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, 2023~~March 31, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-37586

INGEVITY CORPORATION

(Exact name of registrant as specified in its charter)

_____________________________________________________________________

Delaware

47-4027764

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

4920 O'Hear Avenue Suite 400

North Charleston

South Carolina

29405

(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 class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock ($0.01 par value)	NGVT	New 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 filer	☒	Accelerated 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 ~~36,231,266~~36,329,455 shares of common stock, $0.01 par value, outstanding at ~~October 31, 2023.~~April 29, 2024.

Ingevity Corporation

INDEX

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 March 31,
				Three Months Ended March 31,
				Three Months Ended March 31,
In millions, except per share data	In millions, except per share data	2023		2022		2023		2022		In millions, except per share data	2024	2023
Net sales	Net sales	$	446.0	$	482.0	$	1,320.4	$	1,284.7
Cost of sales	Cost of sales	317.0		305.7		908.0		820.0
Gross profit	Gross profit	129.0		176.3		412.4		464.7
Selling, general, and administrative expenses	Selling, general, and administrative expenses	40.0		54.2		140.3		142.9
Research and technical expenses	Research and technical expenses	7.8		7.6		24.6		23.1
Restructuring and other (income) charges, net	Restructuring and other (income) charges, net	24.6		3.3		49.4		10.6
Acquisition-related costs	Acquisition-related costs	0.1		1.9		3.8		1.9
Other (income) expense, net	Other (income) expense, net	1.3		2.0		(13.9)		(1.0)
Interest expense, net	Interest expense, net	23.1		11.5		64.3		37.3
Income (loss) before income taxes	Income (loss) before income taxes	32.1		95.8		143.9		249.9
Provision (benefit) for income taxes	Provision (benefit) for income taxes	6.9		20.4		32.5		53.9
Net income (loss)	Net income (loss)	$	25.2	$	75.4	$	111.4	$	196.0

Per share data	Per share data

Per share data

Per share data
Basic earnings (loss) per share
Basic earnings (loss) per share
Basic earnings (loss) per share	Basic earnings (loss) per share	$	0.70	$	1.99	$	3.05	$	5.10
Diluted earnings (loss) per share	Diluted earnings (loss) per share	0.69		1.98		3.03		5.06

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

INGEVITY CORPORATION

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

Three Months Ended September 30, Nine Months Ended September 30,
In millions 2023 2022 2023 2022
Net income (loss) $ 25.2 $ 75.4 $ 111.4 $ 196.0
Other comprehensive income (loss), net of tax:
Foreign currency adjustments:
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 zero, $1.0, zero, $3.2 — 3.4 — 10.7
Total foreign currency adjustments, net of tax provision (benefit) of zero, $1.0, zero, $3.2 (21.4) (51.9) (6.9) (114.2)
Derivative instruments:
Unrealized 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) 1.1 (2.4) 2.2 (5.7)
Total derivative instruments, net of tax provision (benefit) of $0.2, $0.1, $(0.1), $1.8 1.0 0.3 (0.3) 5.7
Pension & other postretirement benefits:
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 periods — — 0.1 0.1
Other 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) $ 4.8 $ 23.8 $ 104.3 $ 87.6


	Three Months Ended March 31,
In millions		2024		2023
Net income (loss)		$	(56.0)	$	50.7
Other comprehensive income (loss), net of tax:
Foreign currency adjustments:
Foreign currency translation adjustment		(9.1)		10.5

Total foreign currency adjustments, net of tax provision (benefit) of zero and zero		(9.1)		10.5
Derivative instruments:
Unrealized gain (loss), net of tax provision (benefit) of $(0.1) and $(0.7)		(0.3)		(2.3)
Reclassifications of deferred derivative instruments (gain) loss, included in net income (loss), net of tax (provision) benefit of $0.2 and $(0.1)		0.5		(0.2)
Total derivative instruments, net of tax provision (benefit) of $0.1 and $(0.8)		0.2		(2.5)




Other comprehensive income (loss), net of tax provision (benefit) of $0.1 and $(0.8)		(8.9)		8.0
Comprehensive income (loss)		$	(64.9)	$	58.7

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

INGEVITY CORPORATION

Condensed Consolidated Balance Sheets


In millions, except share and par value data	In millions, except share and par value data	September 30, 2023		December 31, 2022		In millions, except share and par value data	March 31, 2024	December 31, 2023
Assets	Assets	(Unaudited)
Cash and cash equivalents	Cash and cash equivalents	$	84.5	$	76.7
Accounts receivable, net of allowance for credit losses of $0.5 - 2023 and $0.5 - 2022		216.6		224.8
Cash and cash equivalents
Cash and cash equivalents
Accounts receivable, net of allowance of $1.2 - 2024 and $1.1 - 2023
Inventories, net	Inventories, net	386.7		335.0
Prepaid and other current assets	Prepaid and other current assets	46.7		42.5
Current assets	Current assets	734.5		679.0
Property, plant, and equipment, net	Property, plant, and equipment, net	800.0		798.6
Operating lease assets, net	Operating lease assets, net	68.7		56.6
Goodwill	Goodwill	520.1		518.5
Other intangibles, net	Other intangibles, net	375.6		404.8
Deferred income taxes	Deferred income taxes	6.1		5.7
Restricted investment, net of allowance for credit losses of $0.3 - 2023 and $0.6 - 2022		80.2		78.0
Restricted investment, net of allowance of $0.1 - 2024 and $0.2 - 2023
Strategic investments	Strategic investments	99.3		109.8
Other assets	Other assets	82.3		85.5
Total Assets	Total Assets	$	2,766.8	$	2,736.5
Liabilities	Liabilities
Accounts payable
Accounts payable
Accounts payable	Accounts payable	$	197.3	$	174.8
Accrued expenses	Accrued expenses	64.5		54.4
Accrued payroll and employee benefits	Accrued payroll and employee benefits	16.5		53.3
Current operating lease liabilities	Current operating lease liabilities	18.4		16.5
Notes payable and current maturities of long-term debt	Notes payable and current maturities of long-term debt	3.0		0.9
Income taxes payable	Income taxes payable	5.4		3.6
Current liabilities	Current liabilities	305.1		303.5
Long-term debt including finance lease obligations	Long-term debt including finance lease obligations	1,469.7		1,472.5
Noncurrent operating lease liabilities	Noncurrent operating lease liabilities	50.6		40.8
Deferred income taxes	Deferred income taxes	105.0		106.5
Other liabilities	Other liabilities	117.7		114.9
Total Liabilities	Total Liabilities	2,048.1		2,038.2
Commitments and contingencies (Note 13)	Commitments and contingencies (Note 13)					Commitments and contingencies (Note 13)
Equity	Equity
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)		0.4		0.4
Preferred stock (par value $0.01 per share; 50,000,000 shares authorized; zero issued and outstanding at 2024 and 2023, respectively)
Preferred stock (par value $0.01 per share; 50,000,000 shares authorized; zero issued and outstanding at 2024 and 2023, respectively)
Preferred stock (par value $0.01 per share; 50,000,000 shares authorized; zero issued and outstanding at 2024 and 2023, respectively)
Common stock (par value $0.01 per share; 300,000,000 shares authorized; 43,585,084 and 43,446,513 issued and 36,324,153 and 36,233,092 outstanding at 2024 and 2023, respectively)
Additional paid-in capital	Additional paid-in capital	162.6		153.0
Retained earnings	Retained earnings	1,119.1		1,007.7
Accumulated other comprehensive income (loss)	Accumulated other comprehensive income (loss)	(53.9)		(46.8)
Treasury stock, common stock, at cost (7,212,449 shares - 2023 and 5,929,183 shares - 2022)		(509.5)		(416.0)
Treasury stock, common stock, at cost (7,260,931 shares - 2024 and 7,213,421 shares - 2023)

Total Equity	Total Equity	718.7		698.3

Total Equity

Total Equity
Total Liabilities and Equity	Total Liabilities and Equity	$	2,766.8	$	2,736.5

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

INGEVITY CORPORATION

Condensed Consolidated Statements of Cash Flows (Unaudited)


				Nine Months Ended September 30,
			Three Months Ended March 31,									Three Months Ended March 31,
In millions	In millions			2023		2022		In millions		2024	2023
Cash provided by (used in) operating activities:	Cash provided by (used in) operating activities:
Net income (loss)	Net income (loss)			$	111.4	$	196.0
Net income (loss)
Net income (loss)
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:	Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:
Depreciation and amortization
Depreciation and amortization
Depreciation and amortization	Depreciation and amortization			97.7		78.6
Non cash operating lease costs	Non cash operating lease costs			13.8		13.5
Deferred income taxes	Deferred income taxes			(2.3)		(2.2)
Disposal/impairment of assets				12.6		1.9

Restructuring and other (income) charges, net
Restructuring and other (income) charges, net
Restructuring and other (income) charges, net
Loss on CTO resales
LIFO reserve	LIFO reserve			62.6		10.7
Share-based compensation	Share-based compensation			8.3		11.1

Gain on sale of strategic investment				(19.3)		—
(Gain) loss on strategic investment
(Gain) loss on strategic investment
(Gain) loss on strategic investment
Other non-cash items	Other non-cash items			14.8		13.3
Changes in operating assets and liabilities, net of effect of acquisitions:	Changes in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable, net
Accounts receivable, net
Accounts receivable, net	Accounts receivable, net			6.1		(98.4)
Inventories, net	Inventories, net			(118.1)		(63.3)
Prepaid and other current assets	Prepaid and other current assets			(5.8)		(2.3)

Accounts payable	Accounts payable			20.6		48.2
Accounts payable
Accounts payable
Accrued expenses	Accrued expenses			9.0		5.3
Accrued payroll and employee benefits	Accrued payroll and employee benefits			(36.7)		(2.7)
Income taxes	Income taxes			4.2		10.1
Pension contribution				(2.0)		—

Restructuring and other spending, net
Restructuring and other spending, net
Restructuring and other spending, net
Operating leases	Operating leases			(16.6)		(15.5)

CTO resales spending, net
CTO resales spending, net
CTO resales spending, net
Changes in other operating assets and liabilities, net	Changes in other operating assets and liabilities, net			0.2		10.6
Net cash provided by (used in) operating activities	Net cash provided by (used in) operating activities			$	160.5	$	214.9
Cash provided by (used in) investing activities:	Cash provided by (used in) investing activities:
Capital expenditures
Capital expenditures
Capital expenditures	Capital expenditures			$	(80.6)	$	(93.3)

Proceeds from sale of strategic investment	Proceeds from sale of strategic investment			31.5		—
Purchase of strategic investment				(2.4)		(62.8)
Net investment hedge settlement				—		14.7

Proceeds from sale of strategic investment

Proceeds from sale of strategic investment

Other investing activities, net

Other investing activities, net

Other investing activities, net	Other investing activities, net			(4.8)		(3.3)
Net cash provided by (used in) investing activities	Net cash provided by (used in) investing activities			$	(56.3)	$	(144.7)
Cash provided by (used in) financing activities:	Cash provided by (used in) financing activities:
Proceeds from revolving credit facility				$	237.1	$	788.0
Proceeds from revolving credit facility and other borrowings
Proceeds from revolving credit facility and other borrowings
Proceeds from revolving credit facility and other borrowings

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)
Payments on revolving credit facility and other borrowings
Payments on revolving credit facility and other borrowings
Payments on revolving credit facility and other borrowings

Finance lease obligations, net	Finance lease obligations, net			(0.6)		(0.4)
Borrowings (repayments) of notes payable and other short-term borrowings, net				2.4		—

Finance lease obligations, net

Finance lease obligations, net

Tax payments related to withholdings on vested equity awards
Tax payments related to withholdings on vested equity awards
Tax payments related to withholdings on vested equity awards	Tax payments related to withholdings on vested equity awards			(4.8)		(2.2)
Proceeds and withholdings from share-based compensation plans, net	Proceeds and withholdings from share-based compensation plans, net			4.7		2.8
Repurchases of common stock under publicly announced plan	Repurchases of common stock under publicly announced plan			(92.1)		(139.2)

Net cash provided by (used in) financing activities

Net cash provided by (used in) financing activities

Net cash provided by (used in) financing activities	Net cash provided by (used in) financing activities			$	(93.4)	$	(264.9)
Increase (decrease) in cash, cash equivalents, and restricted cash	Increase (decrease) in cash, cash equivalents, and restricted cash			10.8		(194.7)
Effect of exchange rate changes on cash	Effect of exchange rate changes on cash			(3.0)		(8.6)
Change in cash, cash equivalents, and restricted cash	Change in cash, cash equivalents, and restricted cash			7.8		(203.3)
Cash, cash equivalents, and restricted cash at beginning of period	Cash, cash equivalents, and restricted cash at beginning of period			77.3		276.1
Cash, cash equivalents, and restricted cash at end of period(1)	Cash, cash equivalents, and restricted cash at end of period(1)			$	85.1	$	72.8

(1)	(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.
(1)
(1)									Includes restricted cash of $16.6 million and $8.2 million and cash and cash equivalents of $88.5 million and $77.9 million at March 31, 2024 and 2023, respectively. Restricted cash is included within "Prepaid and other current assets" and "Restricted investment" within the condensed consolidated balance sheets.

Supplemental cash flow information:	Supplemental cash flow information:
Supplemental cash flow information:
Supplemental cash flow information:
Cash paid for interest, net of capitalized interest
Cash paid for interest, net of capitalized interest
Cash paid for interest, net of capitalized interest	Cash paid for interest, net of capitalized interest			$	57.9	$	35.9
Cash paid for income taxes, net of refunds	Cash paid for income taxes, net of refunds			27.9		42.6
Purchases of property, plant, and equipment in accounts payable	Purchases of property, plant, and equipment in accounts payable			6.1		5.1
Leased assets obtained in exchange for new finance lease liabilities				0.2		—

Leased assets obtained in exchange for new operating lease liabilities	Leased assets obtained in exchange for new operating lease liabilities			26.0		9.2
Leased assets obtained in exchange for new operating lease liabilities
Leased assets obtained in exchange for new operating lease liabilities

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

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

~~September 30, 2023~~March 31, 2024

(Unaudited)

Note 1: Background

Description of Business

Ingevity Corporation ("Ingevity," "the ~~Company,~~company," "we," "us," or "our") provides products and technologies that purify, protect, and enhance the world around us. Through a diverse team of talented and experienced people, we develop, manufacture, and bring to market solutions that are largely renewably sourced and help customers solve complex problems ~~and make~~while making 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 separated our engineered polymers product line from the Performance Chemicals 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 are used in a variety of demanding applications, including adhesives, agrochemicals, asphalt paving, bioplastics, coatings, elastomers, lubricants, pavement markings, ~~publication inks,~~ oil exploration and production and automotive components. We operate in three reportable segments: Performance Materials, Performance Chemicals and Advanced Polymer Technologies.

Basis of Consolidation and Presentation

These unaudited Condensed Consolidated Financial Statements reflect the consolidated operations of the ~~Company~~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, 2023, 2022 ~~2021~~ and ~~2020,~~2021, collectively referred to as the “Annual Consolidated Financial Statements,” included in our Annual Report on Form 10-K for the year ended December 31, ~~2022~~2023 (the ~~"2022~~"2023 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~~present the ~~condensed consolidated~~financial position, results of operations, and cash flows for the interim periods ~~presented.~~presented and contain adequate disclosures to make the information presented not misleading. 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 within 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~~Condensed Consolidated Financial Statements.

