Ingevity Corporation Common Stock

Good morning, my name is Brica and I'll be your conference operator today. At this time I would like to welcome everyone to the Q1 2022 Ingenuity Earnings Webcast conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks there will be a question and answer session. If you would like to ask a question during this time simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press the pound key. Thank you. Mary Hall, Chief Financial Officer, you may begin your conference.

Thank you, Brica, and good morning all, and happy Cinco de Mayo. Welcome to Ingevity's first quarter 2022 earnings call. Early this morning, we posted a presentation on our investor site that you can use to follow today's discussion. It can be found on ir.engevity.com under events and presentations. Also, throughout this call, we may refer to non-GAAP financial measures, which are intended to supplement, not substitute for, comparable GAAP measures. Definitions of these non-GAAP financial measures and reconciliations to comparable GAAP measures are included in our earnings release and also in our Form 10-K. We may also make forward-looking statements regarding future events and future financial performance of the company during this call, and we caution you that these statements are just projections and actual results or events may differ materially from those projections as further described in our earnings release. In addition to me, our speakers today include John Fortson, our President and CEO, Ed Woodcock, Executive Vice President and President of Performance Materials, and Rich White, Senior Vice President, Performance Chemicals, and President of Industrial Specialties and Pavement Technologies. We also have President Steve Hume, Senior Vice President, Performance Chemicals, and President, Engineered Polymers, and Eric Ripple, Chief Growth and Innovation Officer, and they will be available for Q&A. I'm also pleased to introduce John Nypaver, our Vice President, Treasurer, and Head of Investor Relations, who joined us in April, and Meredith Breeden, our Manager of Investor Relations. John previously worked with me at Eastman Chemical, and most recently was the Treasurer and Head of IR for 3D Systems, based in Rock Hill, South Carolina. Meredith has been with Ingevity for 10 years in finance and supply chain roles and spent two years with us in China. She knows our business as well and is a great addition to our IR team. We will follow the agenda on slide three, and Jon Fortman will start us off with a review of key strategic themes for 2022. And with that, over to you, Jon.

Thanks, Mary, and good morning, everyone. Before I begin, I also want to welcome John Emeritus to our IR efforts. I know they will be a terrific resource for all of you on the phone. I also want to recognize Rich White, who as a co-president of Performance Chemicals, will be speaking to the segment's results today. We thank the world of Rich and know he will do a great job leading and growing this business. In Japan, he delivered terrific results this quarter. We achieved these levels of growth and profitability while focusing on our mission to purify, protect, and enhance the world around us. First quarter 2022 was an all-time record quarter for revenue and a record for first quarter adjusted EBITDA. Our products touch many aspects of daily life and sustainably improve the performance of materials all around us. We saw strong demand across all our businesses. Mary will shortly cover the financial results in more detail, but I want to thank the Ingevity team for all their hard work this quarter. If you turn to slide five, I'd like to discuss some of our key strategic initiatives in 2022. We delivered strong first quarter results in large part due to our ability to capture value for our products. Both segments saw their revenue growth drop through to EBITDA. In many instances, our price increases have been necessary to offset inflationary increases that are impacting energy, raw material, freight, and logistics costs. We took quick action to optimize our mix of products where possible to address raw material constraints and or logistics challenges, resulting in an improved mix of higher value-derivatized products in our performance chemicals segment. Performance materials benefited from a positive geographic mix shift, but also from increased demand for our process purification products. We continue to price all our products based on their performance characteristics and the value that they bring to our customers. Our products are typically sold in comparatively small quantities, but deliver outsized performance in the form of durability, endurance, safety, and environmental benefits. We continue to drive long-term organic growth to innovation. We recently introduced new InvaWet wetting agents and InvaDry additives to the oilfield market to enhance emulsifiers used in drilling and production. In the upper right of this page, you can see a beaker with a clear liquid. That is AFA that was run last week at our Crosset Arkansas biorefinery. Testing of production at scale is happening now. We expect to ramp up sales over the rest of the year. The team in Crosset worked around the clock to get this process started up. This alternative fatty acid is very high quality and we continue to work on this project. We should be able to drive revenue through product substitution and entry into new markets while continuing to drive costs down. and every product substitution allows us to sell more TOFA. We will continue to work with other non-CTO oils to broaden our product offerings. This is a win across our value chain. The polyol expansion in Derrida, while delayed a bit due to supply chain disruptions, is on track for completion in the next few months. In performance materials, we have had considerable success in growing increasingly more profitable opportunities in our process purification markets. For customers, The addition of our carbon improves the efficacy of their processes, which in turn lowers their manufacturing costs. Our sustainability profile is a competitive advantage, and we see ourselves as a leader in this movement. We sell products today with real sustainable value that generates strong economic profit now. To demonstrate this and command higher prices in the markets, we need to generate the relevant data and research to achieve certain certifications. A few weeks ago, we announced the results of our latest product study. This one on an agricultural dispersant polyphonic H. The study was conducted by ESG consulting firm ERM and found that the greenhouse gas reductions obtained by our products more than offset the greenhouse gases generated in their manufacture by more than 120%. Stay tuned for more of these studies as we continue to certify our products and their benefits for the planet. We also recently received certification from TUV Austria for marine biodegradability related to our Kappa thermoplastic products. This is potentially a huge opportunity for Ingevity. I'm sure you are all aware of the issues associated with plastics in our oceans. Biodegradability will play a large part in solving this for future generations. In addition, in the first quarter, we joined the UN Global Compact as a participant in working to advance important social and environmental goals to improve our world. And be on the lookout for our next sustainability report, which we expect to issue in the coming weeks. Lastly, we continue to maintain our focus on operational excellence. This takes the form of first safety, but also resource efficiency and cost reduction. This is particularly important when there is uncertainty regarding raw material energy supply and costs. As I've often said, we work on controlling what we can control. We remain flexible and adaptive in an environment where so much is influenced by economic and geopolitical distractions. Auto production issues, the war in Ukraine, and COVID issues in China are all a part of a dynamic operating environment. However, these types of environments present opportunities for us to differentiate ourselves from our competition by providing better and more consistent support to our customers. As we move forward into 2022, we continue to focus on both near-term execution and long-term strategy. Our future as a best-in-class specialty chemical company remains bright. Our performance chemical segment has many secular tailwinds tied to the sustainable nature of our products. Our increasing use of alternative oleo-based chemistries, coupled with the important opportunities and engineered polymers that they have in traditional and bioplastic markets presents Ingevity with great opportunities to grow revenue and profits. Additionally, in performance materials, we are continuing to find promising alternative uses for our carbon while we support the auto industry transition to electric vehicles. We will continue to grow the business regardless of the exact rate of change in the auto transition. We continue to develop and supply technologies to eliminate gasoline emissions on ICE autos, and our products will be a critical component in hybrid electric vehicles as that market grows. Across Ingevity, we also are using CAPA products for noise reduction jounces and EVs, and our pine-based materials are increasingly being used to support lithium mining. I am more confident than ever that Ingevity will continue to grow and thrive. With that, I'll turn the call over to Mary to discuss our strong results for the quarter.