the current year and carries a Zacks Rank #2. Its shares have gained around 14% in the past year.

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