UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________________________________________ 
FORM 10-Q
_______________________________________________________________________ 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 20222023
 OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 001-37586

ingevitylogorgba11.jpg
INGEVITY CORPORATION
(Exact name of registrant as specified in its charter)
_____________________________________________________________________ 
Delaware47-4027764
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
4920 O'Hear Avenue Suite 400North CharlestonSouth Carolina29405
(Address of principal executive offices)(Zip code)

843-740-2300
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock ($0.01 par value)NGVTNew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  x No  o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that registrant was required to submit such files).  Yes  x No  o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. 
Large accelerated filerAccelerated filer
Non-accelerated filer  Smaller reporting company
Emerging growth company
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.                                    o
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).                            o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  o
Indicate by check mark whether the Registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act).  Yes   No  x
The registrant had 37,371,62936,231,266 shares of common stock, $0.01 par value, outstanding at November 1, 2022.October 31, 2023.



Ingevity Corporation
INDEX
Page No.





2


PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

INGEVITY CORPORATION
Condensed Consolidated Statements of Operations (Unaudited)
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended September 30,Nine Months Ended September 30,
In millions, except per share dataIn millions, except per share data2022202120222021In millions, except per share data2023202220232022
Net salesNet sales$482.0 $376.8 $1,284.7 $1,055.5 Net sales$446.0 $482.0 $1,320.4 $1,284.7 
Cost of salesCost of sales305.7 235.0 820.0 647.7 Cost of sales317.0 305.7 908.0 820.0 
Gross profitGross profit176.3 141.8 464.7 407.8 Gross profit129.0 176.3 412.4 464.7 
Selling, general, and administrative expensesSelling, general, and administrative expenses54.2 43.5 142.9 131.0 Selling, general, and administrative expenses40.0 54.2 140.3 142.9 
Research and technical expensesResearch and technical expenses7.6 6.8 23.1 19.3 Research and technical expenses7.8 7.6 24.6 23.1 
Restructuring and other (income) charges, netRestructuring and other (income) charges, net3.3 4.1 10.6 12.3 Restructuring and other (income) charges, net24.6 3.3 49.4 10.6 
Acquisition-related costsAcquisition-related costs1.9 0.2 1.9 0.9 Acquisition-related costs0.1 1.9 3.8 1.9 
Other (income) expense, netOther (income) expense, net2.0 84.6 (1.0)81.6 Other (income) expense, net1.3 2.0 (13.9)(1.0)
Interest expense, netInterest expense, net11.5 11.6 37.3 36.2 Interest expense, net23.1 11.5 64.3 37.3 
Income (loss) before income taxesIncome (loss) before income taxes95.8 (9.0)249.9 126.5 Income (loss) before income taxes32.1 95.8 143.9 249.9 
Provision (benefit) for income taxesProvision (benefit) for income taxes20.4 (4.8)53.9 37.7 Provision (benefit) for income taxes6.9 20.4 32.5 53.9 
Net income (loss)Net income (loss)$75.4 $(4.2)$196.0 $88.8 Net income (loss)$25.2 $75.4 $111.4 $196.0 
Per share dataPer share dataPer share data
Basic earnings (loss) per shareBasic earnings (loss) per share$1.99 $(0.11)$5.10 $2.22 Basic earnings (loss) per share$0.70 $1.99 $3.05 $5.10 
Diluted earnings (loss) per shareDiluted earnings (loss) per share1.98 (0.11)5.06 2.21 Diluted earnings (loss) per share0.69 1.98 3.03 5.06 

The accompanying notes are an integral part of these financial statements.




3


INGEVITY CORPORATION
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended September 30,Nine Months Ended September 30,
In millionsIn millions2022202120222021In millions2023202220232022
Net income (loss)Net income (loss)$75.4 $(4.2)$196.0 $88.8 Net income (loss)$25.2 $75.4 $111.4 $196.0 
Other comprehensive income (loss), net of tax:Other comprehensive income (loss), net of tax:Other comprehensive income (loss), net of tax:
Foreign currency adjustments:Foreign currency adjustments:Foreign currency adjustments:
Foreign currency translation adjustmentForeign currency translation adjustment(55.3)(16.7)(124.9)(8.5)Foreign currency translation adjustment(21.4)(55.3)(6.9)(124.9)
Unrealized gain (loss) on net investment hedges, net of tax provision (benefit) of $1.0, $0.9, $3.2, $1.93.4 2.9 10.7 6.1 
Total foreign currency adjustments, net of tax provision (benefit) of $1.0, $0.9, $3.2, $1.9(51.9)(13.8)(114.2)(2.4)
Unrealized gain (loss) on net investment hedges, net of tax provision (benefit) of zero, $1.0, zero, $3.2Unrealized gain (loss) on net investment hedges, net of tax provision (benefit) of zero, $1.0, zero, $3.2— 3.4 — 10.7 
Total foreign currency adjustments, net of tax provision (benefit) of zero, $1.0, zero, $3.2Total foreign currency adjustments, net of tax provision (benefit) of zero, $1.0, zero, $3.2(21.4)(51.9)(6.9)(114.2)
Derivative instruments:Derivative instruments:Derivative instruments:
Unrealized gain (loss), net of tax provision (benefit) of $0.8, $0.8, $3.5, $1.62.7 2.8 11.4 5.3 
Reclassifications of deferred derivative instruments (gain) loss, included in net income (loss), net of tax (provision) benefit of $(0.7), $(0.1), $(1.7), $(0.1)(2.4)(0.1)(5.7)(0.2)
Total derivative instruments, net of tax provision (benefit) of $0.1, $0.7, $1.8, $1.50.3 2.7 5.7 5.1 
Unrealized gain (loss), net of tax provision (benefit) of $(0.1), $0.8, $(0.8), $3.5Unrealized gain (loss), net of tax provision (benefit) of $(0.1), $0.8, $(0.8), $3.5(0.1)2.7 (2.5)11.4 
Reclassifications of deferred derivative instruments (gain) loss, included in net income (loss), net of tax (provision) benefit of $0.3, $(0.7), $0.7, $(1.7)Reclassifications of deferred derivative instruments (gain) loss, included in net income (loss), net of tax (provision) benefit of $0.3, $(0.7), $0.7, $(1.7)1.1 (2.4)2.2 (5.7)
Total derivative instruments, net of tax provision (benefit) of $0.2, $0.1, $(0.1), $1.8Total derivative instruments, net of tax provision (benefit) of $0.2, $0.1, $(0.1), $1.81.0 0.3 (0.3)5.7 
Pension & other postretirement benefits:Pension & other postretirement benefits:Pension & other postretirement benefits:
Unrealized actuarial gains (losses) and prior service (costs) credits, net of tax of zero for all periods— — — — 
Reclassifications of net actuarial and other (gain) loss and amortization of prior service cost, included in net income, net of tax of zero for all periodsReclassifications of net actuarial and other (gain) loss and amortization of prior service cost, included in net income, net of tax of zero for all periods— — 0.1 0.1 Reclassifications of net actuarial and other (gain) loss and amortization of prior service cost, included in net income, net of tax of zero for all periods— — 0.1 0.1 
Total pension and other postretirement benefits, net of tax of zero for all periodsTotal pension and other postretirement benefits, net of tax of zero for all periods— — 0.1 0.1 Total pension and other postretirement benefits, net of tax of zero for all periods— — 0.1 0.1 
Other comprehensive income (loss), net of tax provision (benefit) of $1.1, $1.6, $5.0, $3.4(51.6)(11.1)(108.4)2.8 
Other comprehensive income (loss), net of tax provision (benefit) of $0.2, $1.1, $(0.1), $5.0Other comprehensive income (loss), net of tax provision (benefit) of $0.2, $1.1, $(0.1), $5.0(20.4)(51.6)(7.1)(108.4)
Comprehensive income (loss)Comprehensive income (loss)$23.8 $(15.3)$87.6 $91.6 Comprehensive income (loss)$4.8 $23.8 $104.3 $87.6 

The accompanying notes are an integral part of these financial statements.




4


INGEVITY CORPORATION
Condensed Consolidated Balance Sheets
In millions, except share and par value dataIn millions, except share and par value dataSeptember 30, 2022December 31, 2021In millions, except share and par value dataSeptember 30, 2023December 31, 2022
AssetsAssets(Unaudited)Assets(Unaudited)
Cash and cash equivalentsCash and cash equivalents$72.3 $275.4 Cash and cash equivalents$84.5 $76.7 
Accounts receivable, net of allowance for credit losses of $2.3 - 2022 and $2.0 - 2021
248.4 161.7 
Accounts receivable, net of allowance for credit losses of $0.5 - 2023 and $0.5 - 2022
Accounts receivable, net of allowance for credit losses of $0.5 - 2023 and $0.5 - 2022
216.6 224.8 
Inventories, netInventories, net281.8 241.2 Inventories, net386.7 335.0 
Prepaid and other current assetsPrepaid and other current assets42.6 46.6 Prepaid and other current assets46.7 42.5 
Current assetsCurrent assets645.1 724.9 Current assets734.5 679.0 
Property, plant and equipment, net720.7 719.7 
Property, plant, and equipment, netProperty, plant, and equipment, net800.0 798.6 
Operating lease assets, netOperating lease assets, net47.3 52.4 Operating lease assets, net68.7 56.6 
GoodwillGoodwill387.6 442.0 Goodwill520.1 518.5 
Other intangibles, netOther intangibles, net272.2 337.6 Other intangibles, net375.6 404.8 
Deferred income taxesDeferred income taxes6.9 6.8 Deferred income taxes6.1 5.7 
Restricted investment, net of allowance for credit losses of $0.6 - 2022 and $0.5 - 2021
77.5 76.1 
Restricted investment, net of allowance for credit losses of $0.3 - 2023 and $0.6 - 2022
Restricted investment, net of allowance for credit losses of $0.3 - 2023 and $0.6 - 2022
80.2 78.0 
Strategic investmentsStrategic investments99.3 109.8 
Other assetsOther assets178.1 109.5 Other assets82.3 85.5 
Total AssetsTotal Assets$2,335.4 $2,469.0 Total Assets$2,766.8 $2,736.5 
LiabilitiesLiabilitiesLiabilities
Accounts payableAccounts payable$164.6 $125.8 Accounts payable$197.3 $174.8 
Accrued expensesAccrued expenses56.9 51.7 Accrued expenses64.5 54.4 
Accrued payroll and employee benefitsAccrued payroll and employee benefits44.7 48.2 Accrued payroll and employee benefits16.5 53.3 
Current operating lease liabilitiesCurrent operating lease liabilities16.4 17.4 Current operating lease liabilities18.4 16.5 
Notes payable and current maturities of long-term debtNotes payable and current maturities of long-term debt0.9 19.6 Notes payable and current maturities of long-term debt3.0 0.9 
Income taxes payableIncome taxes payable6.8 6.2 Income taxes payable5.4 3.6 
Current liabilitiesCurrent liabilities290.3 268.9 Current liabilities305.1 303.5 
Long-term debt including finance lease obligationsLong-term debt including finance lease obligations1,153.2 1,250.0 Long-term debt including finance lease obligations1,469.7 1,472.5 
Noncurrent operating lease liabilitiesNoncurrent operating lease liabilities31.8 36.2 Noncurrent operating lease liabilities50.6 40.8 
Deferred income taxesDeferred income taxes106.6 114.6 Deferred income taxes105.0 106.5 
Other liabilitiesOther liabilities119.6 125.5 Other liabilities117.7 114.9 
Total LiabilitiesTotal Liabilities1,701.5 1,795.2 Total Liabilities2,048.1 2,038.2 
Commitments and contingencies (Note 14)
Commitments and contingencies (Note 13)
Commitments and contingencies (Note 13)
EquityEquityEquity
Preferred stock (par value $0.01 per share; 50,000,000 shares authorized; zero issued and outstanding - 2022 and 2021)
— — 
Common stock (par value $0.01 per share; 300,000,000 shares authorized; issued: 43,212,857 - 2022 and 43,102,011 - 2021; outstanding: 37,358,879 - 2022 and 39,269,399 - 2021)
0.4 0.4 
Preferred stock (par value $0.01 per share; 50,000,000 shares authorized; zero issued and outstanding - 2023 and 2022)
Preferred stock (par value $0.01 per share; 50,000,000 shares authorized; zero issued and outstanding - 2023 and 2022)
— — 
Common stock (par value $0.01 per share; 300,000,000 shares authorized; issued: 43,443,512 - 2023 and 43,228,172 - 2022; outstanding: 36,231,063 - 2023 and 37,298,989 - 2022)
Common stock (par value $0.01 per share; 300,000,000 shares authorized; issued: 43,443,512 - 2023 and 43,228,172 - 2022; outstanding: 36,231,063 - 2023 and 37,298,989 - 2022)
0.4 0.4 
Additional paid-in capitalAdditional paid-in capital147.5 136.3 Additional paid-in capital162.6 153.0 
Retained earningsRetained earnings992.1 796.1 Retained earnings1,119.1 1,007.7 
Accumulated other comprehensive income (loss)Accumulated other comprehensive income (loss)(95.3)13.1 Accumulated other comprehensive income (loss)(53.9)(46.8)
Treasury stock, common stock, at cost (5,853,978 shares - 2022 and 3,832,612 shares - 2021)
(410.8)(272.1)
Treasury stock, common stock, at cost (7,212,449 shares - 2023 and 5,929,183 shares - 2022)
Treasury stock, common stock, at cost (7,212,449 shares - 2023 and 5,929,183 shares - 2022)
(509.5)(416.0)
Total EquityTotal Equity633.9 673.8 Total Equity718.7 698.3 
Total Liabilities and EquityTotal Liabilities and Equity$2,335.4 $2,469.0 Total Liabilities and Equity$2,766.8 $2,736.5 
The accompanying notes are an integral part of these financial statements.




5



INGEVITY CORPORATION
Condensed Consolidated Statements of Cash Flows (Unaudited)
Nine Months Ended September 30,
In millions20222021
Cash provided by (used in) operating activities:
Net income (loss)$196.0 $88.8 
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:
Depreciation and amortization78.6 81.7 
Non-cash operating lease costs13.5 12.9 
Deferred income taxes(2.2)(2.2)
LIFO Reserve10.7 (1.9)
Share-based compensation11.1 9.8 
Other non-cash items15.2 10.6 
Changes in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable, net(98.4)(28.2)
Inventories, net(63.3)(37.3)
Prepaid and other current assets(2.3)(7.5)
Accounts payable48.2 20.3 
Accrued expenses5.3 (0.2)
Accrued payroll and employee benefits(2.7)9.6 
Income taxes10.1 (4.6)
Litigation verdict charge— 85.0 
Operating leases(15.5)(15.3)
Changes in other operating assets and liabilities, net10.6 (4.5)
Net cash provided by (used in) operating activities$214.9 $217.0 
Cash provided by (used in) investing activities:
Capital expenditures$(93.3)$(66.4)
Purchase of strategic investments(62.8)(16.5)
Net investment hedge settlement14.7 — 
Other investing activities, net(3.3)(0.5)
Net cash provided by (used in) investing activities$(144.7)$(83.4)
Cash provided by (used in) financing activities:
Proceeds from revolving credit facility$788.0 $— 
Payments on revolving credit facility(279.0)— 
Payments on long-term borrowings(628.1)(18.8)
Debt issuance costs(3.0)— 
Debt repayment costs(3.8)— 
Finance lease obligations, net(0.4)(0.6)
Borrowings (repayments) of notes payable and other short-term borrowings, net— (1.9)
Tax payments related to withholdings on vested equity awards(2.2)(2.4)
Proceeds and withholdings from share-based compensation plans, net2.8 3.7 
Repurchases of common stock under publicly announced plan(139.2)(100.3)
Net cash provided by (used in) financing activities$(264.9)$(120.3)
Increase (decrease) in cash, cash equivalents, and restricted cash(194.7)13.3 
Effect of exchange rate changes on cash(8.6)(1.8)
Change in cash, cash equivalents, and restricted cash(203.3)11.5 
Cash, cash equivalents, and restricted cash at beginning of period276.1 258.4 
Cash, cash equivalents, and restricted cash at end of period(1)
$72.8 $269.9 
(1) Includes restricted cash of $0.5 million and $0.5 million and cash and cash equivalents of $72.3 million and $269.4 million at September 30, 2022 and 2021, respectively. Restricted cash is included within "Prepaid and other current assets" within the condensed consolidated balance sheets.
Supplemental cash flow information:
Cash paid for interest, net of capitalized interest$35.9 $35.5 
Cash paid for income taxes, net of refunds42.6 43.2 
Purchases of property, plant and equipment in accounts payable5.1 5.9 
Leased assets obtained in exchange for new operating lease liabilities9.2 14.7 
Nine Months Ended September 30,
In millions20232022
Cash provided by (used in) operating activities:
Net income (loss)$111.4 $196.0 
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:
Depreciation and amortization97.7 78.6 
Non cash operating lease costs13.8 13.5 
Deferred income taxes(2.3)(2.2)
Disposal/impairment of assets12.6 1.9 
LIFO reserve62.6 10.7 
Share-based compensation8.3 11.1 
Gain on sale of strategic investment(19.3)— 
Other non-cash items14.8 13.3 
Changes in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable, net6.1 (98.4)
Inventories, net(118.1)(63.3)
Prepaid and other current assets(5.8)(2.3)
Accounts payable20.6 48.2 
Accrued expenses9.0 5.3 
Accrued payroll and employee benefits(36.7)(2.7)
Income taxes4.2 10.1 
Pension contribution(2.0)— 
Operating leases(16.6)(15.5)
Changes in other operating assets and liabilities, net0.2 10.6 
Net cash provided by (used in) operating activities$160.5 $214.9 
Cash provided by (used in) investing activities:
Capital expenditures$(80.6)$(93.3)
Proceeds from sale of strategic investment31.5 — 
Purchase of strategic investment(2.4)(62.8)
Net investment hedge settlement— 14.7 
Other investing activities, net(4.8)(3.3)
Net cash provided by (used in) investing activities$(56.3)$(144.7)
Cash provided by (used in) financing activities:
Proceeds from revolving credit facility$237.1 $788.0 
Payments on revolving credit facility(240.1)(279.0)
Payments on long-term borrowings— (628.1)
Debt issuance costs— (3.0)
Debt repayment costs— (3.8)
Finance lease obligations, net(0.6)(0.4)
Borrowings (repayments) of notes payable and other short-term borrowings, net2.4 — 
Tax payments related to withholdings on vested equity awards(4.8)(2.2)
Proceeds and withholdings from share-based compensation plans, net4.7 2.8 
Repurchases of common stock under publicly announced plan(92.1)(139.2)
Net cash provided by (used in) financing activities$(93.4)$(264.9)
Increase (decrease) in cash, cash equivalents, and restricted cash10.8 (194.7)
Effect of exchange rate changes on cash(3.0)(8.6)
Change in cash, cash equivalents, and restricted cash7.8 (203.3)
Cash, cash equivalents, and restricted cash at beginning of period77.3 276.1 
Cash, cash equivalents, and restricted cash at end of period(1)
$85.1 $72.8 
(1)Includes restricted cash of $0.6 million and $0.5 million and cash and cash equivalents of $84.5 million and $72.3 million at September 30, 2023 and 2022, respectively. Restricted cash is included within "Prepaid and other current assets" within the condensed consolidated balance sheets.
Supplemental cash flow information:
Cash paid for interest, net of capitalized interest$57.9 $35.9 
Cash paid for income taxes, net of refunds27.9 42.6 
Purchases of property, plant, and equipment in accounts payable6.1 5.1 
Leased assets obtained in exchange for new finance lease liabilities0.2 — 
Leased assets obtained in exchange for new operating lease liabilities26.0 9.2 
The accompanying notes are an integral part of these financial statements.