Recently Issued Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, “Segment Reporting: Improvements to Reportable Segment Disclosures”, which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The purpose of the amendment is to provide readers of the financial statements with information to better understand an entity’s overall performance and assess potential future cash flows. The guidance is effective beginning with our 2024 fiscal year Form 10-K and will be applied to all prior periods presented in the financial statements. We are currently evaluating the potential impact of adopting this new guidance on our Condensed Consolidated Financial Statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09, “Improvements to Income Tax Disclosures”, which is intended to enhance income tax disclosures around the rate reconciliation and income taxes paid. The purpose of the amendment is to provide readers of the financial statements with information to better assess the differences between the effective tax rate and the statutory tax rate across multiple jurisdictions, enabling them to understand tax implications around operational

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

~~September 30, 2023~~March 31, 2024

(Unaudited)

opportunities and potential future cash flows. The guidance is effective beginning with our 2025 fiscal year. Early adoption is permitted and we are currently evaluating the potential impact of adopting this new guidance on our Condensed Consolidated Financial Statements and related disclosures.

Note 3: ~~Revenues~~Net Sales

Disaggregation of ~~Revenue~~Net Sales

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 March 31,
In millions	In millions	2023		2022		2023		2022		In millions		2024	2023

Performance Materials segment	Performance Materials segment	$	147.2	$	144.9	$	433.2	$	415.7

Performance Materials segment

Performance Materials segment

Performance Chemicals segment	Performance Chemicals segment	$	256.0	$	267.6	$	725.6	$	683.9
Pavement Technologies product line		129.7		88.3		316.4		194.0
Performance Chemicals segment
Performance Chemicals segment
Road Technologies product line
Road Technologies product line
Road Technologies product line
Industrial Specialties product line	Industrial Specialties product line	126.3		179.3		409.2		489.9

Total
Total
Total
Advanced Polymer Technologies segment	Advanced Polymer Technologies segment	$	42.8	$	69.5	$	161.6	$	185.1
Net sales	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 March 31,
				Three Months Ended March 31,
				Three Months Ended March 31,
In millions	In millions	2023		2022		2023		2022		In millions	2024	2023
North America	North America	$	292.4	$	291.9	$	854.3	$	759.7
Asia Pacific	Asia Pacific	92.4		113.6		264.3		297.3
Europe, Middle East, and Africa	Europe, Middle East, and Africa	48.6		62.6		167.6		194.0
South America	South America	12.6		13.9		34.2		33.7
Net sales	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~~we have an enforceable right to payment for performance completed to date 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 Asset
September 30,
In millions 2023 2022
Beginning balance $ 6.4 $ 5.3
Contract asset additions 13.2 14.3
Reclassification to accounts receivable, billed to customers (11.7) (13.4)
Ending balance (1)
$ 7.9 $ 6.2
The following table provides information about contract assets from contracts with certain customers.


	Contract Asset
	March 31,
In millions	2024		2023
Beginning balance	$	11.2	$	6.4
Contract asset additions	8.8		3.9
Reclassification to accounts receivable, billed to customers	(4.1)		(4.1)
Ending balance (1)	$	15.9	$	6.2

______________

(1) Included within "Prepaid and other current assets" on the condensed consolidated balance sheets.

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

March 31, 2024

(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 inon 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

~~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 millions	In millions	Level 1(1)		Level 2(2)		Level 3(3)		Total		In millions	Level 1(1)	Level 2(2)	Level 3(3)	Total
September 30, 2023
March 31, 2024
Assets:	Assets:
Assets:
Assets:

Deferred compensation plan investments (4)

Deferred compensation plan investments (4)

Deferred compensation plan investments (4)	Deferred compensation plan investments (4)	$	2.4	$	—	$	—	$	2.4
Total assets	Total assets	$	2.4	$	—	$	—	$	2.4
Liabilities:	Liabilities:
Deferred compensation arrangement (4)	Deferred compensation arrangement (4)	$	15.1	$	—	$	—	$	15.1
Deferred compensation arrangement (4)
Deferred compensation arrangement (4)

Total liabilities	Total liabilities	$	15.1	$	—	$	—	$	15.1
December 31, 2022

Total liabilities

Total liabilities

In millions
In millions
In millions											Level 1(1)	Level 2(2)	Level 3(3)	Total
December 31, 2023
Assets:	Assets:
Assets:
Assets:

Deferred compensation plan investments (4)

Deferred compensation plan investments (4)

Deferred compensation plan investments (4)	Deferred compensation plan investments (4)	$	1.1	$	—	$	—	$	1.1
Total assets	Total assets	$	1.1	$	—	$	—	$	1.1
Liabilities:	Liabilities:
Deferred compensation arrangement (4)	Deferred compensation arrangement (4)	$	12.5	$	—	$	—	$	12.5
Deferred compensation arrangement (4)
Deferred compensation arrangement (4)

Total liabilities	Total liabilities	$	12.5	$	—	$	—	$	12.5

Total liabilities

Total liabilities

______________

(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.~~securities recognized on our condensed consolidated balance sheets. Both the asset and liability related to investment securities 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~~had company-owned life insurance ~~("COLI")~~ related to the deferred compensation ~~arrangement. COLI is~~arrangement recorded at cash surrender value ~~and included~~ in "Other assets" ~~on the condensed consolidated balance sheets in the amount~~ of ~~$13.8~~$15.8 million and ~~$13.3~~$14.9 million at ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively.

Nonrecurring Fair Value Measurements

There were no nonrecurring fair value measurements inon the condensed consolidated balance ~~sheet~~sheets during the ~~quarters~~periods ended ~~September 30, 2023,~~March 31, 2024, and December 31, ~~2022.~~2023.

Strategic Investments

Equity Method Investments

The aggregate carrying value of all strategic equity method investments totaled ~~$16.1~~$15.7 million and ~~$28.2~~$16.0 million at ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively. During the first quarter of 2023, we sold a strategic equity method investment for ~~$31.5~~$31.4 million, resulting in a ~~$19.3~~$19.2 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~~March 31, 2024 and December 31, ~~2022.~~2023.

~~Measurement Alternative Investments~~

During 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 March 31, 2024 and December 31, 2023, respectively, we had approximately $5.6 million of unfunded commitments, which we anticipate will be paid over a period of 10 years. The ~~aggregate~~ carrying value of ~~all measurement alternative investments where fair value is not readily determinable totaled $83.2~~our strategic equity investment was $1.6 million and ~~$80.8~~$1.7 million at ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively. There were no adjustments to the carrying value of the measurement alternative method investments for impairment or observable price changes for the periods ended September 30, 2023 and December 31, 2022.

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

~~September 30, 2023~~March 31, 2024

(Unaudited)

~~Restricted Investment~~Measurement Alternative Investments

~~At September 30, 2023~~The aggregate carrying value of all measurement alternative investments where fair value is not readily determinable totaled $78.4 million and $83.2 million at March 31, 2024 and December 31, ~~2022,~~2023, respectively. During the period ended March 31, 2024, the company identified a triggering event indicating that an investment being accounted for under the measurement alternative may be impaired. For the three months ended March 31, 2024, the Company recognized an impairment of $4.8 million, recorded in Other (income) expense, net on the condensed consolidated statement of operations.

Restricted Investment

Our restricted investment is a trust managed in order to secure repayment of the finance lease obligation associated with our Performance Materials' Wickliffe, Kentucky, manufacturing site at maturity. The trust, presented as Restricted investment on our condensed consolidated balance sheets, originally purchased long-term bonds that mature through 2026. The principal received at maturity of the bonds, along with interest income that is reinvested in the trust, are expected to be equal to or more than the $80.0 million finance lease obligation that is due in 2027. Because the provisions of the trust provide us the ability, and it is our intent, to hold the investments to maturity, the investments held by the trust are accounted for as held to maturity ("HTM"); therefore, they are held at their amortized cost. The investments held by the trust earn interest at the stated coupon rate of the invested bonds. Interest earned on the investments held by the trust is recognized and presented as interest income on our condensed consolidated statement of operations. As interest from the bonds is received and as bonds mature, any proceeds not reinvested are held in highly liquid securities and treated as restricted cash.

At March 31, 2024 and December 31, 2023, the carrying value of our restricted investment ~~which is accounted for as held-to-maturity ("HTM") and therefore recorded at amortized costs,~~ was ~~$80.2~~$79.8 million and ~~$78.0~~$79.1 million, net of an allowance for credit losses of ~~$0.3~~$0.1 million and ~~$0.6~~$0.2 million, and included restricted cash of ~~$9.1~~$16.0 million and ~~$7.0~~$15.4 million, respectively. The fair value at ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022~~2023 was ~~$76.4~~$77.2 million and ~~$74.7~~$76.7 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 millions AA+ AA AA- A A- 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


	HTM Debt Securities
In millions	AA+		AA-	A	A-	BBB+	Total
March 31, 2024	$	13.3	10.4	13.2	17.0	10.0	$	63.9
December 31, 2023	$	13.3	10.4	13.2	17.0	10.0	$	63.9

Debt and Finance Lease Obligations

At ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, the carrying value of finance lease obligations was ~~$101.3~~$100.8 million and ~~$101.9~~$101.1 million, respectively, and the fair value was ~~$103.6~~$104.3 million and ~~$106.2~~$105.7 million, respectively. The fair value of our finance lease obligation 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,~~value, excluding debt issuance fees, of our variable interest rate ~~long-term~~ debt was ~~$825.0~~$847.6 million and ~~$828.0~~$821.4 million as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively. The carrying value of our variable rate debt is a reasonable estimate of the fair ~~value of the outstanding debt based on the variable interest rate of the debt.~~value.

At ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, the carrying value of our fixed rate debt was $550.0 million and $550.0 million, respectively, and the fair value was ~~$453.9~~$497.3 million and ~~$471.8~~$494.6 million, respectively, based on Level 2 inputs.

~~Note 5: Inventories, net~~
In millions September 30, 2023 December 31, 2022
Raw materials $ 172.9 $ 106.7
Production materials, stores, and supplies 29.9 27.9
Finished and in-process goods 274.3 228.2
Subtotal $ 477.1 $ 362.8
Less: LIFO reserve (1)
(90.4) (27.8)
Inventories, net $ 386.7 $ 335.0

~~__________~~

~~(1)~~ The increase in the LIFO balance in 2023 is primarily attributable to the significant inflation in the price of crude tall oil ("CTO") which is the primary raw material for our Performance Chemicals reportable segment.

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

~~September 30, 2023~~March 31, 2024

(Unaudited)

Note 5: Inventories, net


In millions	March 31, 2024		December 31, 2023
Raw materials	$	129.9	$	128.3
Production materials, stores, and supplies	26.2		26.0
Finished and in-process goods	263.3		255.2
Subtotal	$	419.4	$	409.5
Less: LIFO reserve	(93.9)		(100.7)
Inventories, net	$	325.5	$	308.8

Note 6: Property, Plant, and Equipment, net


In millions	In millions	September 30, 2023		December 31, 2022		In millions	March 31, 2024	December 31, 2023
Machinery and equipment	Machinery and equipment	$	1,218.1	$	1,162.7
Buildings and leasehold improvements	Buildings and leasehold improvements	210.5		200.9
Land and land improvements	Land and land improvements	26.3		24.9
Construction in progress	Construction in progress	110.9		120.9
Total cost	Total cost	$	1,565.8	$	1,509.4
Less: accumulated depreciation		(765.8)		(710.8)
Less: accumulated depreciation (1)
Property, plant, and equipment, net	Property, plant, and equipment, net	$	800.0	$	798.6

_______________

(1) As a result of the Performance Chemicals' repositioning, as further described in Note 11, we accelerated the depreciation of certain property, plant and equipment assets. This resulted in $31.6 million of additional expense for the three months ended March 31, 2024, which is included in Restructuring and other (income) charges, net within the condensed consolidated statement of operations.

Note 7: Goodwill and Other Intangible Assets, net

Goodwill

As 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.


	Reporting Units
In millions	Performance Materials		Performance Chemicals		Advanced Polymer Technologies		Total
December 31, 2023	$	4.3	$	349.4	$	173.8	$	527.5

Foreign currency translation	—		(0.1)		(1.5)		(1.6)
March 31, 2024	$	4.3	$	349.3	$	172.3	$	525.9

~~We have reallocated~~There were no events or circumstances indicating that goodwill might be impaired 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 impairment was identified.March 31, 2024.

Reporting Units
In millions Performance Materials Performance Chemicals Advanced Polymer Technologies Total
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 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 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, 2023. Consequently, we concluded that there was no impairment for the quarter ended September 30, 2023.

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

~~September 30, 2023~~March 31, 2024

(Unaudited)

Other Intangible Assets


In millions	In millions	Customer contracts and relationships		Brands (1)		Developed Technology		Total
In millions
In millions										Customer contracts and relationships	Brands (1)	Developed Technology	Total
Gross Asset Value	Gross Asset Value
December 31, 2022		$	388.5	$	89.2	$	88.5	$	566.2

December 31, 2023
December 31, 2023
December 31, 2023
Retirements (2)
Foreign currency translation	Foreign currency translation	1.4		0.6		0.6		2.6
September 30, 2023		$	389.9	$	89.8	$	89.1	$	568.8
March 31, 2024
Accumulated Amortization	Accumulated Amortization
December 31, 2022		$	(113.8)	$	(23.9)	$	(23.7)	$	(161.4)
Amortization		(20.0)		(4.3)		(7.1)		(31.4)

December 31, 2023
December 31, 2023
December 31, 2023
Amortization (3)
Retirements (2)
Foreign currency translation	Foreign currency translation	(0.3)		—		(0.1)		(0.4)
September 30, 2023		$	(134.1)	$	(28.2)	$	(30.9)	$	(193.2)
March 31, 2024
Other intangibles, net	Other intangibles, net	$	255.8	$	61.6	$	58.2	$	375.6

_______________

(1) Represents trademarks, trade names, and know-how.

(2) As a result of the Performance Chemicals' repositioning, as further described in Note 11, we retired certain customer contract and relationships, and developed technology finite-lived intangible assets.

(3) As a result of the Performance Chemicals' repositioning, as further described in Note 11, we accelerated the amortization of certain customer contract and relationship finite-lived intangible assets. This resulted in $22.1 million of additional expense for the three months ended March 31, 2024, and $37.4 million of additional expenses for the twelve months ended December 31, 2023, which is included in Restructuring and other (income) charges, net within the condensed consolidated statement of operations.

Intangible assets subject to amortization were attributed to our business segments as follows:


In millions	In millions	September 30, 2023		December 31, 2022		In millions	March 31, 2024	December 31, 2023
Performance Materials	Performance Materials	$	1.5	$	1.7
Performance Chemicals	Performance Chemicals	180.7		198.0
Advanced Polymer Technologies	Advanced Polymer Technologies	193.4		205.1
Other intangibles, net	Other intangibles, net	$	375.6	$	404.8

~~Amortization~~The amortization expense related to our intangible assets in the table above is shown in the table below.


