9. Ingevity Corporation (NYSE:NGVT)
Market Capitalization: $1.69 Billion
Number of Hedge Fund Holders: 17
Ingevity Corporation (NYSE:NGVT) is a specialty chemicals company that produces performance chemicals, high-performance carbon materials, and engineered polymers. Their products are used in various applications, including adhesives, agrochemicals, and automotive components.
In the third quarter of 2024, Ingevity Corporation (NYSE:NGVT) reported net sales of $376.9 million, a 16% decline compared to the same period last year. This decrease was primarily due to restructuring efforts in the Performance Chemicals segment and adverse weather affecting the Road Technologies product line. However, the Performance Materials segment saw sales increase by 3% to $151.1 million, driven by strategic pricing adjustments and improved operational efficiency, resulting in an EBITDA of $80.6 million with a strong margin of 53.3%.
The Advanced Polymer Technologies segment also performed well, with sales rising 14% to $48.8 million, benefiting from recovering volumes in the market, particularly in Asia. Despite facing pricing pressures and unfavorable foreign exchange rates, this segment maintained an EBITDA margin of 20.1%.
The company is actively repositioning its Performance Chemicals segment by exiting lower-margin markets and optimizing its operations. Ingevity Corporation (NYSE:NGVT) incurred before-tax restructuring charges of $86.9 million during the quarter, primarily related to closing its Crossett facility and terminating a long-term supply contract.
Despite the challenges faced, during Q3, Ingevity Corporation (NYSE:NGVT) achieved $18 million in savings from the repositioning efforts in the Performance Chemicals segment. The company is on track to meet its target of $65 million to $75 million in savings for 2024. With a focus on executing its strategic initiatives and improving operational efficiencies, Ingevity Corporation (NYSE:NGVT) presents a compelling investment opportunity in the specialty chemicals sector, making it an attractive stock.
As of the third quarter of 2024, Ingevity Corporation (NYSE:NGVT) was held by 17 hedge funds, according to Insider Monkey’s database. SouthernSun Asset Management, LLC stated the following regarding Ingevity Corporation (NYSE:NGVT) in its “SouthernSun Small Cap Strategy” third quarter 2024 investor letter:
“Ingevity Corporation (NYSE:NGVT) was one of the top detractors in the Small Cap strategy in the third quarter. Ingevity manufactures specialty chemicals that are used in a wide range of industrial applications and consumer products as well as activated carbon used to reduce gasoline vapor emissions in automobiles. The company is undergoing a strategic shift to reduce its exposure to crude tall oil (CTO), a key raw material in its Performance Chemicals segment. Within the last year, Ingevity has announced the closure of two of its three refineries and is consolidating its one remaining facility. In July of this year, the company terminated its final CTO supply agreement, which resulted in a settlement charge of $100 million. In addition, after the end of Q3, the company announced the departure of John Fortson, CEO, and named Luis Fernandez-Moreno, a long-time board member, as interim CEO. While these changes have created a lot of noise in recent months, we believe that the business will be much better positioned moving forward with a significantly lower cost structure. Importantly, these strategic decisions have all related to the Performance Chemicals operating segment. The other two operating segments have not been impacted, and while the Advanced Polymer Technologies segment has experienced some headwinds due to broader weakness in industrial end markets, the Performance Materials business continues to benefit from both market and regulatory tailwinds as well operational efficiencies. We continue to assess our position in light of the recent strategic shifts and management changes including ongoing discussions with new and existing leaders.”