6


INGEVITY CORPORATION
Notes to the Condensed Consolidated Financial Statements
September 30, 20222023
(Unaudited)


Note 1: Background
Description of Business
Ingevity Corporation ("Ingevity," "the Company," "we," "us," or "our") provides products and technologies that purify, protect, and enhance the world around us. Through a team of talented and experienced people, we develop, manufacture, and bring to market solutions that help customers solve complex problems and make the world more sustainable. During the first quarter of 2023, we realigned our segment reporting structure to increase transparency for our investors and better align with how our chief operating decision maker intends to measure segment operating performance and allocate resources across our operating segments. We report in two business segments, Performance Materials and Performance Chemicals.
Our Performance Materials segment manufactures products in the form of powder, granular, extruded pellets, extruded honeycombs, and activated carbon sheets. Automotive technologies products are sold into gasoline vapor emission control applications within the automotive industry, while process purification products are sold into the food, water, beverage, and chemical purification industries.
Our Performance Chemicals segment consists ofseparated our pavement technologies, industrial specialties, and engineered polymers product lines.line from the Performance Chemicals manufactures products derived from crude tall oil ("CTO") and lignin extracted from the kraft pulping process as well as caprolactone monomers and derivatives derived from cyclohexanone and hydrogen peroxide.reportable segment into its own reportable segment, Advanced Polymer Technologies. This reportable segment change also resulted in our Performance Chemicals reporting unit for goodwill being split into two separate reporting units for the purposes of goodwill impairment testing.
We operate in three reportable segments: Performance Chemicals, which includes specialty chemicals and pavement technologies; Advanced Polymer Technologies, which includes biodegradable plastics and polyurethane materials; and Performance Materials, which includes activated carbon. Our products serve as critical inputsare used in a variety of high performancedemanding applications, including warm mix paving, pavement preservation, and pavement reconstruction and recycling (pavement technologies product line); adhesives, agrochemicals, asphalt paving, bioplastics, coatings, elastomers, lubricants, printingpavement markings, publication inks, industrial intermediates,oil exploration and oilfield (industrial specialties product line);production and coatings, resins, elastomers, adhesives, bio-plastics, and medical devices (engineered polymers product line).automotive components.
Basis of Consolidation and Presentation
These unaudited Condensed Consolidated Financial Statements reflect the consolidated operations of the Company and have been prepared in accordance with United States Securities and Exchange Commission ("SEC") interim reporting requirements. Accordingly, the accompanying Condensed Consolidated Financial Statements do not include all disclosures required by accounting principles generally accepted in the United States of America ("GAAP") for full financial statements and should be read in conjunction with the Annual Consolidated Financial Statements for the years ended December 31, 2022, 2021 2020 and 2019,2020, collectively referred to as the “Annual Consolidated Financial Statements,” included in our Annual Report on Form 10-K for the year ended December 31, 20212022 (the "2021"2022 Annual Report").
In the opinion of management, the Condensed Consolidated Financial Statements contain all adjustments which include only normal recurring adjustments necessary to fairly state the condensed consolidated results for the interim periods presented. The consolidated results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.
The preparation of the Condensed Consolidated Financial Statements requires management to make estimates and assumptions with respect to the reported amounts of assets, liabilities, revenue, and expenses and the disclosure of contingent assets and liabilities. Actual results could differ from these estimates.
Certain prior year amounts have been reclassified to conform with the current year's presentation.
Note 2: New Accounting Guidance
The Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC" or "Codification") is the sole source of authoritative GAAP other than SEC issued rules and regulations that apply only to SEC registrants. The FASB issues an Accounting Standards Update ("ASU") to communicate changes to the Codification. We consider the applicability and impact of all ASUs. Recently issued ASUs that are not listed below werewithin this Form 10-Q have been assessed and determined to be either not applicable or are not expected to have a material impact on the consolidated financial statements.
Recently Issued Accounting Pronouncements
In March 2020, the FASB issued ASU 2020-04 "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting." The ASU is intended to provide temporary optional expedients and exceptions to the GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the




7


INGEVITY CORPORATION
Notes to the Condensed Consolidated Financial Statements
September 30, 20222023
(Unaudited)

expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. This guidance became effective beginning on March 12, 2020, and we may elect to apply the amendments prospectively until December 31, 2022. As of September 30, 2022, we have not yet elected any optional expedients provided in the standard. We will apply the accounting relief, if necessary, as relevant contract and hedge accounting relationship modifications are made during the reference rate reform transition period. We do not expect this new standard to have a material impact on our consolidated financial statements.
Note 3: Revenues
Disaggregation of Revenue
The following table presents our Net sales disaggregated by reportable segment and product line.
Three Months Ended September 30,Nine Months Ended September 30, Three Months Ended September 30,Nine Months Ended September 30,
In millionsIn millions2022202120222021In millions2023202220232022
Performance Materials segmentPerformance Materials segment$144.9 $118.1 $415.7 $384.8 Performance Materials segment$147.2 $144.9 $433.2 $415.7 
Performance Chemicals segmentPerformance Chemicals segmentPerformance Chemicals segment$256.0 $267.6 $725.6 $683.9 
Pavement Technologies product linePavement Technologies product line88.3 73.2 194.0 162.4 Pavement Technologies product line129.7 88.3 316.4 194.0 
Industrial Specialties product lineIndustrial Specialties product line179.3 132.6 489.9 364.7 Industrial Specialties product line126.3 179.3 409.2 489.9 
Engineered Polymers product line69.5 52.9 185.1 143.6 
Total$337.1 $258.7 $869.0 $670.7 
Advanced Polymer Technologies segmentAdvanced Polymer Technologies segment$42.8 $69.5 $161.6 $185.1 
Net salesNet sales$482.0 $376.8 $1,284.7 $1,055.5 Net sales$446.0 $482.0 $1,320.4 $1,284.7 
The following table presents our Net sales disaggregated by geography, based on the delivery address of our customer.
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended September 30,Nine Months Ended September 30,
In millionsIn millions2022202120222021In millions2023202220232022
North AmericaNorth America$291.9 $219.3 $759.7 $580.8 North America$292.4 $291.9 $854.3 $759.7 
Asia PacificAsia Pacific113.6 89.6 297.3 285.0 Asia Pacific92.4 113.6 264.3 297.3 
Europe, Middle East, and AfricaEurope, Middle East, and Africa62.6 62.3 194.0 172.5 Europe, Middle East, and Africa48.6 62.6 167.6 194.0 
South AmericaSouth America13.9 5.6 33.7 17.2 South America12.6 13.9 34.2 33.7 
Net salesNet sales$482.0 $376.8 $1,284.7 $1,055.5 Net sales$446.0 $482.0 $1,320.4 $1,284.7 
Contract Balances
The following table provides information about contract assets and contract liabilities from contracts with customers. The contract assets primarily relate to our rights to consideration for products produced but not billed at the reporting date. The contract assets are recognized as accounts receivables when the rights become unconditional and the customer has been billed. Contract liabilities represent obligations to transfer goods to a customer for which we have received consideration from our customer. For all periods presented, we had no contract liabilities.
Contract AssetContract Asset
September 30,September 30,
In millionsIn millions20222021In millions20232022
Beginning balanceBeginning balance$5.3 $5.7 Beginning balance$6.4 $5.3 
Contract asset additionsContract asset additions14.3 15.8 Contract asset additions13.2 14.3 
Reclassification to accounts receivable, billed to customersReclassification to accounts receivable, billed to customers(13.4)(15.4)Reclassification to accounts receivable, billed to customers(11.7)(13.4)
Ending balance (1)
Ending balance (1)
$6.2 $6.1 
Ending balance (1)
$7.9 $6.2 
______________
(1) Included within "Prepaid and other current assets" on the condensed consolidated balance sheets.




8


INGEVITY CORPORATION
Notes to the Condensed Consolidated Financial Statements
September 30, 2022
(Unaudited)

Note 4: Fair Value Measurements
Fair Value Measurements
Recurring Fair Value Measurements
The following information is presented for assets and liabilities that are recorded in the condensed consolidated balance sheets at fair value measured on a recurring basis. There were no transfers of assets and liabilities that were recorded at


8


INGEVITY CORPORATION
Notes to the Condensed Consolidated Financial Statements
September 30, 2023
(Unaudited)

fair value between the three-level fair value hierarchy during the periods reported.
In millionsIn millions
Level 1(1)
Level 2(2)
Level 3(3)
TotalIn millions
Level 1(1)
Level 2(2)
Level 3(3)
Total
September 30, 2022
September 30, 2023September 30, 2023
Assets:Assets:Assets:
Deferred compensation plan investments (4)
Deferred compensation plan investments (4)
$0.8 $— $— $0.8 
Deferred compensation plan investments (4)
$2.4 $— $— $2.4 
Total assetsTotal assets$0.8 $— $— $0.8 Total assets$2.4 $— $— $2.4 
Liabilities:Liabilities:Liabilities:
Deferred compensation arrangement (4)
Deferred compensation arrangement (4)
$11.3 $— $— $11.3 
Deferred compensation arrangement (4)
$15.1 $— $— $15.1 
Contingent consideration (5)
— — 0.8 0.8 
Total liabilitiesTotal liabilities$11.3 $— $0.8 $12.1 Total liabilities$15.1 $— $— $15.1 
December 31, 2021
December 31, 2022December 31, 2022
Assets:Assets:Assets:
Deferred compensation plan investments (4)
Deferred compensation plan investments (4)
$0.9 $— $— $0.9 
Deferred compensation plan investments (4)
$1.1 $— $— $1.1 
Total assetsTotal assets$0.9 $— $— $0.9 Total assets$1.1 $— $— $1.1 
Liabilities:Liabilities:Liabilities:
Deferred compensation arrangement (4)
Deferred compensation arrangement (4)
$13.7 $— $— $13.7 
Deferred compensation arrangement (4)
$12.5 $— $— $12.5 
Contingent consideration (5)
— — 0.8 0.8 
Total liabilitiesTotal liabilities$13.7 $— $0.8 $14.5 Total liabilities$12.5 $— $— $12.5 
______________
(1) Quoted prices in active markets for identical assets.
(2) Quoted prices for similar assets and liabilities in active markets.
(3) Significant unobservable inputs.
(4) Consists of a deferred compensation arrangement, through which we hold various investment securities. Both the asset and liability are recorded at fair value, and are included within "Other assets" and "Other liabilities" on the condensed consolidated balance sheets, respectively. In addition to the investment securities, we also have company-owned life insurance ("COLI") related to the deferred compensation arrangement. COLI is recorded at cash surrender value and included in "Other assets" on the condensed consolidated balance sheets in the amount of $12.7$13.8 million and $14.0$13.3 million at September 30, 20222023 and December 31, 2021,2022, respectively.
(5) Included within "Other liabilities" on the condensed consolidated balance sheets.
Nonrecurring Fair Value Measurements
There were no nonrecurring fair value measurements in the condensed consolidated balance sheet during the quarters ended September 30, 20222023, and December 31, 2021.2022.
Strategic Investments
Equity Method Investments
The aggregate carrying value of all strategic equity method investments totaled $16.1 million and $28.2 million at September 30, 2023 and December 31, 2022, respectively. During the first quarter of 2023, we sold a strategic equity method investment for $31.5 million, resulting in a $19.3 million gain, recorded within "Other (income) expense, net" on the condensed consolidated statement of operations. There were no adjustments to the carrying value of equity method investments for impairment for the periods ended September 30, 2023 and third quarters of 2022, we acquired two strategic investments in privately-held companies for $2.0 million and $60.0 million respectively, which are accounted for under the measurement alternative method. December 31, 2022.
Measurement Alternative Investments
The aggregate carrying value of all measurement alternative investments where fair value is not readily determinable totaled $80.8$83.2 million and $18.8$80.8 million at September 30, 20222023 and December 31, 2021,2022, respectively. There were no adjustments to the carrying value of the measurement alternative method investments for impairment or observable price changes for the periodperiods ended September 30, 2023 and December 31, 2022.




9


INGEVITY CORPORATION
Notes to the Condensed Consolidated Financial Statements
September 30, 20222023
(Unaudited)

During the second quarter of 2021, we acquired a strategic investment in a privately-held company for $16.5 million, which is accounted for under the equity method of accounting. The carrying value of our strategic equity investment was $14.5 million and $16.5 million at September 30, 2022 and December 31, 2021, respectively.

During the third quarter of 2022, we entered into an investment with a venture capital fund for $0.8 million, which is accounted for under the equity method of accounting. As of September 30, 2022, we had approximately $6.8 million of unfunded commitments which we anticipate will be paid over a period of 10 years. The carrying value of our strategic equity investment was $0.8 million at September 30, 2022.
Restricted Investment
At September 30, 20222023 and December 31, 2021,2022, the carrying value of our restricted investment, which is accounted for as held-to-maturity ("HTM") and therefore recorded at amortized cost,costs, was $77.5$80.2 million and $76.1$78.0 million, net of an allowance for credit losses of $0.6$0.3 million and $0.5$0.6 million, and included cash of $6.4$9.1 million and $4.7$7.0 million, respectively. The fair value at September 30, 20222023 and December 31, 20212022 was $73.5$76.4 million and $80.0$74.7 million, respectively, based on Level 1 inputs.
The following table shows the total amortized cost of our HTM debt securities by credit rating, excluding the allowance for credit losses and cash. The primary factor in our expected credit loss calculation is the composite bond rating. As the rating decreases, the risk present in holding the bond is inherently increased, leading to an increase in expected credit losses.
HTM Debt Securities
In millionsAA+AAAA-AA-BBB+Total
September 30, 2022$13.4 — 10.5 13.3 14.1 20.4 $71.7 
December 31, 2021$13.4 — 10.6 13.3 14.1 20.5 $71.9 
HTM Debt Securities
In millionsAA+AAAA-AA-BBB+Total
September 30, 2023$13.3 — 10.4 13.2 24.4 10.1 $71.4 
December 31, 2022$13.4 — 10.5 13.2 14.1 20.4 $71.6 
Debt and Finance Lease Obligations
At September 30, 20222023 and December 31, 2021,2022, the carrying value of finance lease obligations was $101.8$101.3 million and $102.4$101.9 million, respectively, and the fair value was $107.1$103.6 million and $118.6$106.2 million, respectively. The fair value of our finance lease obligationsobligation associated with our Performance Materials' Wickliffe, Kentucky, manufacturing site is based on the period-end quoted market prices for the obligations, using Level 2 inputs. The fair value of all other finance lease obligations approximates their carrying values.
The carrying amount, excluding debt issuance fees, of our variable interest rate long-term debt was $509.0$825.0 million and $328.1$828.0 million as of September 30, 20222023 and December 31, 2021,2022, respectively. The carrying value is a reasonable estimate of the fair value of the outstanding debt based on the variable interest rate of the debt.
At September 30, 20222023 and December 31, 2021,2022, the carrying value of our fixed rate debt was $550.0 million and $850.0$550.0 million, respectively, and the fair value was $452.4$453.9 million and $843.9$471.8 million, respectively, based on Level 2 inputs.
Contingent Consideration
In connection with the acquisition of certain assets in 2020, we are contingently obligated to make an additional payment for such assets of up to an aggregate amount of $7.0 million. Note 5: Inventories, net
In millionsSeptember 30, 2023December 31, 2022
Raw materials$172.9 $106.7 
Production materials, stores, and supplies29.9 27.9 
Finished and in-process goods274.3 228.2 
Subtotal$477.1 $362.8 
Less: LIFO reserve (1)
(90.4)(27.8)
Inventories, net$386.7 $335.0 
__________
(1) The contingent consideration is payable if certain sales volume targets are achieved prior to December 31, 2024, herein referred to as "Revenue Earn-out."
The fair value of the five-year Revenue Earn-out consideration was $0.8 million at September 30, 2022 and December 31, 2021, respectively. Any subsequent changesincrease in the fair valueLIFO balance in 2023 is primarily attributable to the significant inflation in the price of crude tall oil ("CTO") which is the contingent consideration liability will be recorded in current period earnings as a selling, general, and administrative expense.primary raw material for our Performance Chemicals reportable segment.




10


INGEVITY CORPORATION
Notes to the Condensed Consolidated Financial Statements
September 30, 20222023
(Unaudited)

The following table summarizes the activity for financial liabilities utilizing Level 3 fair value measurements:
Contingent Consideration
In millionsSeptember 30, 2022December 31, 2021
Beginning balance$0.8 $0.8 
Newly issued— — 
Change in revaluation of contingent consideration included in earnings— — 
Exercises/settlements— — 
Ending balance (1)
$0.8 $0.8 
______________
(1) Included within "Other liabilities" on the condensed consolidated balance sheets.
Note 5: Inventories, net
In millionsSeptember 30, 2022December 31, 2021
Raw materials$71.6 $48.8 
Production materials, stores and supplies28.4 26.8 
Finished and in-process goods210.3 183.4 
Subtotal$310.3 $259.0 
Less: LIFO reserve(28.5)(17.8)
Inventories, net$281.8 $241.2 
Note 6: Property, Plant, and Equipment, net
In millionsIn millionsSeptember 30, 2022December 31, 2021In millionsSeptember 30, 2023December 31, 2022
Machinery and equipmentMachinery and equipment$1,119.5 $1,113.3 Machinery and equipment$1,218.1 $1,162.7 
Buildings and leasehold improvementsBuildings and leasehold improvements177.4 177.2 Buildings and leasehold improvements210.5 200.9 
Land and land improvementsLand and land improvements22.5 20.4 Land and land improvements26.3 24.9 
Construction in progressConstruction in progress92.3 64.4 Construction in progress110.9 120.9 
Total costTotal cost$1,411.7 $1,375.3 Total cost$1,565.8 $1,509.4 
Less: accumulated depreciationLess: accumulated depreciation(691.0)(655.6)Less: accumulated depreciation(765.8)(710.8)
Property, plant, and equipment, netProperty, plant, and equipment, net$720.7 $719.7 Property, plant, and equipment, net$800.0 $798.6 
Note 7: Goodwill and Other Intangible Assets, net
Goodwill
Reporting Units
In millionsPerformance ChemicalsPerformance MaterialsTotal
December 31, 2021$437.7 $4.3 $442.0 
Foreign currency translation(54.4)— (54.4)
September 30, 2022$383.3 $4.3 $387.6 
There wereAs described in Note 1, we reorganized our segment reporting structure to increase transparency for our investors and better align with the markets and customers we serve through each of our segments. This structure is also consistent with the manner in which information is presently used internally by our chief operating decision maker to evaluate performance and make resource allocation decisions. This reportable segment change impacted the identification of our Performance Chemicals reporting unit, resulting in two reporting units, Performance Chemicals and Advanced Polymer Technologies.
We have reallocated goodwill as of January 1, 2023 to align to our new reporting unit structure by using a relative fair value approach and tested goodwill for impairment immediately before and after the realignment; no interimimpairment was identified.
Reporting Units
In millionsPerformance MaterialsPerformance ChemicalsAdvanced Polymer TechnologiesTotal
December 31, 2022$4.3 $514.2 $— $518.5 
Segment change reallocation— (165.0)165.0 — 
Foreign currency translation— — 1.6 1.6 
September 30, 2023$4.3 $349.2 $166.6 $520.1 
During the third quarter of 2023, continued reduction in demand in industrial end markets has negatively impacted our ability to offset elevated CTO costs through pricing actions within our Performance Chemicals’ reportable segment, particularly in our industrial specialties product line. CTO is essential to our industrial specialties and some of our pavement technologies product lines within our Performance Chemicals reportable segment. As a result, we concluded that a triggering events or circumstances indicating thatevent occurred for our Performance Chemicals’ reporting unit, and we performed an analysis of the reporting unit’s goodwill, might be impairedintangibles and long-lived assets as of September 1, 2023. Our analysis included significant assumptions such as: revenue growth rate, Earnings before Interest, Taxes, Depreciation and Amortization ("EBITDA") margin, and discount rate which are judgmental and variations in any assumptions could result in materially different calculations of fair value. Based on our analysis, the headroom associated with our Performance Chemicals’ reporting unit, which is defined as the percentage difference between the fair value of a reporting unit and its carrying value, is 19 percent at September 30, 2022.2023. Consequently, we concluded that there was no impairment for the quarter ended September 30, 2023.




11


INGEVITY CORPORATION
Notes to the Condensed Consolidated Financial Statements
September 30, 20222023
(Unaudited)

Other Intangible Assets
September 30, 2022December 31, 2021
In millionsGrossAccumulated amortizationNetGrossAccumulated amortizationNet
Customer contracts and relationships$288.7 $105.0 $183.7 $317.8 $95.0 $222.8 
Brands (1)
69.4 21.5 47.9 81.7 20.3 61.4 
Developed technology60.4 19.8 40.6 72.2 18.8 53.4 
Other— — — 0.5 0.5 — 
Other intangibles, net (2)
$418.5 $146.3 $272.2 $472.2 $134.6 $337.6 
In millionsCustomer contracts and relationships
Brands (1)
Developed TechnologyTotal
Gross Asset Value
December 31, 2022$388.5 $89.2 $88.5 $566.2 
Foreign currency translation1.4 0.6 0.6 2.6 
September 30, 2023$389.9 $89.8 $89.1 $568.8 
Accumulated Amortization
December 31, 2022$(113.8)$(23.9)$(23.7)$(161.4)
Amortization(20.0)(4.3)(7.1)(31.4)
Foreign currency translation(0.3)— (0.1)(0.4)
September 30, 2023$(134.1)$(28.2)$(30.9)$(193.2)
Other intangibles, net$255.8 $61.6 $58.2 $375.6 
_______________
(1) Represents trademarks, trade names, and know-how.
(2) The majority of our Other intangibles, net are held in British Pound Sterling (GBP) and changes period over period are primarily driven by foreign currency fluctuations between GBP and USD.

Intangible assets subject to amortization were allocated amongattributed to our business segments as follows:
In millionsIn millionsSeptember 30, 2022December 31, 2021In millionsSeptember 30, 2023December 31, 2022
Performance MaterialsPerformance Materials$1.7 $1.9 Performance Materials$1.5 $1.7 
Performance ChemicalsPerformance Chemicals270.5 335.7Performance Chemicals180.7 198.0 
Advanced Polymer TechnologiesAdvanced Polymer Technologies193.4 205.1 
Other intangibles, netOther intangibles, net$272.2 $337.6 Other intangibles, net$375.6 $404.8 
Amortization expense related to our intangible assets is included in Selling, general and administrative expenses on the condensed consolidated statement of operations. During the three and nine months ended September 30, 2022,2023, we recognized amortization expense of $7.9$10.5 million and $23.8$31.4 million, respectively, and during the three and nine months ended September 30, 2021,2022, we recognized amortization expense of $8.3$7.9 million and $25.1$23.8 million, respectively. The increase in amortization expense in 2023 as compared to 2022 was due to the Ozark Materials, LLC (“OM”), and Ozark Logistics, LLC (“OL” and, together with OM, “Ozark Materials”) acquisition as further described in Note 16.
Based on the current carrying values of intangible assets, estimated pre-tax amortization expense for the next five years is as follows: 2022 - $31.7$10.5 million for the remainder of 2023, - $31.7 million, 2024 - $31.4$41.6 million, 2025 - $31.4$41.3 million, 2026 - $40.6 million, and 20262027 - $31.4$40.6 million. The estimated pre-tax amortization expense may fluctuate due to changes in foreign currency exchange rates.
Note 8: Financial Instruments and Risk Management
Net Investment Hedges
DuringIn the third quarter of 2022, we terminated our fixed-to-fixed cross currencycross-currency interest rate swaps, accounted for as net investment hedges,hedges. During the three and receivednine months ended September 30, 2023, we recognized net proceeds of $14.7 million. The proceeds are presented within cash provided by investing activities within the condensed consolidated statement of cash flows. The $14.7 million gain is reported as a component of the foreign currency adjustments (“CTA”) within Accumulated other comprehensiveinterest income (loss) ("AOCI") on the condensed consolidated balance sheet. The gain on net investment hedges are reclassified to earnings only when the related CTA are required to be reclassified, usually upon sale or liquidation of the investment.
The fair value of our net investment hedge was a net asset (liability)associated with this financial instrument of zero and $1.0 million at September 30, 2022zero, respectively, and December 31, 2021, respectively. Duringduring the three and nine months ended September 30, 2022, we recognized net interest income associated with this financial instrument of $0.1 million and $2.8 million, respectively, and during the three and nine months ended September 30, 2021, we recognized net interest income associated with this financial instrument of $0.1 million and $0.3 million, respectively.