	Three Months Ended March 31,
In millions	2024		2023
Selling, general, and administrative expenses	$	9.5	$	10.3
Restructuring and other (income) charges, net (1)	22.1		—
Total amortization expense	$	31.6	$	10.3

_______________

(1) Amounts recorded to Restructuring and other (income) charges, net are not included ~~in Selling, general~~within segment depreciation and administrative expenses on the condensed consolidated statement of operations. During the three and nine months ended September 30, 2023, we recognized amortization expense of $10.5 million and $31.4 million, respectively, and during the three and nine months ended September 30, 2022, we recognized amortization expense of $7.9 million and $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.amortization.

Based on the current carrying values of intangible assets, estimated pre-tax amortization expense for the next five years is as follows: ~~$10.5~~$22.6 million for the remainder of ~~2023,~~ 2024, ~~- $41.6 million,~~ 2025 - ~~$41.3~~$29.8 million, 2026 - ~~$40.6~~$29.1 million, 2027 - $29.1 million, and ~~2027~~2028 - ~~$40.6~~$29.1 million. The estimated pre-tax amortization expense may fluctuate due to changes in foreign currency exchange rates.

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

March 31, 2024

(Unaudited)

Note 8: Financial Instruments and Risk Management

~~Net Investment Hedges~~

~~In the third quarter of 2022, we terminated our fixed-to-fixed cross-currency interest rate swaps, accounted for as net investment hedges.~~ During the three and nine months ended September 30, 2023, we recognized net interest income associated with this financial instrument of zero and zero, respectively, and during 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.

~~INGEVITY CORPORATION~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~September 30, 2023~~

~~(Unaudited)~~

Cash Flow Hedges

Foreign Currency Exchange Risk Management

As of ~~September 30, 2023,~~March 31, 2024, there were ~~$6.0~~$1.9 million open foreign currency derivative contracts. The fair value of the designated foreign currency hedge contracts was a net asset (liability) of ~~$0.1 million and $(0.5) million~~zero at ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively.

Commodity Price Risk Management

As of ~~September 30, 2023,~~March 31, 2024, we had ~~0.8~~1.3 million and 0.1 million mm 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, 2023,~~March 31, 2024, open commodity contracts hedge forecasted transactions until May ~~2024.~~2025. The fair value of the outstanding designated natural gas commodity hedge contracts as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, was a net asset (liability) of ~~$(0.8)~~$(0.5) million and ~~$(1.6)~~$(0.9) million, respectively.

~~Interest Rate Risk Management~~ Effect of Cash Flow and Net Investment Hedge Accounting on AOCI

~~During 2022,~~


















In millions	Amount of Gain (Loss) Recognized in AOCI				Amount of Gain (Loss) Reclassified from AOCI into Net income (loss)				Location of Gain (Loss) Reclassified from AOCI in Net income (loss)
	Three Months Ended March 31,
	2024		2023		2024		2023
Cash flow hedging derivatives
Currency exchange contracts	$	—	$	(0.1)	$	—	$	(0.2)	Net sales
Natural gas contracts	(0.4)		(2.9)		(0.7)		0.5		Cost of sales

Total	$	(0.4)	$	(3.0)	$	(0.7)	$	0.3

Within the next twelve months, we ~~had floating-to-fixed interest rate swaps effectively converting a portion of our floating rate debt~~expect to ~~a fixed rate. In the second quarter of 2022, we terminated the interest rate swap instruments. Upon termination of the interest rate swap instruments, we reclassified a~~reclassify $1.7 million ~~gain~~of net gains from AOCI ~~into Interest expense, net on the condensed consolidated statement of operations.~~to income, before taxes.

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

~~September 30, 2023~~

~~(Unaudited)~~

~~Effect of Cash Flow and Net Investment Hedge Accounting on AOCI~~

In millions Amount of Gain (Loss) Recognized in AOCI Amount of Gain (Loss) Reclassified from AOCI into Net income Location of Gain (Loss) Reclassified from AOCI in Net income
Three Months Ended September 30,
2023 2022 2023 2022
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 AOCI Amount 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,
2023 2022 2023 2022
Net investment hedging derivative
Currency exchange contracts(1)
$ — $ 4.4 $ — $ 0.1 Interest expense, net
Total $ — $ 4.4 $ — $ 0.1
In millions Amount of Gain (Loss) Recognized in AOCI Amount of Gain (Loss) Reclassified from AOCI into Net income Location of Gain (Loss) Reclassified from AOCI in Net income
Nine Months Ended September 30,
2023 2022 2023 2022
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 millions Amount of Gain (Loss) Recognized in AOCI Amount 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,
2023 2022 2023 2022
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 $2.1 million of net gains from AOCI to income, before taxes.~~

~~INGEVITY CORPORATION~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~September 30, 2023~~March 31, 2024

(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, 2023,~~March 31, 2024, or December 31, ~~2022.~~2023.


		September 30, 2023
	March 31, 2024													March 31, 2024
In millions	In millions	Level 1(1)		Level 2(2)		Level 3(3)		Total		In millions	Level 1(1)	Level 2(2)	Level 3(3)		Total
Assets:	Assets:
Currency exchange contracts (4)
Currency exchange contracts (4)
Currency exchange contracts (4)	Currency exchange contracts (4)	$	—	$	0.5	$	—	$	0.5

Total assets	Total assets	$	—	$	0.5	$	—	$	0.5

Total assets

Total assets
Liabilities:	Liabilities:
Natural gas contracts (5)
Natural gas contracts (5)
Natural gas contracts (5)
Currency exchange contracts(5)	Currency exchange contracts(5)	$	—	$	0.4	$	—	$	0.4
Natural gas contracts (5)		—		0.8		—		0.8

Total liabilities	Total liabilities	$	—	$	1.2	$	—	$	1.2

Total liabilities

Total liabilities

December 31, 2023

In millions

Level 1(1)

Level 2(2)

Level 3(3)

Total

Assets:

Currency exchange contracts (4)

December 31, 2022

In millions

Level 1(1)

Level 2(2)

Level 3(3)

Total

Total assets

Liabilities:

Natural gas contracts (5)

—

1.6

—

1.6

Currency exchange contracts (5)

—

0.5

—

0.5

Total liabilities

—

2.1

—

2.1

Total liabilities

__________

(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 "Prepaid and other current assets" on the condensed consolidated balance sheet.

(5) Included within "Accrued expenses" on the condensed consolidated balance sheet.

1514

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

~~September 30, 2023~~March 31, 2024

(Unaudited)

Note 9: Debt, including Finance Lease Obligations

Current and long-term debt including finance lease obligations consisted of the following:


In millions, except percentages	In millions, except percentages	September 30, 2023		December 31, 2022

Revolving Credit Facility and other lines of credit (1)		$	825.0	$	828.0
In millions, except percentages

In millions, except percentages						March 31, 2024	December 31, 2023

Revolving Credit Facility and other lines of credit (1)(2)
Revolving Credit Facility and other lines of credit (1)(2)
Revolving Credit Facility and other lines of credit (1)(2)

3.88% Senior Notes due 2028	3.88% Senior Notes due 2028	550.0		550.0

Finance lease obligations		101.3		101.9

3.88% Senior Notes due 2028

3.88% Senior Notes due 2028

Finance lease obligations (3)
Finance lease obligations (3)
Finance lease obligations (3)
Accounts receivable securitization (4)
Other notes payable	Other notes payable	2.0		—
Total debt including finance lease obligations	Total debt including finance lease obligations	$	1,478.3	$	1,479.9
Less: debt issuance costs	Less: debt issuance costs	5.6		6.5
Total debt, including finance lease obligations, net of debt issuance costs	Total debt, including finance lease obligations, net of debt issuance costs	$	1,472.7	$	1,473.4
Less: debt maturing within one year (2)		3.0		0.9
Less: debt maturing within one year (5)
Long-term debt including finance lease obligations	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~~$2.5 million and ~~$2.3~~$2.5 million and available funds under the facility were ~~$172.7~~$233.5 million and ~~$169.7~~$259.5 million at ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively.

(2) The weighted average interest rate associated with our revolving credit facility was 6.68 percent and 6.36 percent for the period ended March 31, 2024 and December 31, 2023, respectively.

(3) At March 31, 2024 and December 31, 2023, $80.0 million of the finance lease obligation upon maturity will be settled utilizing liquid assets that have been placed into a trust established strictly for this purpose. The trust is presented as Restricted investments on the condensed consolidated balance sheets in the amount of $79.8 million and $79.1 million as of March 31, 2024 and December 31, 2023, respectively. Refer to Note 4, under the section: Restricted Investment, for more information.

(4) The interest rate associated with our accounts receivable securitization program was 5.54 percent and 5.61 percent for the period ended March 31, 2024 and December 31, 2023, respectively.

(5) Debt maturing within one year is included in "Notes payable and current maturities of long-term debt" on the condensed consolidated balance sheets.

Debt Covenants

Our ~~Senior 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 notes 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, 2023.~~March 31, 2024.

The credit agreement governing our revolving credit facility contains 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, 2023~~March 31, 2024 was ~~2.5,~~2.8, and our actual interest coverage for the four consecutive quarters ended ~~September 30, 2023~~March 31, 2024 was ~~6.8.~~5.6. We were in compliance with all covenants under the credit agreement at ~~September 30, 2023.~~March 31, 2024.

1615

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

~~September 30, 2023~~March 31, 2024

(Unaudited)

Note 10: Equity

~~The tables below provide a roll forward of equity.~~


		Common Stock
		Common Stock
		Common Stock

		Common Stock
In millions, shares in thousands	In millions, shares in thousands	Shares	Amount		Additional paid in capital		Retained earnings		Accumulated other comprehensive income (loss)		Treasury stock		Total Equity
Balance at December 31, 2022		43,228	$	0.4	$	153.0	$	1,007.7	$	(46.8)	$	(416.0)	$	698.3
In millions, shares in thousands
In millions, shares in thousands															Shares	Amount	Additional paid in capital	Retained earnings	Accumulated other comprehensive income (loss)	Treasury stock	Total Equity
Balance at December 31, 2023
Net income (loss)	Net income (loss)	—	—		—		50.7		—		—		50.7
Other comprehensive income (loss)	Other comprehensive income (loss)	—	—		—		—		8.0		—		8.0
Common stock issued	Common stock issued	139	—		—		—		—		—		—
Exercise of stock options, net	Exercise of stock options, net	41	—		2.2		—		—		—		2.2
Tax payments related to vested restricted stock units	Tax payments related to vested restricted stock units	—	—		—		—		—		(4.5)		(4.5)
Share repurchase program	Share repurchase program	—	—		—		—		—		(33.4)		(33.4)

Share-based compensation plans	Share-based compensation plans	—	—		3.7		—		—		0.7		4.4
Share-based compensation plans
Share-based compensation plans

Balance at March 31, 2023		43,408	$	0.4	$	158.9	$	1,058.4	$	(38.8)	$	(453.2)	$	725.7
Net income (loss)		—	—		—		35.5		—		—		35.5
Other comprehensive income (loss)		—	—		—		—		5.3		—		5.3
Common stock issued		22	—		—		—		—		—		—
Exercise of stock options, net		—	—		—		—		—		—		—
Tax payments related to vested restricted stock units		—	—		—		—		—		—		—
Share repurchase program		—	—		—		—		—		(58.7)		(58.7)
Balance at March 31, 2024
Balance at March 31, 2024
Balance at March 31, 2024

Share-based compensation plans		—	—		4.7		—		—		1.6		6.3
Balance at June 30, 2023		43,430	$	0.4	$	163.6	$	1,093.9	$	(33.5)	$	(510.3)	$	714.1
Net income (loss)		—	—		—		25.2		—		—		25.2
Other comprehensive income (loss)		—	—		—		—		(20.4)		—		(20.4)
Common stock issued		13	—		—		—		—		—		—
Exercise of stock options, net		—	—		—		—		—		—		—
Tax payments related to vested restricted stock units		—	—		—		—		—		(0.2)		(0.2)
Share repurchase program		—	—		—		—		—		—		—

Share-based compensation plans		—	—		(1.0)		—		—		1.0		—
Balance at September 30, 2023		43,443	$	0.4	$	162.6	$	1,119.1	$	(53.9)	$	(509.5)	$	718.7



	Common Stock
In millions, shares in thousands	Shares	Amount		Additional paid in capital		Retained earnings		Accumulated other comprehensive income (loss)		Treasury stock		Total Equity
Balance at December 31, 2022	43,228	$	0.4	$	153.0	$	1,007.7	$	(46.8)	$	(416.0)	$	698.3
Net income (loss)	—	—		—		50.7		—		—		50.7
Other comprehensive income (loss)	—	—		—		—		8.0		—		8.0
Common stock issued	139	—		—		—		—		—		—
Exercise of stock options, net	41	—		2.2		—		—		—		2.2
Tax payments related to vested restricted stock units	—	—		—		—		—		(4.5)		(4.5)
Share repurchase program	—	—		—		—		—		(33.4)		(33.4)

Share-based compensation plans	—	—		3.7		—		—		0.7		4.4

Balance at March 31, 2023	43,408	$	0.4	$	158.9	$	1,058.4	$	(38.8)	$	(453.2)	$	725.7

1716

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

~~September 30, 2023~~March 31, 2024

(Unaudited)

Common Stock
In millions, shares in thousands Shares Amount Additional paid in capital Retained earnings Accumulated
other
comprehensive
income (loss) Treasury stock Total Equity
Balance at December 31, 2021 43,102 $ 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 issued 42 — — — — — —
Exercise of stock options, net 36 — 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, 2022 43,180 $ 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 issued 18 — — — — — —
Exercise of stock options, net 2 — 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, 2022 43,200 $ 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 8 — — — — (0.2) (0.2)
Exercise of stock options, net 5 — 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, 2022 43,213 $ 0.4 $ 147.5 $ 992.1 $ (95.3) $ (410.8) $ 633.9


Accumulated other comprehensive income (loss)
	Three Months Ended March 31,
In millions		2024		2023
Foreign currency translation
Beginning balance		$	(25.6)	$	(45.8)


Net gains (losses) on foreign currency translation		(9.1)		10.5



Other comprehensive income (loss), net of tax		(9.1)		10.5
Ending balance		$	(34.7)	$	(35.3)

Derivative instruments
Beginning balance		$	(1.6)	$	(1.4)
Gains (losses) on derivative instruments		(0.4)		(3.0)
Less: tax provision (benefit)		(0.1)		(0.7)
Net gains (losses) on derivative instruments		(0.3)		(2.3)
(Gains) losses reclassified to net income		0.7		(0.3)
Less: tax (provision) benefit		0.2		(0.1)
Net (gains) losses reclassified to net income		0.5		(0.2)
Other comprehensive income (loss), net of tax		0.2		(2.5)
Ending balance		$	(1.4)	$	(3.9)

Pension and other postretirement benefits
Beginning balance		$	0.5	$	0.4






Other comprehensive income (loss), net of tax		—		—
Ending balance		$	0.5	$	0.4

Total AOCI ending balance at March 31		$	(35.6)	$	(38.8)

~~INGEVITY CORPORATION~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~September 30, 2023~~

~~(Unaudited)~~

Accumulated other comprehensive income (loss)
Three Months Ended September 30, Nine Months Ended September 30,
In millions 2023 2022 2023 2022
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 income 1.4 (3.1) 2.9 (7.4)
Less: tax (provision) benefit 0.3 (0.7) 0.7 (1.7)
Net (gains) losses reclassified to net income 1.1 (2.4) 2.2 (5.7)
Other comprehensive income (loss), net of tax 1.0 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)

~~INGEVITY CORPORATION~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~September 30, 2023~~

~~(Unaudited)~~

											Reclassifications of accumulated other comprehensive income (loss)
		Three Months Ended September 30,					Nine Months Ended September 30,
Reclassifications of accumulated other comprehensive income (loss)
Reclassifications of accumulated other comprehensive income (loss)
				Three Months Ended March 31,									Three Months Ended March 31,
In millions	In millions	2023			2022		2023		2022		In millions	2024		2023
Derivative instruments	Derivative instruments
Currency exchange contracts (1)	Currency exchange contracts (1)	$	(0.2)		$	0.8	$	(0.7)	$	1.6
Currency exchange contracts (1)
Currency exchange contracts (1)
Natural gas contracts (2)	Natural gas contracts (2)	(1.2)			2.3		(2.2)		4.1
Net investment hedge contract(3)		—			—		—		1.7

Total before tax
Total before tax
Total before tax	Total before tax	(1.4)			3.1		(2.9)		7.4
(Provision) benefit for income taxes	(Provision) benefit for income taxes	0.3			(0.7)		0.7		(1.7)
Amount included in net income (loss)	Amount included in net income (loss)	$	(1.1)		$	2.4	$	(2.2)	$	5.7

Pension and other post retirement benefits
Amortization of prior service costs (2)		$	—		$	—	$	0.1	$	0.1

Total before tax		—			—		0.1		0.1
(Provision) benefit for income taxes		—			—		—		—
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~~

INGEVITY CORPORATION

Notes to the ~~condensed consolidated statement of operations.~~Condensed Consolidated Financial Statements

March 31, 2024

(Unaudited)

Share Repurchases

On July 25, 2022, our Board of Directors authorized the repurchase of up to ~~$500~~$500.0 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,~~March 31, 2024 and 2023, we repurchased zero and ~~$92.1~~$33.4 million, inclusive of ~~$0.8~~$0.2 million in excise tax, in common stock, representing zero and ~~1,269,373~~449,475 shares of our common stock at a weighted average cost per share of zero and ~~$71.93,~~$73.86, respectively. At ~~September 30, 2023,~~March 31, 2024, $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.~~Authorization.

