What changed in this filing

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Item 1. Financial Statements

2020-07-30 compared with 2020-04-30 · 258 added, 150 removed, 717 unchanged (36% of the section changed)

2 unchanged sentences

Condensed Consolidated Statements of Operations (Unaudited)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

In millions, except per share data 2020 2019 2020 2019

17 unchanged sentences

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

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

In millions 2020 2019 2020 2019

3 unchanged sentences

Foreign currency translation adjustment ( 1.7 ) ( 15.5 ) ( 41.8 ) ( 6.1 )

Unrealized gain (loss) on net investment hedges, net of tax provision (benefit) of $ 1.7 and zero

Total foreign currency adjustments, net of tax provision (benefit) of $ 1.7 and zero

Unrealized gain (loss) on net investment hedges, net of tax provision (benefit) of $( 0.6 ), zero , $ 1.1 , and zero

( 2.2 ) ( 0.2 ) 3.5 ( 0.2 )

Total foreign currency adjustments, net of tax provision (benefit) of $( 0.6 ), zero , $ 1.1 , and zero

( 3.9 ) ( 15.7 ) ( 38.3 ) ( 6.3 )

Derivative instruments:

Unrealized gain (loss), net of tax provision (benefit) of $( 1.4 ) and zero

Unrealized gain (loss), net of tax provision (benefit) of $( 0.2 ), $( 1.2 ), $( 1.6 ), and $( 1.2 )

( 0.4 ) ( 3.6 ) ( 5.2 ) ( 3.5 )

Reclassifications of deferred derivative instruments (gain) loss, included in net income (loss), net of tax (provision) benefit of $ 0.1 , zero , $ 0.1 , and $( 0.1 )

0.2 ( 0.1 ) 0.3 ( 0.5 )

Total derivative instruments, net of tax provision (benefit) of $( 0.1 ), $( 1.2 ), $( 1.5 ), and $( 1.3 )

1 unchanged sentence

Other comprehensive income (loss), net of tax provision (benefit) of $( 0.7 ), $( 1.2 ), $( 0.4 ), and $( 1.3 )

( 4.1 ) ( 19.4 ) ( 43.2 ) ( 10.3 )

Comprehensive income (loss) $ 16.1 $ 37.4 $ 22.3 $ 69.2

2 unchanged sentences

Condensed Consolidated Balance Sheets

In millions, except share and par value data March 31, 2020 December 31, 2019

In millions, except share and par value data June 30, 2020 December 31, 2019

Assets (Unaudited)

43 unchanged sentences

Condensed Consolidated Statements of Cash Flows (Unaudited)

Three Months Ended March 31,

Six Months Ended June 30,

In millions 2020 2019

3 unchanged sentences

Depreciation and amortization 48.4 39.9

Non cash operating lease costs 9.4 10.4

Deferred income taxes 6.5 1.6

Restructuring and other (income) charges, net 7.8 0.3

Share-based compensation 3.2 7.4

Pension and other postretirement benefit costs 0.4 0.3

Other non-cash items 9.2 8.1

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Prepaid and other current assets ( 2.7 ) ( 6.2 )

Planned major maintenance outage ( 0.8 ) ( 2.0 )

Accounts payable 9.4 15.4

Accrued expenses ( 3.2 ) ( 12.4 )

Accrued payroll and employee benefits ( 12.4 ) ( 26.6 )

Current liabilities ( 31.6 ) ( 15.2 )

Income taxes 2.8 6.4

Operating leases ( 9.4 ) ( 10.2 )

Changes in other operating assets and liabilities, net ( 1.4 ) —

23 unchanged sentences

$ 185.6 $ 54.4

(1) Includes restricted cash of $ 8.0 million and $ 1.1 million and cash and cash equivalents of $ 302.7 million and $ 38.4 million of March 31, 2020 and 2019, respectively.

(1) Includes restricted cash of $ 8.0 million and $ 1.1 million and cash and cash equivalents of $ 177.6 million and $ 53.3 million at June 30, 2020 and 2019, respectively.

Restricted cash is included within "Prepaid and other current assets" within the condensed consolidated balance sheets.

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Notes to the Condensed Consolidated Financial Statements

March 31, 2020

June 30, 2020

Description of Business and Basis of Presentation

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Actual results could differ from these estimates.

During the three months ended March 31, 2020 and subsequent to this date, there have been significant changes to the global economic situation and to public securities markets as a consequence of the novel strain of coronavirus ("COVID-19") pandemic.

During the three and six months ended June 30, 2020 and subsequent to this date, there have been significant changes to the global economic situation and to public securities markets as a consequence of the novel strain of coronavirus ("COVID-19") pandemic.

It is reasonably possible that this could cause changes to estimates as a result of the financial circumstances of the markets in which we operate, the price of our publicly traded equity in comparison to the carrying value, and the health of the global economy.

Such changes to estimates could potentially result in impacts that would be material to the condensed consolidated financial statements.

While there was not a material impact to our condensed consolidated financial statements as of and for the quarter ended March 31, 2020, our future assessment of the magnitude and duration of COVID-19, as well as other factors, could result in material impacts to our consolidated financial statements in future reporting periods.

While there was not a material impact to our condensed consolidated financial statements as of and for the three and six months ended June 30, 2020, our future assessment of the magnitude and duration of COVID-19, as well as other factors, could result in material impacts to our consolidated financial statements in future reporting periods.

Certain prior year amounts have been reclassified to conform with the current year's presentation.

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Notes to the Condensed Consolidated Financial Statements

March 31, 2020

June 30, 2020

Coronavirus Pandemic

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In order to strengthen our short term liquidity and to ensure financial flexibility, in March 2020, we drew down $ 250 million from our revolving credit facility as a precautionary measure and also suspended our share repurchase program.

During the three months ended June 30, 2020 we paid back $ 155 million of this drawn down amount.

We also implemented work-from-home policies and protocols for the majority of our global salaried workforce, as well as social distancing practices to ensure the safety of our employees at our manufacturing facilities.