12


INGEVITY CORPORATION
Notes to the Condensed Consolidated Financial Statements
September 30, 20222023
(Unaudited)

Cash Flow Hedges
Foreign Currency Exchange Risk Management
We manufacture and sell our products in several countries throughout the world and, thus, we are exposed to changes in foreign currency exchange rates. To manage the volatility relating to these exposures, we net the exposures on a consolidated basis to take advantage of natural offsets. To manage the remaining exposure, from time to time, we utilize forward currency exchange contracts to minimize the volatility to earnings and cash flows resulting from the effect of fluctuating foreign currency exchange rates on export sales denominated in foreign currencies (principally the euro). These contracts are generally designated as cash flow hedges. Designated cash flow hedges entered to minimize foreign currency exchange risk of forecasted revenue transactions are recorded to Net sales on the condensed consolidated statement of operations when the forecasted transaction occurs. As of September 30, 2022,2023, there were $5.6$6.0 million open foreign currency derivative contracts. The fair value of the designated foreign currency hedge contracts was ana net asset (liability) of $0.9$0.1 million and $0.5$(0.5) million at September 30, 20222023 and December 31, 2021,2022, respectively.
Commodity Price Risk Management
Certain energy sources used in our manufacturing operations are subject to price volatility caused by weather, supply and demand conditions, economic variables, and other unpredictable factors. This volatility is primarily related to the market pricing of natural gas. To mitigate expected fluctuations in market prices and the volatility to earnings and cash flow resulting from changes to pricing of natural gas purchases, from time to time, we will enter into swap contracts and zero cost collar option contracts and designate these contracts as cash flow hedges. As of September 30, 2022,2023, we had 1.40.8 million and 0.40.1 million mmBTUSmm BTUS (millions of British Thermal Units) in aggregate notional volume of outstanding natural gas commodity swap contracts and zero cost collar option contracts, respectively, designated as cash flow hedges. As of September 30, 2022,2023, open commodity contracts hedge forecasted transactions until December 2023.May 2024. The fair value of the outstanding designated natural gas commodity hedge contracts as of September 30, 20222023 and December 31, 20212022, was a net asset (liability) of $1.9$(0.8) million and $(0.6)$(1.6) million, respectively.
Interest Rate Risk Management 
During the year2022, we had floating-to-fixed interest rate swaps with a combined notional amount of $166.2 million to manage the variability of cash flows in the interest rate payments associated with our existing LIBOR-based interest payments, effectively converting $166.2 milliona portion of our floating rate debt to a fixed rate. Per the terms of these instruments, we received floating rate interest payments based upon three-month U.S. dollar LIBOR and in return were obligated to pay interest at a fixed rate of 3.79 percent until July 2023. Due to the repayment of our term loan (refer to Note 9 for more information), duringIn the second quarter of 2022, we terminated thesethe interest rate swap instruments. Upon termination of the interest rate swap instruments, we reclassified a $1.7 million gain from AOCI into Interest expense, net on the condensed consolidated statement of operations. The fair value of outstanding interest rate instruments at September 30, 2022 and December 31, 2021 was an asset (liability) of zero and $(4.0) million, respectively.




13


INGEVITY CORPORATION
Notes to the Condensed Consolidated Financial Statements
September 30, 20222023
(Unaudited)

Effect of Cash Flow and Net Investment Hedge Accounting on AOCI
In millionsAmount of Gain (Loss) Recognized in AOCIAmount of Gain (Loss) Reclassified from AOCI into Net incomeLocation of Gain (Loss) Reclassified from AOCI in Net income
Three Months Ended September 30,
2022202120222021
Cash flow hedging derivatives
Currency exchange contracts$0.5 $0.1 $(0.8)$(0.2)Net sales
Natural gas contracts3.0 2.8 (2.3)— Cost of sales
Interest rate swap contracts— 0.7 — — Interest expense, net
Total$3.5 $3.6 $(3.1)$(0.2)
Amount of Gain (Loss) Recognized in AOCIAmount of Gain (Loss) Recognized in Income on Derivative
(Amount Excluded from Effectiveness Testing)
Location of Gain or (Loss) Recognized in Income on Derivative
(Amount Excluded from
Effectiveness Testing)
Three Months Ended September 30,
2022202120222021
Net investment hedging derivative
Currency exchange contracts(1)
$4.4 $3.8 $0.1 $— Interest expense, net
Total$4.4 $3.8 $0.1 $— 
In millionsAmount of Gain (Loss) Recognized in AOCIAmount of Gain (Loss) Reclassified from AOCI into Net incomeLocation of Gain (Loss) Reclassified from AOCI in Net income
Nine Months Ended September 30,
2022202120222021
Cash flow hedging derivatives
Currency exchange contracts$1.8 $0.3 $(1.6)$(0.2)Net sales
Natural gas contracts7.4 3.7 (4.1)(0.1)Cost of sales
Interest rate swap contracts5.7 2.9 (1.7)— Interest expense, net
Total$14.9 $6.9 $(7.4)$(0.3)
In millionsAmount of Gain (Loss) Recognized in AOCIAmount of Gain (Loss) Recognized in Income on Derivative
(Amount Excluded from Effectiveness Testing)
Location of Gain or (Loss) Recognized in Income on Derivative
(Amount Excluded from
Effectiveness Testing)
Nine Months Ended September 30,
2022202120222021
Net investment hedging derivative
Currency exchange contracts (1)
$13.9 $8.0 $2.8 $0.2 Interest expense, net
Total$13.9 $8.0 $2.8 $0.2 
In millionsAmount of Gain (Loss) Recognized in AOCIAmount of Gain (Loss) Reclassified from AOCI into Net incomeLocation of Gain (Loss) Reclassified from AOCI in Net income
Three Months Ended September 30,
2023202220232022
Cash flow hedging derivatives
Currency exchange contracts$0.1 $0.5 $(0.2)$0.8 Net sales
Natural gas contracts(0.3)3.0 (1.2)2.3 Cost of sales
Interest rate swap contracts— — — — Interest expense, net
Total$(0.2)$3.5 $(1.4)$3.1 
Amount of Gain (Loss) Recognized in AOCIAmount of Gain (Loss) Recognized in Income on Derivative
(Amount Excluded from Effectiveness Testing)
Location of Gain or (Loss) Recognized in Income on Derivative
(Amount Excluded from
Effectiveness Testing)
Three Months Ended September 30,
2023202220232022
Net investment hedging derivative
Currency exchange contracts(1)
$— $4.4 $— $0.1 Interest expense, net
Total$— $4.4 $— $0.1 
In millionsAmount of Gain (Loss) Recognized in AOCIAmount of Gain (Loss) Reclassified from AOCI into Net incomeLocation of Gain (Loss) Reclassified from AOCI in Net income
Nine Months Ended September 30,
2023202220232022
Cash flow hedging derivatives
Currency exchange contracts$— $1.8 $(0.7)$1.6 Net sales
Natural gas contracts(3.3)7.4 (2.2)4.1 Cost of sales
Interest rate swap contracts— 5.7 — 1.7 Interest expense, net
Total$(3.3)$14.9 $(2.9)$7.4 
In millionsAmount of Gain (Loss) Recognized in AOCIAmount of Gain (Loss) Recognized in Income on Derivative
(Amount Excluded from Effectiveness Testing)
Location of Gain or (Loss) Recognized in Income on Derivative
(Amount Excluded from
Effectiveness Testing)
Nine Months Ended September 30,
2023202220232022
Net investment hedging derivative
Currency exchange contracts (1)
$— $13.9 $— $2.8 Interest expense, net
Total$— $13.9 $— $2.8 
__________
(1) Reclassifications from AOCI to Net Income were zero for all periods presented. Gains and losses would be reclassified from AOCI to Other (income) expense, net.
Within the next twelve months, we expect to reclassify $4.8$2.1 million of net gains from AOCI to income, before taxes.




14


INGEVITY CORPORATION
Notes to the Condensed Consolidated Financial Statements
September 30, 20222023
(Unaudited)

Fair Value Measurements
The following information is presented for derivative assets and liabilities that are recorded in the condensed consolidated balance sheets at fair value measured on a recurring basis. There were no transfers of assets and liabilities that are recorded at fair value between Level 1 and Level 2 during the periods reported. There were no nonrecurring fair value measurements related to derivative assets and liabilities on the condensed consolidated balance sheets as of September 30, 20222023, or December 31, 2021.2022.
September 30, 2022September 30, 2023
In millionsIn millions
Level 1(1)
Level 2(2)
Level 3(3)
TotalIn millions
Level 1(1)
Level 2(2)
Level 3(3)
Total
Assets:Assets:Assets:
Currency exchange contracts (4)
Currency exchange contracts (4)
$— $0.9 $— $0.9 
Currency exchange contracts (4)
$— $0.5 $— $0.5 
Natural gas contracts (4)
— 2.1 — 2.1 
Total assetsTotal assets$— $3.0 $— $3.0 Total assets$— $0.5 $— $0.5 
Liabilities:Liabilities:Liabilities:
Currency exchange contracts(5)
Currency exchange contracts(5)
$— $0.4 $— $0.4 
Natural gas contracts (6)(5)
Natural gas contracts (6)(5)
$— $0.2 $— $0.2 
Natural gas contracts (6)(5)
— 0.8 — 0.8 
Total liabilitiesTotal liabilities$— $0.2 $— $0.2 Total liabilities$— $1.2 $— $1.2 
December 31, 2021
In millions
Level 1(1)
Level 2(2)
Level 3(3)
Total
Assets:
Currency exchange contracts (4)
$— $0.5 $— $0.5 
Net investment hedge (5)
— 2.0 — 2.0 
Total assets$— $2.5 $— $2.5 
Liabilities:
Natural gas contracts (6)
$— $0.6 $— $0.6 
Net investment hedge (7)
— 1.0 — 1.0 
Interest rate swap contracts (7)
— 4.0 — 4.0 
Total liabilities$— $5.6 $— $5.6 
December 31, 2022
In millions
Level 1(1)
Level 2(2)
Level 3(3)
Total
Liabilities:
Natural gas contracts (5)
$— $1.6 $— $1.6 
Currency exchange contracts (5)
— 0.5 — 0.5 
Total liabilities$— $2.1 $— $2.1 
__________
(1) Quoted prices in active markets for identical assets.
(2) Quoted prices for similar assets and liabilities in active markets.
(3) Significant unobservable inputs.
(4) Included within "Other"Prepaid and other current assets" on the condensed consolidated balance sheet.
(5) Included within "Other assets" on the condensed consolidated balance sheet.
(6) Included within "Accrued expenses" on the condensed consolidated balance sheet.
(7) Included within "Other liabilities" on the condensed consolidated balance sheet.




15


INGEVITY CORPORATION
Notes to the Condensed Consolidated Financial Statements
September 30, 20222023
(Unaudited)

Note 9: Debt, including Finance Lease Obligations
Current and long-term debt including finance lease obligations consisted of the following:
In millions, except percentagesIn millions, except percentagesSeptember 30, 2022December 31, 2021In millions, except percentagesSeptember 30, 2023December 31, 2022
Revolving Credit Facility and other lines of credit (1)
Revolving Credit Facility and other lines of credit (1)
$509.0 $— 
Revolving Credit Facility and other lines of credit (1)
$825.0 $828.0 
Term Loan— 328.1 
3.88% Senior Notes due 20283.88% Senior Notes due 2028550.0 550.0 3.88% Senior Notes due 2028550.0 550.0 
4.50% Senior Notes due 2026— 300.0 
Finance lease obligationsFinance lease obligations101.8 102.4 Finance lease obligations101.3 101.9 
Other notes payableOther notes payable2.0 — 
Total debt including finance lease obligationsTotal debt including finance lease obligations$1,160.8 $1,280.5 Total debt including finance lease obligations$1,478.3 $1,479.9 
Less: debt issuance costsLess: debt issuance costs6.7 10.9 Less: debt issuance costs5.6 6.5 
Total debt, including finance lease obligations, net of debt issuance costsTotal debt, including finance lease obligations, net of debt issuance costs$1,154.1 $1,269.6 Total debt, including finance lease obligations, net of debt issuance costs$1,472.7 $1,473.4 
Less: debt maturing within one year (2)
Less: debt maturing within one year (2)
0.9 19.6 
Less: debt maturing within one year (2)
3.0 0.9 
Long-term debt including finance lease obligationsLong-term debt including finance lease obligations$1,153.2 $1,250.0 Long-term debt including finance lease obligations$1,469.7 $1,472.5 
______________
(1) Letters of credit outstanding under the revolving credit facility were $2.3 million and $2.5$2.3 million and available funds under the facility were $488.7$172.7 million and $497.5$169.7 million at September 30, 20222023 and December 31, 2021,2022, respectively.
(2) Debt maturing within one year is included in "Notes payable and current maturities of long-term debt" on the condensed consolidated balance sheets.
Senior Notes due 2026
On April 27, 2022, we redeemed the $300.0 million outstanding aggregate principal balance of our 4.50% Senior Notes due in 2026 prior to maturity. The redemption was primarily funded utilizing the outstanding capacity under our revolving credit facility. At redemption, we recognized a $3.4 million redemption premium and accelerated the remaining deferred finance fees of $2.7 million, both the redemption premium and accelerated deferred finance fees were recorded to Interest Expense, net on the condensed consolidated statements of operations. Legal expenses associated with this redemption have been recorded as incurred.
Revolving Credit Facility Amendment
On June 23, 2022, we entered into an Amendment and Restatement Agreement (the “Amendment”) together with the other parties named therein, which amends and restates our existing credit agreement, dated as of March 7, 2016, as amended, supplemented or otherwise modified.
Among other things, the Amendment (a) extends the maturity date from October 28, 2025 to June 23, 2027 and increases the aggregate principal amount of revolving commitments thereunder from $500 million to $1 billion, (b) adds Ingevity UK as a borrower under the revolving credit facility, and (c) modifies certain leverage ratio tests and thresholds.
Borrowings under the revolving credit facility bear interest at a rate per annum equal to either (a) the applicable term benchmark rate, subject to a zero floor, or (b) a base rate, in each case, plus an applicable margin of 1.00 percent to 1.75 percent for term benchmark loans and 0.00 percent to 0.75 percent for base rate loans.
Fees of $3.0 million were incurred to secure the Amendment. These fees have been deferred and will be amortized over the term of the facility and recorded to Interest Expense, net on the condensed consolidated statement of operations.
Term Loan Repayment
On the closing date of the Amendment, we repaid our outstanding term loan in an aggregate principal amount of $323.0 million. Upon repayment, we recognized $1.3 million in outstanding interest, $0.4 million in repayment fees and accelerated the remaining deferred finance fees of $0.4 million. The interest, fees, and accelerated deferred finance fees were recorded to Interest Expense, net on the condensed consolidated statements of operations. Legal expenses associated with this repayment have been recorded as incurred.





16


INGEVITY CORPORATION
Notes to the Condensed Consolidated Financial Statements
September 30, 2022
(Unaudited)

Debt Covenants
Our indentures containSenior Notes indenture contains certain customary covenants (including covenants limiting Ingevity's and its restricted subsidiaries’ ability to grant or permit liens on certain property securing debt, declare or pay dividends, make distributions on or repurchase or redeem capital stock, make investments in unrestricted subsidiaries, engage in sale and lease-back transactions, and engage in a consolidation or merger, or sell, transfer or otherwise dispose of all or substantially all of the assets of Ingevity and our restricted subsidiaries, taken as a whole) and events of default (subject in certain cases to customary exceptions, as well as grace and cure periods). The occurrence of an event of default under the 2028 Senior Notes could result in the acceleration of the notenotes of such series and could cause a cross-default resulting in the acceleration of other indebtedness of Ingevity and its subsidiaries. We were in compliance with all covenants under the indenture as of September 30, 2022.2023.
The credit agreementsagreement governing our revolving credit facility containcontains customary default provisions, including defaults for non-payment, breach of representations and warranties, insolvency, non-compliance with covenants and cross-defaults to other material indebtedness. The occurrence of an uncured event of default under the credit agreement could result in all loans and other obligations becoming immediately due and payable and our revolving credit facility being terminated. The credit agreement also contains certain customary covenants, including financial covenants. The revolving credit facility financial covenants require Ingevity to maintain on a consolidated basis a maximum total net leverage ratio of 4.0 to 1.0 (which may be increased to 4.5 to 1.0 under certain circumstances) and a minimum interest coverage ratio of 3.0 to 1.0. As calculated per the credit agreement, our net leverage for the four consecutive quarters ended September 30, 20222023 was 2.0,2.5, and our actual interest coverage for the four consecutive quarters ended September 30, 20222023 was 10.7.6.8. We were in compliance with all covenants under the credit agreement at September 30, 2022.2023.




1716


INGEVITY CORPORATION
Notes to the Condensed Consolidated Financial Statements
September 30, 20222023
(Unaudited)

Note 10: Equity
The tables below provide a roll forward of equity.
Common StockCommon Stock
In millions, except per share data in thousandsSharesAmountAdditional paid in capitalRetained earningsAccumulated
other
comprehensive
income (loss)
Treasury stockTotal Equity
Balance at December 31, 202143,102 $0.4 $136.3 $796.1 $13.1 $(272.1)$673.8 
In millions, shares in thousandsIn millions, shares in thousandsSharesAmountAdditional paid in capitalRetained earningsAccumulated
other
comprehensive
income (loss)
Treasury stockTotal Equity
Balance at December 31, 2022Balance at December 31, 202243,228 $0.4 $153.0 $1,007.7 $(46.8)$(416.0)$698.3 
Net income (loss)Net income (loss)— — — 60.8 — — 60.8 Net income (loss)— — — 50.7 — — 50.7 
Other comprehensive income (loss)Other comprehensive income (loss)— — — — (10.1)— (10.1)Other comprehensive income (loss)— — — — 8.0 — 8.0 
Common stock issuedCommon stock issued42 — — — — — — Common stock issued139 — — — — — — 
Exercise of stock options, netExercise of stock options, net36 — 0.4 — — — 0.4 Exercise of stock options, net41 — 2.2 — — — 2.2 
Tax payments related to vested restricted stock unitsTax payments related to vested restricted stock units— — — — — (1.8)(1.8)Tax payments related to vested restricted stock units— — — — — (4.5)(4.5)
Share repurchase programShare repurchase program— — — — — (40.4)(40.4)Share repurchase program— — — — — (33.4)(33.4)
Share-based compensation plansShare-based compensation plans— — 2.9 — — 0.5 3.4 Share-based compensation plans— — 3.7 — — 0.7 4.4 
Balance at March 31, 202243,180 $0.4 $139.6 $856.9 $3.0 $(313.8)$686.1 
Net income (loss)— — — 59.8 — — 59.8 
Other comprehensive income (loss)— — — — (46.7)— (46.7)
Common stock issued18 — — — — — — 
Exercise of stock options, net— 0.1 — — — 0.1 
Tax payments related to vested restricted stock units— — — — — (0.2)(0.2)
Share repurchase program— — — — — (49.5)(49.5)
Noncontrolling interest distributions— — — — — — — 
Share-based compensation plans— — 3.3 — — 1.4 4.7 
Balance at June 30, 202243,200 $0.4 $143.0 $916.7 $(43.7)$(362.1)$654.3 
Balance at March 31, 2023Balance at March 31, 202343,408 $0.4 $158.9 $1,058.4 $(38.8)$(453.2)$725.7 
Net income (loss)Net income (loss)— — — 75.4 — — 75.4 Net income (loss)— — — 35.5 — — 35.5 
Other comprehensive income (loss)Other comprehensive income (loss)— — — — (51.6)— (51.6)Other comprehensive income (loss)— — — — 5.3 — 5.3 
Common stock issuedCommon stock issued— — — — (0.2)(0.2)Common stock issued22 — — — — — — 
Exercise of stock options, netExercise of stock options, net— 0.3 — — — 0.3 Exercise of stock options, net— — — — — — — 
Tax payments related to vested restricted stock unitsTax payments related to vested restricted stock units— — — — — — — Tax payments related to vested restricted stock units— — — — — — — 
Share repurchase programShare repurchase program— — — — — (49.3)(49.3)Share repurchase program— — — — — (58.7)(58.7)
Share-based compensation plansShare-based compensation plans— — 4.2 — — 0.8 5.0 Share-based compensation plans— — 4.7 — — 1.6 6.3 
Balance at September 30, 202243,213 $0.4 $147.5 $992.1 $(95.3)$(410.8)$633.9 
Balance at June 30, 2023Balance at June 30, 202343,430 $0.4 $163.6 $1,093.9 $(33.5)$(510.3)$714.1 
Net income (loss)Net income (loss)— — — 25.2 — — 25.2 
Other comprehensive income (loss)Other comprehensive income (loss)— — — — (20.4)— (20.4)
Common stock issuedCommon stock issued13 — — — — — — 
Exercise of stock options, netExercise of stock options, net— — — — — — — 
Tax payments related to vested restricted stock unitsTax payments related to vested restricted stock units— — — — — (0.2)(0.2)
Share repurchase programShare repurchase program— — — — — — — 
Share-based compensation plansShare-based compensation plans— — (1.0)— — 1.0 — 
Balance at September 30, 2023Balance at September 30, 202343,443 $0.4 $162.6 $1,119.1 $(53.9)$(509.5)$718.7 