~~INGEVITY CORPORATION~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~September 30, 2023~~

~~(Unaudited)~~

Note 11: Restructuring and Other (Income) Charges, net

Detail on the restructuring charges and other (income) charges, net, is provided below.

Three Months Ended September 30, Nine Months Ended September 30,
In millions 2023 2022 2023 2022
Severance and other employee-related costs(1)
$ 1.5 $ — $ 8.9 $ —
Other(2)
— — 2.7 —
Restructuring charges 1.5 — 11.6 —
Alternative Feedstock Transition 11.8 — 18.4 —
North Charleston Plant Transition 9.8 — 12.7 —
Business transformation costs 1.5 3.3 6.7 10.6
Other (income) charges, net 23.1 3.3 37.8 10.6
Total restructuring and other (income) charges, net $ 24.6 $ 3.3 $ 49.4 $ 10.6


	Three Months Ended March 31,
In millions		2024		2023



Restructuring charges		$	62.3	$	3.1



Other (income) charges, net		0.5		2.5

Total Restructuring and other (income) charges, net		$	62.8	$	5.6

Restructuring Charges


In millions	Severance and other employee-related costs		Other charges (income) (1)		Asset disposal charges (2)		Total
Performance Chemicals' repositioning	$	2.1	$	5.2	$	55.0	$	62.3

Three Months Ended March 31, 2024	$	2.1	$	5.2	$	55.0	$	62.3

Other	$	3.0	$	0.1	$	—	$	3.1
Three Months Ended March 31, 2023	$	3.0	$	0.1	$	—	$	3.1

_______________

(1) ~~Represents severance~~Primarily represents costs associated with contract terminations, plant and ~~employee benefit charges.~~

~~(2) Primarily represents~~equipment decommissioning charges and other miscellaneous exit costs.

(2) Primarily represents property, plant and equipment and finite-lived intangible asset write-downs, accelerated depreciation and amortization, and impairment charges on certain assets, which were or are to be disposed of or abandoned. Also included, to the extent incurred, the acceleration effect of re-estimating settlement dates and revised cost estimates associated with asset retirement obligations related to asset disposal charges that are included within restructuring charges.

~~Restructuring Charges~~

~~Beginning~~On November 1, 2023, we announced a number of strategic actions designed to reposition our Performance Chemicals reportable segment to improve profitability and reduce the cyclicality of the Company as a whole. These actions increase our focus on growing our most profitable Performance Chemicals' product lines, such as road technologies, and accelerate our transition to non-crude tall oil ("CTO") based fatty acids. This initiative will result in the ~~first quarter~~reduction, and in some cases exit, of certain historical end-use markets of our industrial specialties product line, such as adhesives, publication inks, and oilfield, representing approximately 45 percent of our industrial specialties product line historical annualized net sales. This initiative includes the permanent closure of our Performance Chemicals' CTO refinery and the closure of our manufacturing plant located in DeRidder, Louisiana (the “DeRidder Plant”), including the polyol production assets associated with the Advanced Polymer Technologies (“APT”) reportable segment. As of March 31, 2024, all production at the DeRidder Plant has ceased with the APT polyol production assets being shuttered in December 2023, ~~we initiated several measures~~and the CTO refinery and other Performance Chemicals’ production assets shuttered in February 2024. The above actions are referred to ~~pursue greater cost efficiency which~~as the "Performance Chemicals' repositioning."

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

March 31, 2024

(Unaudited)

The Performance Chemicals’ repositioning initiative included ~~a reorganization to streamline certain functions~~additional corporate and ~~reduce ongoing costs. During the second and third quarters, we expanded our~~business cost reduction actions ~~to reorganize our operations and~~executed in November 2023.

The Performance Chemicals' repositioning, when combined with other targeted workforce reduction initiatives during 2023, resulted in the ~~fourth quarter we announced further actions as described~~reduction of Ingevity's global workforce by almost 20 percent, 25 percent of these reductions being employees directly associated with commercial sales activities of the soon-to-be exited and/or reduced end-use markets of our industrial specialties product line. Specific to Performance Chemicals, the reduction represented approximately 30 percent of the reportable segment's workforce.

Expected Charges

We expect to incur aggregate charges of approximately $280 million associated with the Performance Chemicals' repositioning, consisting of approximately $185 million in ~~Note 17. The combined restructuring program is expected to cost~~asset-related charges, approximately ~~$12-14 million and is expected to be completed over the remainder of 2023. During the three and nine months ended September 30, 2023, we recorded $1.5 million and $8.9~~$15 million in severance and other employee-related costs, and ~~zero and $2.7~~approximately $80 million in other restructuring costs including decommissioning, dismantling and removal charges, ~~including asset write-offs~~and contract termination costs. Through March 31, 2024, we have incurred $197.6 million associated with these actions, including $180.2 million of non-cash asset-related charges and $17.4 million of charges to be settled in cash. As of March 31, 2024, $13.4 million of the charges to be settled in cash have been paid. We expect approximately $185 million of the total charges to be non-cash and $95 million to be settled in cash. The remainder of the non-cash and 50-60 percent of cash charges are expected to be recognized in 2024.

Charges Related to Exited End-Market Inventory

The collective actions of workforce, operational, and regional business exits, we believe will hinder our ~~reorganization, respectively.~~ability to dispose of the associated inventory on hand. As a result, we recorded $19.7 million and $2.5 million of non-cash, lower of cost or market, inventory charges during the three months ended December 31, 2023 and March 31, 2024, respectively, to adjust the carrying value of the impacted inventory to what we expect to realize upon disposal, less disposal costs. These inventory charges are recorded to Cost of sales on the condensed consolidated statement of operations. Since these inventory charges are directly attributable to the Performance Chemicals’ repositioning, that is, they do not represent normal, recurring expenses necessary to operate our business, we have combined these charges with the restructuring charges noted above, and have excluded such impact from the financial results of our Performance Chemicals reportable segment. Please refer to Note 14 for more information.

CTO Resale Activity

Due to the DeRidder Plant closure and the corresponding reduced CTO refining capacity, we may be obligated, under an existing CTO supply contract, to purchase CTO volumes through 2025 at amounts in excess of required CTO volumes needed to support our current business operations. We intend to manage our CTO volumes by reselling excess volumes (herein referred to as "CTO resales") in the open market. Excluded from the estimated $280.0 million of aggregate charges relating to the Performance Chemicals' repositioning are potential costs we may incur associated with the CTO resales which, based on what we believe to be market rates today, may result in $50 million to $80 million of incremental losses in 2024. This is updated from our previously disclosed estimate of $30 million to $80 million based on our current expectations on CTO procurement costs for 2024, which we expect to be offset by spot market CTO resales. For the three months ended March 31, 2024, we have incurred $26.5 million of CTO resale losses, which are recorded as Other (income) expense, net on the condensed consolidated statement of operations.

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

March 31, 2024

(Unaudited)

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 material charges not currently contemplated due to events that may occur as a result of, or in connection with, these actions.

Restructuring and Other (Income) Charges, net Reserves

~~Restructuring~~The following table (in millions) shows a roll forward of restructuring reserves that will result in cash spending, the majority of which ~~are included within Accrued expenses~~relate to the Performance Chemicals' repositioning.


Balance at		Change in	Cash		Balance at
12/31/2023 (1)		Reserve (2)	Payments	Other (3)	3/31/2024 (1)
$	8.2	7.8	(10.0)	—	$	6.0

_______________

(1) Included in "Accrued expenses" on the condensed consolidated balance ~~sheets were $3.2 million~~sheets.

(2) Includes severance and ~~$0.5 million at September 30, 2023~~other employee-related costs, exited leases, contract terminations and ~~December 31, 2022, respectively.~~other miscellaneous exit costs. Any asset write-downs including accelerated depreciation and impairment charges are not included in the above table.

(3) Primarily foreign currency translation adjustments.

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~~plant transition

Our North Charleston, South Carolina Performance Chemicals manufacturing plant ishas historically been 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 conversion 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~~would permanently cease operating its North Charleston paper mill by August 31, 2023 and notified us that it iswas terminating the shared services in accordance with our operating agreement.

~~INGEVITY CORPORATION~~

~~Notes~~ WestRock ceased production at their North Charleston paper mill in June 2023. During 2023, we executed a transition plan to separate certain critical operating services WestRock had historically provided to us such as steam, water and wastewater treatment. During the ~~Condensed Consolidated Financial Statements~~

~~September 30,~~three months ended March 31, 2024 and 2023,

~~(Unaudited)~~

we incurred charges of $0.5 million and zero, respectively. We expect to incur ~~approximately $15-20~~an additional $2-4 million of ~~non-capital transition~~ costs ~~in 2023~~ as we ~~continue to~~complete this transition ~~those shared services and minimize disruption to our operations and are continuing to evaluate~~in 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.~~first half of 2024.

Business transformation costs

~~We embarked upon a~~Our enterprise resource planning tool implementation and associated business transformation initiative that includes the implementation of an upgraded enterprise resource planning ("ERP") system. The implementation of our new ERP occurred in multiple phases beginning with our pilot deployment which occurred during the first quarter of 2022 and concluded ~~with our final deployment~~ in the ~~first~~fourth quarter of 2023. Costs incurred, during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2024 and 2023, totaled ~~$1.5~~zero and $2.5 million, ~~and $6.7 million, respectively, and during the three and nine months ended September 30, 2022, totaled $3.3 million and $10.6 million,~~ respectively. Costs are directly associated with the business transformation initiative that, in accordance with GAAP, cannot be capitalized. We expect to complete this initiative by the end of 2023 and anticipate incurring an additional $1-2 million in non-capitalizable costs.

Note 12: Income Taxes

The effective tax rates, including discrete items, were as follows:
Three Months Ended September 30, Nine Months Ended September 30,
2023 2022 2023 2022
Effective tax rate 21.5 % 21.3 % 22.6 % 21.6 %


	Three Months Ended March 31,
		2024		2023
Effective tax rate		22.1	%	20.9	%

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.

2220

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

~~September 30, 2023~~March 31, 2024

(Unaudited)

The below table provides a reconciliation between our reported effective tax rates and the EAETR.


		Three Months Ended September 30,
		2023						2022

		Three Months Ended March 31,

		Three Months Ended March 31,

		Three Months Ended March 31,
	2024																					2024										2023
In millions, except percentages	In millions, except percentages	Before tax		Tax		Effective tax rate % impact		Before tax		Tax		Effective tax rate % impact		In millions, except percentages	Before tax		Tax		Effective tax rate % impact						Before tax		Tax		Effective tax rate % impact
Consolidated operations	Consolidated operations	$	32.1	$	6.9	21.5	%	$	95.8	$	20.4	21.3	%	Consolidated operations	$	(71.9)	$	(15.9)	22.1	22.1	%				$	64.1	$	13.4	20.9	20.9	%
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)		(0.1)		—				—		—
Restructuring and other (income) charges, net (1)
Restructuring and other (income) charges, net (1)
Gain (loss) on strategic investments (2)
Gain (loss) on strategic investments (2)
Gain (loss) on strategic investments (2)

Other tax only discrete items

Other tax only discrete items

Other tax only discrete items	Other tax only discrete items	—		2.3				—		(0.3)
Total discrete items	Total discrete items	1.4		2.7				—		(0.3)
Total discrete items
Total discrete items
Consolidated operations, before discrete items
Consolidated operations, before discrete items
Consolidated operations, before discrete items	Consolidated operations, before discrete items	$	33.5	$	9.6			$	95.8	$	20.1
EAETR (3)	EAETR (3)					28.7	%					21.0	%

		Nine Months Ended September 30,
		2023						2022
In millions, except percentages		Before tax		Tax		Effective tax rate % impact		Before tax		Tax		Effective tax rate % impact
Consolidated operations		$	143.9	$	32.5	22.6	%	$	249.9	$	53.9	21.6	%
Discrete items:
Restructuring and other (income) charges, net (1)		8.9		2.1				—		—
Sale of strategic investment (2)		(19.3)		(4.5)				—		—

Other tax only discrete items		—		2.8				—		(1.1)
Total discrete items		(10.4)		0.4				—		(1.1)
Consolidated operations, before discrete items		$	133.5	$	32.9			$	249.9	$	52.8
EAETR (3)	EAETR (3)					24.6	%					21.1	%
EAETR (3)																							24.2	%									22.8	%

_______________

(1) See Note 1114 for further information.

(2) See Note 4 for further information.

(3) Increase in EAETR for three ~~and nine~~ months ended ~~September 30, 2023,~~March 31, 2024, as compared to ~~September 30, 2022,~~March 31, 2023, is due to an overall change in the mix of forecasted earnings in various tax jurisdictions with varying rates, most notably in the U.S. Additionally, there was a significant ~~decrease~~reduction in the ~~foreign derived~~foreign-derived intangible income ~~benefit, and the corporate tax rate~~deduction due to reduced taxable income in the ~~UK increasing from 19%~~U.S., which further increased the EAETR. The EAETR tax percentage shown, may not precisely recalculate due to 25% on April 1, 2023. Furthermore, changes in estimates used in the EAETR during the third quarter of 2023 as compared to the second quarter of 2023 attributed to the increase in the EAETR during the three months ended September 30, 2023.rounding.

At ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, we had deferred tax assets of ~~$10.3~~$11.0 million and ~~$9.2~~$11.1 million, respectively, resulting from certain historical net operating losses from our Brazil and China 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, 2023,~~March 31, 2024, 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 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.