Further, in April 2020, we decreased production at some of our U.S.

based Performance Materials' manufacturing plants, due to COVID-19 impacts to the projected demand of our U.S.

based automotive customers.

As of March 31, 2020, we evaluated, in accordance with ASC 350 - Goodwill and Other and ASC 360 - Property, Plant, and Equipment, whether the economic impacts of the COVID-19 pandemic constitute triggering events requiring impairment or recoverability analysis to be performed.

Further, during the second quarter, we decreased production at some of our U.S.

and China based manufacturing plants due to COVID-19 impacts to the projected customer demand and implemented a cost reduction initiative further described in Note 14 .

As of March 31, 2020 and June 30, 2020, we evaluated, in accordance with ASC 350 - Goodwill and Other and ASC 360 - Property, Plant, and Equipment, whether the economic impacts of the COVID-19 pandemic constitute triggering events requiring impairment or recoverability analysis to be performed.

We considered the current and expected future economic and market conditions surrounding the COVID-19 pandemic and its impact on each of the reporting units and asset groups.

Further, we assessed the current market capitalization, forecasts and the amount of headroom in the 2019 impairment test.

We determined that a triggering event has not occurred which would require an interim impairment test to be performed.However, a lack of recovery or further deterioration in market conditions related to the general economy and the industries in which we operate, a sustained trend of weaker than anticipated financial performance, a lack of recovery or further decline in our share price for a sustained period of time, or an increase in the market-based weighted average cost of capital, among other factors, could significantly impact the impairment analysis and may result in future impairment charges that, if incurred, could have a material adverse effect on our financial condition and results of operations.

While the disruptions caused by the pandemic are currently expected to be temporary, there is uncertainty regarding the virus's duration.

Further, we assessed our current market capitalization, forecasts and the amount of excess fair value above book value as calculated in our 2019 impairment test.

We determined that a triggering event has not occurred which would require an interim impairment test to be performed.

However, a lack of sustained recovery or further deterioration in market conditions related to the general economy and the industries in which we operate, a sustained trend of weaker than anticipated financial performance, or further decline in our share price for a sustained period of time, or an increase in the market-based weighted average cost of capital, among other factors, could significantly impact the impairment analysis and may result in future impairment charges that, if incurred, could have a material adverse effect on our financial condition and results of operations.

While the disruptions caused by the pandemic are currently expected to be temporary, there is uncertainty regarding the virus's duration and severity.

COVID-19 has impacted, and will continue to impact, our results of operations, financial position, and liquidity.

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We adopted this standard on a prospective basis on January 1, 2020.

As a result of the adoption, we anticipate capitalizing certain implementation costs that were previously expensed as incurred, which will be recorded to either prepaid

As a result of the adoption, we anticipate

Ingevity Corporation

Notes to the Condensed Consolidated Financial Statements

March 31, 2020

and other current assets or other assets on the condensed consolidated balance sheets, depending on the duration of the agreement.

June 30, 2020

capitalizing certain implementation costs that were previously expensed as incurred, which will be recorded to either prepaid and other current assets or other assets on the condensed consolidated balance sheets, depending on the duration of the agreement.

The impact of the adoption did not have a material impact on our Condensed Consolidated Financial Statements and related disclosures.

11 unchanged sentences

Using a PDM, we calculated an expected credit loss allowance at January 1, 2020 of $ 0.6 million, which was recorded as an adjustment to the opening balance of retained earnings.

The following table displays changes in our allowance for credit losses as of March 31, 2020, including the transition impact of adopting the CECL standard.

The following table displays changes in our allowance for credit losses as of June 30, 2020, including the transition impact of adopting the CECL standard.

(in millions) Balance at

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Impact from Adoption of ASC 326 Balance at January 1, 2020 Current Period Provision Balance at

March 31, 2020 (2)

June 30, 2020 (2)

Allowance for credit losses $ 0.5 0.6 1.1 1.6 $ 2.7

1 unchanged sentence

(1) The allowance for credit losses at December 31, 2019 of $ 0.5 million was included in "Accounts receivable, net" on the condensed consolidated balance sheets.

(2) The allowance for credit losses at March 31, 2020 of $ 0.5 million and $ 0.9 million was included "Accounts receivable, net" and "Restricted investment" on the condensed consolidated balance sheets, respectively.

(2) The allowance for credit losses at June 30, 2020 of $ 1.7 million and $ 1.0 million was included "Accounts receivable, net" and "Restricted investment" on the condensed consolidated balance sheets, respectively.

Our expected credit losses can vary from period to period based on several factors, such as changes in bond ratings, actual observed bond defaults, and overall economic environment.

The primary factor that contributed to our provision for expected credit losses in the first quarter of 2020 was a pessimistic outlook of the macroeconomic environment due to the COVID-19 pandemic, and related effects on the financial performance of U.S.-based corporations.

The increase in the allowance for credit losses of $ 0.3 million is attributed to Level 1 securities expected credit loss.

There was no material change in the accounts receivable expected credit loss.

The primary factor that contributed to our provision for expected credit losses in the first half of 2020 was a pessimistic outlook of the macroeconomic environment due to the COVID-19 pandemic, and related effects on the financial performance of U.S.-based corporations.

The increase in the allowance for credit losses of $ 1.6 million is attributed to $ 0.4 million for Level 1 securities and $ 1.2 million for accounts receivable expected credit losses.

Recently Issued Accounting Pronouncements

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Simplifying the Accounting for Income Taxes." This ASU amends ASC 740 to add, remove, and clarify disclosure requirements related to income taxes.

The new standard is effective for fiscal years ending after December 15, 2020.

Although we are still evaluating the impact of this

Ingevity Corporation

Notes to the Condensed Consolidated Financial Statements

March 31, 2020

new standard, we do not believe that the adoption of this new standard will materially impact our Condensed Consolidated Financial Statements and related disclosures.

June 30, 2020

new standard is effective for fiscal years ending after December 15, 2020.

Although we are still evaluating the impact of this new standard, we do not believe that the adoption of this new standard will materially impact our Condensed Consolidated Financial Statements and related disclosures.

