Ingevity is a smaller company than it was a year ago, and a more profitable one.

The North Charleston company reported third-quarter net income from continuing operations of $51.1 million, or $1.46 per diluted share, on Nov. 4. That compares with $40.8 million, or $1.10 a share, a year earlier.

Net sales fell 8% to $305.1 million from $333.1 million, mostly because Ingevity sold its road markings product line to PPG Industries on April 15. Excluding that line, sales rose 2%, the company said.

“Third quarter results reflect disciplined execution across the portfolio amid a mixed global demand environment,” President and CEO Dave Li said in the earnings release.

Carbon still carries the company

Performance Materials, which makes activated carbon used in automotive gasoline vapor controls and in filtration, had sales of $154.1 million, nearly flat with a year earlier. Its segment earnings before interest, taxes, depreciation and amortization, or EBITDA, were $83.4 million, a margin of 54.1%.

The company credited resilient North American demand, “supported by continued consumer preference for hybrid vehicles,” and higher prices on filtration products outside the auto market. Those gains offset lower volumes from softer automotive demand in China and Europe.

Li singled out filtration. “We are particularly encouraged by the progress in filtration, where our investments in talent, technology and commercial capabilities are translating into customer adoption and tangible growth,” he said.

Asphalt costs weigh on pavement

Pavement Technologies sales fell 24% to $106.0 million, mainly because of the road markings sale. Without road markings, sales were nearly flat as higher prices offset softer demand, the company said.

“Persistently higher asphalt costs, driven by crude oil inflation, continued to increase project costs for our customers, pressuring demand and limiting sales growth,” the release said. Segment EBITDA fell $7.3 million to $19.6 million.

Li said the company is “taking action to improve performance” in that segment.

A sale that may wait

Advanced Polymer Technologies, the caprolactone polymers business Ingevity has been trying to sell, grew sales 18% to $45.0 million on higher prices, including a surcharge to cover rising input costs. Its segment EBITDA rose to $11.7 million.

The deal may not come this year. “We also continue to advance the sale of Advanced Polymer Technologies, however, the timing of an announced agreement may extend into early 2027,” Li said.

Ingevity recorded a $32.1 million impairment charge on the unit’s long-lived assets in the second quarter, according to its quarterly filings.

Cash and buybacks

Third-quarter operating cash flow was $99.2 million, and free cash flow was $85.5 million, down $32.3 million from a year earlier. The company said the prior-year quarter included $21 million in working capital benefits from businesses it has since sold.

Ingevity bought back about $39 million of its stock in the quarter at an average of $71.45 a share, bringing repurchases to about $125 million for the year. About $172 million remains under its buyback authorization. Net leverage held at 2.5 times.

For the first nine months, Ingevity earned $114.3 million from continuing operations. A year earlier it lost $71.5 million, a figure that included a $183.8 million goodwill impairment charge.

The outlook

Ingevity narrowed its full-year adjusted EBITDA forecast to $385 million to $395 million, from $380 million to $400 million, keeping the midpoint. It expects net sales of about $1.1 billion and adjusted earnings of $5.25 to $5.45 a share.

It now expects free cash flow of $220 million to $230 million, not counting the $113.2 million it paid in April to settle its long-running litigation with BASF.

Still home on O’Hear Avenue

Ingevity’s headquarters remain on O’Hear Avenue in North Charleston. The company said in the release that it operates from 17 locations and employs about 1,400 people, down from the roughly 1,500 it reported in its annual report in February.

Its North Charleston plant on Virginia Avenue now shares a site with the crude tall oil refinery that Ingevity sold to Mainstream Pine Products on Jan. 1, under long-term lease and operating agreements described in the company’s quarterly report, filed Nov. 5.

The company scheduled a webcast for Nov. 5 to discuss the results.