Pillar Two, released by the Organisation for Economic Cooperation and Development (OECD), went into effect on January 1, 2024. Pillar Two’s intent is to create a 15% global minimum tax for all jurisdictions in which multinational enterprises operate. To date, ten of our reporting jurisdictions have enacted final legislation adopting Pillar Two. While we do not anticipate that this legislation will have a material impact on our tax provision or effective tax rate, we continue to monitor evolving tax legislation in the jurisdictions in which we operate. No tax impacts of Pillar Two were recorded for the quarter ending March 31, 2024.

2321

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

~~September 30, 2023~~March 31, 2024

(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 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 our 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 trebled under U.S. antitrust law to approximately $85.0 million. On May 18, 2023, the court in the Delaware Proceeding entered judgment on the jury’s verdict, which commenced the post-trial briefing stage. On February 13, 2024, the court in the Delaware Proceeding denied BASF’s motion for pre-judgment interest on its tortious interference claim as well as our motion seeking judgment as a matter of law, or a new trial in the alternative.In addition, BASF ~~is seeking pre-judgment interest and~~ has indicated it will seek attorneys’ fees and costs in amounts that they will allege and have to ~~support~~demonstrate 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 entry of ~~judgment, and are seeking judgment~~judgment. Therefore, on March 13, 2024, we appealed the verdict 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 may challenge~~well as 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 3018 months.

As of ~~September 30, 2023,~~March 31, 2024, nothing has occurred in the post-trial proceedings to warrant any change to our conclusions as disclosed within our ~~2022~~2023 Annual Report. The full amount of the trebled jury's verdict, $85.0 million, is accrued in Other liabilities on the condensed consolidated balance sheet as of ~~September 30, 2023.~~March 31, 2024 and the charge was included within Other (income) expense, net on the consolidated statement of operations for the year ended December 31, 2021. In addition, as a result of the judgment being ~~officially~~ entered on May 18, 2023, we have started accruing for post-judgment interest at the ~~post-judgment interest.~~legally mandated interest rate. The amount of any liability we may ultimately incur could be more or less than the amount accrued.

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

March 31, 2024

(Unaudited)

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.

~~INGEVITY CORPORATION~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~September 30, 2023~~

~~(Unaudited)~~


		Three Months Ended September 30,				Nine Months Ended September 30,
				Three Months Ended March 31,
				Three Months Ended March 31,
				Three Months Ended March 31,
In millions	In millions	2023		2022		2023		2022		In millions	2024	2023
Net sales	Net sales
Performance Materials
Performance Materials
Performance Materials	Performance Materials	$	147.2	$	144.9	$	433.2	$	415.7
Performance Chemicals	Performance Chemicals	256.0		267.6		725.6		683.9
Advanced Polymer Technologies	Advanced Polymer Technologies	42.8		69.5		161.6		185.1
Total net sales (1)	Total net sales (1)	$	446.0	$	482.0	$	1,320.4	$	1,284.7

Segment EBITDA (2)	Segment EBITDA (2)
Segment EBITDA (2)
Segment EBITDA (2)
Performance Materials
Performance Materials
Performance Materials	Performance Materials	$	74.5	$	61.2	$	208.5	$	194.7
Performance Chemicals	Performance Chemicals	24.7		65.7		89.9		158.2
Advanced Polymer Technologies	Advanced Polymer Technologies	11.2		11.3		36.6		25.4
Total Segment EBITDA (2)	Total Segment EBITDA (2)	$	110.4	$	138.2	$	335.0	$	378.3
Interest expense, net	Interest expense, net	(23.1)		(11.5)		(64.3)		(37.3)
(Provision) benefit for income taxes	(Provision) benefit for income taxes	(6.9)		(20.4)		(32.5)		(53.9)
Depreciation and amortization - Performance Materials	Depreciation and amortization - Performance Materials	(9.5)		(8.9)		(28.7)		(26.7)
Depreciation and amortization - Performance Chemicals	Depreciation and amortization - Performance Chemicals	(17.8)		(9.7)		(45.6)		(29.4)
Depreciation and amortization - Advanced Polymer Technologies	Depreciation and amortization - Advanced Polymer Technologies	(7.9)		(7.1)		(23.4)		(22.5)
Restructuring and other income (charges), net (3), (6)		(20.0)		(3.3)		(43.8)		(10.6)
Restructuring and other income (charges), net (3)(7)

Acquisition and other-related costs (4)		(0.1)		(1.9)		(4.6)		(1.9)
Acquisition and other-related income (costs), net (4)(8)
Acquisition and other-related income (costs), net (4)(8)
Acquisition and other-related income (costs), net (4)(8)

Gain on sale of strategic investment (5)		0.1		—		19.3		—
Loss on CTO resales (5)
Loss on CTO resales (5)
Loss on CTO resales (5)
Gain (loss) on strategic investments (6)
Net income (loss)	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~~net sales 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, interest income, income taxes, depreciation, amortization, restructuring and other ~~(income)~~income (charges), net, including inventory lower of cost or market charges ~~net,~~associated with restructuring actions, acquisition and ~~other related costs,~~other-related income (costs), litigation verdict charges, ~~(losses) and gains from the sale of~~gain (loss) on strategic investments, ~~and~~loss on CTO resales, pension and postretirement settlement and curtailment ~~(income) charges,~~income (charges), net.

(3) ~~For~~The table below provides an allocation of these charges between our three reportable segments to provide investors, potential investors, securities analysts and others with the ~~three and nine months ended September 30, 2023,~~information, should they choose, to apply such (income) charges ~~of $1.3 million and $7.5 million relate~~to each respective reportable segment for which the charges relate.


	Three Months Ended March 31,
In millions		2024		2023
Performance Materials		$	0.1	$	1.7
Performance Chemicals		65.3		3.1
Advanced Polymer Technologies		(0.1)		0.8
Restructuring and other (income) charges, net		$	65.3	$	5.6

INGEVITY CORPORATION

Notes to the ~~Performance Materials~~Condensed Consolidated Financial Statements

March 31, 2024

(Unaudited)

(4) The table below provides an allocation of these charges between our three reportable segments to provide investors, potential investors, securities analysts and others with the information, should they choose, to apply such (income) charges to each respective reportable segment charges of $18.3 million and $34.0 million relate to the 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, charges of $1.7 million and $5.4 million relate to the Performance Chemicals segment, and charges of $0.5 million and $1.5 million relate to the Advanced Polymer Technologies segment, respectively. For more detail onfor which the charges ~~incurred see Note 11.~~relate.

(4) For the three and nine months ended September 30, 2023 and September 30, 2022, all charges relate to the acquisition and integration of Ozark Materials into the Performance Chemicals segment. For more detail see Note 16.


	Three Months Ended March 31,
In millions		2024		2023
Performance Materials		$	—	$	—
Performance Chemicals		0.3		2.7
Advanced Polymer Technologies		—		—
Acquisition and other-related (income) costs, net		$	0.3	$	2.7

(5) For the three ~~and nine~~ months ended ~~September 30, 2023, gain on sale of strategic investment relates~~March 31, 2024, charges relate 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 11 for more information.

(6) For the three months ended March 31, 2024, gain (loss) on strategic investments relates to a measurement alternative investment associated with the Performance Chemicals reportable segment. For the three months ended March 31, 2023, gain (loss) on strategic investments relates to the Performance Materials segment. We exclude gains and losses from strategic investments from our segment results, as well as our non-GAAP financial measures, because we do not consider such gains or losses to be directly associated with the operational performance of the segment. We believe that the inclusion of such gains or losses, would impair the factors and trends affecting the historical financial performance of our reportable segments. We continue to include undistributed earnings or loss, distributions, amortization or accretion of basis differences, and other-than-temporary impairments for equity method investments that we believe are directly attributable to the operational performance of such investments, in our reportable segment results. Refer to Note 4, under the section: Strategic Investments, for more information.

(7) We regularly perform strategic reviews and assess the return on our operations, which sometimes results in a plan to restructure the business. These costs are excluded from our reportable segment results; details of which are included in the table below.


	Three Months Ended March 31,
In millions	2024		2023
Restructuring charges (1)	$	62.3	$	3.1



Other (income) charges, net (1)	0.5		2.5
Performance Chemicals' repositioning inventory charges (2)	2.5		—
Restructuring and other (income) charges, net	$	65.3	$	5.6
_________________
(1) Amounts are recorded within Restructuring and other (income) charges, net on the condensed consolidated statement of operations, refer to Note 11 for more information.
(2) Amounts are recorded within Cost of sales on the condensed consolidated statement of operations, refer to Note 11 for more information.

(8) Charges represent (gains) losses incurred to complete and integrate acquisitions and other strategic investments. Charges may include the expensing of the inventory fair value step-up resulting from the application of purchase accounting for acquisitions and certain legal and professional fees associated with the completion of acquisitions and strategic investments.


	Three Months Ended March 31,
In millions		2024		2023
Legal and professional service fees		$	0.3	$	1.9
Acquisition-related (income) costs		$	0.3	$	1.9
Inventory fair value step-up amortization (1)		—		0.8
Acquisition and other-related (income) charges		$	0.3	$	2.7
_________________
(1) Included in Cost of sales on the condensed consolidated statement of operations.

2524

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

~~September 30, 2023~~March 31, 2024

(Unaudited)

Note 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 data		2023		2022		2023		2022
				Three Months Ended March 31,
				Three Months Ended March 31,
				Three Months Ended March 31,
In millions (except share and per share data)										In millions (except share and per share data)	2024	2023
Net income (loss)	Net income (loss)	$	25.2	$	75.4	$	111.4	$	196.0

Basic and Diluted earnings (loss) per share	Basic and Diluted earnings (loss) per share
Basic and Diluted earnings (loss) per share
Basic and Diluted earnings (loss) per share
Basic earnings (loss) per share
Basic earnings (loss) per share
Basic earnings (loss) per share	Basic earnings (loss) per share	$	0.70	$	1.99	$	3.05	$	5.10
Diluted earnings (loss) per share	Diluted earnings (loss) per share	0.69		1.98		3.03		5.06

Shares (in thousands)	Shares (in thousands)
Shares (in thousands)
Shares (in thousands)
Weighted average number of common shares outstanding - Basic
Weighted average number of common shares outstanding - Basic
Weighted average number of common shares outstanding - Basic	Weighted average number of common shares outstanding - Basic	36,225		37,839		36,585		38,451
Weighted average additional shares assuming conversion of potential common shares	Weighted average additional shares assuming conversion of potential common shares	162		295		226		269
Shares - diluted basis		36,387		38,134		36,811		38,720
Shares - diluted basis (1)
_______________
(1) For the quarter ended March 31, 2024, 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.
(1) For the quarter ended March 31, 2024, 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.
(1) For the quarter ended March 31, 2024, 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.

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,
In thousands 2023 2022 2023 2022
Average number of potential common shares - antidilutive 491 209 400 204

~~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.


	Three Months Ended March 31,
In thousands		2024	2023
Average number of potential common shares - antidilutive		304	182

~~INGEVITY CORPORATION~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~September 30, 2023~~

~~(Unaudited)~~


~~Purchase Price Allocation~~
~~In millions~~	~~Weighted Average Amortization Period~~	~~Fair Value~~
~~Cash and cash equivalents~~		$	~~8.0~~
~~Accounts receivable~~		~~28.7~~
~~Inventories~~ ~~(1)~~		~~48.4~~
~~Prepaid and other current assets~~		~~2.0~~
~~Property, plant and equipment~~		~~43.1~~
~~Intangible assets~~ ~~(2)~~
~~Brands~~	~~10 years~~	~~15.0~~
~~Customer relationships~~	~~15 years~~	~~88.6~~
~~Developed technology~~	~~7 years~~	~~23.5~~
~~Goodwill~~ ~~(3)~~		~~109.8~~
~~Other assets, including operating leases~~		~~0.1~~
~~Total fair value of assets acquired~~		$	~~367.2~~
~~Accounts payable~~		~~13.9~~
~~Other liabilities~~		~~2.6~~
~~Total fair value of liabilities assumed~~		$	~~16.5~~
~~Less: Cash acquired~~		~~(8.0)~~
~~Plus: Amounts due from Seller~~		~~1.8~~
~~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 millions 2023 2022 2023 2022
Legal and professional service fees $ 0.1 $ 1.9 $ 3.8 $ 1.9
Acquisition-related costs 0.1 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.~~

~~INGEVITY CORPORATION~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~September 30, 2023~~

~~(Unaudited)~~

~~Note 17: Subsequent Events~~

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 product lines 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 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 through 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 incremental losses in 2024.

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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, ~~2022~~2023, filed on February ~~28, 2023~~22, 2024, with the Securities and Exchange Commission ("SEC") as part of the Company's Annual Reporting on Form 10-K ("~~2022~~2023 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 ~~2022~~2023 Annual Report.

Cautionary Statements ~~About~~Regarding 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 ~~2022~~2023 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:

•the 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 plant closure;

•the anticipated timing, charges and costs associated with the repositioning of our Performance Chemicals reportable segment and crude tall oil (“CTO”) resales may differ materially from our estimates due to events that may occur as a result of, or in connection with, such actions;

•we may be adversely affected by general global economic, geopolitical, and financial conditions beyond our control, including inflation, ~~and~~ the Russia-Ukraine war, 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;

•if more stringent air quality standards are not adopted worldwide, our growth could be impacted;

•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")~~CTO, which is limited in supply and subject to price increases that have negatively impacted the business and will continue to do so if our ability to pass through such price increases remains limited;

•lack of access to 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~~problems 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 and operation of our new enterprise resource planning 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;~~industry and subsidies or incentives that may impact key raw materials or products may adversely affect financial results; and

•losses due to lawsuits arising out of environmental damage or personal injuries associated with chemical or other manufacturing processes.

Overview

Ingevity isCorporation ("Ingevity," "the company," "we," "us," or "our") provides products and technologies that purify, protect, and enhance the world around us. Through a ~~leading global manufacturer~~diverse team of ~~specialty chemicals~~talented and ~~high performance activated carbon materials.~~experienced people, we develop, manufacture, and bring to market solutions that are largely renewably sourced and help customers solve complex problems while making the world more sustainable. Our products are used in a variety of demanding applications, including adhesives, agrochemicals, asphalt paving, bioplastics, coatings, elastomers, lubricants, pavement markings, oil exploration and production and automotive components. We ~~provide innovative solutions to meet our customers’ unique and demanding requirements through proprietary formulated products. We report~~operate in three reportable ~~segments,~~segments: Performance Materials, Performance Chemicals and Advanced Polymer ~~Technologies~~.Technologies.

Recent Developments and Updates

Performance ~~Chemicals~~Chemicals' Repositioning

On November 1, 2023, we announced a number of strategic actions designed to ~~further~~ reposition our Performance Chemicals reportable 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~~Chemicals' product lines, such as ~~Pavement Technologies~~road technologies, and accelerate our transition to ~~non-CTO-based~~non-crude tall oil ("CTO") based fatty acids. ~~The announced actions include~~This initiative will result in the reduction, and in some cases exit, of certain historical end-use markets of our industrial specialties product line, such as adhesives, publication inks, and oilfield, representing approximately 45 percent of our industrial specialties product line historical annualized net sales. This initiative includes the permanent closure of our Performance ~~Chemicals~~Chemicals' CTO refinery and the closure of our manufacturing plant located in DeRidder, Louisiana (the “DeRidder Plant”), including the polyol production assets associated with the Advanced Polymer Technologies (“APT”) reportable segment. As of March 31, 2024, all production at the DeRidder Plant has ceased with the APT polyol production assets being shuttered in December 2023, and the CTO refinery and other Performance Chemicals’ production assets shuttered in February 2024. The above actions are referred to as ~~well as~~the "Performance Chemicals' repositioning." The Performance Chemicals’ repositioning initiative included additional corporate and business cost reduction ~~actions. We expect to close~~actions executed in November 2023.