In March 2020, the FASB issued ASU 2020-04 "Reference Rate Reform (Topic 848):

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Perstorp Holding AB's Caprolactone Business

On February 13, 2019, we completed the acquisition of 100 percent of the equity of Perstorp UK Ltd with Perstorp Holding AB ("Seller"), including the Seller's entire caprolactone business ("Caprolactone Business"), herein referred to as the "Caprolactone Acquisition." The Caprolactone Acquisition was completed for an aggregate purchase price of € 578.9 million ($ 652.5 million), less assumed debt of € 100.4 million ($ 113.1 million).

On February 13, 2019, we completed the acquisition of 100 % of the equity of Perstorp UK Ltd with Perstorp Holding AB ("Seller"), including the Seller's entire caprolactone business ("Caprolactone Business"), herein referred to as the "Caprolactone Acquisition." The Caprolactone Acquisition was completed for an aggregate purchase price of € 578.9 million ($ 652.5 million), less assumed debt of € 100.4 million ($ 113.1 million).

At closing, the assumed debt was settled with an affiliate of the Seller.

The Caprolactone Acquisition has been integrated into our Performance Chemicals segment and included within our engineered polymers product line.

The Caprolactone Acquisition contributed Net sales of $ 36.3 million and $ 24.2 million for the three months ended March 31, 2020 and 2019, respectively, to the consolidated operating results of Ingevity.

The Caprolactone Acquisition contributed Net sales of $ 31.6 million and $ 34.3 million for the three months ended June 30, 2020 and 2019, respectively, and $ 67.9 million and $ 58.5 million for the six months ended June 30, 2020 and 2019, respectively, to our consolidated operating results.

A substantial portion of the Caprolactone Business was integrated into our existing Performance Chemicals operations during 2019.

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Notes to the Condensed Consolidated Financial Statements

March 31, 2020

June 30, 2020

Purchase Price Allocation

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Inventories are accounted for on a first-in, first-out basis of accounting.

(2) The aggregate amortization expense was $ 4.8 million and $ 1.9 million for the three months ended March 31, 2020 and 2019, respectively.

(2) The aggregate amortization expense was $ 4.7 million and $ 3.9 million for the three months ended June 30, 2020 and 2019, respectively, and the aggregate amortization expense was $ 9.5 million and $ 5.8 million for the six months ended June 30, 2020 and 2019, respectively.

Estimated amortization expense is as follows:

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The following unaudited pro forma results of operations assume that the Caprolactone Acquisition occurred at the beginning of the periods presented.

These unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of what the actual results of operations would have been if the acquisitions occurred at the beginning of the periods presented, nor are they indicative of future results of operations.

These unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of what the actual results of operations would have been if the acquisition occurred at the beginning of the periods presented, nor are they indicative of future results of operations.

The pro forma results include additional interest expense on the debt issued to finance the acquisition, amortization and depreciation expense based on the estimated fair value and useful lives of intangible assets and tangible assets, and related tax effects.

The pro forma results presented below are adjusted for the removal of Acquisition and other-related costs for the three months ended March, 31 2019 of $ 31.2 million.

The pro forma results presented below are adjusted for the removal of Acquisition and other-related costs for the six months ended June 30, 2019 of $ 32.0 million.

Ingevity Corporation

Notes to the Condensed Consolidated Financial Statements

March 31, 2020

Three Months Ended

In millions March 31, 2019

June 30, 2020

In millions Six Months Ended June 30, 2019

Net sales $ 647.3

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The following table summarizes such costs.

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

In millions 2020 2019 2020 2019

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The following table presents our Net sales disaggregated by product line.

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

In millions 2020 2019 2020 2019

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Engineered Polymers product line (1)

31.6 34.3 67.9 58.5

Performance Chemicals segment $ 186.2 $ 229.7 $ 353.3 $ 397.4

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see Note 4 for more information.

The following table presents our Net sales disaggregated by geography, based on the delivery address of our customer.

Ingevity Corporation

Notes to the Condensed Consolidated Financial Statements

March 31, 2020

The following table presents our Net sales disaggregated by geography, based on the delivery address of our customer.

Three Months Ended March 31,

June 30, 2020

Three Months Ended June 30, Six Months Ended June 30,

In millions 2020 2019 2020 2019

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Contract Asset (1)

In millions March 31, 2020 March 31, 2019

In millions June 30, 2020 June 30, 2019

Beginning balance $ 6.2 $ 5.1

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There were no transfers of assets and liabilities that were recorded at fair value between Level 1 and Level 2 during the periods reported.

There were no non-recurring fair value measurements in the condensed consolidated balance sheets as of March 31, 2020 or December 31, 2019.

During the periods ended June 30, 2020 and December 31, 2019, we had no significant measurements of assets or liabilities at fair value on a nonrecurring basis subsequent to their initial recognition.

Ingevity Corporation

Notes to the Condensed Consolidated Financial Statements

March 31, 2020

June 30, 2020

In millions Level 1 (1)

March 31, 2020

June 30, 2020

Equity securities (4)

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$ 11.4 $ — $ — $ 11.4

Separation-related reimbursement awards (6)

Contingent consideration (7)

Total liabilities $ 11.4 $ — $ 1.1 $ 12.5

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

(7) Included within "Other liabilities" on the condensed consolidated balance sheet.

Equity Securities

Our investments in equity securities with a readily determinable fair value totaled $ 0.1 million and $ 0.4 million at June 30, 2020 and December 31, 2019, respectively.

The net realized gain/(loss) recognized during the three and six months ended June 30, 2020 was zero and $( 0.1 ) million, respectively, and the net realized gain/(loss) recognized during both the three and six months ended June 30, 2019 was zero .

The unrealized gain/(loss) was zero for the three and six months ended June 30, 2020 and 2019.

The aggregate carrying value of investments in equity securities where fair value is not readily determinable totaled zero and $ 1.5 million as of June 30, 2020 and December 31, 2019, respectively, and is included in "Other assets" on the condensed consolidated balance sheet.

