Ingevity Corporation Common Stock

Greetings. Welcome to the Ingevity third quarter earnings report. At this time, all participants are in listen only mode. The question and answer session will follow the formal presentation. If anyone should require operator assistance during this conference, please press star zero from your telephone keypad. Please note this conference is being recorded. I'll now turn the conference over to Bill Hamilton, treasurer and head of investor relations. Bill, you may now begin.

Thanks, Rob. Good morning, everyone. Welcome to Ingevity's third quarter 2021 earnings conference call. This morning, we posted a presentation on our investor site that you can use to follow today's call. It can be found on ir.ingevity.com under events and presentations. Any projections or goals we may include in our presentation today are likely to involve risks we've detailed in our earnings release, our SEC filings, and the forward-looking statement you see here on slide two. I'll also refer you to our earnings release and presentation for disclosures and reconciliation of non-GAAP measures we use when discussing our results. Our agenda is on slide three. With me today are John Fortson, President and CEO, Mary Hall, our CFO, Mike Smith, President of Performance Chemicals, and Ed Woodcock, President of Performance Materials. First, John will comment on the highlights of the quarter. Mike and Ed will review the performance of our two segments. Mary will comment on our current financial status. And lastly, John will discuss a revised guidance for the year. With that, I'll turn the call over to our CEO, John Fortson.

Thanks, Bill, and good morning, everyone. Thank you for joining us. If you turn to slide four, you'll note some highlights for the quarter. Overall, I'm really proud of the way Ingevity has performed this quarter. We continue to grow many of our current businesses in the face of raw material inflation and supply chain headwinds, while also advancing our new product initiatives. Sales in the third quarter of 2021 rose 14% to $377 million compared to the previous year's third quarter. Our third quarter results were driven by significantly higher performance chemicals volumes in engineered polymers and industrial specialties, and were supported by price increases across the segment. Engineer Polymer saw increased volumes in Q3 for all product lines. This business has demonstrated robust growth throughout 2021. Our industrial specialties business also delivered very good performance on increased demand, and sales of our pavement technology products are slightly ahead of the prior year's third quarters. The prolonged impact of the global microchip shortage continued to depress automotive production, which negatively impacted sales of our activated carbon products in our performance materials segment. As a result, performance materials sales and adjusted EBITDA were down compared to 2020's third quarter, which is a tough comparable period. This was the quarter last year when demand and production rebounded sharply from pandemic lows. With respect to Ingevity's consolidated earnings, Both our adjusted EBITDA and adjusted EBITDA margin were down from third quarter 2020 due to margin compression caused by the impact of lower sales in our performance materials segment. However, when compared to the more normal year of 2019, margins were essentially flat on EBITDA that grew almost 5%. You will hear more from Mike and Ed, but we continue to advance important initiatives across the companies that are positioning us for long-term sustainable growth. We had our first commercial sales of TOFA into the European biofuels market. An application we anticipate will represent a significant opportunity for us in the future. We have obtained certification for biofuel sales at our North Charleston plant, and the process to expand it to Derrida and Crossit is well underway. We are working to advance our soy-based fatty acid production capacity at our Crossit facility with a goal of significantly more capability in the second quarter of 2022. We are finding increasing market opportunities for this alternate feedstock. We are also expanding our monomer production capacity of caprolactone in Warrington to meet the higher levels of demand for our products, and our plans to add polyol capacity to our deriver plant are on track for Q2 of next year. Our products are even finding their way into the electric vehicle value chain. Our industrial specialties team is selling product to support lithium mining operations. And our engineered polymers Kappa products are used as critical performance-enhancing materials in electric vehicle battery pads to dampen noise and protect the batteries. We are excited to be finding ways to add value in these growth markets. Finally, we are continuing to see increased testing by utility fleets for our A&G technology. Beyond trucks, testing of our large on-site storage tank is largely complete, and we are operational with our methane capture and storage strategic partner, GreenGas USA. You may have recently seen GreenGas announced a 10-year offtake agreement with Enviva. This is their second, their first being with Duke University. Additionally, we published our 2020 sustainability report update last week that highlights Ingevity's ongoing commitment to operating sustainably, bringing high-performing, customer-focused solutions to the market and playing an important role in the global race to lower emissions. Our renewable raw materials and the significant environmental benefits of our technologies give us a competitive edge. I encourage you to read the update, which can be found on the homepage of our investor site. I want to thank the entire Ingevity team for their continued hard work in these challenging times. I continue to be impressed by the drive and determination of our entire team, but particularly the operations and supply chain employees who work smart and safely day in and day out under these trying market conditions. I was able to get to our engineered polymer site in the UK this past quarter to thank them for what has been a remarkable story of supporting recovery in their existing markets and advancing new technology adoption. We are all excited about the opportunities they have in their future. With that, I'll turn the call over to Mike to review the results from Florence Chemicals. Thanks, John.