17


INGEVITY CORPORATION
Notes to the Condensed Consolidated Financial Statements
September 30, 2023
(Unaudited)

Common Stock
In millions, shares in thousandsSharesAmountAdditional paid in capitalRetained earningsAccumulated
other
comprehensive
income (loss)
Treasury stockTotal Equity
Balance at December 31, 202143,102 $0.4 $136.3 $796.1 $13.1 $(272.1)$673.8 
Net income (loss)— — — 60.8 — — 60.8 
Other comprehensive income (loss)— — — — (10.1)— (10.1)
Common stock issued42 — — — — — — 
Exercise of stock options, net36 — 0.4 — — — 0.4 
Tax payments related to vested restricted stock units— — — — — (1.8)(1.8)
Share repurchase program— — — — — (40.4)(40.4)
Share-based compensation plans— — 2.9 — — 0.5 3.4 
Balance at March 31, 202243,180 $0.4 $139.6 $856.9 $3.0 $(313.8)$686.1 
Net income (loss)— — — 59.8 — — 59.8 
Other comprehensive income (loss)— — — — (46.7)— (46.7)
Common stock issued18 — — — — — — 
Exercise of stock options, net— 0.1 — — — 0.1 
Tax payments related to vested restricted stock units— — — — — (0.2)(0.2)
Share repurchase program— — — — — (49.5)(49.5)
Share-based compensation plans— — 3.3 — — 1.4 4.7 
Balance at June 30, 202243,200 $0.4 $143.0 $916.7 $(43.7)$(362.1)$654.3 
Net income (loss)— — — 75.4 — — 75.4 
Other comprehensive income (loss)— — — — (51.6)— (51.6)
Common stock issued— — — — (0.2)(0.2)
Exercise of stock options, net— 0.3 — — — 0.3 
Tax payments related to vested restricted stock units— — — — — — — 
Share repurchase program— — — — — (49.3)(49.3)
Share-based compensation plans— — 4.2 — — 0.8 5.0 
Balance at September 30, 202243,213 $0.4 $147.5 $992.1 $(95.3)$(410.8)$633.9 


18


INGEVITY CORPORATION
Notes to the Condensed Consolidated Financial Statements
September 30, 20222023
(Unaudited)

Common Stock
In millions, except per share data in thousandsSharesAmountAdditional paid in capitalRetained earningsAccumulated
other
comprehensive
income (loss)
Treasury stockTotal Equity
Balance at December 31, 202042,913 $0.4 $121.3 $678.0 $4.7 $(162.3)$642.1 
Net income (loss)— — — 48.7 — — 48.7 
Other comprehensive income (loss)— — — — 8.5 — 8.5 
Common stock issued97 — — — — — — 
Exercise of stock options, net24 — 0.9 — — — 0.9 
Tax payments related to vested restricted stock units— — — — — (2.3)(2.3)
Share repurchase program— — — — — (39.4)(39.4)
Share-based compensation plans— — 2.6 — — — 2.6 
Balance at March 31, 202143,034 $0.4 $124.8 $726.7 $13.2 $(204.0)$661.1 
Net income (loss)— — — 44.3 — — 44.3 
Other comprehensive income (loss)— — — — 5.4 — 5.4 
Common stock issued19 — — — — — — 
Exercise of stock options, net32 — 1.5 — — — 1.5 
Tax payments related to vested restricted stock units— — — — — — — 
Share repurchase program— — — — — (28.7)(28.7)
Share-based compensation plans— — 4.0 — — 0.9 4.9 
Balance at June 30, 202143,085 $0.4 $130.3 $771.0 $18.6 $(231.8)$688.5 
Net income (loss)— — — (4.2)— — (4.2)
Other comprehensive income (loss)— — — — (11.1)— (11.1)
Common stock issued— — — — — — 
Exercise of stock options, net— 0.1 — — — 0.1 
Tax payments related to vested restricted stock units— — — — — (0.1)(0.1)
Share repurchase program— — — — — (32.2)(32.2)
Share-based compensation plans— — 3.0 — — 0.5 3.5 
Balance at September 30, 202143,092 $0.4 $133.4 $766.8 $7.5 $(263.6)$644.5 
Accumulated other comprehensive income (loss)
Three Months Ended September 30,Nine Months Ended September 30,
In millions2023202220232022
Foreign currency translation
Beginning balance$(31.3)$(43.9)$(45.8)$18.4 
Net gains (losses) on foreign currency translation(21.4)(55.3)(6.9)(124.9)
Gains (losses) on net investment hedges— 4.4 — 13.9 
Less: tax provision (benefit)— 1.0 — 3.2 
Net gains (losses) on net investment hedges— 3.4 — 10.7 
Other comprehensive income (loss), net of tax(21.4)(51.9)(6.9)(114.2)
Ending balance$(52.7)$(95.8)$(52.7)$(95.8)
Derivative instruments
Beginning balance$(2.7)$3.3 $(1.4)$(2.1)
Gains (losses) on derivative instruments(0.2)3.5 (3.3)14.9 
Less: tax provision (benefit)(0.1)0.8 (0.8)3.5 
Net gains (losses) on derivative instruments(0.1)2.7 (2.5)11.4 
(Gains) losses reclassified to net income1.4 (3.1)2.9 (7.4)
Less: tax (provision) benefit0.3 (0.7)0.7 (1.7)
Net (gains) losses reclassified to net income1.1 (2.4)2.2 (5.7)
Other comprehensive income (loss), net of tax1.0 0.3 (0.3)5.7 
Ending balance$(1.7)$3.6 $(1.7)$3.6 
Pension and other postretirement benefits
Beginning balance$0.5 $(3.1)$0.4 $(3.2)
Unrealized actuarial gains (losses) and prior service (costs) credits— — — — 
Less: tax provision (benefit)— — — — 
Net actuarial gains (losses) and prior service (costs) credits— — — — 
Amortization of actuarial and other (gains) losses, prior service cost (credits), and settlement and curtailment (income) charge reclassified to net income— — 0.1 0.1 
Less: tax (provision) benefit— — — — 
Net actuarial and other (gains) losses, amortization of prior service cost (credits), and settlement and curtailment (income) charge reclassified to net income— — 0.1 0.1 
Other comprehensive income (loss), net of tax— — 0.1 0.1 
Ending balance$0.5 $(3.1)$0.5 $(3.1)
Total AOCI ending balance at September 30$(53.9)$(95.3)$(53.9)$(95.3)




19


INGEVITY CORPORATION
Notes to the Condensed Consolidated Financial Statements
September 30, 20222023
(Unaudited)

Accumulated other comprehensive income (loss)
Three Months Ended September 30,Nine Months Ended September 30,
In millions2022202120222021
Foreign currency translation
Beginning balance$(43.9)$27.8 $18.4 $16.4 
Net gains (losses) on foreign currency translation(55.3)(16.7)(124.9)(8.5)
Gains (losses) on net investment hedges4.4 3.8 13.9 8.0 
Less: tax provision (benefit)1.0 0.9 3.2 1.9 
Net gains (losses) on net investment hedges3.4 2.9 10.7 6.1 
Other comprehensive income (loss), net of tax(51.9)(13.8)(114.2)(2.4)
Ending balance$(95.8)$14.0 $(95.8)$14.0 
Derivative instruments
Beginning balance$3.3 $(4.5)$(2.1)$(6.9)
Gains (losses) on derivative instruments3.5 3.6 14.9 6.9 
Less: tax provision (benefit)0.8 0.8 3.5 1.6 
Net gains (losses) on derivative instruments2.7 2.8 11.4 5.3 
(Gains) losses reclassified to net income(3.1)(0.2)(7.4)(0.3)
Less: tax (provision) benefit(0.7)(0.1)(1.7)(0.1)
Net (gains) losses reclassified to net income(2.4)(0.1)(5.7)(0.2)
Other comprehensive income (loss), net of tax0.3 2.7 5.7 5.1 
Ending balance$3.6 $(1.8)$3.6 $(1.8)
Pension and other postretirement benefits
Beginning balance$(3.1)$(4.7)$(3.2)$(4.8)
Unrealized actuarial gains (losses) and prior service (costs) credits— — — — 
Less: tax provision (benefit)— — — — 
Net actuarial gains (losses) and prior service (costs) credits— — — — 
Amortization of actuarial and other (gains) losses, prior service cost (credits), and settlement and curtailment (income) charge reclassified to net income— — 0.1 0.1 
Less: tax (provision) benefit— — — — 
Net actuarial and other (gains) losses, amortization of prior service cost (credits), and settlement and curtailment (income) charge reclassified to net income— — 0.1 0.1 
Other comprehensive income (loss), net of tax— — 0.1 0.1 
Ending balance$(3.1)$(4.7)$(3.1)$(4.7)
Total AOCI ending balance at September 30$(95.3)$7.5 $(95.3)$7.5 




20


INGEVITY CORPORATION
Notes to the Condensed Consolidated Financial Statements
September 30, 2022
(Unaudited)

Reclassifications of accumulated other comprehensive income (loss)Reclassifications of accumulated other comprehensive income (loss)Reclassifications of accumulated other comprehensive income (loss)
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended September 30,Nine Months Ended September 30,
In millionsIn millions2022202120222021In millions2023202220232022
Derivative instrumentsDerivative instrumentsDerivative instruments
Currency exchange contracts (1)
Currency exchange contracts (1)
$0.8 $0.2 $1.6 $0.2 
Currency exchange contracts (1)
$(0.2)$0.8 $(0.7)$1.6 
Natural gas contracts (2)
Natural gas contracts (2)
2.3 — 4.1 0.1 
Natural gas contracts (2)
(1.2)2.3 (2.2)4.1 
Interest rate swap contracts (3)
— — 1.7 — 
Net investment hedge contract(3)
Net investment hedge contract(3)
— — — 1.7 
Total before taxTotal before tax3.1 0.2 7.4 0.3 Total before tax(1.4)3.1 (2.9)7.4 
(Provision) benefit for income taxes(Provision) benefit for income taxes(0.7)(0.1)(1.7)(0.1)(Provision) benefit for income taxes0.3 (0.7)0.7 (1.7)
Amount included in net income (loss)Amount included in net income (loss)$2.4 $0.1 $5.7 $0.2 Amount included in net income (loss)$(1.1)$2.4 $(2.2)$5.7 
Pension and other post retirement benefitsPension and other post retirement benefitsPension and other post retirement benefits
Amortization of prior service costs (2)
Amortization of prior service costs (2)
$— $— $0.1 $0.1 
Amortization of prior service costs (2)
$— $— $0.1 $0.1 
Total before taxTotal before tax— — 0.1 0.1 Total before tax— — 0.1 0.1 
(Provision) benefit for income taxes(Provision) benefit for income taxes— — — — (Provision) benefit for income taxes— — — — 
Amount included in net income (loss)Amount included in net income (loss)$— $— $0.1 $0.1 Amount included in net income (loss)$— $— $0.1 $0.1 
______________
(1) Included within "Net sales" on the condensed consolidated statement of operations.
(2) Included within "Cost of sales" on the condensed consolidated statement of operations.
(3) Included within "Interest expense, net" on the condensed consolidated statement of operations.
Share Repurchases
On July 25, 2022, our Board of Directors authorized the repurchase of up to $500.0$500 million of our common stock, (the "2022 Authorization"), and rescinded the prior outstanding repurchase authorization with respect to the shares that remained unused under the prior authorization. Shares under the 2022 Authorization may be purchased through open market or privately negotiated transactions at the discretion of management based on its evaluation of market prevailing conditions and other factors, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended.
During the three and nine months ended September 30, 2023, we repurchased zero and $92.1 million, inclusive of $0.8 million in excise tax, in common stock, representing zero and 1,269,373 shares of our common stock at a weighted average cost per share of zero and $71.93, respectively. At September 30, 2023, $353.4 million remained unused under our Board-authorized repurchase program.
During the three and nine months ended September 30, 2022, we repurchased $49.3 million and $139.2 million in common stock, representing 697,523 and 2,027,206 shares of our common stock at a weighted average cost per share of $70.75 and $68.68, respectively. At September 30, 2022, $450.7 million remained unused under our 2022 Authorization.
During the three and nine months ended September 30, 2021, we repurchased $32.2 million and $100.3 million in common stock, representing 414,501 and 1,298,167 shares of our common stock at a weighted average cost per share of $77.77 and $77.25, respectively.




2120


INGEVITY CORPORATION
Notes to the Condensed Consolidated Financial Statements
September 30, 20222023
(Unaudited)

Note 11: Retirement PlansRestructuring and Other (Income) Charges, net
The following table summarizesDetail on the components ofrestructuring charges and other (income) charges, net, periodic benefit cost (income) for our defined benefit pension plans:is provided below.
Three Months Ended September 30,
PensionsOther Benefits
In millions2022202120222021
Components of net periodic benefit cost (income):
Service cost (1)
$0.4 $0.4 $— $— 
Interest cost (2)
0.3 0.3 — — 
Expected return on plan assets (2)
(0.4)(0.3)— — 
Amortization of prior service cost (credit) (1)
— — — — 
Amortization of net actuarial and other (gain) loss (2)
— — — — 
Net periodic benefit cost (income)$0.3 $0.4 $— $— 
Nine Months Ended September 30,
PensionsOther Benefits
In millions2022202120222021
Components of net periodic benefit cost (income):
Service cost (1)
$1.2 $1.3 $— $— 
Interest cost (2)
0.9 0.8 — — 
Expected return on plan assets (2)
(1.3)(1.0)— — 
Amortization of prior service cost (credit) (1)
0.1 0.1 — — 
Amortization of net actuarial and other (gain) loss (2)
— — — — 
Net periodic benefit cost (income)$0.9 $1.2 $— $— 
Three Months Ended September 30,Nine Months Ended September 30,
In millions2023202220232022
Severance and other employee-related costs(1)
$1.5 $— $8.9 $— 
Other(2)
— — 2.7 — 
Restructuring charges1.5 — 11.6 — 
Alternative Feedstock Transition11.8 — 18.4 — 
North Charleston Plant Transition9.8 — 12.7 — 
Business transformation costs1.5 3.3 6.7 10.6 
Other (income) charges, net23.1 3.3 37.8 10.6 
Total restructuring and other (income) charges, net$24.6 $3.3 $49.4 $10.6 
_______________
(1) Amounts are recorded to "Cost of sales" on our condensed consolidated statements of operations consistent with theRepresents severance and employee compensation costs that participatebenefit charges.
(2) Primarily represents other miscellaneous exit costs.

Restructuring Charges
Beginning in the plan.
(2) Amounts are recordedfirst quarter of 2023, we initiated several measures to "Other (income) expense, net" onpursue greater cost efficiency which included a reorganization to streamline certain functions and reduce ongoing costs. During the second and third quarters, we expanded our condensed consolidated statementscost reduction actions to reorganize our operations and in the fourth quarter we announced further actions as described in Note 17. The combined restructuring program is expected to cost approximately $12-14 million and is expected to be completed over the remainder of operations.
Contributions
We did not make any voluntary cash contributions to our Union Hourly defined benefit pension plan in2023. During the three and nine months ended September 30, 2022. There2023, we recorded $1.5 million and $8.9 million in severance and other employee-related costs and zero and $2.7 million in other restructuring charges, including asset write-offs associated with our reorganization, respectively.
Restructuring Reserves
Restructuring reserves which are no required cash contributionsincluded within Accrued expenses on the condensed consolidated balance sheets were $3.2 million and $0.5 million at September 30, 2023 and December 31, 2022, respectively.
Other (income) charges, net
Alternative Fatty Acid Transition
In April 2023, we began the feedstock transition of our Crossett, Arkansas manufacturing plant (“Crossett”). This transition will convert Crossett from a CTO based feedstock production facility to produce fatty acids from alternative plant based feedstocks. To initiate this transition, we halted all production at Crossett in April.
During the three and nine months ended September 30, 2023, we incurred $11.8 million and $18.4 million in costs, respectively. We expect to incur approximately $20-25 million of expense in 2023, representing non-capital retooling and stranded costs, with modest levels of capital expenditure.
North Charleston Plant Transition
Our North Charleston, South Carolina Performance Chemicals manufacturing plant is co-located with a WestRock Company (“WestRock”) paper mill. WestRock provides certain critical operating services to us including steam, water and wastewater. WestRock also disposes of brine, a by-product resulting from our Union Hourly defined benefit pension planconversion of black liquor soap skimmings into CTO and provides other non-critical services that support our operations. In May 2023, WestRock announced that it will permanently cease operating its North Charleston paper mill by August 31, 2023 and notified us that it is terminating the shared services in 2022, and we currently have no plans to make any voluntary cash contributions in 2022.accordance with our operating agreement.




2221


INGEVITY CORPORATION
Notes to the Condensed Consolidated Financial Statements
September 30, 20222023
(Unaudited)

Note 12: RestructuringWe expect to incur approximately $15-20 million of non-capital transition costs in 2023 as we continue to transition those shared services and Other (Income) Charges, net
Other (income) charges, netminimize disruption to our operations and are continuing to evaluate the future impact. During the three and nine months ended September 30, 2023, we incurred $9.8 million and $12.7 million in costs, respectively.
Business transformation costs
In 2020, weWe embarked upon a business transformation initiative that includes the implementation of an upgraded enterprise resource planning ("ERP") system. This new ERP system will equip our employees with standardized processes and secure integrated technology that enable us to better understand and meet our customers' needs and compete in the marketplace. The implementation of our new ERP is expected to occuroccurred in multiple phases over two years beginning with our pilot deployment which occurred during the first quarter of 2022. This business transformation requires2022 and concluded with our final deployment in the integrationfirst quarter of the new ERP system with multiple new and existing information systems and business processes in order to maintain the accuracy of our books and records and to provide our management team with real-time information important to the operation of our business. Such an implementation initiative is a major financial undertaking and requires substantial time and attention of management and key employees.2023. Costs incurred, during the three and nine months ended September 30, 2022, of $3.32023, totaled $1.5 million and $10.6$6.7 million, respectively, and during the three and nine months ended September 30, 2021, of $4.12022, totaled $3.3 million and $12.2$10.6 million, respectively, represent costsrespectively. Costs are directly associated with the business transformation initiative that, in accordance with GAAP, cannot be capitalized. Over the course ofWe expect to complete this initiative weby the end of 2023 and anticipate incurring approximately $90-95an additional $1-2 million of total costs, which includes $45-50 million ofin non-capitalizable costs, $12-14 million of which we expect to be incurred in 2022.
Rollforward of Restructuring Reserves
The following table shows a roll forward of restructuring reserves that will result in cash spending.
Balance atChange inCashBalance at
In millions
12/31/2021(1)
ReservePayments
Other(2)
9/30/2022(1)
Restructuring Reserves$0.5 — — — $0.5 
_______________
(1) Included in "Accrued Expenses" on the condensed consolidated balance sheets.
(2) Primarily foreign currency translation adjustments.costs.
Note 13:12: Income Taxes
The effective tax rates, including discrete items, were as follows:
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Effective tax rate (1)
21.3 %53.3 %21.6 %29.8 %
_______________
(1) The decrease in the effective tax rate in the three and nine months ended September 30, 2022 was driven by a one-time legislative tax rate change in 2021.
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Effective tax rate21.5 %21.3 %22.6 %21.6 %
We determine our interim tax provision using an Estimated Annual Effective Tax Rate methodology (“EAETR”). The EAETR is applied to the year-to-date ordinary income, exclusive of discrete items. The tax effects of discrete items are then included to arrive at the total reported interim tax provision.
The determination of the EAETR is based upon a number of estimates, including the estimated annual pre-tax ordinary income in each tax jurisdiction in which we operate. As our projections of ordinary income change throughout the year, the EAETR will change period-to-period. The tax effects of discrete items are recognized in the tax provision in the period they occur. Depending on various factors, such as the item’s significance in relation to total income and the rate of tax applicable in the jurisdiction to which it relates, discrete items in any quarter may materially impact the reported effective tax rate. As a global enterprise, our tax expense may be impacted by changes in tax rates or laws, the finalization of tax audits and reviews, as well as other factors. As such, there may be significant volatility in interim tax provisions.