During the three and six months ended June 30, 2020, we recorded an impairment charge of $ 0.1 million and $ 1.4 million, respectively, to an equity security where fair value is not readily determinable held within our Performance Materials segment.

The impairment charge represented the difference between liquidation value of the investment and our book value at the time our investment was liquidated.

Ingevity Corporation

Notes to the Condensed Consolidated Financial Statements

March 31, 2020

Equity Securities

Our investments in equity securities with a readily determinable fair value totaled $ 0.1 million and $ 0.4 million at March 31, 2020 and December 31, 2019, respectively.

The net realized gain/(loss) recognized during the three months ended March 31, 2020 and 2019 was $( 0.1 ) million and zero , respectively.

The unrealized gain/(loss) was zero for both the three months ended March 31, 2020 and 2019.

The aggregate carrying value of investments in equity securities where fair value is not readily determinable totaled $ 0.2 million and $ 1.5 million as of March 31, 2020 and December 31, 2019, respectively, and is included in "Other assets" on the condensed consolidated balance sheet.

During the three months ended March 31, 2020, we recorded an impairment charge of $ 1.3 million to an equity security where fair value is not readily determinable held within our Performance Materials segment.

The charge was based on recently updated expected future cash flow projections for the investment.

June 30, 2020

Restricted Investment

At March 31, 2020, the book value of our restricted investment, which is accounted for as held to maturity ("HTM") and therefore held at amortized costs, was $ 72.2 million, which includes an allowance for credit losses of $ 0.9 million and cash of $ 0.8 million, and the fair value was $ 75.4 million, based on Level 1 inputs.

Our restricted investment is a trust managed in order to secure repayment of the finance lease obligation, associated with Performance Materials' Wickliffe, Kentucky manufacturing site, at maturity.

The trust, presented as restricted investment on our consolidated balance sheet, purchased long term bonds that mature in 2025 and 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 as interest income and presented within Interest income on our consolidated statement of operations.

At June 30, 2020, the book value of our restricted investment, which is accounted for as HTM and therefore held at amortized costs, was $ 72.5 million, which includes an allowance for credit losses of $ 1.0 million and cash of $ 1.2 million, and the fair value was $ 79.3 million, based on Level 1 inputs.

The following table shows the total amortized cost of our HTM debt securities by credit rating.

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As the rating decreases, the risk present in holding the bond is inherently increased, leading to an increase in expected credit losses.

March 31, 2020

June 30, 2020

(in millions) AA+ AA A A- BBB+ Total

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Debt Obligations

At March 31, 2020, the book value of finance lease obligations was $ 80.0 million and the fair value was $ 100.1 million.

At June 30, 2020, the book value of finance lease obligations was $ 80.0 million and the fair value was $ 102.6 million.

The fair value of our finance lease obligations is based on the period-end quoted market prices for the obligations, using Level 2 inputs.

The carrying amount, excluding debt issuance fees, of our variable interest rate long-term debt was $ 1,115.9 million as of March 31, 2020.

The carrying amount, excluding debt issuance fees, of our variable interest rate long-term debt was $ 956.3 million as of June 30, 2020.

The carrying value is a reasonable estimate of the fair value of the outstanding debt based on the variable interest rate of the debt.

At March 31, 2020, the book value of our fixed rate debt was $ 300.0 million, and the fair value was $ 282.8 million, based on Level 2 inputs.

At June 30, 2020, the book value of our fixed rate debt was $ 300.0 million, and the fair value was $ 296.6 million, based on Level 2 inputs.

Contingent Consideration

In connection with the acquisition of certain assets in May 2020, we are contingently obligated to make an additional payment for such assets of up to an aggregate amount of $ 7.0 million.

The contingent consideration is payable if certain sales volume targets are achieved prior to the expiration on December 31, 2024 .

The fair value of the five-year revenue earn-out consideration was $ 1.1 million at June 30, 2020.

Any subsequent changes in the fair value of the contingent consideration liability will be recorded in current period earnings as a selling, general and administrative expense.

The following table summarizes the activity for financial liabilities utilizing Level 3 fair value measurements:

Ingevity Corporation

Notes to the Condensed Consolidated Financial Statements

June 30, 2020

Contingent Consideration

In millions June 30, 2020

Beginning balance $ —

Newly issued 1.1

Change in revaluation of contingent consideration included in earnings —

Exercises/settlements —

Ending balance (1)

______________

(1) Included within "Other liabilities" on the condensed consolidated balance sheet.

Inventories, net

In millions March 31, 2020 December 31, 2019

In millions June 30, 2020 December 31, 2019

Raw materials $ 49.8 $ 42.6

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Inventories, net $ 223.5 $ 212.5

Ingevity Corporation

Notes to the Condensed Consolidated Financial Statements

March 31, 2020

Property, Plant and Equipment, net

In millions March 31, 2020 December 31, 2019

In millions June 30, 2020 December 31, 2019

Machinery and equipment $ 978.5 $ 964.3

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_______________

(1) This includes finance leases related to machinery and equipment at our Wickliffe, Kentucky facility of $ 68.8 million and $ 68.8 million, and net book value of $ 5.8 million and $ 6.0 million at March 31, 2020, and December 31, 2019, respectively.

This also includes finance leases related to our Waynesboro, Georgia manufacturing facility for (a) machinery and equipment of $ 18.4 million and $ 18.4 million and net book value of $ 16.5 million and $ 16.8 million, (b) construction in progress of $ 8.3 million and $ 6.4 million and (c) buildings and leasehold improvements of $ 4.3 million and $ 4.2 million and net book value of $ 4.2 million and $ 4.20 million at March 31, 2020 and December 31, 2019, respectively.

(1) This includes finance leases related to machinery and equipment at our Wickliffe, Kentucky facility of $ 68.8 million and $ 68.8 million and net book value of $ 5.7 million and $ 6.0 million at June 30, 2020, and December 31, 2019, respectively.

