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Ingevity's (NGVT) Earnings Beat Estimates in Q2, Sales Lag

Zacks Equity Research

Ingevity Corporation NGVT logged profits (attributable to stockholders) of $56.8 million or $1.34 per share in second-quarter 2019, up from $46.7 million or $1.10 a year ago.

Adjusted earnings per share for the quarter were $1.36, up from $1.11 a year ago. The results surpassed the Zacks Consensus Estimate of $1.35.

The company’s revenues rose roughly 14% year over year to $352.8 million in the quarter, but fell short of the Zacks Consensus Estimate of $365.7 million.

Adjusted EBITDA climbed roughly 21% year over year to $108.3 million in the quarter. While the chemical maker faced challenges from weaker industrial demand in the quarter, it gained from its inorganic and organic growth strategy and focus on driving margins and profitability.

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 rose around 8% year over year to $229.7 million in the quarter. Revenues were driven by the addition of the engineered polymers product line through the acquisition of the Capa caprolactone business.

Revenues from the Performance Materials unit went up around 28% to $123.1 million, driven by strong sales to automotive customers in China. The growth was also supported by strong growth in sales 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 $53.3 million, down around 36% year over year. Long-term debt was $1,363.3 million, up around 87%.

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.

Price Performance

Shares of Ingevity have rallied 24.6% year to date, outperforming the industry’s 20.8% rise.



 

Zacks Rank & Key Picks

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

Better-ranked stocks worth considering in the basic materials space include Israel Chemicals Ltd. ICL, Flexible Solutions International Inc FSI and Air Products and Chemicals, Inc. APD.

Israel Chemicals has an expected earnings growth rate of 13.5% for the current year and carries a Zacks Rank #1 (Strong Buy). Its shares are up roughly 8% in 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 342.9% for the current fiscal year and carries a Zacks Rank #2 (Buy). Its shares have surged around 151% in the past year.

Air Products has an expected earnings growth rate of 10.3% for the current fiscal year and carries a Zacks Rank #2. The company’s shares have gained around 39% over the past year.  

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