2322


INGEVITY CORPORATION
Notes to the Condensed Consolidated Financial Statements
September 30, 20222023
(Unaudited)

The below table provides a reconciliation between our reported effective tax rates and the EAETR.
Three Months Ended September 30,Three Months Ended September 30,
2022202120232022
In millions, except percentagesIn millions, except percentagesBefore taxTaxEffective tax rate % impactBefore taxTaxEffective tax rate % impactIn millions, except percentagesBefore taxTaxEffective tax rate % impactBefore taxTaxEffective tax rate % impact
Consolidated operationsConsolidated operations$95.8 $20.4 21.3 %$(9.0)$(4.8)53.3��%Consolidated operations$32.1 $6.9 21.5 %$95.8 $20.4 21.3 %
Discrete items:Discrete items:Discrete items:
Restructuring and other (income) charges, net (1)
Restructuring and other (income) charges, net (1)
1.5 0.4 — — 
Sale of strategic investment (2)
Sale of strategic investment (2)
(0.1)— — — 
Legislative tax rate changes (1)
— — — 0.1 
Litigation verdict charge (2)
— — 85.0 19.7 
Other tax only discrete itemsOther tax only discrete items— (0.3)— 0.5 Other tax only discrete items— 2.3 — (0.3)
Total discrete itemsTotal discrete items— (0.3)85.0 20.3 Total discrete items1.4 2.7 — (0.3)
Consolidated operations, before discrete itemsConsolidated operations, before discrete items$95.8 $20.1 $76.0 $15.5 Consolidated operations, before discrete items$33.5 $9.6 $95.8 $20.1 
EAETR (3)
EAETR (3)
21.0 %20.4 %
EAETR (3)
28.7 %21.0 %
Nine Months Ended September 30,Nine Months Ended September 30,
2022202120232022
In millions, except percentagesIn millions, except percentagesBefore taxTaxEffective tax rate % impactBefore taxTaxEffective tax rate % impactIn millions, except percentagesBefore taxTaxEffective tax rate % impactBefore taxTaxEffective tax rate % impact
Consolidated operationsConsolidated operations$249.9 $53.9 21.6 %$126.5 $37.7 29.8 %Consolidated operations$143.9 $32.5 22.6 %$249.9 $53.9 21.6 %
Discrete items:Discrete items:Discrete items:
Restructuring and other (income) charges, net— — 0.1 — 
Restructuring and other (income) charges, net (1)
Restructuring and other (income) charges, net (1)
8.9 2.1 — — 
Sale of strategic investment (2)
Sale of strategic investment (2)
(19.3)(4.5)— — 
Legislative tax rate changes (1)
— — — (14.6)
Litigation verdict charge (2)
— — 85.0 19.7 
Other tax only discrete itemsOther tax only discrete items— (1.1)— 0.7 Other tax only discrete items— 2.8 — (1.1)
Total discrete itemsTotal discrete items— (1.1)85.1 5.8 Total discrete items(10.4)0.4 — (1.1)
Consolidated operations, before discrete itemsConsolidated operations, before discrete items$249.9 $52.8 $211.6 $43.5 Consolidated operations, before discrete items$133.5 $32.9 $249.9 $52.8 
EAETR (3)
EAETR (3)
21.1 %20.6 %
EAETR (3)
24.6 %21.1 %
_______________
(1) Legislative tax rate changes in 2021, enacted in the United Kingdom ("UK"), resulted in discrete tax expense of $14.6 million related to the revaluation of our net deferred tax liability associated with our UK operations. The corporate tax rate in the UK will increase from 19.0% to 25.0% on April 1, 2023.See Note 11 for further information.
(2) Refer toSee Note 144 for additionalfurther information.
(3) Increase in EAETR for the three and nine months ended September 30, 2022,2023, as compared to September 30, 2021,2022, is due to an overall change in the mix of forecasted earnings in various tax jurisdictions with varying rates, a significant decrease in the foreign derived intangible income benefit, and the corporate tax rate in the UK increasing from 19% to 25% on April 1, 2023. Furthermore, changes in estimates used in the EAETR during the third quarter of 2023 as well as ancompared to the second quarter of 2023 attributed to the increase in foreign earnings deemed taxable in the U.S.EAETR during the three months ended September 30, 2023.
At September 30, 20222023 and December 31, 2021,2022, we had deferred tax assets of $9.2$10.3 million and $8.8$9.2 million, respectively, resulting from certain historical net operating losses from our BrazilianBrazil and ChineseChina operations and U.S. state tax credits for which a valuation allowance has been established. The ultimate realization of these deferred tax assets depends on the generation of future taxable income during the periods in which these net operating losses and tax credits are available to be used. In evaluating the realizability of these deferred tax assets, we consider projected future taxable income and tax planning strategies in making our assessment. As of September 30, 2022,2023, we cannot objectively assert that these deferred tax assets are more likely than not to be realized and therefore we have maintained a valuation allowance. We intend to continue maintaining a valuation allowance on these deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances. A release of all or a portion of the valuation allowance could be possible, if we determine that sufficient positive evidence becomes available to allow us to reach a conclusion that the valuation allowance will no longer be needed. A release of the valuation allowance would result in the recognition of certain deferred tax assets and a reduction to income tax




24


INGEVITY CORPORATION
Notes to the Condensed Consolidated Financial Statements
September 30, 2022
(Unaudited)

expense for the period the release is recorded. However, the exact timing and amount of the valuation allowance release are subject to change based on the level of profitability that we are able to actually achieve.


23


INGEVITY CORPORATION
Notes to the Condensed Consolidated Financial Statements
September 30, 2023
(Unaudited)

Undistributed earnings of Ingevity’s foreign subsidiaries have historically been indefinitely reinvested offshore. Management does not currently expect to repatriate cash earnings from our foreign operations to fund U.S. operations; however, during the second quarter of 2023, we determined that the current year's earnings of our China subsidiaries are no longer permanently reinvested. No deferred tax liability was recorded as a result of this change in our assertion, as the impacts will be captured in the year current earnings are distributed.
Note 14:13: Commitments and Contingencies
Legal Proceedings
On July 19, 2018, we filed suit against BASF Corporation (“BASF”) in the United States District Court for the District of Delaware (the “Delaware Proceeding”) alleging BASF infringed Ingevity’s patent covering canister systems used in the control of automotive gasoline vapor emissions (U.S. Patent No. RE38,844) (the “844 Patent”). On February 14, 2019, BASF asserted counterclaims against us in the Delaware Proceeding, alleging two claims for violations of U.S. antitrust law (one for exclusive dealing and the other for tying) as well as a claim for tortious interference with an alleged prospective business relationship between BASF and a BASF customer (the “BASF Counterclaims”). The BASF Counterclaims relate to our enforcement of the 844 Patent and our entry into several supply agreements with customers of itsour fuel vapor canister honeycombs. The U.S. District Court dismissed our patent infringement claims on November 18, 2020, and the case proceeded to trial on the BASF Counterclaims in September 2021.
On September 15, 2021, a jury in the Delaware Proceeding issued a verdict in favor of BASF on the BASF Counterclaims and awarded BASF damages of approximately $28.3 million, which will be trebled under U.S. antitrust law to approximately $85.0 million whenmillion. On May 18, 2023, the court enters judgment.in the Delaware Proceeding entered judgment on the jury’s verdict, which commenced the post-trial briefing stage. In addition, BASF may seek pre- and post-judgmentis seeking pre-judgment interest and has indicated it will seek attorneys’ fees and costs in amounts that they will have to support at a future date. Unless the judgment is set aside, BASF will be entitled to post-judgment interest pursuant to the rate provided under federal law.
We disagree with the verdict, including the court’s application of the law and we intend to seekentry of judgment, and are seeking judgment as a matter of law, or a new trial in the alternative, in the Delaware Proceeding post-trial briefing stage and intend to do so on appeal, if necessary. In addition, we intend tomay challenge the U.S. District Court’s November 2020 dismissal of our patent infringement claims against BASF. Ingevity believes in the strength of its intellectual property and the merits of its position and intends to pursue all legal relief available to challenge these outcomes in the Delaware Proceeding. Final resolution of these matters could take up to eighteen30 months.
As of September 30, 2022, there2023, nothing has been no progressoccurred in the post-trial proceedings to warrant any change to our conclusions as disclosed within our 20212022 Annual Report. As such, no changes to our reserve were made during this quarter. The full amount of the trebled jury's verdict, $85.0 million, is accrued in Other liabilities on the Condensed Consolidated Balance Sheetcondensed consolidated balance sheet as of September 30, 2022.2023. In addition, as a result of the judgment being officially entered on May 18, 2023, we have started accruing for the post-judgment interest. The amount of any liability we may ultimately incur related to the Delaware Proceeding could be more or less than the amount accrued.
Note 14: Segment Information
Segment change
As described in Note 1, effective in the first quarter of 2023, we separated our engineered polymers product line from the Performance Chemicals reportable segment into its own reportable segment, Advanced Polymer Technologies. We have recast the data below to reflect the changes in our reportable segments to conform to the current year presentation.




2524


INGEVITY CORPORATION
Notes to the Condensed Consolidated Financial Statements
September 30, 20222023
(Unaudited)

Note 15: Segment Information
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended September 30,Nine Months Ended September 30,
In millionsIn millions2022202120222021In millions2023202220232022
Net salesNet salesNet sales
Performance MaterialsPerformance Materials$144.9 $118.1 $415.7 $384.8 Performance Materials$147.2 $144.9 $433.2 $415.7 
Performance ChemicalsPerformance Chemicals337.1 258.7 869.0 670.7 Performance Chemicals256.0 267.6 725.6 683.9 
Advanced Polymer TechnologiesAdvanced Polymer Technologies42.8 69.5 161.6 185.1 
Total net sales (1)
Total net sales (1)
$482.0 $376.8 $1,284.7 $1,055.5 
Total net sales (1)
$446.0 $482.0 $1,320.4 $1,284.7 
Segment EBITDA (2)
Segment EBITDA (2)
Segment EBITDA (2)
Performance MaterialsPerformance Materials$61.2 $56.4 $194.7 $191.4 Performance Materials$74.5 $61.2 $208.5 $194.7 
Performance ChemicalsPerformance Chemicals77.0 63.1 183.6 151.2 Performance Chemicals24.7 65.7 89.9 158.2 
Advanced Polymer TechnologiesAdvanced Polymer Technologies11.2 11.3 36.6 25.4 
Total Segment EBITDA (2)
Total Segment EBITDA (2)
$138.2 $119.5 $378.3 $342.6 
Total Segment EBITDA (2)
$110.4 $138.2 $335.0 $378.3 
Interest expense, netInterest expense, net(11.5)(11.6)(37.3)(36.2)Interest expense, net(23.1)(11.5)(64.3)(37.3)
(Provision) benefit for income taxes(Provision) benefit for income taxes(20.4)4.8 (53.9)(37.7)(Provision) benefit for income taxes(6.9)(20.4)(32.5)(53.9)
Depreciation and amortization - Performance MaterialsDepreciation and amortization - Performance Materials(8.9)(8.9)(26.7)(26.9)Depreciation and amortization - Performance Materials(9.5)(8.9)(28.7)(26.7)
Depreciation and amortization - Performance ChemicalsDepreciation and amortization - Performance Chemicals(16.8)(18.7)(51.9)(54.8)Depreciation and amortization - Performance Chemicals(17.8)(9.7)(45.6)(29.4)
Restructuring and other income (charges), net (3)
(3.3)(4.1)(10.6)(12.3)
Depreciation and amortization - Advanced Polymer TechnologiesDepreciation and amortization - Advanced Polymer Technologies(7.9)(7.1)(23.4)(22.5)
Restructuring and other income (charges), net (3), (6)
Restructuring and other income (charges), net (3), (6)
(20.0)(3.3)(43.8)(10.6)
Acquisition and other-related costs (4)
Acquisition and other-related costs (4)
(1.9)(0.2)(1.9)(0.9)
Acquisition and other-related costs (4)
(0.1)(1.9)(4.6)(1.9)
Litigation verdict charge (5)
— (85.0)— (85.0)
Gain on sale of strategic investment (5)
Gain on sale of strategic investment (5)
0.1 — 19.3 — 
Net income (loss)Net income (loss)$75.4 $(4.2)$196.0 $88.8 Net income (loss)$25.2 $75.4 $111.4 $196.0 
_______________
(1) Relates to external customers only, all intersegment sales and related profit have been eliminated in consolidation.
(2) Segment EBITDA is the primary measure used by our chief operating decision maker to evaluate the performance of and allocate
resources among our operating segments. Segment EBITDA is defined as segment revenue less segment operating expenses (segment operating expenses consist of costs of sales, selling, general and administrative expenses, research and technical expenses, other (income) expense, net, excluding depreciation and amortization). We have excluded the following items from segment EBITDA: interest expense, net, associated with corporate debt facilities, income taxes, depreciation, amortization, restructuring and other (income) charges, net, acquisition and other related costs, litigation verdict charges, (losses) and gains from the sale of strategic investments, and pension and postretirement settlement and curtailment (income) charges, net.
(3) Income (charges) for all periods presentedFor the three and nine months ended September 30, 2023, charges of $1.3 million and $7.5 million relate to restructuring activitythe Performance Materials segment, charges of $18.3 million and costs associated with$34.0 million relate to the business transformation initiative.Performance Chemicals segment, and charges of $0.4 million and $2.3 million relate to the Advanced Polymer Technologies segment, respectively. For the three and nine months ended September 30, 2022, charges of $1.1 million and $3.7 million relate to the Performance Materials segment, and charges of $2.2$1.7 million and $6.9$5.4 million relate to the Performance Chemicals segment, respectively. For the three and nine months ended September 30, 2021, charges of $1.1$0.5 million and $4.5$1.5 million relate to the Performance Materials segment and charges of $3.0 million and $7.8 million relate to the Performance ChemicalsAdvanced Polymer Technologies segment, respectively. For more detail on the charges incurred see Note 12.11.
(4) For the three and nine months ended September 30, 2023 and September 30, 2022, all acquisition costscharges relate to the acquisition and integration of the Ozark Materials business into ourthe Performance Chemicals segment. For the three and nine months ended September 30, 2021, charges of zero and $0.2 million relate to the acquisition of a strategic investment in the Performance Materials segment and charges of $0.2 million and $0.7 million relate to the integration of the Perstorp Capa business into our Performance Chemicals segment, respectively.more detail see Note 16.
(5) For the three and nine months ended September 30, 2021, litigation verdict charge2023, gain on sale of strategic investment relates to the Performance Materials segment. For more detail see Note 4.
(6) Excludes $4.6 million and $5.6 million of depreciation and amortization for the three and nine months ended September 30, 2023, relating to the alternative feedstock transition and North Charleston plant transition within our Performance Chemicals reportable segment. Refer to Note 1411 for additionalmore information.






2625


INGEVITY CORPORATION
Notes to the Condensed Consolidated Financial Statements
September 30, 20222023
(Unaudited)

Note 16:15: Earnings (Loss) per Share
Basic earnings (loss) per share is computed by dividing net income (loss) for the period by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share is computed by dividing net income (loss) for the period by the weighted average number of common shares and potentially dilutive common shares outstanding for the period. The calculation of diluted net income per share excludes all antidilutive common shares.
Three Months Ended September 30,Nine Months Ended September 30,
In millions, except share and per share data2022202120222021
Net income (loss)$75.4 $(4.2)$196.0 $88.8 
Basic and Diluted earnings (loss) per share
Basic earnings (loss) per share$1.99 $(0.11)$5.10 $2.22 
Diluted earnings (loss) per share1.98 (0.11)5.06 2.21 
Shares (in thousands)
Weighted average number of common shares outstanding - Basic37,839 39,537 38,451 39,993 
Weighted average additional shares assuming conversion of potential common shares (1)
295 — 269 245 
Shares - diluted basis (1)
38,134 39,537 38,720 40,238 
_______________
(1) For the three months ended September 30, 2021, all potentially dilutive common shares were excluded from the calculation of diluted earnings (loss) per share as we had a net loss for the period.
Three Months Ended September 30,Nine Months Ended September 30,
In millions, except share and per share data2023202220232022
Net income (loss)$25.2 $75.4 $111.4 $196.0 
Basic and Diluted earnings (loss) per share
Basic earnings (loss) per share$0.70 $1.99 $3.05 $5.10 
Diluted earnings (loss) per share0.69 1.98 3.03 5.06 
Shares (in thousands)
Weighted average number of common shares outstanding - Basic36,225 37,839 36,585 38,451 
Weighted average additional shares assuming conversion of potential common shares162 295 226 269 
Shares - diluted basis36,387 38,134 36,811 38,720 
The following average number of potential common shares were antidilutive, and therefore, were not included in the diluted earnings per share calculation:
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended September 30,Nine Months Ended September 30,
In thousandsIn thousands2022202120222021In thousands2023202220232022
Average number of potential common shares - antidilutiveAverage number of potential common shares - antidilutive209 375 204 200 Average number of potential common shares - antidilutive491 209 400 204 
Note 16: Acquisitions
Ozark Materials
On October 3, 2022, we completed our acquisition of Ozark Materials, pursuant to that certain Equity Purchase Agreement (the “Purchase Agreement”), by and among Ingevity, Ozark Materials and Ozark Holdings, Inc. (“Seller”). In accordance with the Purchase Agreement, we acquired from Seller, all of the issued and outstanding limited liability company membership interests of Ozark Materials for a purchase price of $325.0 million, subject to customary adjustments for working capital, indebtedness and transaction expenses (the "Acquisition"). The Acquisition has been integrated into our Performance Chemicals segment and is included within our pavement technologies product line. We funded the Acquisition through a combination of borrowings under our existing credit facilities and cash on hand.
The Acquisition is not considered significant to our condensed consolidated financial statements for the three and nine months ended September 30, 2023; therefore, proforma results of operations have not been presented.
Purchase Price Allocation
Ozark Materials is considered an acquisition of a business under business combinations accounting guidance, and therefore we applied acquisition accounting. Acquisition accounting requires, among other things, that assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date. The aggregate purchase price noted above was allocated to the major categories of assets acquired and liabilities assumed based upon their estimated fair values at the acquisition date using primarily Level 2 and Level 3 inputs. These Level 2 and Level 3 valuation inputs include an estimate of future cash flows and discount rates. Additionally, estimated fair values are based, in part, upon outside appraisals for certain assets, including specifically-identified intangible assets. See Note 4 for an additional explanation of Level 2 and Level 3 inputs. We finalized the purchase price allocation in the third quarter of 2023.



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INGEVITY CORPORATION
Notes to the Condensed Consolidated Financial Statements
September 30, 2023
(Unaudited)

Purchase Price Allocation
In millionsWeighted Average Amortization PeriodFair Value
Cash and cash equivalents$8.0 
Accounts receivable28.7 
Inventories (1)
48.4 
Prepaid and other current assets2.0 
Property, plant and equipment43.1 
Intangible assets (2)
Brands10 years15.0 
Customer relationships15 years88.6 
Developed technology7 years23.5 
Goodwill (3)
109.8 
Other assets, including operating leases0.1 
Total fair value of assets acquired$367.2 
Accounts payable13.9 
Other liabilities2.6 
Total fair value of liabilities assumed$16.5 
Less: Cash acquired(8.0)
Plus: Amounts due from Seller1.8 
Total cash paid, less cash and restricted cash acquired$344.5 
_______________
(1) Fair value of finished goods inventories acquired included a step-up in the value of $1.8 million, of which zero and $0.8 million was expensed in the three and nine months ended September 30, 2023. The expense is included within "Cost of sales" on the consolidated statement of operations. Inventories are accounted for on a FIFO basis of accounting.
(2) The aggregate amortization expense was $2.7 million and $8.2 million for the three and nine months ended September 30, 2023. Estimated amortization expense is as follows: $2.7 million for the remainder of 2023, 2024 - $10.9 million, 2025 - $10.7 million, 2026 - $10.0 million, and 2027 - $10.0 million.
(3) Goodwill largely consists of expected cost synergies and economies of scale resulting from the business combination. We expect the full amount to be deductible for income tax purposes. This acquired goodwill has been included within our Performance Chemicals reporting unit. See Note 7 for further information regarding our allocation of goodwill among our reporting units.
Acquisition and other-related costs
Costs incurred to complete and integrate acquisitions and other strategic investments are expensed as incurred on our consolidated statement of operations. The following table summarizes the costs incurred associated with these combined activities.
Three Months Ended September 30,Nine Months Ended September 30,
In millions2023202220232022
Legal and professional service fees$0.1 $1.9 $3.8 $1.9 
  Acquisition-related costs0.1 1.9 3.8 1.9 
Inventory fair value step-up amortization (1)
— — 0.8 — 
  Acquisition and other-related costs$0.1 $1.9 $4.6 $1.9 
_______________
(1) Included within "Cost of sales" on the consolidated statement of operations.


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INGEVITY CORPORATION
Notes to the Condensed Consolidated Financial Statements
September 30, 2023
(Unaudited)

Note 17: Subsequent Events
Ozark Materials Acquisition
On October 3, 2022,November 1, 2023, we completedannounced a number of strategic actions designed to further reposition our previously announced acquisition of Ozark Materials, LLC (“OM”),Performance Chemicals segment to improve the profitability and Ozark Logistics, LLC (“OL” and, together with OM, “Ozark Materials”), pursuant to that certain Equity Purchase Agreement (the “Purchase Agreement”), by and among Ingevity, Ozark Materials and Ozark Holdings, Inc. (“Seller”). In accordance withreduce the Purchase Agreement, we acquired from Seller, allcyclicality of the issuedPerformance Chemicals business and outstanding limited liability company membership intereststhe Company as a whole. These actions increase our focus on growing our most profitable Performance Chemicals product lines such as Pavement Technologies and accelerate our transition to non-CTO-based fatty acids. The announced actions include the permanent closure of Ozark Materials for aour Performance Chemicals manufacturing plant located in DeRidder, Louisiana (the “DeRidder Plant”) as well as additional corporate and business cost reduction actions. We expect to close the DeRidder Plant by the end of the first half of 2024.
We expect to incur aggregate charges of approximately $280.0 million associated with these actions, consisting of approximately $180.0 million in asset-related charges, approximately $15.0 million in severance and other employee-related costs, and approximately $85.0 million in other restructuring costs including decommissioning, dismantling and removal charges, and contract termination costs. We expect approximately $180.0 million of the total charges to be non-cash. The majority of non-cash charges and 50-60 percent of cash charges are expected to be recognized by the end of the first half of 2024. Excluded from the $280.0 million of estimated aggregate charges are potential costs we may incur associated with excess volumes of CTO that we may be obligated to purchase pricethrough October 2025 under existing long-term CTO supply contracts. We intend to manage our CTO inventories by reselling excess volumes in the open market which, based on what we believe to be market rates today, may result in $30.0 million to $80.0 million of $325 million,incremental losses in 2024.
The charges we currently expect to incur in connection with these actions are subject to customary adjustments for working capital, indebtednessa number of assumptions and transaction expenses (the "Acquisition").risks, and actual results may differ materially. We funded the Acquisition throughmay also incur other material charges not currently contemplated due to events that may occur as a combinationresult of, borrowings under our existing credit facilities and cash on hand.
Ozark Materials is considered a business under business combinations accounting guidance, and therefore we will apply acquisition accounting to the Acquisition. Acquisition accounting requires, among other things, that acquired assets and assumed liabilities be recognized at their fair values as of the acquisition date. The net assets of the Acquisition will be recorded at the estimated fair values, primarily using Level 2 and Level 3 inputs. Our preliminary purchase price valuation is stillor in process and we will include the required details in our future filings once complete.connection with, these actions.