This also includes finance leases related to our Waynesboro, Georgia manufacturing facility for (a) machinery and equipment of $ 18.5 million and $ 18.4 million and net book value of $ 16.3 million and $ 16.8 million, (b) construction in progress of $ 8.8 million and $ 6.4 million and (c) buildings and leasehold improvements of $ 4.4 million and $ 4.2 million and net book value of $ 4.2 million and $ 4.2 million at June 30, 2020 and December 31, 2019, respectively.

Amortization expense associated with these finance leases is included within depreciation expense.

Ingevity Corporation

Notes to the Condensed Consolidated Financial Statements

June 30, 2020

Goodwill and Other Intangible Assets, net

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Foreign currency translation ( 20.7 ) — ( 20.7 )

March 31, 2020 $ 412.5 $ 4.3 $ 416.8

There were no events or circumstances indicating that goodwill might be impaired as of March 31, 2020.

June 30, 2020 $ 411.4 $ 4.3 $ 415.7

There were no events or circumstances indicating that goodwill might be impaired as of June 30, 2020.

Other Intangible Assets

All of our other intangibles, net are related to the Performance Chemicals operating segment.

The following table summarizes these assets:

March 31, 2020 December 31, 2019

June 30, 2020 December 31, 2019

In millions Gross Accumulated amortization Net Gross Accumulated amortization Net

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

At June 30, 2020 and December 31, 2019 , the intangible assets subject to amortization were allocated among our business segments as follows:

In millions June 30, 2020 December 31, 2019

Performance Chemicals $ 361.5 $ 396.2

Performance Materials 2.2 —

Total Other intangibles, net $ 363.7 $ 396.2

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

Ingevity Corporation

Notes to the Condensed Consolidated Financial Statements

March 31, 2020

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

In millions 2020 2019 2020 2019

3 unchanged sentences

$ 7.9 $ 7.4 $ 16.2 $ 12.9

_______________

(1) See Note 4 for more information about the Caprolactone Acquisition, and the related increase in amortization expense.

Ingevity Corporation

Notes to the Condensed Consolidated Financial Statements

June 30, 2020

Based on the current carrying values of intangible assets, estimated pre-tax amortization expense for the next five years is as follows:

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dollar denominated debt to euro denominated debt is recorded as interest income on the condensed consolidated statements of operations.

The fair value of the fixed-to-fixed cross currency interest rate swap was an asset (liability) of $ 10.4 million and $ 3.0 million at March 31, 2020 and December 31, 2019, respectively.

During the three months ending March 31, 2020, we recognized net interest income associated with this financial instrument of $ 0.8 million.

The fair value of the fixed-to-fixed cross currency interest rate swap was a net asset (liability) of $ 7.6 million and $ 3.0 million at June 30, 2020 and December 31, 2019, respectively.

During the three and six months ending June 30, 2020, we recognized net interest income associated with this financial instrument of $ 0.5 million and $ 1.3 million, respectively, and during both the three and six months ended June 30, 2019, we recognized net interest income associated with this financial instrument of $ 0.6 million.

Cash Flow Hedges

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Designated cash flow hedges entered to minimize foreign currency exchange risk of forecasted revenue transactions are recorded to "Net sales" on the consolidated statement of operations when the forecasted transaction occurs.

As of March 31, 2020, there were $ 14.7 million open foreign currency derivative contracts.

The fair value of the designated foreign currency hedge contracts was an asset (liability) of $ 0.3 million and zero at March 31, 2020 and December 31, 2019, respectively.

As of June 30, 2020, there were $ 10.2 million open foreign currency derivative contracts.

The fair value of the designated foreign currency hedge contracts was an asset (liability) of $ 0.1 million and zero at June 30, 2020 and December 31, 2019, respectively.

Commodity Price Risk Management

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To mitigate expected fluctuations in market prices and the volatility to earnings and cash flow resulting from changes to pricing of natural gas purchases, from time to time, we will enter into swap contracts and zero cost collar option contracts and designate these contracts as cash flow hedges.

As of March 31, 2020, we had 1.5 million and 0.1 million mmBTUS (millions of British Thermal Units) in aggregate notional volume of outstanding natural gas commodity swap contracts and zero cost collar option contracts, respectively.

Designated commodity cash flow hedge gains or losses recorded in Accumulated other comprehensive income ("AOCI") are recognized in "Cost of sales" on the condensed consolidated

Ingevity Corporation

Notes to the Condensed Consolidated Financial Statements

March 31, 2020

statements of operations when the inventory is sold.

As of March 31, 2020, open commodity contracts hedge forecasted transactions until September 2020.

The fair value of the outstanding designated natural gas commodity hedge contracts as of both March 31, 2020 and December 31, 2019 was an asset (liability) of $( 0.5 ) million.

As of June 30, 2020, we had 1.4 million and 0.6 million mmBTUS (millions of British Thermal Units) in aggregate notional volume of outstanding natural gas commodity swap contracts and zero cost collar option contracts, respectively.

Designated commodity cash flow hedge gains or losses recorded in Accumulated other comprehensive income ("AOCI") are recognized in "Cost of sales" on the condensed consolidated statements of operations when the inventory is sold.

As of June 30, 2020, open commodity contracts hedge forecasted transactions until November 2021.

The fair value of the outstanding designated natural gas commodity hedge contracts as of June 30, 2020 and December 31, 2019 was an asset (liability) of $( 0.3 ) million and $( 0.5 ) million, respectively.

Interest Rate Risk Management

Our policy is to manage interest expense using a mix of fixed and variable rate debt.

To manage interest rate risk effectively, from time to time, we may enter into cash flow interest rate derivative instruments, which can consist of forward starting swaps and treasury locks.

To manage interest rate risk effectively, from time to time, we may enter into cash flow interest rate derivative instruments, which can consist of forward

Ingevity Corporation

Notes to the Condensed Consolidated Financial Statements

June 30, 2020

starting swaps and treasury locks.

In all cases, the notional amount of the interest rate swap agreements is equal to or less than the designated debt being hedged.

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These instruments are designated as cash flow hedges.