The Performance Chemicals' repositioning, when combined with other targeted workforce reduction initiatives during 2023, resulted in the ~~DeRidder Plant~~reduction of Ingevity's global workforce by ~~the end~~almost 20 percent, 25 percent of these reductions being

employees directly associated with commercial sales activities of the ~~first half~~soon-to-be exited and/or reduced end-use markets of ~~2024.~~our industrial specialties product line. Specific to Performance Chemicals, the reduction represented approximately 30 percent of the reportable segment's workforce.

Expected Charges

We expect to incur aggregate charges of approximately ~~$280.0~~$280 million associated with ~~these actions,~~the Performance Chemicals' repositioning, consisting of approximately ~~$180.0~~$185 million in asset-related charges, approximately ~~$15.0~~$15 million in severance and other employee-related costs, and approximately ~~$85.0~~$80 million in other restructuring costs including decommissioning, dismantling and removal charges, and contract termination costs. Through March 31, 2024, we have incurred $197.6 million associated with these actions, including $180.2 million of non-cash asset-related charges and $17.4 million of charges to be settled in cash. As of March 31, 2024, $13.4 million of the charges to be settled in cash have been paid. We expect approximately ~~$180.0~~$185 million of the total charges to be ~~non-cash.~~non-cash and $95 million to be settled in cash. The ~~majority~~remainder of the non-cash ~~charges~~ and 50-60 percent of cash charges are expected to be recognized ~~by the end~~in 2024.

Charges Related to Exited End-Market Inventory

The collective actions of workforce, operational, and regional business exits, we believe will hinder our ability to dispose of the ~~first half~~associated inventory on hand. As a result, we recorded $19.7 million and $2.5 million of non-cash, lower of cost or market, inventory charges during the three months ended December 31, 2023 and March 31, 2024, respectively, to adjust the carrying value of the impacted inventory to what we expect to realize upon disposal, less disposal costs. These inventory charges are recorded to Cost of sales on the condensed consolidated statement of operations. Since these inventory charges are directly attributable to the Performance Chemicals’ repositioning, that is, they do not represent normal, recurring expenses necessary to operate our business, we have combined these charges with the restructuring charges noted above, and have excluded such impact from the financial results of our Performance Chemicals reportable segment. Please refer to Note 14 within the Condensed Consolidated Financial Statements for more information.

CTO Resale Activity

Expected Savings and Impact

The Performance Chemicals' repositioning will result in the reduction, and in some cases exit, of certain historical end-use markets of our industrial specialties product line, such as adhesives, publication inks, and oilfield, representing approximately 45 percent of our industrial specialties product line historical annualized net sales. The annualized cash savings we expect to realize from these actions are approximately $65 million to $75 million beginning in 2024. These cash savings will be derived from headcount reductions, plant operating efficiencies, and reduced supply chain costs. In addition to the cash savings, annualized depreciation and intangible amortization expense related to assets charges taken throughout this initiative will decline by approximately $10 million and $12 million, respectively, of which we expect to realize approximately $8 million and $10 million in 2024, respectively.

Collectively, these savings are expected to be realized in the following financial statement captions: 70-80 percent in Cost of sales, 15-25 percent in Selling, general, and administrative expenses, and ~5 percent in Research and technical expenses, all presented on our condensed consolidated statement of operations. During the three months ended March 31, 2024, we realized cash savings of approximately $20 million, including $15 million in Cost of sales, $4 million in Selling, general, and administrative expenses, and $1 million in Research and technical expenses.

The charges we currently expect to incur and the savings we expect to obtain 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 material charges not currently contemplated due to events that may occur as a result of, or in connection with, these actions.

~~Supply Agreements~~

Measurement Alternative Investments

On November 1, 2023, Ingevity Corporation (the “Company”), and WestRock Shared Services, LLC and WestRock MWV, LLC, on behalf of the affiliates of WestRock Company (“WestRock”), entered into Amendment No.1 (the “Amendment”) to that certain Amended and Restated Crude Tall Oil and Black Liquor Soap Skimmings Agreement, dated as of March 20, 2023, by and between the Company and WestRock.

~~Performance Chemicals Reporting Unit~~

During the third quarter of 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 concluded thatperiod ended March 31, 2024, the company identified a triggering event ~~occurred~~indicating that an investment being accounted for ~~our Performance Chemicals’ reporting unit, and we performed~~under the measurement alternative may be impaired. For the three months ended March 31, 2024, the Company recognized an ~~analysis~~impairment of $4.8 million, recorded in Other (income) expense, net on the ~~reporting unit’s goodwill, intangibles and long-lived assets as~~condensed consolidated statement 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 currently 19 percent. Consequently, we concluded that there was no impairment for the quarter ended September 30, 2023.operations.

Performance Chemicals Reporting Unit - Headroom Sensitivity Analysis
Reporting Unit Fair Value Revenue Growth Rate Declines by 100 Bps EBITDA Margin Declines by 100 Bps Discount Rate increases by 100 Bps
Headroom 19% 14% 14% 7%

Results of Operations


		Three Months Ended September 30,				Nine Months Ended September 30,
				Three Months Ended March 31,
				Three Months Ended March 31,
				Three Months Ended March 31,
In millions	In millions	2023		2022		2023		2022		In millions	2024	2023
Net sales	Net sales	$	446.0	$	482.0	$	1,320.4	$	1,284.7
Cost of sales	Cost of sales	317.0		305.7		908.0		820.0
Gross profit	Gross profit	129.0		176.3		412.4		464.7

Selling, general, and administrative expenses	Selling, general, and administrative expenses	40.0		54.2		140.3		142.9
Selling, general, and administrative expenses
Selling, general, and administrative expenses
Research and technical expenses	Research and technical expenses	7.8		7.6		24.6		23.1

Restructuring and other (income) charges, net
Restructuring and other (income) charges, net
Restructuring and other (income) charges, net	Restructuring and other (income) charges, net	24.6		3.3		49.4		10.6
Acquisition-related costs	Acquisition-related costs	0.1		1.9		3.8		1.9
Other (income) expense, net	Other (income) expense, net	1.3		2.0		(13.9)		(1.0)
Interest expense, net	Interest expense, net	23.1		11.5		64.3		37.3
Income (loss) before income taxes	Income (loss) before income taxes	32.1		95.8		143.9		249.9
Provision (benefit) for income taxes	Provision (benefit) for income taxes	6.9		20.4		32.5		53.9
Net income (loss)	Net income (loss)	$	25.2	$	75.4	$	111.4	$	196.0

Net sales

The table below shows the ~~2023~~2024 Net sales and variances from ~~2022:~~2023:
Change vs. prior year
In millions Prior year Net sales Volume Price/Mix Currency effect Current 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


			Change vs. prior year
In millions	Prior year Net sales		Volume	Price/Mix	Currency effect	Current year Net Sales

Three months ended March 31, 2024 vs. 2023	$	392.6	(45.0)	(4.0)	(3.5)	$	340.1

Three Months Ended ~~September 30,~~March 31, 2024 vs. 2023 ~~vs. 2022~~

The sales decrease of ~~$36.0~~$52.5 million in ~~2023~~2024 was driven primarily by ~~unfavorable~~our Performance Chemicals' industrial specialties product line due to repositioning actions which included a manufacturing plant closure and exit from certain low margin end markets. Also contributing to the lower sales were continued weakness in China and certain industrial end markets that negatively impacted sales in our Advanced Polymer Technologies ("APT") reportable segment and industrial specialties product line, slightly offset by a three increase in Performance Materials reportable segment.

Volume declines in Performance Chemicals' industrial specialties product line and our APT reportable segment drove the combined volume decline of ~~$72.1~~$45.0 million ~~(15~~(11 percent) ~~primarily within our Performance Chemicals~~. Unfavorable pricing and ~~Advanced Polymers Technologies reportable segments~~sales composition (mix) of $4.0 million (one percent) 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 $35.7 million in 2023 was driven by favorable price/mix of $142.4 million (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$3.5 million (one percent). also contributed to the decline in Net sales.

3229

Gross Profit

Three Months Ended ~~September 30,~~March 31, 2024 vs. 2023 ~~vs. 2022~~

Gross profit decrease of ~~$47.3~~$30.7 million was driven by unfavorable sales volume of $16.1 million, increased manufacturing costs of ~~$42.6~~$7.4 million (which includes the realized savings of $15 million from the Performance Chemicals repositioning actions initiated in 2023) due primarily to significant CTO raw material ~~inflationary pressures, primarily CTO~~cost pressure within our ~~industrial specialties product line,~~Performance Chemicals reportable segment, unfavorable pricing and ~~unfavorable~~ sales ~~volume~~composition (mix) of ~~$36.7~~$4.3 million primarily driven by our APT reportable segment, Performance ~~Chemicals and Advanced Polymer Technologies reportable segments. The decrease was partially offset by favorable pricing and product mix~~Chemicals' repositioning actions which lead to inventory charges of ~~$26.9~~$2.5 million, and ~~favorable~~unfavorable foreign currency exchange of ~~$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 all segments.~~

~~Nine Months Ended September 30, 2023 vs. 2022~~

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$0.4 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,~~March 31, 2024 vs. 2023 ~~vs. 2022~~

Selling, general and administrative expenses ("SG&A") were ~~$40.0~~$47.2 million ~~(nine~~(14 percent of Net sales) and ~~$54.2~~$48.6 million ~~(11~~(12 percent of Net sales) for the three months ended ~~September 30,~~March 31, 2024 and 2023, and 2022, respectively. The decrease in SG&A as a percentage of Net sales was driven by 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, 2023 vs. 2022~~

~~Selling, general and administrative expenses ("SG&A") were $140.3 million (11 percent of Net sales) and $142.9 million (11 percent of Net sales) for the nine months ended September 30, 2023 and 2022,~~ respectively. SG&A as a percentage of Net sales ~~was unchanged as the impact of~~ increased ~~amortization costs of $9.2~~due to lower sales. Overall, SG&A decreased by approximately $4 million ~~primarily driven by the Ozark Materials acquisition, was~~or 8 percent due to cost savings initiatives implemented last year offset by ~~decreased employee-related costs~~higher spending of ~~$7.0~~$2.6 million ~~and decreased travel and other miscellaneous costs of $4.8 million.~~on commercial activities.

Research and technical expenses

Three Months Ended ~~September 30,~~March 31, 2024 vs. 2023 ~~vs. 2022~~

Research and technical expenses as a percentage of Net sales remained relatively consistent period over period, ~~increasing~~decreasing to ~~1.7~~2.0 percent from ~~1.6~~2.2 percent for the three months ended ~~September 30,~~March 31, 2024 and 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~~ Included in the $2.0 million decrease is approximately $1 million realized from ~~1.8 percent for the nine months ended September 30, 2023 and 2022, respectively.~~

cost savings initiatives implemented last year.

Restructuring and other (income) charges, net

Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2024 vs. 2023 ~~vs. 2022~~

Restructuring and other (income) charges, net were ~~$24.6~~$62.8 million and ~~$49.4~~$5.6 million for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2024 and 2023, ~~respectively, and $3.3~~respectively. Asset disposal charges increased $55.0 million, ~~and $10.6 million for the three and nine months ended September 30, 2022, respectively. Severance and other employee-related costs increased $1.5 million and $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~~$5.1 million, and costs associated with the North Charleston plant transition ~~increased $9.8~~were $0.5 million, ~~and $12.7 million, both~~all for the three ~~and nine~~ months ended ~~September 30, 2023, respectively.~~March 31, 2024. The increase was partially offset by a ~~$1.8 million and $3.9~~$2.5 million decrease related to our business transformation initiative ~~for the three~~ and ~~nine months ended September 30, 2023, respectively.~~decreased severance and other employee-related costs of $0.9 million. See Note 11 within the Condensed Consolidated Financial Statements for more information.

Acquisition-related costs

Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2024 vs. 2023 ~~vs. 2022~~

Acquisition-related costs were ~~$0.1~~$0.3 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,~~March 31, 2024 and 2023, respectively. All charges relate to the integration of Ozark Materials into our Performance Chemicals segment. ~~See Note 16 within the Condensed Consolidated Financial Statements for more information.~~

Other (income) expense, net

Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2024 vs. 2023 ~~vs. 2022~~


		Three Months Ended September 30,				Nine Months Ended September 30,
				Three Months Ended March 31,
				Three Months Ended March 31,
				Three Months Ended March 31,
In millions	In millions	2023		2022		2023		2022		In millions	2024	2023
Foreign currency exchange (income) loss		$	1.7	$	1.2	$	4.4	$	1.6
Gain on sale of strategic investment		(0.1)		—		(19.3)		—

Foreign currency transaction (gain) loss
Gain (loss) on strategic investments (1)
Loss on CTO resales (2)
Other (income) expense, net	Other (income) expense, net	(0.3)		0.8		1.0		(2.6)
Total Other (income) expense, net	Total Other (income) expense, net	$	1.3	$	2.0	$	(13.9)	$	(1.0)

_______________

~~Interest expense, net~~

~~Three and Nine Months Ended September 30, 2023 vs. 2022~~

Three Months Ended September 30, Nine Months Ended September 30,
In millions 2023 2022 2023 2022
Finance lease obligations $ 1.9 $ 1.8 $ 5.5 $ 5.5
Revolving credit and term loan facilities (1)
15.0 5.4 43.2 11.5
Senior notes (1)
5.6 5.6 16.8 27.5
Litigation related interest expense (2)
1.3 — 1.7 —
Other interest (income) expense, net (0.7) (1.3) (2.9) (7.2)
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.~~

~~Provision (benefit) for income taxes~~

~~Three and Nine Months Ended September 30, 2023 vs. 2022~~

For the three months ended September 30, 2023 and 2022, our effective tax rate was 21.5 percent and 21.3 percent, respectively. Excluding discrete items, the effective rate was 28.7 percent compared to 21.0 percent in the three months ended September 30, 2023 and 2022, respectively. See Note 12 within the Condensed Consolidated Financial Statements for 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 124 within the Condensed Consolidated Financial Statements for more information.

3530

(2) See Note 11 and 14 within the Condensed Consolidated Financial Statements for more information.

Interest expense, net

Three Months Ended March 31, 2024 vs. 2023


	Three Months Ended March 31,
In millions		2024		2023
Accounts receivable securitization (1)		$	1.4	$	—
Finance lease obligations		1.8		1.8
Litigation related interest expense (2)		1.3		—
Revolving Credit Facility and other lines of credit (1)		13.2		13.2
Senior notes (1)		5.6		5.6



Other interest (income) expense, net		(1.0)		(1.0)
Total Interest expense, net		$	22.3	$	19.6

_______________

(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.