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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Introduction
Management’s discussion and analysis of Ingevity Corporation's (Ingevity, the company, we, us, or our) financial condition and results of operations (“MD&A”) is provided as a supplement to the Condensed Consolidated Financial Statements and related notes included elsewhere herein to help provide an understanding of our financial condition, changes in financial condition and results of our operations. The following discussion should be read in conjunction with Ingevity’s consolidated financial statements as of and for the year ended December 31, 20212022 filed on February 24, 202228, 2023 with the Securities and Exchange Commission ("SEC") as part of the Company's Annual Reporting on Form 10-K ("20212022 Annual Report") and the unaudited interim Condensed Consolidated Financial Statements and notes to the unaudited interim Condensed Consolidated Financial Statements, which are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP").
Investors are cautioned that the forward-looking statements contained in this section and other parts of this Quarterly Report on Form 10-Q involve both risk and uncertainty. Several important factors could cause actual results to differ materially from those anticipated by these statements. Many of these statements are macroeconomic in nature and are, therefore, beyond the control of management. See "Cautionary Statements About Forward-Looking Statements" below and at the beginning of our 20212022 Annual Report.
Cautionary Statements About Forward-Looking Statements
This section and other parts of this Quarterly Report on Form 10-Q contain forward-looking statements, within the meaning of the Securities Exchange Act of 1934, as amended, (the "Exchange Act") and the Private Securities Litigation Reform Act of 1995 that reflect our current expectations, beliefs, plans or forecasts with respect to, among other things, future events and financial performance. Forward-looking statements are often characterized by words or phrases such as “may,” “will,” “could,” “should,” “would,” “anticipate,” “estimate,” “expect,” “outlook,” “project,” “intend,” “plan,” “believe,” “target,” “prospects,” “potential” and “forecast,” and other words, terms and phrases of similar meaning. Forward-looking statements involve estimates, expectations, projections, goals, forecasts, assumptions, risks and uncertainties. We caution readers that a forward-looking statement is not a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking statement. Such risks and uncertainties include, among others, those discussed in Part I, Item 1A. Risk Factors of our 20212022 Annual Report, as well as in our unaudited Condensed Consolidated Financial Statements, related notes, and the other information appearing elsewhere in this report and our other filings with the SEC. We do not intend, and undertake no obligation, to update any of our forward-looking statements after the date of this report to reflect actual results or future events or circumstances. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. In addition to any such risks, uncertainties and other factors discussed elsewhere herein, risks, uncertainties and other factors that could cause or contribute to actual results differing materially from those expressed or implied by the forward-looking statements include, but are not limited to the following:
adverse effectsthe anticipated timing, charges and costs of the closure of our DeRidder, Louisiana plant may differ materially from our estimates due to events that may occur as a result of, or in connection with, the novel coronavirus ("COVID-19") pandemic;plant closure;
we may be adversely affected by general global economic, geopolitical, and financial conditions beyond our control, including inflation and the Russia-Ukraine war in Ukraine;and the Israel-Gaza war;
we are exposed to risks related to our international sales and operations;
adverse conditions in the automotive market have and may continue to negatively impact demand for our automotive carbon products;
we face competition from substitute products, new technologies, and new or emerging competitors;
if more stringent air quality standards worldwide are not adopted, our growth could be impacted;
we may be adversely affected by a decrease in government infrastructure spending;
adverse conditions in cyclical end markets may continue to adversely affect demand for our products;
our Performance Chemicals segment is highly dependent on crude tall oil ("CTO") which is limited in supply and subject to price increases that we may be unablehave negatively impacted the business and will continue to do so if our ability to pass through;through such price increases remains limited;




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lack of access to sufficient CTO and other raw materials upon which we depend would impact our ability to produce our products;
the inability to make or effectively integrate future acquisitions and other investments may negatively affect our results;
we are dependent upon third parties for the provision of certain critical operating services at several of our facilities;
adverse effects of the novel coronavirus ("COVID-19") pandemic;
we may continue to be adversely affected by disruptions in our supply chain;
the occurrence of natural disasters and extreme weather or other unanticipated problem such as labor difficulties (including work stoppages), equipment failure, or unscheduled maintenance and repair, which could result in operational disruptions of varied duration;
we are dependent upon attracting and retaining key personnel;
we are dependent on certain large customers;
from time to time, we are and may be engaged in legal actions associated with our intellectual property rights;
if we are unable to protect our intellectual property and other proprietary information, we may lose significant competitive advantage;
information technology security breaches and other disruptions;
complications with the design or implementation of our new enterprise resource planning system;system, including higher than anticipated associated costs;
government policies and regulations, including, but not limited to, those affecting the environment, climate change, tax policies, tariffs, and the chemicals industry; and
losses due to lawsuits arising out of environmental damage or personal injuries associated with chemical or other manufacturing processes.
Overview
Ingevity is a leading global manufacturer of specialty chemicals and high performance activated carbon materials. We provide innovative solutions to meet our customers’ unique and demanding requirements through proprietary formulated products. We report in two businessthree reportable segments, Performance Materials, and Performance Chemicals, and Advanced Polymer Technologies.
Recent Developments
WarPerformance Chemicals Repositioning
On November 1, 2023, we announced a number of strategic actions designed to further reposition our Performance Chemicals segment to improve the profitability and reduce the cyclicality of the Performance Chemicals business and the Company as a whole. These actions increase our focus on growing our most profitable Performance Chemicals businesses such as Pavement Technologies and accelerate our transition to non-CTO-based fatty acids. The announced actions include the permanent closure of our Performance Chemicals manufacturing plant located in UkraineDeRidder, Louisiana (the “DeRidder Plant”) as well as additional corporate and business cost reduction actions. We expect to close the DeRidder Plant by the end of the first half of 2024.
We expect to incur aggregate charges of approximately $280.0 million associated with these actions, consisting of approximately $180.0 million in asset-related charges, approximately $15.0 million in severance and other employee-related costs, and approximately $85.0 million in other restructuring costs including decommissioning, dismantling and removal charges, and contract termination costs. We expect approximately $180.0 million of the total charges to be non-cash. The majority of non-cash charges and 50-60 percent of cash charges are monitoring the ongoing war between Russia and Ukraine, including the related sanctions imposed on Russia and Belarusexpected to be recognized by the U.S.end of the first half of 2024.
The charges we currently expect to incur in connection with these actions are subject to a number of assumptions and risks, and actual results may differ materially. We may also incur other countries. We havematerial charges not seen and do not foresee any direct material adverse effects on our business. However,currently contemplated due to events that may occur as a result of, the geopolitical disruption, we have experienced volatilityor in energy prices, specifically natural gas, but the impact has not been and is not expected to be material to our results.connection with, these actions.
Ozark MaterialsSupply Agreements


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On October 3, 2022, we completed our previously announced acquisition of Ozark Materials, LLC (“OM”November 1, 2023, Ingevity Corporation (the “Company”), and Ozark Logistics,WestRock Shared Services, LLC (“OL” and together with OM, “Ozark Materials”WestRock MWV, LLC, on behalf of the affiliates of WestRock Company (“WestRock”), pursuantentered into Amendment No.1 (the “Amendment”) to that certain Equity PurchaseAmended and Restated Crude Tall Oil and Black Liquor Soap Skimmings Agreement, (the “Purchase Agreement”),dated as of March 20, 2023, by and among Ingevity, Ozark Materialsbetween the Company and Ozark Holdings, Inc. (“Seller”). Refer to Note 17 to the Condensed Consolidated Financial Statements included within Part I. Item 1 of this Form 10-Q for more information.WestRock.
Strategic InvestmentPerformance Chemicals Reporting Unit
During the third quarter of 2022,2023, continued reduction in demand in industrial end markets has negatively impacted our ability to offset elevated crude tall oil (“CTO”) costs through pricing actions within our Performance Chemicals’ reportable segment, particularly in our industrial specialties product line. CTO is essential to our industrial specialties and some of our pavement technologies product lines within our Performance Chemicals reportable segment. As a result, we acquiredconcluded that a strategic investmenttriggering event occurred for our Performance Chemicals’ reporting unit, and we performed an analysis of the reporting unit’s goodwill, intangibles and long-lived assets as of September 1, 2023. Our analysis included significant assumptions such as: revenue growth rate, Earnings before Interest, Taxes, Depreciation and Amortization ("EBITDA") margin, and discount rate which are judgmental and variations in a privately-held company for $60.0 million,any assumptions could result in materially different calculations of fair value. Based on our analysis, the headroom associated with our Performance Chemicals’ reporting unit, which is accounted for underdefined as the measurement alternative method. There were no adjustments topercentage difference between the fair value of a reporting unit and its carrying value, of the measurement alternative method investment foris currently 19 percent. Consequently, we concluded that there was no impairment or observable price changes for the periodquarter ended September 30, 2022. Refer to Note 4 to the Condensed Consolidated Financial Statements included within Part I. Item 1 of this Form 10-Q for more information.2023.
Net Investment Hedge
Performance Chemicals Reporting Unit - Headroom Sensitivity Analysis
Reporting Unit Fair ValueRevenue Growth Rate Declines by 100 BpsEBITDA Margin Declines by 100 BpsDiscount Rate increases by 100 Bps
Headroom19%14%14%7%
During the third quarter of 2022, we terminated our fixed-to-fixed cross currency interest rate swaps, accounted for as net investment hedges, and received proceeds of $14.7 million. Refer to Note 8 to the Condensed Consolidated Financial Statements included within Part I. Item 1 of this Form 10-Q for more information.





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Results of Operations
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended September 30,Nine Months Ended September 30,
In millionsIn millions2022202120222021In millions2023202220232022
Net salesNet sales$482.0 $376.8 $1,284.7 $1,055.5 Net sales$446.0 $482.0 $1,320.4 $1,284.7 
Cost of salesCost of sales305.7 235.0 820.0 647.7 Cost of sales317.0 305.7 908.0 820.0 
Gross profitGross profit176.3 141.8 464.7 407.8 Gross profit129.0 176.3 412.4 464.7 
Selling, general, and administrative expensesSelling, general, and administrative expenses54.2 43.5 142.9 131.0 Selling, general, and administrative expenses40.0 54.2 140.3 142.9 
Research and technical expensesResearch and technical expenses7.6 6.8 23.1 19.3 Research and technical expenses7.8 7.6 24.6 23.1 
Restructuring and other (income) charges, netRestructuring and other (income) charges, net3.3 4.1 10.6 12.3 Restructuring and other (income) charges, net24.6 3.3 49.4 10.6 
Acquisition-related costsAcquisition-related costs1.9 0.2 1.9 0.9 Acquisition-related costs0.1 1.9 3.8 1.9 
Other (income) expense, netOther (income) expense, net2.0 84.6 (1.0)81.6 Other (income) expense, net1.3 2.0 (13.9)(1.0)
Interest expense, netInterest expense, net11.5 11.6 37.3 36.2 Interest expense, net23.1 11.5 64.3 37.3 
Income (loss) before income taxesIncome (loss) before income taxes95.8 (9.0)249.9 126.5 Income (loss) before income taxes32.1 95.8 143.9 249.9 
Provision (benefit) for income taxesProvision (benefit) for income taxes20.4 (4.8)53.9 37.7 Provision (benefit) for income taxes6.9 20.4 32.5 53.9 
Net income (loss)Net income (loss)$75.4 $(4.2)$196.0 $88.8 Net income (loss)$25.2 $75.4 $111.4 $196.0 
Net sales and Gross profit
The table below shows the 20222023 Net sales and variances from 2021:2022:
Change vs. prior year
In millionsPrior year Net salesVolumePrice/MixCurrency effectCurrent year Net sales
Three months ended September 30, 2022 vs. 2021$376.8 26.9 87.6 (9.3)$482.0 
Nine months ended September 30, 2022 vs. 2021$1,055.5 20.9 227.9 (19.6)$1,284.7 
Change vs. prior year
In millionsPrior year Net salesVolumePrice/MixCurrency effectCurrent year Net Sales
Three months ended September 30, 2023 vs. 2022$482.0 (72.1)38.3 (2.2)$446.0 
Nine months ended September 30, 2023 vs. 2022$1,284.7 (97.1)142.4 (9.6)$1,320.4 
Three Months Ended September 30, 20222023 vs. 20212022
The sales decrease of $36.0 million in 2023 was driven by unfavorable volume decline of $72.1 million (15 percent) primarily within our Performance Chemicals and Advanced Polymers Technologies reportable segments and unfavorable foreign currency exchange of $2.2 million (zero percent). These unfavorable impacts to Net sales were partially offset by favorable price/mix of $38.3 million (eight percent) across all segments.
Nine Months Ended September 30, 2023 vs. 2022
The sales increase of $105.2$35.7 million in 2022 was driven by favorable pricing and sales composition (mix) of $87.6 million (23 percent) and favorable volume of $26.9 million (seven percent), partially offset by unfavorable foreign currency exchange of $9.3 million (two percent), driven by the strengthening of the U.S. dollar against the euro, Chinese renminbi and GBP.
Gross profit increase of $34.5 million2023 was driven by favorable price/mix of $87.2$142.4 million favorable(11 percent) across all segments, partially offset by unfavorable volume decline, particularly in our Performance Chemicals' Industrial Specialties product line and Advanced Polymer Technologies, for a combined impact of $97.1 million (eight percent), and unfavorable foreign currency exchange of $9.6 million (one percent).


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Gross Profit
Three Months Ended September 30, 2023 vs. 2022
Gross profit decrease of $47.3 million was driven by increased manufacturing costs of $42.6 million due to raw material inflationary pressures, primarily CTO within our industrial specialties product line, and unfavorable sales volume of $16.2$36.7 million, primarily driven by our Performance Chemicals and Advanced Polymer Technologies reportable segments. The decrease was partially offset by favorable pricing and product mix of $26.9 million, and favorable foreign currency exchange of $0.8 million, partially offset by increased manufacturing costs of $69.7 million due to raw material and energy cost inflationary pressures. Refer to the Segment Operating Results section included within this MD&A for more information on the drivers to the changes in gross profit period over period for both segments.
Nine Months Ended September 30, 2022 vs. 2021
The sales increase of $229.2 million in 2022 was driven by favorable price/mix of $227.9 million (22 percent) and higher sales volumes of $20.9 million (two percent), partially offset by unfavorable foreign currency exchange of $19.6 million (two percent), driven by the strengthening of the U.S. dollar against the euro, Chinese renminbi and GBP.
Gross profit increase of $56.9 million was driven by favorable price/mix improvement of $225.6 million and favorable sales volume of $13.2 million, partially offset by increased manufacturing costs of $179.3 million due to raw material and energy cost inflationary pressures and unfavorable foreign currency exchange of $2.6$5.1 million. Refer to the Segment Operating Results section included within this MD&A for more information on the drivers to the changes in gross profit period over period for bothall segments.

Nine Months Ended September 30, 2023 vs. 2022



30


Gross profit decrease of $52.3 million was driven by increased manufacturing costs of $140.2 million due to raw material inflationary pressures, primarily CTO within our industrial specialties product line in our Performance Chemicals reportable segment, and unfavorable sales volume of $44.3 million. The decrease was partially offset by pricing improvements and favorable mix of $127.4 million primarily driven by our industrial specialties product line, and favorable foreign currency exchange of $4.8 million. Refer to the Segment Operating Results section included within this MD&A for more information on the drivers to the changes in gross profit period over period for all segments.
Selling, general and administrative expenses
Three Months Ended September 30, 20222023 vs. 20212022
Selling, general and administrative expenses ("SG&A") were $54.2$40.0 million (11.2(nine percent of Net sales) and $43.5$54.2 million (11.5(11 percent of Net sales) for the three months ended September 30, 2023 and 2022, and 2021, respectively. The year over year increase of $10.7 million was primarily driven by increased travel and other miscellaneous costs of $5.8 million and increased employee-related costs of $8.8 million, slightly reduced by lower legal spending of $3.9 million. The decrease in SG&A as a percentage of Net sales was driven by higher sales.lower employee-related costs of $12.0 million, and decreased travel and other miscellaneous costs of $5.1 million, partially offset by increased amortization expense of $2.9 million primarily driven by the Ozark Materials, LLC and Ozark Logistics, LLC (collectively, "Ozark Materials") acquisition.
Nine Months Ended September 30, 20222023 vs. 20212022
Selling, general and administrative expenses ("SG&A was $142.9&A") were $140.3 million (11.1(11 percent of Net sales) and $131.0$142.9 million (12.4(11 percent of Net sales) for the nine months ended September 30, 2023 and 2022, and 2021, respectively. The year over year increase of $11.9 million was driven by increased employee-related costs of $7.6 million and increased travel and other miscellaneous costs of $11.7 million, slightly offset by reduced legal costs of $7.4 million. The decrease in SG&A as a percentage of Net sales was unchanged as the impact of increased amortization costs of $9.2 million, primarily driven by higher sales.the Ozark Materials acquisition, was offset by decreased employee-related costs of $7.0 million, and decreased travel and other miscellaneous costs of $4.8 million.
Research and technical expenses
Three Months Ended September 30, 20222023 vs. 2021
Research and technical expenses as a percentage of Net sales decreased to 1.6 percent from 1.8 percent for the three months ended September 30, 2022 and 2021, respectively.
Nine Months Ended September 30, 2022 vs. 2021
Research and technical expenses as a percentage of Net sales remained relatively consistent period over period, at 1.8increasing to 1.7 percent from 1.6 percent for the three months ended September 30, 2023 and 2022, respectively.
Nine Months Ended September 30, 2023 vs. 2022
Research and technical expenses as a percentage of Net sales remained relatively consistent period over period, increasing to 1.9 percent from 1.8 percent for the nine months ended September 30, 2023 and 2022, and 2021, respectively.


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Restructuring and other (income) charges, net
Three and Nine Months Ended September 30, 20222023 vs. 20212022
Restructuring and other (income) charges, net were $24.6 million and $49.4 million for the three and nine months ended September 30, 2023, respectively, and $3.3 million and $10.6 million for the three and nine months ended September 30, 2022, respectively,respectively. Severance and $4.1other employee-related costs increased $1.5 million and $12.3$8.9 million, and other restructuring charges increased zero and $2.7 million, respectively. Additionally, alternative fatty acid transition costs increased $11.8 million and $18.4 million, and costs associated with the North Charleston plant transition increased $9.8 million and $12.7 million, both for the three and nine months ended September 30, 2021,2023, respectively. The increase was partially offset by a $1.8 million and $3.9 million decrease related to our business transformation initiative for the three and nine months ended September 30, 2023, respectively. See Note 12 to11 within the Condensed Consolidated Financial Statements included within Part I. Item 1 of this Form 10-Q for more information.
Acquisition-related costs
Three and Nine Months Ended September 30, 20222023 vs. 20212022
Acquisition-related costs were $0.1 million and $3.8 million for the three and nine months ended September 30, 2023, respectively, and $1.9 million for the three and nine months ended September 30, 2022, respectively, and $0.2 million and $0.9 million for the three and nine months ended September 30, 2021, respectively. For the three and nine months ended September 30, 2022, allAll charges relate to the integration of the Ozark Materials business into our Performance Chemicals segment. ForSee Note 16 within the three and nine months ended September 30, 2021, charges of zero and $0.2 million relate to the acquisition of a strategic investment in the Performance Materials segment, respectively, and charges of $0.2 million and $0.7 million relate to the integration of Perstorp Holding AB's caprolactone business into our Performance Chemicals segment, respectively.




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Condensed Consolidated Financial Statements for more information.
Other (income) expense, net
Three and Nine Months Ended September 30, 20222023 vs. 20212022
Three Months Ended September 30,Nine Months Ended September 30,
In millions2022202120222021
Foreign currency exchange (income) loss$1.2 $0.2 $1.6 $2.1 
Litigation verdict charge (1)
— 85.0 — 85.0 
Other (income) expense, net0.8 (0.6)(2.6)(5.5)
Total Other (income) expense, net$2.0 $84.6 $(1.0)$81.6 
_______________
(1) Refer to Note 14 within the Condensed Consolidated Financial Statements for more information.

Three Months Ended September 30,Nine Months Ended September 30,
In millions2023202220232022
Foreign currency exchange (income) loss$1.7 $1.2 $4.4 $1.6 
Gain on sale of strategic investment(0.1)— (19.3)— 
Other (income) expense, net(0.3)0.8 1.0 (2.6)
Total Other (income) expense, net$1.3 $2.0 $(13.9)$(1.0)
Interest expense, net
Three and Nine Months Ended September 30, 20222023 vs. 20212022
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended September 30,Nine Months Ended September 30,
In millionsIn millions2022202120222021In millions2023202220232022
Finance lease obligationsFinance lease obligations$1.8 $1.8 $5.5 $5.5 Finance lease obligations$1.9 $1.8 $5.5 $5.5 
Revolving credit and term loan facilities (1)
Revolving credit and term loan facilities (1)
5.4 2.0 11.5 6.2 
Revolving credit and term loan facilities (1)
15.0 5.4 43.2 11.5 
Senior note (1)
5.6 9.1 27.5 27.5 
Senior notes (1)
Senior notes (1)
5.6 5.6 16.8 27.5 
Litigation related interest expense (2)
Litigation related interest expense (2)
1.3 — 1.7 — 
Other interest (income) expense, netOther interest (income) expense, net(1.3)(1.3)(7.2)(3.0)Other interest (income) expense, net(0.7)(1.3)(2.9)(7.2)
Total Interest expense, netTotal Interest expense, net$11.5 $11.6 $37.3 $36.2 Total Interest expense, net$23.1 $11.5 $64.3 $37.3 
_______________
(1) See Note 9 within the Condensed Consolidated Financial Statements for more information.
(2) See Note 13 within the Condensed Consolidated Financial Statements for more information.


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Provision (benefit) for income taxes
Three and Nine Months Ended September 30, 20222023 vs. 20212022
For the three months ended September 30, 20222023 and 2021,2022, our effective tax rate was 21.321.5 percent and 53.3 percent, respectively. Excluding discrete items, the effective tax rate was 21.0 percent and 20.4 percent, respectively. An explanation of the change in the effective tax rate is presented in Note 13 to the Condensed Consolidated Financial Statements included within Part I. Item 1 of this Form 10-Q.
For the nine months ended September 30, 2022 and 2021, our effective tax rate was 21.6 percent and 29.821.3 percent, respectively. Excluding discrete items, the effective rate was 21.128.7 percent and 20.6compared to 21.0 percent respectively. An explanation of the change in the effective tax rate is presented inthree months ended September 30, 2023 and 2022, respectively. See Note 13 to12 within the Condensed Consolidated Financial Statements includedfor more information.
For the nine months ended September 30, 2023 and 2022, our effective tax rate was 22.6 percent and 21.6 percent, respectively. Excluding discrete items, the effective rate was 24.6 percent compared to 21.1 percent in the nine months ended September 30, 2023 and 2022, respectively. See Note 12 within Part I. Item 1 of this Form 10-Q.

the Condensed Consolidated Financial Statements for more information.




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Segment Operating Results
In addition to the information discussed above, the following sections discuss the results of operations for bothall of Ingevity's segments. Our segments are (i) Performance Materials, and (ii) Performance Chemicals.Chemicals and (iii) Advanced Polymer Technologies. Segment Earnings before Interest, Taxes, Depreciation and Amortization ("EBITDA") is the primary measure used by the Company's chief operating decision maker to evaluate the performance of and allocate resources among our operating segments. Segment EBITDA is defined as segment revenue less segment operating expenses (segment operating expenses consist of costs of sales, selling, general and administrative expenses, research and technical expenses, other (income) expense, net, excluding depreciation and amortization). We have excluded the following items from segment EBITDA: interest expense, net associated with corporate debt facilities, income taxes, depreciation, amortization, restructuring and other (income) charges, net, acquisition and other-related costs, litigation verdict charges, (losses) and gains from the sale of strategic investments, and pension and postretirement settlement and curtailment (income) charges.
In general, the accounting policies of the segments are the same as those described in the Summary of Significant Accounting Policies in the Annual Consolidated Financial Statements included in our 20212022 Annual Report.
Performance Materials
In millionsThree Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Total Performance Materials - Net sales$144.9 $118.1 $415.7 $384.8 
Segment EBITDA$61.2 $56.4 $194.7 $191.4 
Quarterly Performance Summary
OurSales in our Performance Materials segment experienced robust automotive volume growth from improved semiconductor chip availability across all regions and China automobile production stimulus. Additionally, the segment also recognized volume improvement in process purification products and we were able to increase prices to capture more of the value of our highly differentiated carbon. Slightly offsetting these top line improvements was continued pressure on manufacturing costs from higher raw material input costs and higher logistic costs driven by inflation. The strengthening of the U.S. dollar against the Chinese renminbi and the euro created some headwinds whenincreased compared to the prior year quarter.quarter, mainly due to increased sales of automotive carbon in North America and Asia Pacific. Segment EBITDA growth was driven primarily by product mix and lower SG&A.
In millionsThree Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Total Performance Materials - Net sales$147.2 $144.9 $433.2 $415.7 
Segment EBITDA$74.5 $61.2 $208.5 $194.7 
Net Sales Comparison of Three and Nine Months Ended September 30, 20222023 and September 30, 2021:2022:
Change vs. prior year
Performance Materials (In millions)
Prior year Net salesVolumePrice/MixCurrency effectCurrent year Net sales
Three months ended September 30, 2022 vs. 2021$118.1 27.6 3.6 (4.4)$144.9 
Nine months ended September 30, 2022 vs. 2021$384.8 26.6 10.8 (6.5)$415.7 
Change vs. prior year
Performance Materials (In millions)
Prior year Net salesVolumePrice/MixCurrency effectCurrent year Net sales
Three months ended September 30, 2023 vs. 2022$144.9 (2.4)8.0 (3.3)$147.2 
Nine months ended September 30, 2023 vs. 2022$415.7 3.4 23.4 (9.3)$433.2 
Three Months Ended September 30, 20222023 vs. 20212022
Segment net salessales. The increase of $26.8$2.3 million in 20222023 was driven by higher sales volumes of $27.6 million (23 percent) and favorable price/mix of $3.6$8.0 million (three(six percent), partially offset by unfavorable foreign currency exchange of $4.4$3.3 million (four(two percent) and a volume decrease of $2.4 million (two percent).
Segment EBITDAEBITDA. increased $4.8The increase of $13.3 million due to higherin 2023 was driven by the increase in sales volume of $16.6 million and favorable price/mix of $4.4 million, partially offset by higher manufacturing costs of $11.1 million, unfavorable foreign currency impacts of $2.7 million, and higher spending onas noted above, decreased SG&A and research and technical expenses of $2.4$6.8 million, favorable mix of $3.4 million, decreased manufacturing costs of $2.8 million, and favorable foreign currency exchange of $1.7 million. The increase was partially offset by a volume decrease of $1.4 million.
Nine Months Ended September 30, 20222023 vs. 20212022
Segment net salessales. The increase of $30.9$17.5 million in 20222023 was driven by higher sales volumesfavorable mix of $26.6$23.4 million (seven(six percent) and favorable price/mixa volume increase of $10.8$3.4 million (three(one percent),. The increase was partially offset by unfavorable foreign currency exchange of $6.5$9.3 million (two percent).
Segment EBITDAEBITDA. increased $3.3The increase of $13.8 million due to higherin 2023 was driven by the increase in sales volumes of $14.4 million,as noted above, favorable price/mix of $10.3$16.3 million, and loweringdecreased SG&A and research and technical expenses of $1.2 million, partially offset by higher manufacturing costs of $18.4$7.7 million, and unfavorable foreign currency impactsa volume increase of $4.2 million.




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$2.7 million. The increase was partially offset by increased manufacturing costs of $11.7 million, and unfavorable foreign currency exchange of $1.2 million.
Performance Chemicals
Three Months Ended September 30,Nine Months Ended September 30,
In millions2022202120222021
Net Sales
Pavement Technologies product line$88.3 $73.2 $194.0 $162.4 
Industrial Specialties product line179.3 132.6 489.9 364.7 
Engineered Polymers product line69.5 52.9 185.1 143.6 
Total Performance Chemicals - Net sales$337.1 $258.7 $869.0 $670.7 
Segment EBITDA$77.0 $63.1 $183.6 $151.2 
Quarterly Performance Summary
OurSales in our Performance Chemicals segment saw strong revenue growth versus the prior year’s quarter on continued price improvement and favorable mix upgrade to higher margin products. These price increases were necessary to keep pace with the increases related to energy, raw material, and logistic costs. The strengthening of the U.S. dollar against the euro and GBP created some headwinds on top line growth whendecreased compared to the prior year quarter.quarter, primarily due to lower volume in our industrial specialties product line. The segment EBITDA decline is primarily due to higher raw material costs, specifically CTO.
Our Engineered Polymers business grew 31.4 percentPavement technologies sales increased as a result of higher pricing in legacy pavement applications as well as the business increased pricing to offset inflationary costs for raw materials, logistics, and particularly energy which has continued to rise throughout 2022. Volume improvementacquisition of Ozark Materials.
Industrial specialties sales decrease was driven by stronger sales in automotive applications and footwear and apparel, mainly in Asia and Europe. These positive volume improvements were slightly offset by a decline in the Americas where some polyurethane customers experienced availability issues with key raw materials.
Industrial Specialties sales increased 35.2 percent driven by price improvements with strong performancedeclines attributed primarily to weak demand across allend markets, particularly adhesives and printing inks. In addition, we began to see weakness in oilfield and adhesives primary end-use markets. Price improvements were supplemented by a favorable mix shift to higher-value derivative products as volumes were negatively impacted by raw material availability.with lower drilling activity during the quarter.
Pavement Technologies sales increased 20.6 percent due primarily to improved volumes and price increases. Volume growth was driven by technology adoption and highway funding in the United States.
Three Months Ended September 30,Nine Months Ended September 30,
In millions2023202220232022
Total Performance Chemicals - Net sales$256.0 $267.6 $725.6 $683.9 
Pavement Technologies product line129.7 88.3 316.4 194.0 
Industrial Specialties product line126.3 179.3 409.2 489.9 
Segment EBITDA$24.7 $65.7 $89.9 $158.2 
Net Sales Comparison of Three and Nine Months Ended September 30, 20222023 and September 30, 2021:2022:
Change vs. prior year
Performance Chemicals (In millions)
Prior year Net salesVolumePrice/MixCurrency effectCurrent year Net Sales
Three months ended September 30, 2022 vs. 2021$258.7 (0.7)84.0 (4.9)$337.1 
Nine months ended September 30, 2022 vs. 2021$670.7 (5.7)217.1 (13.1)$869.0 
Change vs. prior year
Performance Chemicals (In millions)
Prior year Net salesVolumePrice/MixCurrency effectCurrent year Net Sales
Three months ended September 30, 2023 vs. 2022$267.6 (38.7)27.0 0.1 $256.0 
Nine months ended September 30, 2023 vs. 2022$683.9 (55.0)97.4 (0.7)$725.6 
Three Months Ended September 30, 20222023 vs. 20212022
Segment net salessales. The decrease of $11.6 million was driven by a volume decrease of $38.7 million (14 percent), primarily in industrial specialties ($65.1 million), partially offset by an increase of $78.4 million reflectsin pavement technologies ($26.4 million), primarily due to Ozark Materials. This decrease was partially offset by favorable pricing and product mix of $84.0$27.0 million (32(10 percent), driven by increases in Industrial Specialtiesindustrial specialties ($62.9 million), Engineered Polymers ($16.3 million), and Pavement Technologies ($4.8 million). Unfavorable volume impacted Net sales by $0.7 million (zero percent), reflecting volume decreases in Industrial Specialties ($15.3 million), partially offset by increases in Pavement Technologies ($10.911.9 million) and Engineered Polymerspavement technologies ($3.715.1 million). Unfavorable foreign currency exchange impacted Net sales by $4.9 million (two percent).
Segment EBITDA increased by $13.9 million due to favorable pricing and product mix of $82.8 million, and favorable foreign currency exchange of $2.9$0.1 million.
Segment EBITDA. The decrease of $41.0 million due to foreign currency denominated manufacturing costs, partially offsetwas driven by higher manufacturing costs of $59.7$47.3 million, higher SG&A expensesprimarily due to CTO, and a volume decrease of $11.7$22.0 million. The decrease was partially offset by favorable mix of $20.2 million, and a decrease in volumelower SG&A of $0.4$8.1 million.
Nine Months Ended September 30, 20222023 vs. 20212022
Segment net salessales. The increase of $198.3$41.7 million was driven by favorable pricing and product mix of $217.1$97.4 million (32(14 percent), attributed to increases in industrial specialties ($70.3 million) and pavement technologies ($27.1 million). This was partially offset by a volume decrease of $55.0 million (eight percent), driven by increasesa decrease in Industrial Specialtiesindustrial specialties ($157.7150.7 million), Engineered Polymerspartially offset by an increase in pavement technologies ($46.595.7 million),.
Segment EBITDA. The decrease of $68.3 million was driven by higher manufacturing costs of $129.0 million, primarily due to CTO, a volume decrease of $28.7 million, and Pavement Technologies ($12.9 million). Unfavorable volume impacted Net saleshigher SG&A of $0.1 million. The decrease was partially offset by $5.7 million (one percent), reflecting decreases infavorable mix of $89.4 million.




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Industrial Specialties ($30.2 million),Advanced Polymer Technologies
Performance Summary
Our Advanced Polymer Technologies segment sales decreased compared to the prior year quarter due to market weakness across the segment's end markets in all regions, partially offset partially by increases in Pavement Technologies ($20.2 million)higher prices. Segment EBITDA was flat, as lower raw material and Engineered Polymers ($4.3 million). Unfavorable foreign currency exchange impacted energy costs offset decreased volume.
In millionsThree Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Total Advanced Polymer Technologies - Net sales$42.8 $69.5 $161.6 $185.1 
Segment EBITDA$11.2 $11.3 $36.6 $25.4 
Net sales by $13.1 million (two percent).Sales Comparison of Three and Nine Months Ended September 30, 2023 and September 30, 2022:
Change vs. prior year
Advanced Polymer Technologies (In millions)
Prior year Net salesVolumePrice/MixCurrency effectCurrent year Net sales
Three months ended September 30, 2023 vs. 2022$69.5 (31.0)3.3 1.0 $42.8 
Nine months ended September 30, 2023 vs. 2022$185.1 (45.5)21.6 0.4 $161.6 
Three Months Ended September 30, 2023 vs. 2022
Segment EBITDAnet sales. increasedThe decrease of $26.7 million in 2023 was driven by $32.4a volume decline of $31.0 million due to(45 percent), partially offset by favorable pricing and product mix of $215.3$3.3 million (five percent), and favorable foreign currency exchange of $2.6$1.0 million (one percent).
Segment EBITDA. The slight decrease of $0.1 million was driven by a volume decline of $13.3 million, and unfavorable foreign currency exchange of $1.0 million, mostly offset by decreased manufacturing costs, primarily energy costs, of $7.3 million, decreased SG&A and research and technical expenses of $3.6 million, and favorable mix of $3.3 million.
Nine Months Ended September 30, 2023 vs. 2022
Segment net sales. The decrease of $23.5 million in 2023 was driven by a volume decline of $45.5 million (25 percent), partially offset by favorable mix of $21.6 million (12 percent), and favorable foreign currency exchange of $0.4 million (zero percent).
Segment EBITDA. The increase of $11.2 million was driven by favorable mix of $21.7 million, decreased manufacturing costs of $8.3 million, and decreased SG&A and research and technical expenses of $2.9 million, partially offset by higher manufacturing costsa volume decline of $162.2 million, higher SG&A of $22.1$18.3 million and a decrease in volumeunfavorable foreign currency exchange of $1.2$3.4 million.
Use of Non-GAAP Financial Measure - Adjusted EBITDA
Ingevity has presented the financial measure, Adjusted EBITDA, defined below, which has not been prepared in accordance with GAAP and has provided a reconciliation to net income, the most directly comparable financial measure calculated in accordance with GAAP. Adjusted EBITDA is not meant to be considered in isolation nor as a substitute for the most directly comparable financial measure calculated in accordance with GAAP. Adjusted EBITDA is utilized by management as a measure of profitability.
We believe this non-GAAP financial measure provides management as well as investors, potential investors, securities analysts and others with useful information to evaluate the performance of the business, because such measure, when viewed together with our financial results computed in accordance with GAAP, provides a more complete understanding of the factors and trends affecting our historical financial performance and projected future results. We believe Adjusted EBITDA is a useful measure because it excludes the effects of financing and investment activities as well as non-operating activities.
Adjusted EBITDA is defined as net income (loss) plus provision (benefit) for income taxes, interest expense, net, depreciation, amortization, restructuring and other (income) charges, net, acquisition and other-related costs, litigation verdict charges, (losses) and gains from the sale of strategic investments, and pension and postretirement settlement and curtailment (income) charges, net.


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This non-GAAP measure is not intended to replace the presentation of financial results in accordance with GAAP and investors should consider the limitations associated with these non-GAAP measures, including the potential lack of comparability of these measures from one company to another. A reconciliation of Adjusted EBITDA to net income is set forth within this section.
Reconciliation of Net Income (Loss) to Adjusted EBITDA
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended September 30,Nine Months Ended September 30,
In millionsIn millions2022202120222021In millions2023202220232022
Net income (loss) (GAAP)
Net income (loss) (GAAP)
$75.4 $(4.2)$196.0 $88.8 
Net income (loss) (GAAP)
$25.2 $75.4 $111.4 $196.0 
Interest expense, netInterest expense, net11.5 11.6 37.3 36.2 Interest expense, net23.1 11.5 64.3 37.3 
Provision (benefit) for income taxesProvision (benefit) for income taxes20.4 (4.8)53.9 37.7 Provision (benefit) for income taxes6.9 20.4 32.5 53.9 
Depreciation and amortization - Performance MaterialsDepreciation and amortization - Performance Materials8.9 8.9 26.7 26.9 Depreciation and amortization - Performance Materials9.5 8.9 28.7 26.7 
Depreciation and amortization - Performance ChemicalsDepreciation and amortization - Performance Chemicals16.8 18.7 51.9 54.8 Depreciation and amortization - Performance Chemicals17.8 9.7 45.6 29.4 
Restructuring and other (income) charges, net3.3 4.1 10.6 12.3 
Depreciation and amortization - Advanced Polymer TechnologiesDepreciation and amortization - Advanced Polymer Technologies7.9 7.1 23.4 22.5 
Restructuring and other (income) charges, net (1)
Restructuring and other (income) charges, net (1)
20.0 3.3 43.8 10.6 
Gain on sale of strategic investmentGain on sale of strategic investment(0.1)— (19.3)— 
Acquisition and other-related costsAcquisition and other-related costs1.9 0.2 1.9 0.9 Acquisition and other-related costs0.1 1.9 4.6 1.9 
Litigation verdict charge— 85.0 — 85.0 
Adjusted EBITDA (Non-GAAP)
Adjusted EBITDA (Non-GAAP)
$138.2 $119.5 $378.3 $342.6 
Adjusted EBITDA (Non-GAAP)
$110.4 $138.2 $335.0 $378.3 
_______________
(1) Excludes $4.6 million and $5.6 million of Depreciation and amortization for the three and nine months ended September 30, 2023, relating to the alternative feedstock transition and North Charleston plant transition within our Performance Chemicals reportable segment. Refer to Note 11 for more information.
Adjusted EBITDA
Three and Nine Months Ended September 30, 20222023 vs. 20212022
The factors that impacted adjusted EBITDA period to period are the same factors that affected earnings discussed in the Results of Operations and Segment Operating Results sections included within this MD&A.
Current Full Year Company Outlook vs. Prior Year
Net sales are expected to be between $1.6 billion and $1.7 billion for the full year 2023. We expect improvement in global automobile production over prior year, which will support growth in our Performance Materials reportable segment. In our Performance Chemicals reportable segment we expect growth from the pavement technologies product line with the inclusion of our Ozark Materials acquisition and continued geographic expansion in our legacy business, partially offset by volume pressure within the industrial specialties product line, primarily in rosin-based products, as well as other industrial end markets. Our Advanced Polymer Technologies reportable segment is expected to see growth in the automotive end market, however, we expect pressure in all other end markets.
Adjusted EBITDA is expected to be between $375 million to $390 million for the full year 2023. We expect EBITDA growth for our Performance Materials segment as volumes shift to higher margin automotive carbon due to improved global automotive production. For Advanced Polymer Technologies, we anticipate improved margins on a combination of pricing and lower input costs. In Performance Chemicals, we expect a significant increase in the cost of CTO, a primary raw material, partially offset by continued growth in the pavement technologies product line.




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Current Company Outlook
For Performance Chemicals revenue, we expect to recognize favorable price improvements across the segment as we work to offset inflation in energy, raw material, and logistic costs. We expect continued volume growth in the Pavement Technologies and Engineered Polymers’ business. Performance Materials will see moderate growth as we expect to benefit from some recovery of auto production.
Adjusted EBITDA is expected to grow versus 2021 mainly driven by our Performance Chemicals segment, where continued profitable growth in all businesses is expected to be partially offset by inflationary costs of energy, logistics, and primary raw materials. Additionally, we expect our Performance Materials segment results to be similar to 2021 as U.S., Chinese, Canadian, and European vehicle production continues to be negatively impacted by global supply chain disruption. These assumptions assume that 2022 will continue to be impacted by global logistical headwinds, geopolitical uncertainty, significant cost inflation, and supply chain disruptions.
A reconciliation of net income to adjusted EBITDA as projected for 20222023 is not provided. Ingevity does not forecast net income as it cannot, without unreasonable effort, estimate or predict with certainty various components of net income. These components, net of tax, include further restructuring and other income (charges), net; additional acquisition and other-related costs; litigation verdict charges; (losses) and gains from the sale of strategic investments; additional pension and postretirement settlement and curtailment (income) charges; and revisions due to legislative tax rate changes. Additionally, discrete tax items could drive variability in our projected effective tax rate. All of these components could significantly impact such financial measures. Further, in the future, other items with similar characteristics to those currently included inwithin adjusted EBITDA, that have a similar impact on the comparability of periods, and which are not known at this time, may exist and impact adjusted EBITDA.




