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Ingevity (NYSE: NGVT) reported higher first-quarter 2026 sales and reaffirmed its full-year outlook, citing progress on portfolio simplification, strong margins in its Performance Materials business, and continued share repurchases.
On the company’s earnings call, President and CEO Dave Li said the quarter reflected “another strong period of execution and results,” despite global volatility and uncertainty. Ingevity posted first-quarter sales of $258 million, up 4% year over year, and adjusted EBITDA of $92 million. The adjusted EBITDA margin was 35.5%, compared with 36.8% in the first quarter of 2025.
GAAP net income was $23.4 million, including about $23 million of pre-tax special charges, according to CFO Phil Platt. He said $16 million of those charges related to the final litigation settlement payment to BASF. Excluding special charges, diluted adjusted earnings per share rose 14% to $1.15, supported by lower interest expense and a reduced share count from buybacks.
Li said Ingevity continued its strategic portfolio transformation during and after the quarter. The company completed the sale of its Ozark Materials Road Markings product line to PPG on April 15 in an all-cash transaction valued at approximately $65 million.
Li said the Road Markings sale followed the January divestiture of its North Charleston CTO refinery and the majority of its Industrial Specialties product line for approximately $93 million in net proceeds. Management said these actions, along with the ongoing sales process for the Advanced Polymer Technologies (APT) business, are intended to simplify the portfolio, sharpen strategic focus, and reduce earnings volatility.
During the Q&A, Li said the APT sales process was “progressing well” and that the company remained encouraged by buyer engagement, adding: “We continue to be confident that we’ll announce something before the end of the year.”
Performance Materials was the strongest contributor in the quarter. Segment sales rose 6% to $155 million, driven by annual low-single-digit price increases and higher volume. Segment EBITDA increased 10% to $92 million, and EBITDA margin expanded to 59% from 57% a year earlier.
Platt said the segment benefited from an inventory build ahead of planned shutdowns in the second quarter, which is expected to reverse in the next quarter and bring full-year margins back in line with guidance of around the mid-50% range.
Management also pointed to a shift in consumer preference away from battery electric vehicles and toward hybrids, which it said supports demand for its activated carbon solutions. Li said the trend is evident in North America and could broaden as electric vehicle subsidies moderate in markets such as China. He added that hybrids require more advanced carbon content due to smaller engine sizes.
Li said Ingevity remains confident in the long-term role of activated carbon solutions in automotive applications while investing to expand into filtration. He noted the company already has a presence in food and beverage, medical and pharma, and consumer applications, though those efforts remain in early stages.
Performance Chemicals results excluded the divested Industrial Specialties product line but still included Road Markings because that sale closed on April 15. Platt said the segment will be renamed Pavement Technologies beginning next quarter, though historical results will not be recast because the divested business does not qualify as discontinued operations.
First-quarter Performance Chemicals sales were comparable to the prior year. Pavement Technologies sales were flat, as pricing and mix gains were offset by lower volumes tied to minor timing shifts at the start of the pavement season. Road Markings sales declined 10% due to competitive pressure on volumes, while pricing remained stable.
Segment EBITDA declined by $5 million, and EBITDA margin fell to 1%. Platt attributed the decline to lower plant utilization in Road Markings, higher supply chain costs, and higher selling, general and administrative expenses tied to indirect costs from the Industrial Specialties divestiture. He said the company remains on track to eliminate those costs by the end of the year.
APT sales grew 5% in the quarter, supported by favorable foreign exchange, while volume growth was offset by lower pricing due to unfavorable mix. Platt said the company was encouraged by sequential volume growth, particularly in Asia Pacific, after a prolonged period of demand weakness and indirect tariff-related headwinds that began in the second quarter of the prior year.
APT segment EBITDA was $7.6 million, with an EBITDA margin of 17.2%, both meaningfully lower than the year-ago period. Platt said the decline was largely due to lower plant utilization and a comparison against last year’s inventory build ahead of an extended planned shutdown to install boilers.
In response to a question from Wells Fargo’s Mike Sisson, represented on the call by Abigail, Platt said some Asian competitors had been affected by the Middle East conflict, allowing Ingevity to step in and supply volume to customers. Li said the company was seeing some demand return in APT and also benefiting from supply chain challenges affecting competitors.
Ingevity reaffirmed its 2026 guidance. The company expects adjusted EPS of $4.70 to $5.20, sales of $1.05 billion to $1.15 billion, and adjusted EBITDA of $370 million to $395 million. The outlook excludes contributions from Road Markings beginning April 15. Li said the exclusion is expected to lift Performance Chemicals margin to the high teens, compared with prior projections in the mid-teens.
The company expects free cash flow of $215 million to $245 million, excluding approximately $113 million in pre-tax litigation-related payments to BASF expected in the second quarter. Platt said first-quarter free cash flow was negative $12 million, reflecting typical seasonal inventory builds ahead of the paving season and additional Performance Materials inventory ahead of planned outages.
Ingevity repurchased about $52 million of shares in the first quarter, totaling approximately 775,000 shares. Platt said the company accelerated buybacks beyond its planned cadence, supported by proceeds from the Industrial Specialties divestiture and market volatility. At quarter-end, Ingevity had approximately $246 million remaining under its share repurchase authorization, and Platt said the company had repurchased almost $15 million of shares already in the second quarter.
Management reiterated plans to complete $300 million of share repurchases through 2027 while reducing and maintaining net leverage within its long-term target range of 2.0 times to 2.5 times in 2026.
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