Provision (benefit) for income taxes

Three Months Ended March 31, 2024 vs. 2023

For the three months ended March 31, 2024 and 2023, our effective tax rate was 22.1 percent and 20.9 percent, respectively. Excluding discrete items, the effective rate was 24.2 percent compared to 22.8 percent in the three months ended March 31, 2024 and 2023, respectively. See Note 12 within the Condensed Consolidated Financial Statements for more information.

Segment Operating Results

In addition to the information discussed above, the following sections discuss the results of operations for all of Ingevity's segments. Our segments are (i) Performance Materials, (ii) Performance 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~~net sales 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, interest income, income taxes, depreciation, amortization, restructuring and other ~~(income)~~income (charges), net, including inventory lower of cost or market charges ~~net,~~associated with restructuring actions, acquisition and other-related ~~costs,~~income (costs), litigation verdict charges, ~~(losses) and gains from the sale of~~gain (loss) on strategic investments, ~~and~~loss on CTO resales, pension and postretirement settlement and curtailment ~~(income) charges.~~income (charges), net.

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 ~~2022~~2023 Annual Report.

Performance Materials

Performance Summary

~~Sales~~Net sales in our Performance Materials reportable segment increased three percent compared to the prior year quarter ~~mainly~~as a result of increased pricing and automotive carbon volumes. Segment EBITDA increased $8.2 million or almost 12 percent primarily due to ~~increased sales~~lower input costs such as energy and certain raw materials as well as a series of ~~automotive carbon in North America and Asia Pacific. Segment EBITDA growth was driven primarily by product mix and lower SG&A.~~operational efficiencies that improved plant throughput.


In millions

In millions	In millions	Three Months Ended September 30,				Nine Months Ended September 30,				In millions	Three Months Ended March 31,
		2023		2022		2023		2022				2024	2023

Total Performance Materials - Net sales	Total Performance Materials - Net sales	$	147.2	$	144.9	$	433.2	$	415.7

Total Performance Materials - Net sales

Total Performance Materials - Net sales
Segment EBITDA	Segment EBITDA	$	74.5	$	61.2	$	208.5	$	194.7

Net Sales Comparison of Three ~~and Nine~~ Months Ended ~~September 30, 2023~~March 31, 2024 and ~~September 30, 2022:~~March 31, 2023:
Change vs. prior year
Performance Materials (In millions)
Prior year Net sales Volume Price/Mix Currency effect Current 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


	Change vs. prior year
Performance Materials (In millions)	Prior year Net sales		Volume	Price/Mix	Currency effect	Current year Net sales

Three months ended March 31, 2024 vs. 2023	$	141.4	2.2	3.9	(2.4)	$	145.1

Three Months Ended ~~September 30,~~March 31, 2024 vs. 2023 ~~vs. 2022~~

Segment net sales. The increase of ~~$2.3~~$3.7 million in ~~2023~~2024 was driven by favorable ~~mix~~pricing and sales composition (mix) of ~~$8.0~~$3.9 million ~~(six~~(three percent), and a volume increase of $2.2 million (two percent). The increase was partially offset by unfavorable foreign currency exchange ~~of $3.3 million (two percent) and a volume decrease~~ of $2.4 million (two percent).

Segment EBITDA. The increase of ~~$13.3~~$8.2 million in ~~2023~~2024 was driven by the increase in sales as noted above, decreased ~~SG&A and research and technical expenses of $6.8 million, favorable mix of $3.4 million, decreased~~ manufacturing costs of ~~$2.8~~$7.0 million, favorable pricing and ~~favorable foreign currency exchange~~sales composition (mix) of ~~$1.7 million. The increase was partially offset by a volume decrease of $1.4 million.~~

~~Nine Months Ended September 30, 2023 vs. 2022~~

~~Segment net sales.~~ ~~The increase of $17.5~~$3.9 million, ~~in 2023 was driven by favorable mix of $23.4 million (six percent)~~ and a volume increase of ~~$3.4 million (one percent). The increase was partially offset by unfavorable foreign currency exchange of $9.3 million (two percent).~~

~~Segment EBITDA.~~ The increase of $13.8 million in 2023 was driven by the increase in sales as noted above, favorable mix of $16.3 million, decreased SG&A and research and technical expenses of $7.7 million, and a volume increase of

~~$2.7~~$1.4 million. The increase was partially offset by increased ~~manufacturing costs~~SG&A and research and technical expenses of ~~$11.7~~$2.7 million, and unfavorable foreign currency exchange of ~~$1.2~~$1.4 million.

Performance Chemicals

Performance Summary

~~Sales~~Net sales in our Performance Chemicals reportable segment decreased 21 percent compared to the prior year ~~quarter, primarily due~~quarter. The road technologies product line net sales were flat compared to ~~lower volume in our~~last year. The industrial specialties product ~~line. The segment EBITDA decline is~~line net sales decrease was primarily ~~due to higher raw material costs, specifically CTO.~~

~~Pavement technologies sales increased~~driven by lower volume as a result of ~~higher pricing in legacy pavement applications~~exiting lower margin end markets as part of the Performance Chemicals' repositioning as well as ~~the acquisition of Ozark Materials.~~

~~Industrial specialties sales decrease was driven by volume declines attributed primarily to weak~~lower market demand ~~across~~in certain industrial end markets ~~particularly adhesives~~such as lubricants and ~~printing inks. In addition, we began~~rubber.

Contributing to ~~see~~the decline in Segment EBITDA was higher CTO spend, which nearly doubled from last year, and unfavorable plant throughput due to continued weakness in ~~oilfield with lower drilling activity~~industrial demand, which negatively impacted utilization rates at both our North Charleston, South Carolina and Crossett, Arkansas manufacturing sites. Slightly offsetting these elevated costs were cost savings realized during the ~~quarter.~~quarter as a result of the Performance Chemicals' repositioning.


		Three Months Ended September 30,				Nine Months Ended September 30,
				Three Months Ended March 31,
				Three Months Ended March 31,
				Three Months Ended March 31,
In millions	In millions	2023		2022		2023		2022		In millions	2024	2023

Total Performance Chemicals - Net sales	Total Performance Chemicals - Net sales	$	256.0	$	267.6	$	725.6	$	683.9
Pavement Technologies product line		129.7		88.3		316.4		194.0

Total Performance Chemicals - Net sales

Total Performance Chemicals - Net sales
Road Technologies product line
Industrial Specialties product line	Industrial Specialties product line	126.3		179.3		409.2		489.9
Segment EBITDA	Segment EBITDA	$	24.7	$	65.7	$	89.9	$	158.2

Net Sales Comparison of Three ~~and Nine~~ Months Ended ~~September 30, 2023~~March 31, 2024 and ~~September 30, 2022:~~March 31, 2023:
Change vs. prior year
Performance Chemicals (In millions)
Prior year Net sales Volume Price/Mix Currency effect Current 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


	Change vs. prior year
Performance Chemicals (In millions)	Prior year Net sales		Volume	Price/Mix	Currency effect	Current year Net Sales

Three months ended March 31, 2024 vs. 2023	$	185.6	(35.5)	(2.8)	(0.3)	$	147.0

Three Months Ended ~~September 30,~~March 31, 2024 vs. 2023 ~~vs. 2022~~

Segment net sales. The decrease of ~~$11.6~~$38.6 million was driven by a volume decrease of ~~$38.7~~$35.5 million (14 percent), primarily in industrial specialties ($65.1 million), partially offset by an increase in pavement technologies ($26.4 million), primarily due to Ozark Materials. This decrease was partially offset by favorable mix of $27.0 million (10 percent), driven by increases in industrial specialties ($11.9 million) and pavement technologies ($15.1 million), and favorable foreign currency exchange of $0.1 million.

~~Segment EBITDA.~~ The decrease of $41.0 million was driven by higher manufacturing costs of $47.3 million, primarily due to CTO, and a volume decrease of $22.0 million. The decrease was partially offset by favorable mix of $20.2 million, and lower SG&A of $8.1 million.

~~Nine Months Ended September 30, 2023 vs. 2022~~

~~Segment net sales.~~ The increase of $41.7 million was driven by favorable mix of $97.4 million (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 $55.0 million (eight(19 percent), driven by a decrease in industrial specialties ($~~150.7~~33.3 million) and road technologies ($2.2 million), unfavorable pricing and sales composition (mix) of $2.8 million (two percent), attributed to a decrease in industrial specialties ($5.0 million), partially offset by an increase in ~~pavement~~road technologies ($~~95.7~~2.2 million), and unfavorable foreign currency exchange of $0.3 million (zero percent).

Segment EBITDA. The decrease of ~~$68.3~~$30.9 million was driven by higher manufacturing costs of ~~$129.0~~$20.2 million, primarily due to increased CTO cost, a volume decrease of ~~$28.7~~$12.8 million, unfavorable pricing and sales composition (mix) of $2.8 million, and ~~higher SG&A~~unfavorable foreign currency exchange of ~~$0.1~~$0.6 million. The decrease was partially offset by ~~favorable mix~~lower SG&A of ~~$89.4 million.~~$5.5 million, which benefited from the Performance Chemicals' repositioning and cost saving initiatives implemented in 2023.

3733

Advanced Polymer Technologies

Performance Summary

~~Our~~Net sales in our Advanced Polymer Technologies reportable segment ~~sales~~ decreased 27 percent compared to the prior year quarter due primarily to ~~market~~lower volumes which we attribute to the continued global demand weakness ~~across~~in many of the ~~segment's end markets in all regions,~~segment’s end-markets.

Segment EBITDA decreased primarily due to lower volumes and price, partially offset by ~~higher prices. Segment EBITDA was flat, as~~ lower ~~raw material~~input costs and ~~energy costs offset decreased volume.~~benefits from the cost savings actions implemented last year.


In millions

In millions	In millions	Three Months Ended September 30,				Nine Months Ended September 30,				In millions	Three Months Ended March 31,
		2023		2022		2023		2022				2024	2023
Total Advanced Polymer Technologies - Net sales	Total Advanced Polymer Technologies - Net sales	$	42.8	$	69.5	$	161.6	$	185.1
Segment EBITDA	Segment EBITDA	$	11.2	$	11.3	$	36.6	$	25.4

Net Sales Comparison of Three ~~and Nine~~ Months Ended ~~September 30, 2023~~March 31, 2024 and ~~September 30, 2022:~~March 31, 2023:
Change vs. prior year
Advanced Polymer Technologies (In millions)
Prior year Net sales Volume Price/Mix Currency effect Current 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


	Change vs. prior year
Advanced Polymer Technologies (In millions)	Prior year Net sales		Volume	Price/Mix	Currency effect	Current year Net sales

Three months ended March 31, 2024 vs. 2023	$	65.6	(11.7)	(5.1)	(0.8)	$	48.0

Three Months Ended ~~September 30,~~March 31, 2024 vs. 2023 ~~vs. 2022~~

Segment net sales. The decrease of ~~$26.7~~$17.6 million in ~~2023~~2024 was driven by a volume decline of ~~$31.0~~$11.7 million ~~(45~~(18 percent), ~~partially offset by favorable mix~~unfavorable pricing and sales composition (mix) of ~~$3.3~~$5.1 million ~~(five~~(eight percent), and ~~favorable~~unfavorable foreign currency exchange of ~~$1.0~~$0.8 million (one percent).

Segment EBITDA. The ~~slight~~ decrease of ~~$0.1~~$4.3 million was driven by unfavorable pricing and sales composition (mix) of $5.4 million, a volume decline of ~~$13.3~~$4.7 million and unfavorable foreign currency exchange of ~~$1.0 million, mostly~~$0.4 million. The decrease was partially 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~~$5.3 million and decreased SG&A ~~and research and technical~~ expenses of ~~$2.9 million, partially offset by a volume decline of $18.3 million and unfavorable foreign currency exchange of $3.4~~$0.9 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~~U.S. generally accepted accounting principles (“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 interest expense, net, provision (benefit) for income taxes, ~~interest expense, net,~~ depreciation, amortization, restructuring and other (income) charges, net, including inventory lower of cost or market charges associated with restructuring actions, acquisition and other-related (income) costs, litigation verdict charges, ~~(losses) and gains from the sale of~~(loss) gain on strategic investments, loss on CTO resales, and pension and postretirement settlement and curtailment (income) charges, net.

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,
In millions 2023 2022 2023 2022
Net income (loss) (GAAP)
$ 25.2 $ 75.4 $ 111.4 $ 196.0
Interest expense, net 23.1 11.5 64.3 37.3
Provision (benefit) for income taxes 6.9 20.4 32.5 53.9
Depreciation and amortization - Performance Materials 9.5 8.9 28.7 26.7
Depreciation and amortization - Performance Chemicals 17.8 9.7 45.6 29.4
Depreciation and amortization - Advanced Polymer Technologies 7.9 7.1 23.4 22.5
Restructuring and other (income) charges, net (1)
20.0 3.3 43.8 10.6
Gain on sale of strategic investment (0.1) — (19.3) —
Acquisition and other-related costs 0.1 1.9 4.6 1.9
Adjusted EBITDA (Non-GAAP)
$ 110.4 $ 138.2 $ 335.0 $ 378.3
~~_______________~~


Reconciliation of Net Income (Loss) to Adjusted EBITDA
	Three Months Ended March 31,
In millions		2024		2023
Net income (loss) (GAAP)		$	(56.0)	$	50.7
Interest expense, net		22.3		19.6
Provision (benefit) for income taxes		(15.9)		13.4
Depreciation and amortization - Performance Materials		9.6		10.0
Depreciation and amortization - Performance Chemicals		12.4		13.8
Depreciation and amortization - Advanced Polymer Technologies		7.6		7.3
Restructuring and other (income) charges, net (1)		65.3		5.6
Acquisition and other-related (income) costs, net (2)		0.3		2.7
Loss on CTO resales (3)		26.5		—
(Gain) loss on strategic investments (4)		4.8		(19.2)
Adjusted EBITDA (Non-GAAP)		$	76.9	$	103.9

_______________

(1) ~~Excludes $4.6 million~~We regularly perform strategic reviews and ~~$5.6~~assess the return on our operations, which sometimes results in a plan to restructure the business. These costs are excluded from our reportable segment results and for the purposes of calculating our non-GAAP financial performance measures. Additionally, this adjustment includes $2.5 million of ~~Depreciation and amortization for~~inventory charges recorded in cost of sales on our condensed consolidated statement of operations, associated with the ~~three and nine~~ ~~months ended September 30, 2023, relating to the alternative feedstock transition and North Charleston plant transition within~~repositioning of our Performance Chemicals ~~reportable~~segment in the three months ended March 31, 2024. Refer to Note 11 within the Condensed Consolidated Financial Statements for more information.

(2) Charges represent costs incurred to complete and integrate acquisitions and other strategic investments and include the expensing of the inventory fair value step-up resulting from the application of purchase accounting for acquisitions and certain legal and professional fees associated with the completion of acquisitions and strategic investments.

(3) Due to the DeRidder Plant closure, as noted in footnote 1 above, and the corresponding reduced CTO refining capacity, we may be obligated, under an existing CTO supply contract, to purchase CTO through 2025 at amounts in excess of required CTO volumes. We intend to manage our CTO volumes by reselling excess volumes (herein referred to as "CTO resales") in the open market. Since these CTO resale activities are directly attributable to the Performance Chemicals’ repositioning, that is, they do not represent normal, recurring expenses necessary to operate our business, we have excluded the CTO resale (income) charges for the purposes of calculating our non-GAAP financial performance measures. For the three months ended March 31, 2024, the loss on CTO resales relates to the Performance Chemicals segment. Refer to Note 11 to the Condensed Consolidated Financial Statements for more information.