As of March 31, 2020, we have entered into interest rate swaps with a notional amount of $ 166.2 million to manage the variability of cash flows in the interest rate payments associated with our existing LIBOR-based interest payments, effectively converting $ 166.2 million of our floating rate debt to a fixed rate.

As of June 30, 2020, we have entered into interest rate swaps with a notional amount of $ 166.2 million to manage the variability of cash flows in the interest rate payments associated with our existing LIBOR-based interest payments, effectively converting $ 166.2 million of our floating rate debt to a fixed rate.

In accordance with the terms of this instrument, we receive floating rate interest payments based upon three-month U.S.

dollar LIBOR and in return are obligated to pay interest at a weighted average fixed rate of 3.79 percent until July 2023.

The fair value of the interest rate swap was an asset (liability) of $( 10.0 ) million and $( 3.9 ) million at March 31, 2020 and December 31, 2019, respectively.

The fair value of the interest rate swap was an asset (liability) of $( 10.4 ) million and $( 3.9 ) million at June 30, 2020 and December 31, 2019, respectively.

Ingevity Corporation

Notes to the Condensed Consolidated Financial Statements

June 30, 2020

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 March 31,

Three Months Ended June 30,

2020 2019 2020 2019

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Effectiveness Testing)

Three Months Ended March 31,

Three Months Ended June 30,

2020 2019 2020 2019

3 unchanged sentences

Total $ ( 2.8 ) $ ( 0.2 ) $ 0.5 $ 0.6

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

Six Months Ended June 30,

2020 2019 2020 2019

Cash flow hedging derivatives

Currency exchange contracts $ 0.2 $ — $ 0.2 $ — Net sales

Natural gas contracts ( 0.5 ) ( 0.6 ) ( 0.6 ) 0.6 Cost of sales

Interest rate swap contracts ( 6.5 ) ( 4.1 ) — — Interest expense, net

Total $ ( 6.8 ) $ ( 4.7 ) $ ( 0.4 ) $ 0.6

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)

Six Months Ended June 30,

2020 2019 2020 2019

Net investment hedging derivative

Currency exchange contracts (1)

$ 4.6 $ ( 0.2 ) $ 1.3 $ 0.6 Interest expense, net

Total $ 4.6 $ ( 0.2 ) $ 1.3 $ 0.6

(1) Reclassifications from AOCI to Net Income were zero for all periods presented.

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Notes to the Condensed Consolidated Financial Statements

March 31, 2020

June 30, 2020

Fair-Value Measurements

2 unchanged sentences

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 non-recurring fair value measurements in the condensed consolidated balance sheets as of March 31, 2020 or December 31, 2019.

There were no non-recurring fair value measurements in the condensed consolidated balance sheets as of June 30, 2020 or December 31, 2019.

In millions Level 1 (1)

March 31, 2020

June 30, 2020

Currency exchange contracts (4)

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Net investment hedge (5)

— 10.4 — 10.4

Total assets $ — $ 7.9 $ — $ 7.9

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$ — $ 0.3 $ — $ 0.3

Net investment hedge (7)

Interest rate swap contracts (7)

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Notes to the Condensed Consolidated Financial Statements

March 31, 2020

June 30, 2020

Debt including Finance Lease Obligations

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

March 31, 2020

In millions, except percentages Interest rate Maturity date March 31, 2020 December 31, 2019

June 30, 2020

In millions, except percentages Interest rate Maturity date June 30, 2020 December 31, 2019

Revolving Credit Facility (1)

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______________

(1) Letters of credit outstanding under the revolving credit facility were $ 2.1 million and undrawn capacity under the facility was $ 372.9 million at March 31, 2020.

(1) Letters of credit outstanding under the revolving credit facility were $ 2.2 million and undrawn capacity under the facility was $ 527.8 million at June 30, 2020.

(2) 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 4.50 percent senior unsecured notes due in 2026 (the "Senior Notes") contain 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 our 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).

Our 4.50 percent senior unsecured notes due in 2026 (the "Senior Notes") contain 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 our and our restricted subsidiaries, taken as a whole, subject, in each of the above cases, to certain qualifications and exceptions) 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 Senior Notes could result in the acceleration of the Senior Notes and could cause a cross-default that could result in the acceleration of other indebtedness of Ingevity and its subsidiaries.

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The revolving credit facility and term loans' financial covenants require Ingevity to maintain on a consolidated basis a maximum total 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.

Our actual leverage for the four consecutive quarters ended March 31, 2020 was 3.5 , and our actual interest coverage for the four consecutive quarters ended March 31, 2020 was 8.1 .

We were in compliance with all covenants at March 31, 2020.

Our actual leverage for the four consecutive quarters ended June 30, 2020 was 3.5 , and our actual interest coverage for the four consecutive quarters ended June 30, 2020 was 7.2 .

We were in compliance with all covenants at June 30, 2020.

Ingevity Corporation

Notes to the Condensed Consolidated Financial Statements

March 31, 2020

June 30, 2020

The tables below provide a roll forward of equity.

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Common stock issued 161 — — — — — —

Exercise of stock options, net — — — — — — —

Tax payments related to vested restricted stock units — — — — — ( 3.1 ) ( 3.1 )

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Balance at March 31, 2020 42,836 $ 0.4 $ 113.6 $ 541.9 $ ( 44.1 ) $ ( 109.7 ) $ 502.1

Net income (loss) — — — 20.2 — — 20.2

Other comprehensive income (loss) — — — — ( 4.1 ) — ( 4.1 )

Common stock issued 5 — — — — — —

Exercise of stock options, net 50 — 1.4 — — — 1.4

Tax payments related to vested restricted stock units — — — — — 0.1 0.1

Share-based compensation plans — — 1.3 — — 1.9 3.2

Balance at June 30, 2020 42,891 $ 0.4 $ 116.3 $ 562.1 $ ( 48.2 ) $ ( 107.7 ) $ 522.9

In millions, except per share data in thousands Shares Amount Additional paid in capital Retained earnings Accumulated

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Balance at March 31, 2019 42,659 $ 0.4 $ 103.8 $ 336.2 $ ( 8.6 ) $ ( 73.1 ) $ 358.7

