“At Ingevity, our number one priority is the health and safety of our employees,” said Rick Kelson, Ingevity’s chairman of the board, and interim president and CEO. “We are also working diligently to exercise our business continuity plans so that we can continue to supply our customers and we remain confident in our financial position and our liquidity is strong.
“In fact, Ingevity’s first quarter is progressing somewhat better than expected, despite moderate headwinds from the coronavirus,” he continued. “Nonetheless, the situation is and will be very dynamic as we move through the rest of the year.”
All non-production and non-essential laboratory employees with remote access capability have been instructed to work from home.
Social distancing measures limiting the number of employees in labs and meetings have been instituted.
The company has implemented a ban on all non-essential international and domestic business travel.
Employees returning from business or personal travel internationally or to highly-impacted areas in the U.S. are instructed to self-quarantine for 14 days before returning to any company location.
The company has stopped visits to the company’s locations by non-employees who have traveled internationally and to other heavily-impacted areas in the U.S. within the past two weeks.
To date, no domestic or international employees have tested positive for COVID-19.
Operations at the company’s manufacturing locations in China (Zhuhai, Changshu) resumed following the Chinese New Year in full force on Feb. 10. These plants continue to run at a rate necessary to meet customer orders which remain steady.
The company’s U.S. and U.K. manufacturing locations continue to run normally with no decreases in production. Plans are in development to adjust production to market needs if necessary.
The company’s manufacturing plants are not experiencing any issues in obtaining raw materials.
All of Ingevity’s manufacturing facilities have pandemic response and business continuity plans in place. Plant leaders are reviewing and preparing to implement those plans if and when necessary.
The kiln replacement outage at the Covington, VA, activated carbon facility previously scheduled for April is being delayed until the fall to ensure that it proceeds without interruption.
Financial Status and Liquidity
To date, net debt to adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) is unchanged from the end of 2019 at 2.8x. Ingevity has maintained this moderate leverage despite its typical first quarter cash consumption in preparation for the paving season. This leverage also reflects the company’s strong focus on cash collections.
Ingevity has a significant $750 million revolver of which $620 million was available at year end. Out of an abundance of caution, the company recently withdrew $250 million from this revolver.
Excluding commitments to letters of credit, approximately $350 million of additional funds are available to the company.
Moody’s recently upgraded Ingevity’s outlook from negative to stable as a result of its deleveraging since its acquisition of the Capa caprolactones business from Perstorp AB.