Ingevity Corporation Common Stock

Good morning or good afternoon, all, and welcome to the Ingevity First Quarter 2023 Earnings Webcast. My name is Adam, and I'll be your operator for today. If you'd like to ask a question at the Q&A portion of today's call, you may do so by pressing star 4.1 on your telephone keypad to enter the queue. I will now hand the call over to John Leipharver to begin. So, John, please go ahead when you are ready.

Thank you, Adam. Good morning, and welcome to Ingevity's First Quarter 2023 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.angevity.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 are 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. Our agenda is on slide three. Our speakers today are John Fortson, our President and CEO, and Mary Hall, our CFO. Our business leads, which include Ed Woodcock, President of Performance Materials, Rich White, President of Performance Chemicals, and Steve Hume, President of Advanced Polymer Technologies, are available for questions and comments. John will start us off with some highlights for the quarter. Mary will follow with a review of our consolidated financial performance and the business segment results for the first quarter. John will then provide an update on guidance, followed by closing comments. With that, over to you, John.

Thanks, John, and hello, everyone. On slide four, you can see our highlights for Q1. After a slow start, we put up a solid quarter. The quarter ended with what we would consider more normal sales levels. However, it was not enough to offset the weakness of the start. This manifested itself in lower volumes in all of our businesses except pavement technologies. We did have a number of positive developments in the quarter. Auto production started picking up in North America, which is obviously good for performance materials. and also for APT, which also sells a lot into the automobile industry. Another positive for APT was that we saw higher demand for bioplastics in the U.S. Pavement technologies enjoyed strong organic growth in the quarter, which is good news for performance chemicals. But the quarter also had its challenges. The slower China recovery affected all the business segments in some way. And we're still seeing some customers who have not restocked to normal expected levels, most acutely in the adhesives markets. As we have discussed, CTO prices continue to rise in the quarter, offsetting gains we have made and reducing costs elsewhere. When comparing to last year, remember that Q1 2022 was a record for both revenue and EBITDA as demand was picking up and inflation hadn't quite peaked, which allowed us to raise prices to offset higher input costs. It is a tough comp. This is the first quarter we get to share the details of the business line formerly known as engineer polymers the segment is now called advanced polymer technologies or a PT for short. The new name better reflects what we do today and where we are going, we produce specially capital act on products with tremendously sustainable characteristics. Including improved durability and biodegrade biodegrade ability and it's in uses. By separating the segment, you will be able to see the strength of this business and the growth opportunities and improved profitability. It's exciting stuff. In the quarter, we continued a number of key strategic moves to transition and better position our performance chemicals business for the future. Ingevity has a long history of innovation and execution. As market demands for CTO-based products have evolved, we are evolving too. Hopefully everyone noticed our filings regarding the extensions of our long-term supply agreements for CTO from both Georgia Pacific and West Rock. These agreements provide us with the certainty of supply to fully run our Charleston and Derrida plants well into the future. These plants will continue to support our existing chemical customer base while also entering the biofuels market. In April, we shut down Cross-It to transition its production fully to alternate soy, palm, and canola fatty acids. We expect the plant to be back up in the next few weeks. These products will offer a broader array of alternatives to our existing customers while also enabling us to enter new markets such as personal care. This strategy should drive our plant utilization rates and resulting volumes up by over a third when we complete this journey. I'm very proud of what has been accomplished so far, but this transition of products and markets will continue through the remainder of the year. However, when complete, we will emerge a stronger and better company. With that, I'll turn it over to Mary to discuss this quarter's financials.