Net income (loss) — — — 56.8 — — 56.8

Other comprehensive income (loss) — — — — ( 19.4 ) — ( 19.4 )

Common stock issued 5 — — — — — —

Exercise of stock options, net 6 — 0.2 — — — 0.2

Share-based compensation plans — — 3.5 — — 0.9 4.4

Balance at June 30, 2019 42,670 $ 0.4 $ 107.5 $ 393.0 $ ( 28.0 ) $ ( 72.2 ) $ 400.7

Ingevity Corporation

Notes to the Condensed Consolidated Financial Statements

March 31, 2020

June 30, 2020

Accumulated other comprehensive income (loss)

Three Months ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

In millions 2020 2019 2020 2019

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Ending Balance $ ( 3.0 ) $ ( 1.7 ) $ ( 3.0 ) $ ( 1.7 )

Total AOCI ending balance at March 31 $ ( 44.1 ) $ ( 8.6 )

Total AOCI ending balance at June 30 $ ( 48.2 ) $ ( 28.0 ) $ ( 48.2 ) $ ( 28.0 )

Ingevity Corporation

Notes to the Condensed Consolidated Financial Statements

March 31, 2020

June 30, 2020

Reclassifications of accumulated other comprehensive income (loss)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

In millions 2020 2019 2020 2019

1 unchanged sentence

Currency exchange contracts (1)

$ 0.2 $ — $ 0.2 $ —

Natural gas contracts (2)

( 0.5 ) 0.1 ( 0.6 ) 0.6

Total before tax ( 0.3 ) 0.1 ( 0.4 ) 0.6

11 unchanged sentences

Share Repurchases

On February 28, 2020, our Board of Directors authorized the repurchase of up to $ 500.0 million of our common stock, and rescinded the prior two authorizations from 2017 and 2018 of $ 100.0 million and $ 350.0 million each, respectively.

The repurchase program does not include a specific timetable or price targets and may be suspended or terminated at any time.

Shares 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.

During the three months ended March 31, 2020, 750,000 shares of our common stock were repurchased for $ 32.4 million.

At March 31, 2020, $ 467.6 million remained unused under our Board-authorized repurchase program.

During the three months ended June 30, 2020, no shares of our common stock were repurchased as we previously suspended share repurchases in light of the uncertainty caused by the COVID-19 pandemic.

At June 30, 2020, $ 467.6 million remained unused under our Board-authorized repurchase program.

We record shares of common stock repurchased at cost as treasury stock, resulting in a reduction of stockholders’ equity in the condensed consolidated balance sheets.

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Notes to the Condensed Consolidated Financial Statements

March 31, 2020

June 30, 2020

Retirement Plans

The following table summarizes the components of net periodic benefit cost (income) for our defined benefit pension plans:

Three Months Ended March 31,

Three Months Ended June 30,

Pensions Other Benefits

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Net periodic benefit cost (income) $ 0.4 $ 0.4 $ — $ —

Six Months Ended June 30,

Pensions Other Benefits

In millions 2020 2019 2020 2019

Components of net periodic benefit cost (income):

Service cost (1)

$ 0.8 $ 0.7 $ — $ —

Interest cost (2)

Expected return on plan assets (2)

( 0.6 ) ( 0.5 ) — —

Amortization of net actuarial and other (gain) loss (2)

Net periodic benefit cost (income) $ 0.8 $ 0.7 $ — $ —

_______________

(1) Amounts are recorded to "Cost of sales" on our condensed consolidated statements of operations consistent with the employee compensation costs that participate in the plan.

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Contributions

We did no t make any voluntary cash contributions to our Union Hourly defined benefit pension plan in the three months ended March 31, 2020.

We did no t make any voluntary cash contributions to our Union Hourly defined benefit pension plan in the six months ended June 30, 2020.

There are no required cash contributions to our Union Hourly defined benefit pension plan in 2020, and we currently have no plans to make any voluntary cash contributions in 2020.

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Notes to the Condensed Consolidated Financial Statements

March 31, 2020

June 30, 2020

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

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

In millions 2020 2019 2020 2019

Gain on sale of assets and businesses $ — $ ( 0.4 ) $ — $ ( 0.4 )

Severance and other employee-related costs 5.8 — 6.0 —

Other — 0.7 — 0.7

Restructuring charges 5.8 0.3 6.0 0.3

Business transformation costs 1.5 — 1.8 —

Other — — — —

Other (income) charges, net 1.5 — 1.8 —

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2020 activities

During the third quarter of 2019, we initiated a reorganization as part of an effort to improve our Performance Chemical’s workflow and efficiency to best serve our customers’ needs and reduce costs.

As a result of this reorganization, we recorded $ 0.2 million in severance and other employee-related costs in the three months ended March 31, 2020.

During the second quarter of 2020, we implemented a cost reduction initiative to realign our cost structure in response to reduced demand for some of our products in response to the COVID-19 pandemic.

As a result of this cost reduction initiative, we recorded $ 5.8 million in severance and other employee-related costs in the three months ended June 30, 2020.

During the six months ended June 30, 2020, we recorded $ 6.0 million, which in addition to the second quarter activity, included severance and other employee-related costs associated with the reorganization initiated in the third quarter of 2019.

2019 activities

In April 2019, we sold assets from the Performance Chemicals derivatives operations in Palmeira, Brazil.

These assets were part of a facility that was closed as a result of a restructuring event in 2016.

As a result of this sale, we recorded $ 0.4 million as a gain on sale of assets, as well as $ 0.7 million related to other miscellaneous exit costs, in the three months ended June 30, 2019.

Rollforward of Restructuring Reserves

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(2) Includes severance and other employee-related costs.

Ingevity Corporation

Notes to the Condensed Consolidated Financial Statements

June 30, 2020

Other (income) charges, net

1 unchanged sentence

In the first quarter of 2020, we embarked upon a business transformation initiative that includes the implementation of an upgraded enterprise resource planning ("ERP") system.

This new ERP system will equip our employees with processes and technology that work together more efficiently and enable us to better serve our customers.