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Liquidity and Capital Resources
The primary source of liquidity for our business is the cash flow provided by operating activities. We expect our cash flow provided by operations combined with cash on hand and available capacity under our revolving credit facility to be sufficient to fund our planned operations and meet our interest and other contractual obligations for at least the next twelve months. As of September 30, 2022,2023, our undrawn capacity under our revolving credit facility was $488.7$172.7 million. Over the next twelve months, we expect to fund the following: interest payments, capital expenditures, expenditures related to our business transformation initiative, debt principal repayments, purchases pursuant to our stock repurchase program (and related excise tax payments), income tax payments, and to incur additional spending associated withrestructuring activities such as our Performance Materials' intellectual property litigation.alternative feedstock transition, North Charleston plant transition, and the actions announced in the fourth quarter of 2023 as further described Note 17 within the condensed consolidated financial statements. In addition, we may also evaluate and consider strategic acquisitions, joint ventures, or other transactions to create stockholder value and enhance financial performance. In connection with such transactions, or to fund other anticipated uses of cash, we may modify our existing revolving credit facility, redeem all or part of our outstanding senior note,notes, seek additional debt financing, issue equity securities, or some combination thereof.
Cash and cash equivalents totaled $72.3$84.5 million at September 30, 2022.2023. We continuously monitor deposit concentrations and the credit quality of the financial institutions that hold our cash and cash equivalents, as well as the credit quality of our insurance providers, customers, and key suppliers.
Due to the global nature of our operations, a portion of our cash is held outside the U.S. The cash and cash equivalents balance at September 30, 2022,2023, included $57.9$74.3 million held by our foreign subsidiaries. Cash and earnings of our foreign subsidiaries are generally used to finance our foreign operations and their capital expenditures. We believe that our foreign holdings of cash will not have a material adverse impact on our U.S. liquidity. If these earnings were distributed, such amounts would be subject to U.S. federal and state income tax at the statutory rate less the available foreign tax credits, if any, and would potentially be subject to withholding taxes in the various jurisdictions. The potential tax implications of the repatriation of unremitted earnings are driven by facts at the time of distribution, therefore, it is not practicable to estimate the income tax liabilities that might be incurred if such cash and earnings were repatriated to the U.S. Management does not currently expect to repatriate cash earnings from our foreign operations in order to fund U.S. operations.
Accounts Receivable Securitization
On October 2, 2023, we entered into a $100.0 million accounts receivable securitization program with a global financial institution. The program requires that we establish a bankruptcy-remote special purpose entity (“SPE”), wholly owned and fully consolidated by Ingevity Corporation. Trade receivables will be sold to this SPE and held as secured collateral for the borrowings under the program. The borrowings will be presented on our balance sheet as short-term debt, and cash flows will be presented as financing on our cash flow statement.
Other Potential Liquidity Needs
Share Repurchases
On July 25, 2022, our Board of Directors authorized the repurchase of up to $500.0$500 million of our common stock (the "2022 Authorization"), and rescinded the prior outstanding repurchase authorizationauthorizations with respect to the shares that remained unused under the prior authorization. Shares under the 2022 Authorization may be purchased through open market or privately negotiated transactions at the discretion of management based on its evaluation of market prevailing conditions and other factors, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended.
During the three and nine months ended September 30, 2023, we repurchased zero and $92.1 million, inclusive of $0.8 million in excise tax, in common stock, representing zero and 1,269,373 shares of our common stock at a weighted average cost per share of zero and $71.93, respectively. At September 30, 2023, $353.4 million remained unused under our Board-authorized repurchase program.
During the three and nine months ended September 30, 2022, we repurchased $49.3 million and $139.2 million in common stock, representing 697,523 and 2,027,206 shares of our common stock at a weighted average cost per share of $70.75 and $68.68, respectively. At September 30, 2022, $450.7 million remained unused under our 2022 Authorization.
During the three and nine months ended September 30, 2021, we repurchased $32.2 million and $100.3 million in common stock, representing 414,501 and 1,298,167 shares of our common stock at a weighted average cost per share of $77.77 and $77.25, respectively.


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Capital Expenditures
Projected 20222023 capital expenditures are $130 - $150$95-$105 million. We have no material commitments associated with these projected capital expenditures as of September 30, 20222023.





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Cash flow comparison of the Nine Months Ended September 30, 20222023 and 20212022
Nine Months Ended September 30,Nine Months Ended September 30,
In millionsIn millions20222021In millions20232022
Net cash provided by (used in) operating activitiesNet cash provided by (used in) operating activities$214.9 $217.0 Net cash provided by (used in) operating activities$160.5 $214.9 
Net cash provided by (used in) investing activitiesNet cash provided by (used in) investing activities(144.7)(83.4)Net cash provided by (used in) investing activities(56.3)(144.7)
Net cash provided by (used in) financing activitiesNet cash provided by (used in) financing activities(264.9)(120.3)Net cash provided by (used in) financing activities(93.4)(264.9)
Cash flows provided by (used in) operating activities
DuringCash flows provided by (used in) operating activities, which consists of net income (loss) adjusted for non-cash items including the cash impact from changes in operating assets and liabilities (i.e., working capital), totaled $160.5 million for the nine months ended September 30, 2022, cash flow2023.
Cash provided by (used in) operating activities for the nine months ended September 30, 2023 was driven by a net increase in overall working capital of $29.5 million, despite a decrease in trade working capital (accounts receivable, inventory, and accounts payable) of $22.1 million. Cash flow from operations remained relatively consistent when compared to the prior year period. Although net income increased more than $107 million in 2022 when compared to the prior year period, this increase was offsetreduced by an increase in trade working capital, less cash and cash equivalentinterest paid of almost $102 million. Below provides a description of the changes to trade working capital during the first nine months of 2022 (i.e. current assets and current liabilities).
Current Assets and Liabilities
In millionsSeptember 30, 2022December 31, 2021
Cash and cash equivalents$72.3 $275.4 
Accounts receivable, net248.4 161.7 
Inventories, net281.8 241.2 
Prepaid and other current assets42.6 46.6 
Total current assets$645.1 $724.9 
Current assets, less cash and cash equivalents as of September 30, 2022, increased $123.3 million compared to December 31, 2021. Accounts receivable, net increased $86.7$22.0 million due to strong salesrising interest rates and higher selling prices and Inventories, net increased $40.6 million driven by inflationary cost pressures on both input logistic costs as well as higher pricing on raw materials purchases.

In millionsSeptember 30, 2022December 31, 2021
Accounts payable$164.6 $125.8 
Accrued expenses56.9 51.7 
Accrued payroll and employee benefits44.7 48.2 
Current operating lease liabilities16.4 17.4 
Notes payable and current maturities of long-term debt0.9 19.6 
Income taxes payable6.8 6.2 
Total current liabilities$290.3 $268.9 
Current liabilities as of September 30, 2022, increased by $21.4 millionoutstanding borrowings during 2023 when compared to December 31, 2021, due to higher Accounts payable2022, and decreased cash earnings of $38.8 million driven primarily from inflationary cost pressures which resulted in higher input costs and therefore large payable balances. The larger Accounts payable balance$17.6 million. This was partially offset by decreasesa reduction in Notes payable and current maturitiestax payments of long-term debt of $18.7 million andAccrued payroll and employee benefits of $3.5$14.7 million.
Cash flows provided by (used in) investing activities
Cash used byin investing activities in the nine months ended September 30, 2022 and September 30, 20212023 was $144.7$56.3 million and $83.4 million,was primarily driven by capital expenditures.expenditures of $80.6 million, partially offset by the proceeds from the sale of a strategic investment for $31.5 million. In the nine months ended September 30, 2023 and 2022, capital spending included the base maintenance capital supporting ongoing operations and 2021, we acquired strategic investments in privately-held companiesgrowth and cost improvement spending, primarily related to our business transformation initiative (see Note 11 within the Condensed Consolidated Financial Statements for $62.8 million and $16.5 million, respectively.

more information).



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Capital expenditure categoriesCapital expenditure categoriesNine Months Ended September 30,Capital expenditure categoriesNine Months Ended September 30,
In millionsIn millions20222021In millions20232022
MaintenanceMaintenance$45.9 $29.9 Maintenance$44.7 $45.9 
Safety, health and environmentSafety, health and environment10.7 8.7 Safety, health and environment9.4 10.7 
Growth and cost improvementGrowth and cost improvement36.7 27.8 Growth and cost improvement26.5 36.7 
Total capital expendituresTotal capital expenditures$93.3 $66.4 Total capital expenditures$80.6 $93.3 
Cash flows provided by (used in) financing activities
Cash used in financing activities in the nine months ended September 30, 2023, was $93.4 million and was primarily driven by payments on our revolving credit facility of $240.1 million, and the repurchase of common stock of $92.1 million, partially offset by borrowings on our revolving credit facility of $237.1 million.
Cash used in financing activities in the nine months ended September 30, 2022 was $264.9 million. Utilizing excess cash provided by operations we paid down outstanding debt in the amount of$119.1 million and were opportunistic with our share repurchases during the year repurchasing over 2 million shares for a total of $139.2 million.
Cash used in financing activities in the nine months ended September 30, 2021 was $120.3 million and was primarily driven by payments on long-term borrowings of $628.1 million, payments on revolving credit facility of $279.0 million, and the repurchase of common stock of $100.3$139.2 million, and paymentspartially offset by borrowings on long-term borrowingsour revolving credit facility of $18.8$788.0 million.


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New Accounting Guidance
ReferThe Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC" or "Codification") is the sole source of authoritative GAAP other than SEC issued rules and regulations that apply only to Note 2SEC registrants. The FASB issues an Accounting Standards Update ("ASU") to communicate changes to the Condensed Consolidated Financial Statements includedCodification. We consider the applicability and impact of all ASUs. Recently issued ASUs that are not listed within Part I. Item 1 of this Form 10-Q forhave been assessed and determined to be either not applicable or are not expected to have a full description of recent accounting pronouncements includingmaterial impact on the respective expected dates of adoption and expected effects on our Condensed Consolidated Financial Statements.consolidated financial statements.
Critical Accounting Policies and Estimates
Our Condensed Consolidated Financial Statements are prepared in conformity with GAAP. The preparation of our financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. We have described our accounting policies in Note 2 to our consolidated financial statements included in our 20212022 Annual Report. We have reviewed these accounting policies, identifying those that we believe to be critical to the preparation and understanding of our financial statements. Critical accounting policies are central to our presentation of results of operations and financial condition and require management to make estimates and judgments on certain matters. We base our estimates and judgments on historical experience, current conditions and other reasonable factors. For a description of our critical accounting policies and estimates, refer to Part II, Item 7, Critical Accounting Policies and Estimates in our 20212022 Annual Report. Our critical accounting policies have not substantially changed from those described in the 20212022 Annual Report.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Foreign currency exchange rate risk
We have foreign-based operations, primarily in Europe, South America and Asia, which accounted for approximately 2321 percent of our net sales in the first nine months of 2022.2023. We have designated the local currency as the functional currency of our significant operations outside of the U.S. The primary currencies for which we have exchange rate exposure are the U.S. dollar versus the euro, the Japanese yen, the pound sterling, and the Chinese renminbi. In addition, certain of our domestic operations have sales to foreign customers. In the conduct of our foreign operations, we also make inter-company sales. All of this exposes us to the effect of changes in foreign currency exchange rates. Our earnings are therefore subject to change due to fluctuations in foreign currency exchange rates when the earnings in foreign currencies are translated into U.S. dollars. In some cases, to minimize the effects of such fluctuations, we use foreign exchange forward contracts to hedge firm and highly anticipated foreign currency cash flows. Our largest exposures are to the Chinese renminbi and the euro. A hypothetical 10 percent adverse change, excluding the impact of any hedging instruments, in the average Chinese renminbi and euro to U.S. dollar exchange rates during the nine months ended September 30, 2022,2023, would have decreased our net sales and income before interest and income taxes by approximately $15.0$13.2 million or one percent, and $5.9$3.9 million or twoone percent, respectively. Comparatively, a hypothetical 10 percent adverse change, excluding the impact of any hedging instruments, in the average Chinese renminbi and euro to U.S. dollar exchange rates during the nine months ended September 30, 2021,2022, would have decreased our net sales and income before interest and income taxes by approximately $15.6$15.0 million or one percent, and $5.9 million or two percent, and $6.9 million or five percent, respectively.




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Interest rate risk
As of September 30, 2022,2023, approximately $509$827.0 million of our borrowings include a variable interest rate component. As a result, we are subject to interest rate risk with respect to such floating-rate debt. A hypothetical 100 basis point increase in the variable interest rate component of our borrowings as offor the nine months ended September 30, 20222023, would have increased our annual interest expense by approximately $5.1$8.3 million or 10ten percent. Comparatively, a 100 basis point increase in the variable interest rate component of our borrowings as offor the nine months ended September 30, 20212022, would have increased our interest expense by approximately $3.3$5.1 million or seventen percent.
DuringCommodity price risk
A portion of our manufacturing costs includes purchased raw materials, which are commodities whose prices fluctuate as market supply and demand fundamentals change. Accordingly, product margins and the year, we had floating-to-fixed interest rate swapslevel of our profitability tend to fluctuate with a combined notional amountthe changes in these commodity prices.


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Crude tall oil price risk
Our results of $166.2 millionoperations are directly affected by the cost of our raw materials, particularly CTO, which represented approximately 25 percent of our consolidated cost of sales for the nine months ended September 30, 2023. Comparatively, CTO represented approximately 13 percent of our consolidated cost of sales for the nine months ended September 30, 2022. Pricing for CTO is driven by the limited supply of the product and competing demands for its use, both of which drive pressure on its price. Our gross profit and margins have been and could continue to manage the variability of cash flowsbe adversely affected by increases in the interest rate payments associated withcost of CTO if we are unable to pass the increases on to our existing LIBOR-based interest payments, effectively converting $166.2 million of our floating rate debt to a fixed rate. Per the terms of these instruments, we received floating rate interest payments based upon three-month U.S. dollar LIBOR and in return were obligated to pay interest at a fixed rate of 3.79 percent until July 2023. Due to the repayment of our term loan (refer to Note 9 to the Condensed Consolidated Financial Statements included within Part I. Item 1 of this Form 10-Q for more information),customers. Based on average pricing during the second quarternine months ended September 30, 2023, a hypothetical unhedged, unfavorable 10 percent increase in the market price for CTO would have increased our cost of 2022,sales for the nine months ended September 30, 2023, by approximately $22 million or two percent, which we terminated these interest rate swap instruments. Upon termination ofmay not have been able to pass on to our customers. Comparatively, based on average pricing during the interest rate swap instruments, we reclassified a $1.7 million gain from AOCI into Interest expense, net on the condensed consolidated statement of operations. The fair value of outstanding interest rate instruments at nine months ended September 30, 2022, and December 31, 2021 was an asset (liability) a hypothetical unhedged, unfavorable 10 percent increase in the market price for CTO would have increased our cost of zero and $(4.0)sales for the nine months ended September 30, 2022, by approximately $10 million, respectively. or one percent.
Other market risks
Information about our other remaining market risks for the period ended September 30, 20222023, does not differ materially from that discussed under Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk of our 20212022 Annual Report.
ITEM 4.    CONTROLS AND PROCEDURES
a)    Evaluation of Disclosure Controls and Procedures 
Ingevity maintains a system of disclosure controls and procedures designed to give reasonable assurance that information required to be disclosed in Ingevity's reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. These controls and procedures also give reasonable assurance that information required to be disclosed in such reports is accumulated and communicated to management to allow timely decisions regarding required disclosures.
As of September 30, 2022,2023, Ingevity's Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), together with management, conducted an evaluation of the effectiveness of Ingevity's disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Based on that evaluation, the CEO and CFO concluded that these disclosure controls and procedures are effective at the reasonable assurance level described above.
b)    Changes in Internal Control over Financial Reporting 
ThereWe have implemented a new global enterprise resource planning (“ERP”) system, which has replaced our prior operating and financial systems. The implementation began with our pilot deployment in the first quarter of 2022, followed by our second deployment in the fourth quarter of 2022. The final phase of our ERP implementation occurred in early 2023. We have implemented updates and changes to our processes and related control activities as a result of this implementation and have evaluated the operating effectiveness of related key controls.
Except as described above, there have been no changechanges in Ingevity's internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the quarter ended September 30, 20222023 that has materially affected, or isare reasonably likely to materially affect, Ingevity's internal control over financial reporting.
We are implementing a new global enterprise resource planning (“ERP”) system, which will replace our existing operating and financial systems. The implementation began with our pilot deployment in the first quarter of 2022 and is expected to occur in multiple phases over the next year. Currently, we have had no changes in our internal controls over financial reporting with respect to this implementation, however, as the implementation progresses, we will give appropriate consideration to whether any process changes necessitate changes in the design of and testing for effectiveness of internal controls over financial reporting.




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PART II.  OTHER INFORMATION
ITEM 1.    LEGAL PROCEEDINGS
Information regarding certain of these matters is set forth below and in Note 1413 – Commitments and Contingencies towithin the Condensed Consolidated Financial Statements included within Part I. Item 1 of this Form 10-Q.Statements.
ITEM 1A.    RISK FACTORS 
Part I, Item 1A, Risk Factors of our 20212022 Annual Report sets forth information relating to important risks and uncertainties that could materially adversely affect the Company’s business, financial condition and operating results.
There Except as set forth below, there have been no material changes in Ingevity's risk factors disclosed in Part I, Item 1A, Risk Factors of our 20212022 Annual Report.Report for the quarter ended September 30, 2023.
There may be negative impacts to our business arising out of the closure of our plant in DeRidder, Louisiana.
On November 1, 2023, we announced our plan to permanently close our plant in DeRidder, Louisiana (the “DeRidder Plant”). The anticipated timing, charges, and costs of the closure of the DeRidder Plant could materially differ from our estimates if the plant closure results in adverse legal or regulatory actions, if personnel required to effect the shutdown become unavailable, or we are affected by other factors not currently contemplated. As a result of the Deridder Plant closing and reduced CTO refining capacity, we expect to have CTO inventory available for sale. Depending on the then current market price for CTO at the time of such sales, we expect to have to sell the CTO at a loss, which may adversely affect our financial condition and results of operations.
The closure of WestRock’s paper mill in North Charleston may negatively impact our production, financial condition, and results of operations.

On May 2, 2023, WestRock Company (“WestRock”) announced that it will permanently cease operating its paper mill in North Charleston, South Carolina and notified Ingevity that it is terminating the Reciprocal Plant Operating Agreement between WestRock Charleston Kraft LLC and Ingevity South Carolina, LLC dated as of July 1, 2008, as amended (the “RPOA”), effective as of August 31, 2023. WestRock provides certain critical operating services to us at our plant in North Charleston, South Carolina under the RPOA, including steam, water and wastewater. WestRock also disposes of brine, a by-product resulting from our conversion of black liquor soap skimmings into crude tall oil, and provides other non-critical services that support our operations. We may be required to expend significant capital to provide these services ourselves if we are unable to obtain these services from other third parties on a timely and cost-effective basis. The costs associated with replacing these services may be significant and any delay in our ability to replace these services could result in interruptions to our operations, both of which could adversely affect our financial condition and results of operations.
ITEM 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Issuer Purchases of Equity Securities
The following table summarizes information with respect to the purchase of our common stock during the three months ended September 30, 2022.2023.
PeriodTotal Number of Shares PurchasedAverage Price Paid Per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans or Programs
Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs(1)
July 1-31, 2022— $— — $500,000,000 
August 1-31, 2022304,064 $72.81 304,064 $477,860,691 
September 1-30, 2022393,459 $69.16 393,459 $450,648,949 
Total697,523 697,523 
PeriodTotal Number of Shares PurchasedAverage Price Paid Per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans or Programs
Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs(1)
July 1-31, 2023— $— — $353,384,633 
August 1-31, 2023— $— — $353,384,633 
September 1-30, 2023— $— — $353,384,633 
Total— — 


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_______________
(1) On July 25, 2022, our Board of Directors authorized the repurchase of up to $500.0 million of our common stock and rescinded the prior outstanding repurchase authorizationauthorizations with respect to the shares that remained unused under the prior Authorization.authorization. Our repurchase program does not include a specific timetable or price targets and may be suspended or terminated at any time. Shares under the 2022 Authorization may be purchased through open market or privately negotiated transactions at the discretion of management based on its evaluation of market prevailing conditions and other factors, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended.
ITEM 3.    DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4.    MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5.    OTHER INFORMATION
None.




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ITEM 6.    EXHIBITS
Exhibit No.Description of Exhibit
Equity Purchase Agreement, dated July 31, 2022, by and among Ingevity Corporation, Ozark Holdings, Inc., Ozark Materials, LLC and Ozark Logistics, LLC (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K, as filed with the U.S. Securities and Exchange Commission on August 2, 2022).
Transaction Support Agreement, dated July 31, 2022, by and among Ingevity Corporation, William H. Carr, Jerry N. Carr, Leon M. Gross, III, Ozark Holdings, Inc. and each of the other entities that are signatories thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, as filed with the U.S. Securities and Exchange Commission on August 2, 2022).
Rule 13a-14(a)/15d-14(a) Certification of the Company’s Principal Executive Officer.
Rule 13a-14(a)/15d-14(a) Certification of the Company’s Principal Financial Officer.
Section 1350 Certification of the Company’s Principal Executive Officer. The information contained in this Exhibit shall not be deemed filed with the Securities and Exchange Commission nor incorporated by reference in any registration statement filed by the registrant under the Securities Act of 1933, as amended.
Section 1350 Certification of the Company’s Principal Financial Officer. The information contained in this Exhibit shall not be deemed filed with the Securities and Exchange Commission nor incorporated by reference in any registration statement filed by the registrant under the Securities Act of 1933, as amended.
101Inline XBRL Instance Document and Related Items - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
104The cover page from the Company’s Quarterly Report on Form 10-Q formatted in Inline XBRL (included in Exhibit 101).
______________
*Incorporated by reference

† Indicates that certain information has been omitted pursuant to Item 601(b)(2) of Regulation S-K.
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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
                                
                                
INGEVITY CORPORATION
(Registrant)
By:/S/ MARY DEAN HALL
Mary Dean Hall
Executive Vice President and Chief Financial Officer
(Principal Financial Officer and Duly Authorized Officer)
Date: November 3, 2022

2, 2023
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