(4) We exclude gains and losses from strategic investments from our segment results, as well as our non-GAAP financial measures, because we do not consider such gains or losses to be directly associated with the operational performance of the segment. We believe that the inclusion of such gains or losses, would impair the factors and trends affecting the historical financial performance of our reportable segments. We continue to include undistributed earnings or loss, distributions, amortization or accretion of basis differences, and other-than-temporary impairments for equity method investments that we believe are directly attributable to the operational performance of such investments, in our reportable segment results. Refer to Note 4 to the Condensed Consolidated Financial Statements for more information.

Adjusted EBITDA

Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2024 vs. 2023 ~~vs. 2022~~

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~~$1.40 billion and ~~$1.7~~$1.55 billion for ~~the full year 2023.~~2024. We expect ~~improvement in global automobile production over prior year, which will support~~ growth in our Performance Materials reportable ~~segment. In~~segment on improved global automotive production over the prior year. While our Performance Chemicals reportable segment ~~we expect growth from~~revenue will reflect the ~~pavement technologies product line with the inclusion~~impact of our ~~Ozark Materials acquisition and continued geographic expansion~~Performance Chemicals repositioning, including the exit of certain low-margin businesses 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.~~we expect continued growth from our road technologies product line due to technology adoption and continued geographic expansion. Our Advanced Polymer Technologies reportable segment is expected to see ~~growth~~demand rebound in industrial markets in the ~~automotive end market, however, we expect pressure in all other end markets.~~second half of the year.

Adjusted EBITDA is expected to be between ~~$375~~$365 million toand $390 million for ~~the full year 2023.~~2024. We expect ~~EBITDA~~ growth ~~for~~in our Performance Materials segment EBITDA, as volumes shift to ~~higher margin~~higher-margin automotive carbon due to improved global automotive ~~production. For~~production and ongoing hybrid vehicle adoption. In Performance Chemicals, we will have less exposure to certain lower-margin end markets from our industrial specialties product line due to the repositioning of the segment, and we expect to see continued growth in our road technologies product line which improves the margin profile for the segment. Performance Chemicals will continue to be impacted by elevated CTO costs, which we expect to trend lower in the second half of the year. We anticipate improved Advanced Polymer Technologies ~~we anticipate improved margins~~segment EBITDA on a combination of ~~pricing~~increased volumes 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.

favorable manufacturing throughput.

A reconciliation of net income to adjusted EBITDA as projected for ~~2023~~2024 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;~~income (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 ~~within~~in 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.

4036

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, 2023,~~March 31, 2024, our undrawn capacity under our revolving credit facility was ~~$172.7~~$233.5 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, income tax payments, purchases pursuant to our stock repurchase program (and related excise tax payments), income tax payments, additional spending associated with our Performance Materials' intellectual property litigation, and restructuring activities such as ~~our alternative feedstock transition,~~the North Charleston plant transition, and the ~~actions announced in the fourth quarter~~repositioning of ~~2023~~our Performance Chemicals operating segment as further described within Note 1711 to the Condensed Consolidated Financial Statements included within ~~the condensed consolidated financial statements.~~this Form 10-Q. 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 notes, seek additional debt financing, issue equity securities, or some combination thereof.

Cash and cash equivalents totaled ~~$84.5~~$88.5 million at ~~September 30, 2023.~~March 31, 2024. 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, 2023,~~March 31, 2024, included ~~$74.3~~$84.9 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 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~~Debt and Finance Lease Obligations

~~On October 2, 2023, we entered into~~Refer to Note 9 to the Condensed Consolidated Financial Statements included within this Form 10-Q for 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 ownedsummary of our outstanding debt obligations 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.revolving credit facility.

Other Potential Liquidity Needs

Share Repurchases

On July 25, 2022, our Board of Directors authorized the repurchase of up to ~~$500~~$500.0 million of our common stock (the "2022 Authorization"), and rescinded the prior outstanding repurchase ~~authorizations~~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.~~Act.

Authorization.

Capital Expenditures

Projected ~~2023~~2024 capital expenditures are ~~$95-~~$90-$~~105~~110 million. We have no material commitments associated with these projected capital expenditures as of ~~September 30, 2023~~March 31, 2024.

Cash flow comparison of the ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2024 and 2023 ~~and 2022~~


		Nine Months Ended September 30,
	Three Months Ended March 31,								Three Months Ended March 31,
In millions	In millions	2023		2022		In millions	2024	2023
Net cash provided by (used in) operating activities	Net cash provided by (used in) operating activities	$	160.5	$	214.9
Net cash provided by (used in) investing activities	Net cash provided by (used in) investing activities	(56.3)		(144.7)
Net cash provided by (used in) financing activities	Net cash provided by (used in) financing activities	(93.4)		(264.9)

Cash flows provided by (used in) operating activities

Cash flows ~~provided by (used in)~~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~~$12.1 million for the ~~nine~~three months ended ~~September 30, 2023.~~March 31, 2024.

Cash ~~provided by (used in)~~used in operating activities for the ~~nine~~three months ended ~~September 30,~~March 31, 2024, when compared to the three months ended March 31, 2023 decreased by $17.4 million. This decrease was driven by reduced cash earnings of $59.8 million, higher spending on restructuring initiatives of $4.4 million and CTO resale spending of $19.8 million and higher cash interest paid of $1.7 million due primarily to rising interest rates when compared to 2023. Partially offsetting these cash outflows was a net ~~increase in overall working capital of $29.5 million, despite a decrease~~reduction in trade working capital ~~(accounts~~of $34.6 million (including accounts receivable, inventory, and accounts payable), reduced employee compensation payments during the first quarter of ~~$22.1 million. Cash flow from operations was reduced by an increase in cash interest paid~~2024 of ~~$22.0~~$28.5 million ~~due to rising interest rates~~ and ~~outstanding borrowings during 2023 when compared to 2022, and decreased cash earnings of $17.6 million. This was partially offset by~~ a reduction in tax payments of ~~$14.7 million.~~$1.8 million as a result of the lower cash earnings.

Cash flows provided by (used in) investing activities

Cash used in investing activities in the ~~nine~~three months ended ~~September 30, 2023~~March 31, 2024 was ~~$56.3~~$16.3 million and was primarily driven by capital expenditures of ~~$80.6 million, partially offset by the proceeds from the sale of a strategic investment for $31.5~~$16.6 million. In the ~~nine~~three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ capital spending included the base maintenance capital supporting ongoing operations, and growth and cost improvement ~~spending, primarily related~~spending. The change in Net cash provided by (used in) investing activities when compared to ~~our business transformation initiative (see Note 11 within~~ the ~~Condensed Consolidated Financial Statements for more information).~~prior year period is due to the first quarter 2023 sale of a strategic investment that resulted in a cash in flow of $31.4 million.


Capital expenditure categories	Capital expenditure categories	Nine Months Ended September 30,				Capital expenditure categories	Three Months Ended March 31,
In millions	In millions	2023		2022		In millions	2024	2023
Maintenance	Maintenance	$	44.7	$	45.9
Safety, health and environment	Safety, health and environment	9.4		10.7
Growth and cost improvement	Growth and cost improvement	26.5		36.7
Total capital expenditures	Total capital expenditures	$	80.6	$	93.3

Cash flows provided by (used in) financing activities

Cash provided by financing activities in the three months ended March 31, 2024, was $23.4 million and was primarily driven by borrowings on our revolving credit facility and other borrowings of $81.4 million, partially offset by payments on our revolving credit facility of $55.0 million.

Cash used in financing activities in the ~~nine~~three months ended ~~September 30,~~March 31, 2023 was ~~$93.4~~$5.6 million and was primarily driven by payments on ~~our~~ revolving credit facility of ~~$240.1~~$60.3 million, ~~and~~ the repurchase of common stock of ~~$92.1~~$33.4 million, and tax payments related to tax withholdings on restricted stock unit vestings of $4.5 million, partially offset by borrowings on our revolving credit facility of ~~$237.1~~$90.3 million.

~~Cash used in financing activities in~~New Accounting Guidance

Refer to Note 2 to the ~~nine months ended September 30, 2022 was $264.9 million~~Condensed Consolidated Financial Statements within this Form 10-Q for a full description of recent accounting pronouncements including the respective expected dates of adoption 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 $139.2 million, partially offset by borrowingsexpected effects on our ~~revolving credit facility of $788.0 million.~~Condensed Consolidated Financial Statements.

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~~New Accounting Guidance~~

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 ~~2022~~2023 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 ~~2022~~2023 Annual Report. Our critical accounting policies have not substantially changed from those described in the ~~2022~~2023 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 2124 percent of our net sales in the first ~~nine~~three months of ~~2023.~~2024. 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~~three months ended ~~September 30, 2023,~~March 31, 2024, would have decreased our net sales and income before income taxes by approximately ~~$13.2~~$3.9 million or one percent, and ~~$3.9~~$1.2 million or ~~one~~two 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~~three months ended ~~September 30, 2022,~~March 31, 2023, would have decreased our net sales and income before income taxes by approximately ~~$15.0~~$3.8 million or one percent, and ~~$5.9~~$1.1 million or two percent, respectively.

Interest rate risk

As of ~~September 30, 2023,~~March 31, 2024, approximately ~~$827.0~~$847.6 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 for the ~~nine~~three months ended ~~September 30, 2023,~~March 31, 2024, would have increased our annual interest expense by approximately ~~$8.3~~$8.5 million or ten percent. Comparatively, a 100 basis point increase in the variable interest rate component of our borrowings for the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, would have increased our interest expense by approximately ~~$5.1~~$8.6 million or ~~ten~~eleven percent.

Commodity 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 level of our profitability tend to fluctuate with the changes in these commodity prices.

Crude tall oil price risk

Our results of operations are directly affected by the cost of our raw materials, particularly CTO. Total raw material CTO ~~which represented~~spend was approximately ~~25 percent of our consolidated cost of sales for~~$74 million during the ~~nine~~three months ended ~~September 30, 2023.~~March 31, 2024. Comparatively, total raw material CTO ~~represented~~spend was approximately ~~13 percent of our consolidated cost of sales for~~$41 million during the ~~nine~~three months ended ~~September 30, 2022.~~March 31, 2023. 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 be adversely affected by increases in the cost of CTO if we are unable to pass the increases on to our customers. Based on average pricing during the ~~nine~~three months ended ~~September 30, 2023,~~March 31, 2024, a hypothetical unhedged, unfavorable 10 percent increase in the market price for CTO would have increased our ~~cost of sales~~spend for the ~~nine~~three months

ended ~~September 30, 2023,~~March 31, 2024, by approximately ~~$22~~$7.4 million, ~~or two percent,~~ which we may not have been able to pass on to our customers. Comparatively, based on average pricing during the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, a hypothetical unhedged, unfavorable 10 percent increase in the market price for CTO would have increased our ~~cost of sales~~spend for the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, by approximately ~~$10 million or one percent.~~$4.1 million.

Other market risks

Information about our other remaining market risks for the period ended ~~September 30, 2023,~~March 31, 2024, does not differ materially from that discussed under Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk of our ~~2022~~2023 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, 2023,~~March 31, 2024, 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.~~level.

b) Changes in Internal Control over Financial Reporting

We 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~~There have been no changes in Ingevity's internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) during the quarter ended ~~September 30, 2023~~March 31, 2024 that materially affected, or are reasonably likely to materially affect, Ingevity's internal control 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 13 – Commitments and Contingencies within the Condensed Consolidated Financial Statements.

ITEM 1A. RISK FACTORS

Part I, Item 1A, Risk Factors of our ~~2022~~2023 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. 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 ~~2022~~2023 Annual Report for the quarter ended ~~September 30, 2023.~~March 31, 2024.

~~There may be negative impacts to our business arising out of the closure~~The repositioning 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,~~Performance Chemicals business will negatively impact the company’s net sales 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 otherwise adversely affect our financial condition and results of ~~operations.~~operations during this transition period.

On November 1, 2023, we announced a number of strategic actions designed to further reposition our Performance Chemicals reportable segment to improve the profitability and reduce the cyclicality of the company as a whole. These initiatives—including our plan to close our plant in DeRidder, Louisiana—will result in the reduction, and in some cases exit, of certain historical end-use markets of our industrial specialties product line, such as adhesives, publication inks, and oilfield, approximately 45 percent of our industrial specialties product line historical annualized net sales.

We expect to incur aggregate charges of approximately $280 million associated with the Performance Chemicals' repositioning, consisting of approximately $185 million in asset-related charges, approximately $15 million in severance and other employee-related costs, and approximately $80 million in other restructuring costs, including decommissioning, dismantling and removal charges, and contract termination costs. The ~~closure~~company expects approximately $185 million of ~~WestRock’s paper mill in North Charleston may negatively impact our production, financial condition, and results of operations.~~the total charges to be non-cash.

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, 2023.~~March 31, 2024.


				Publicly Announced Program (1)
Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total 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~~January 1-31, ~~2023~~2024	—	$	—	—	$	353,384,633
~~August 1-31, 2023~~February 1-29, 2024	—	$	—	—	$	353,384,633
~~September 1-30, 2023~~March 1-31, 2024	—	$	—	—	$	353,384,633
Total	—			—

_______________

(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 ~~authorizations~~authorization with respect to the shares that remained unused under the prior 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.~~Act.

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
3.1			Third Amended and Restated Certificate of Incorporation of Ingevity Corporation.







31.1			Rule 13a-14(a)/15d-14(a) Certification of the Company’s Principal Executive Officer.

31.2			Rule 13a-14(a)/15d-14(a) Certification of the Company’s Principal Financial Officer.

32.1			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.

32.2			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.

101			Inline 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.

104			The cover page from the Company’s Quarterly Report on Form 10-Q formatted in Inline XBRL (included in Exhibit 101).

4743

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~~May 2, ~~2023~~2024

4844


		Page No.
PART I - FINANCIAL INFORMATION		3
Item 1. Financial Statements		3
	Condensed Consolidated Statements of Operations	3
	Condensed Consolidated Statements of Comprehensive Income (Loss)	4
	Condensed Consolidated Balance Sheets	5
	Condensed Consolidated Statements of Cash Flows	6
	Notes to the Condensed Consolidated Financial Statements	7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		2926
Item 3. Quantitative and Qualitative Disclosures About Market Risk		4339
Item 4. Controls and Procedures		4440
PART II - OTHER INFORMATION		4541
Item 1. Legal Proceedings		4541
Item 1A. Risk Factors		4541
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		4541
Item 3. Defaults Upon Senior Securities		4642
Item 4. Mine Safety Disclosures		4642
Item 5. Other Information		4642
Item 6. Exhibits		4743
SIGNATURES		4844


	Contract Asset
	September 30,
In millions	2023		2022
Beginning balance	$	6.4	$	5.3
Contract asset additions	13.2		14.3
Reclassification to accounts receivable, billed to customers	(11.7)		(13.4)
Ending balance (1)	$	7.9	$	6.2


	Performance Chemicals Reporting Unit - Headroom Sensitivity Analysis
	Reporting Unit Fair Value	Revenue Growth Rate Declines by 100 Bps	EBITDA Margin Declines by 100 Bps	Discount Rate increases by 100 Bps
Headroom	19%	14%	14%	7%