This new ERP system will equip our employees with standardized processes and secure integrated technology that enable us to better understand and meet our customers' needs and compete in the marketplace.

We expect this business transformation initiative and related ERP implementation to be a complex, multi-year project.

It requires the integration of the new ERP system with multiple new and existing information systems and business processes, in order to maintain the accuracy of our books and records, to provide our management team with information important to the operation of our business.

It requires the integration of the new ERP system with multiple new and existing information systems and business processes, in order to maintain the accuracy of our books and records and to provide our management team with real-time information important to the operation of our business.

Such an implementation initiative is a major financial undertaking and will require substantial time and attention of management and key employees.

Costs incurred during the three months ended March 31, 2020 of $ 0.3 million represent costs directly associated with the business transformation initiative that, in accordance with GAAP, cannot be capitalized.

Over the course of this initiative, we anticipate incurring approximately $ 60 - 70 million of total costs which includes $ 10 - 15 million of non-capitalizable costs, $ 2 - 3 million of which we expect in 2020.

Ingevity Corporation

Notes to the Condensed Consolidated Financial Statements

March 31, 2020

Costs incurred, during the three and six months ended June 30, 2020, of $ 1.5 million and $ 1.8 million, respectively, represent costs directly associated with the business transformation initiative that, in accordance with GAAP, cannot be capitalized.

Over the course of this initiative, we anticipate incurring approximately $ 60 - 70 million of total costs, which includes $ 10 - 15 million of non-capitalizable costs, $ 2 - 3 million of which we expect to be incurred in 2020.

The effective tax rates, including discrete items, were as follows:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

Effective tax rate 20.5 % 21.9 % 18.7 % 16.7 %

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As such, there may be significant volatility in interim tax provisions.

Ingevity Corporation

Notes to the Condensed Consolidated Financial Statements

June 30, 2020

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

Three Months Ended March 31,

Three Months Ended June 30,

In millions, except percentages Before tax Tax Effective tax rate % impact Before tax Tax Effective tax rate % impact

2 unchanged sentences

Restructuring and other (income) charges, net

7.3 1.7 0.3 —

Acquisition and other-related costs (1)

1 unchanged sentence

Other tax only discrete items

— ( 0.1 ) — 0.1

Total discrete items 7.7 1.7 1.1 0.4

1 unchanged sentence

Quarterly effect of changes in the EAETR 20.8 % 22.1 %

Six Months Ended June 30,

In millions, except percentages Before tax Tax Effective tax rate % impact Before tax Tax Effective tax rate % impact

Consolidated operations $ 80.6 $ 15.1 18.7 % $ 95.4 $ 15.9 16.7 %

Discrete items:

Restructuring and other (income) charges, net 7.8 1.8 0.3 —

Acquisition and other-related costs (1)

1.7 0.4 32.0 5.6

Other tax only discrete items — 1.2 — 6.8

Total discrete items 9.5 3.4 32.3 12.4

Consolidated operations, before discrete items $ 90.1 $ 18.5 $ 127.7 $ 28.3

20.5 % 22.2 %

_______________

(1) See Note 4 for more information on our acquisition and other-related costs.

(2) Decrease in EAETR for the three months ended March 31, 2020, as compared to March 31, 2019, is due to a change in the mix of forecasted earnings in various tax jurisdictions with varying rates, offset by a large reduction in acquisition related costs and excess stock compensation benefit.

At March 31, 2020 and December 31, 2019, we had deferred tax assets of $ 10.2 million and $ 13.0 million, respectively, resulting from certain historical net operating losses from our Brazilian operations and U.S.

(2) Decrease in EAETR for the six months ended June 30, 2020, as compared to June 30, 2019, is due to a change in the mix of forecasted earnings in various tax jurisdictions with varying rates, offset by a large reduction in acquisition related costs and excess stock compensation benefit.

At June 30, 2020 and December 31, 2019, we had deferred tax assets of $ 9.8 million and $ 13.0 million, respectively, resulting from certain historical net operating losses from our Brazilian operations and U.S.

state tax credits for which a valuation allowance has been established.

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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 March 31, 2020, 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.

As of June 30, 2020, 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.

4 unchanged sentences

Notes to the Condensed Consolidated Financial Statements

March 31, 2020

June 30, 2020

Commitments and Contingencies

3 unchanged sentences

Segment Information

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

In millions 2020 2019 2020 2019

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Restructuring and other income (charges), net (3)

( 7.3 ) ( 0.3 ) ( 7.8 ) ( 0.3 )

Acquisition and other-related costs (4)

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We have excluded the following items from segment EBITDA:

interest expense, net, associated with corporate debt facilities, income taxes, depreciation, amortization, restructuring and other (income) charges, net, acquisition and other-related costs, pension and postretirement settlement and curtailment (income) charge.

(3) Income (charges) for all periods presented relate to restructuring activity in our Performance Chemicals segment and costs associated with the business transformation initiative.

(3) Income (charges) for all periods presented relate to restructuring activity and costs associated with the business transformation initiative.

For the three and six months ended June 30, 2020, charges of $ 2.7 million and $ 2.9 million relate to the Performance Material segment, respectively, and charges of $ 4.6 million and $ 4.9 million related the Performance Chemicals segment.

For the three and six months ended June 30, 2019, all charges relate to the Performance Chemicals segment.

For more detail on the charges incurred see Note 14 within these Condensed Consolidated Financial Statements.

1 unchanged sentence

For more detail on the charges incurred see Note 4 within these Condensed Consolidated Financial Statements.

Ingevity Corporation

Notes to the Condensed Consolidated Financial Statements

June 30, 2020

Earnings (Loss) per Share

2 unchanged sentences

The calculation of diluted net income per share excludes all antidilutive common shares.

Ingevity Corporation

Notes to the Condensed Consolidated Financial Statements

March 31, 2020

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

In millions, except share and per share data 2020 2019 2020 2019

8 unchanged sentences

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 March 31,

Three Months Ended June 30, Six Months Ended June 30,

In thousands 2020 2019 2020 2019

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements