What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-07-29 compared with 2021-04-29 · 219 added, 111 removed, 605 unchanged (35% 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 2021 2020 2021 2020

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 2021 2020 2021 2020

4 unchanged sentences

Unrealized gain (loss) on net investment hedges, net of tax provision (benefit) of $( 0.5 ), $( 0.6 ), $ 1.0 , and $ 1.1

( 1.7 ) ( 2.2 ) 3.2 3.5

Total foreign currency adjustments, net of tax provision (benefit) of $( 0.5 ), $( 0.6 ), $ 1.0 , and $ 1.1

4.1 ( 3.9 ) 11.4 ( 38.3 )

Derivative instruments:

Unrealized gain (loss), net of tax provision (benefit) of $ 0.4 , $( 0.2 ), $ 0.8 , and $( 1.6 )

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

1.2 ( 0.4 ) 2.5 ( 5.2 )

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

— 0.2 ( 0.1 ) 0.3

Total derivative instruments, net of tax provision (benefit) of $ 0.4 , $( 0.1 ), $ 0.8 , and $( 1.5 )

1.2 ( 0.2 ) 2.4 ( 4.9 )

Pension & other postretirement benefits:

Unrealized actuarial gains (losses) and prior service (costs) credits, net of tax of zero for all periods

Reclassifications of net actuarial and other (gain) loss and amortization of prior service cost, included in net income, net of tax of zero for all periods

Total pension and other postretirement benefits, net of tax of zero for all periods

Other comprehensive income (loss), net of tax provision (benefit) of $( 0.1 ), $( 0.7 ), $ 1.8 , and $( 0.4 )

5.4 ( 4.1 ) 13.9 ( 43.2 )

Comprehensive income (loss) $ 49.7 $ 16.1 $ 106.9 $ 22.3

2 unchanged sentences

Condensed Consolidated Balance Sheets

In millions, except share and par value data March 31, 2021 December 31, 2020

In millions, except share and par value data June 30, 2021 December 31, 2020

Assets (Unaudited)

42 unchanged sentences

Condensed Consolidated Statements of Cash Flows (Unaudited)

Three Months Ended March 31,

Six Months Ended June 30,

In millions 2021 2020

6 unchanged sentences

Share-based compensation 6.7 3.2

Pension and other postretirement benefit costs — —

Other non-cash items 6.6 9.2

12 unchanged sentences

Capital expenditures $ ( 40.9 ) $ ( 34.5 )

Purchase of strategic investments ( 16.5 ) —

Other investing activities, net 0.2 ( 2.9 )

16 unchanged sentences

$ 233.9 $ 185.6

(1) Includes restricted cash of $ 0.6 million and $ 8.0 million and cash and cash equivalents of $ 237.8 million and $ 302.7 million at March 31, 2021 and 2020, respectively.

(1) Includes restricted cash of $ 0.6 million and $ 8.0 million and cash and cash equivalents of $ 233.3 million and $ 177.6 million at June 30, 2021 and 2020, respectively.

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

8 unchanged sentences

Notes to the Condensed Consolidated Financial Statements

March 31, 2021

June 30, 2021

Description of Business and Basis of Presentation

30 unchanged sentences

Notes to the Condensed Consolidated Financial Statements

March 31, 2021

June 30, 2021

prospectively until December 31, 2022.

As of March 31, 2021, we have not yet elected any optional expedients provided in the standard.

As of June 30, 2021, we have not yet elected any optional expedients provided in the standard.

We will apply the accounting relief, if necessary, as relevant contract and hedge accounting relationship modifications are made during the reference rate reform transition period.

2 unchanged sentences

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 2021 2020 2021 2020

4 unchanged sentences

Industrial Specialties product line (1)

120.1 90.7 232.2 200.8

Engineered Polymers product line 44.6 31.6 90.7 67.9

6 unchanged sentences

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

Three Months Ended March 31,

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

In millions 2021 2020 2021 2020

12 unchanged sentences

Notes to the Condensed Consolidated Financial Statements

March 31, 2021

June 30, 2021

Contract Asset

11 unchanged sentences

There were no transfers of assets and liabilities that were recorded at fair value between the three-level fair value hierarchy during the periods reported.

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

March 31, 2021

See Note 8 for more information regarding our fair value measurements of our financial instruments and risk management activities.

In millions Level 1 (1)

March 31, 2021

June 30, 2021

Deferred compensation plan investments (4)

14 unchanged sentences

Total liabilities $ 11.6 $ — $ 0.8 $ 12.4

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

June 30, 2021

______________

5 unchanged sentences

In addition to the investment securities, we also have company-owned life insurance ("COLI") related to the deferred compensation arrangement.

COLI is recorded at cash surrender value and included in "Other assets" on the condensed consolidated balance sheets in the amount of $ 10.9 million and $ 10.8 million at March 31, 2021 and December 31, 2020 respectively.

COLI is recorded at cash surrender value and included in "Other assets" on the condensed consolidated balance sheets in the amount of $ 12.9 million and $ 10.8 million at June 30, 2021 and December 31, 2020 respectively.

(5) Included within "Other liabilities" on the condensed consolidated balance sheets.

1 unchanged sentence

Nonrecurring Fair Value Measurements

Equity Investment

During the three months ended June 30, 2021, our Performance Materials segment acquired a strategic equity investment in a privately-held company for $ 16.5 million.

Our strategic equity investment is accounted for under the equity method of accounting, which requires us to record our initial investment at cost.

Subsequently, we will recognize, through the condensed consolidated statements of operations (Other (income) expense, net) and as an adjustment to the investment balance (Other assets), our proportionate share of undistributed earnings or loss and the amortization of basis differences.

At each reporting period, we will evaluate our investment to determine whether events or changes in business circumstances indicate that the carrying value of the investment may not be fully recoverable.

The carrying value of our strategic equity investment was $ 16.5 million at June 30, 2021 and zero at December 31, 2020.

There were no adjustments to the carrying value of our strategic equity investment for impairment or observable price changes during the three months ended June 30, 2021.

Restricted Investment

At March 31, 2021 and December 31, 2020, the carrying value of our restricted investment, which is accounted for as held-to-maturity ("HTM") and therefore recorded at amortized costs, was $ 74.4 million and $ 73.6 million, net of an allowance for credit losses of $ 0.6 million and $ 0.9 million, and included cash of $ 2.9 million and $ 2.4 million, respectively.

The fair value at March 31, 2021 and December 31, 2020 was $ 79.8 million and $ 81.5 million, respectively, based on Level 1 inputs.

At June 30, 2021 and December 31, 2020, the carrying value of our restricted investment, which is accounted for as held-to-maturity ("HTM") and therefore recorded at amortized costs, was $ 74.9 million and $ 73.6 million, net of an allowance for credit losses of $ 0.6 million and $ 0.9 million, and included cash of $ 3.5 million and $ 2.4 million, respectively.

The fair value at June 30, 2021 and December 31, 2020 was $ 80.8 million and $ 81.5 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.

3 unchanged sentences

In millions AA+ AA A A- BBB+ Total

March 31, 2021 $ 13.5 10.6 24.2 13.4 10.4 $ 72.1

June 30, 2021 $ 13.5 10.6 24.2 13.3 10.4 $ 72.0

December 31, 2020 $ 13.5 10.6 24.2 13.4 10.4 $ 72.1

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

March 31, 2021

Debt Obligations

At March 31, 2021 and December 31, 2020, the carrying value of finance lease obligations was $ 103.0 million and $ 103.1 million, respectively, and the fair value was $ 121.4 million and $ 127.0 million, respectively.

At June 30, 2021 and December 31, 2020, the carrying value of finance lease obligations was $ 102.8 million and $ 103.1 million, respectively, and the fair value was $ 121.6 million and $ 127.0 million, respectively.

The fair value of all other finance lease obligations approximates their carrying values.

The carrying amount, excluding debt issuance fees, of our variable interest rate long-term debt was $ 342.2 million and $ 353.4 million as of March 31, 2021 and December 31, 2020, respectively.

The carrying amount, excluding debt issuance fees, of our variable interest rate long-term debt was $ 337.5 million and $ 353.4 million as of June 30, 2021 and December 31, 2020, respectively.

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

At March 31, 2021 and December 31, 2020, the carrying value of our fixed rate debt was $ 850.0 million and the fair value was $ 839.0 million and $ 864.1 million, respectively, based on Level 2 inputs.

At June 30, 2021 and December 31, 2020, the carrying value of our fixed rate debt was $ 850.0 million and the fair value was $ 856.7 million and $ 864.1 million, respectively, based on Level 2 inputs.

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

June 30, 2021

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 December 31, 2024, herein referred to as "Revenue Earn-out."

The fair value of the five-year Revenue Earn-out consideration was $ 0.8 million at March 31, 2021 and December 31, 2020, respectively.

The contingent consideration is payable if certain sales volume targets are achieved prior to the measurement period ending on December 31, 2024, herein referred to as "Revenue Earn-out."

The fair value of the five-year Revenue Earn-out consideration was $ 0.8 million at June 30, 2021 and December 31, 2020, respectively.

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 on the condensed consolidated statements of operations.

1 unchanged sentence

Contingent Consideration

In millions March 31, 2021

In millions June 30, 2021

Beginning balance $ 0.8

6 unchanged sentences

Inventories, net

In millions March 31, 2021 December 31, 2020

In millions June 30, 2021 December 31, 2020

Raw materials $ 40.2 $ 39.1

4 unchanged sentences

Inventories, net $ 214.5 $ 189.0

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

March 31, 2021

Property, Plant, and Equipment, net

In millions March 31, 2021 December 31, 2020

In millions June 30, 2021 December 31, 2020

Machinery and equipment $ 1,097.9 $ 1,065.5

5 unchanged sentences

Property, plant, and equipment, net $ 699.5 $ 703.6

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

June 30, 2021

Goodwill and Other Intangible Assets, net

3 unchanged sentences

Foreign currency translation 3.7 — 3.7

March 31, 2021 $ 443.4 $ 4.3 $ 447.7

There were no interim triggering events or circumstances indicating that goodwill might be impaired as of March 31, 2021.

June 30, 2021 $ 444.7 $ 4.3 $ 449.0

There were no interim triggering events or circumstances indicating that goodwill might be impaired as of June 30, 2021.

Other Intangible Assets

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

In millions Gross Accumulated amortization Net Gross Accumulated amortization Net

7 unchanged sentences

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

In millions March 31, 2021 December 31, 2020

In millions June 30, 2021 December 31, 2020

Performance Materials $ 2.0 $ 2.1

1 unchanged sentence

Other intangibles, net $ 359.7 $ 373.3

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

March 31, 2021

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

Three Months Ended March 31,

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

In millions 2021 2020 2021 2020

5 unchanged sentences

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

June 30, 2021

Financial Instruments and Risk Management

8 unchanged sentences

dollar denominated debt compared 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 a net asset (liability) of $( 2.2 ) million and $( 8.6 ) million at March 31, 2021 and December 31, 2020 , respectively.

During the three months ended March 31, 2021 and 2020, we recognized net interest income associated with this financial instrument of $ 0.1 million and $ 0.8 million, respectively.

The fair value of the fixed-to-fixed cross currency interest rate swap was a net asset (liability) of $( 4.4 ) million and $( 8.6 ) million at June 30, 2021 and December 31, 2020 , respectively.

During the three and six months ended June 30, 2021, we recognized net interest income associated with this financial instrument of $ 0.1 million and $ 0.2 million, respectively, and during the three and six months ended June 30, 2020, we recognized net interest income associated with this financial instrument of $ 0.5 million and $ 1.3 million, respectively.

Cash Flow Hedges

5 unchanged sentences

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, 2021, there were $ 6.5 million open foreign currency derivative contracts.

The fair value of the designated foreign currency hedge contracts was an asset (liability) of $ 0.2 million and $( 0.1 ) at March 31, 2021 and December 31, 2020, respectively.

As of June 30, 2021, there were $ 12.7 million open foreign currency derivative contracts.

The fair value of the designated foreign currency hedge contracts was an asset (liability) of $ 0.2 million and $( 0.1 ) million at June 30, 2021 and December 31, 2020, respectively.

Commodity Price Risk Management

2 unchanged sentences

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, 2021, we had 0.7 million and 1.0 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 as cash flow hedges.

As of March 31, 2021, open

As of June 30, 2021, we had 0.4 million and 0.7 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 as cash flow hedges.

As of June 30, 2021, open commodity contracts hedge forecasted transactions until February 2022.

The fair value of the outstanding designated natural gas commodity hedge contracts as of June 30, 2021 and December 31, 2020 was a net asset (liability) of $ 0.8 million and $( 0.1 ) million, respectively.

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

March 31, 2021

commodity contracts hedge forecasted transactions until February 2022.

The fair value of the outstanding designated natural gas commodity hedge contracts as of March 31, 2021 and December 31, 2020 was a net asset (liability) of zero and $( 0.1 ) million, respectively.

June 30, 2021

Interest Rate Risk Management

4 unchanged sentences

Designated interest rate cash flow hedge gains or losses are recorded in Accumulated other comprehensive income (loss) ("AOCI") and are recognized in "Interest expense, net" on the condensed consolidated statements of operations on a straight-line basis over the remaining maturity of the underlying debt.

As of March 31, 2021, we have floating-to-fixed 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, 2021, we have floating-to-fixed 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 fixed rate of 3.79 percent until July 2023.

The fair value of the interest rate swap was an asset (liability) of $( 7.5 ) million and $( 8.9 ) million at March 31, 2021 and December 31, 2020, respectively.

The fair value of the interest rate swap was an asset (liability) of $( 6.7 ) million and $( 8.9 ) million at June 30, 2021 and December 31, 2020, respectively.

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

March 31, 2021

June 30, 2021

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,

2021 2020 2021 2020

8 unchanged sentences

Effectiveness Testing)

Three Months Ended March 31,

Three Months Ended June 30,

2021 2020 2021 2020

3 unchanged sentences

Total $ ( 2.2 ) $ ( 2.8 ) $ 0.1 $ 0.5

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,

2021 2020 2021 2020

Cash flow hedging derivatives

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

Natural gas contracts 0.9 ( 0.5 ) 0.1 ( 0.6 ) Cost of sales

Interest rate swap contracts 2.2 ( 6.5 ) — — Interest expense, net

Total $ 3.3 $ ( 6.8 ) $ 0.1 $ ( 0.4 )

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,

2021 2020 2021 2020

Net investment hedging derivative

Currency exchange contracts (1)

$ 4.2 $ 4.6 $ 0.2 $ 1.3 Interest expense, net

Total $ 4.2 $ 4.6 $ 0.2 $ 1.3

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

1 unchanged sentence

Within the next twelve months, we expect to reclassify $ 0.1 million of net gains from AOCI to income, before taxes.

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

June 30, 2021

Fair Value Measurements

1 unchanged sentence

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 March 31, 2021 or December 31, 2020.

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

March 31, 2021

There were no nonrecurring fair value measurements related to derivative assets and liabilities on the condensed consolidated balance sheets as of June 30, 2021 or December 31, 2020.

See Note 4 for more information regarding our fair value measurements beyond our financial instruments and risk management activities.

In millions Level 1 (1)

March 31, 2021

June 30, 2021

Currency exchange contracts (4)

2 unchanged sentences

Total assets $ — $ 1.0 $ — $ 1.0

Currency exchange contracts (5)

Natural gas contracts (5)

9 unchanged sentences

Natural gas contracts (5)

Currency exchange contracts (5)

$ — $ 0.2 $ — $ 0.2

Currency exchange contracts (5)

Net investment hedge (6)

9 unchanged sentences

Notes to the Condensed Consolidated Financial Statements

March 31, 2021

June 30, 2021

Debt including Finance Lease Obligations

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

March 31, 2021

In millions, except percentages Interest rate Maturity date March 31, 2021 December 31, 2020

June 30, 2021

In millions, except percentages Interest rate Maturity date June 30, 2021 December 31, 2020

Variable Rate Debt:

13 unchanged sentences

______________

(1) Letters of credit outstanding under the revolving credit facility were $ 2.3 million and undrawn capacity under the facility was $ 497.7 million at March 31, 2021 and December 31, 2020, respectively.

(1) Letters of credit outstanding under the revolving credit facility were $ 2.7 million and $ 2.3 million and undrawn capacity under the facility was $ 497.3 million and $ 497.7 million at June 30, 2021 and December 31, 2020, respectively.

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

2 unchanged sentences

The occurrence of an event of default under the 2026 Notes or 2028 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, including the other series.

We were in compliance with all covenants under the indentures as of March 31, 2021.

We were in compliance with all covenants under the indentures as of June 30, 2021.

The credit agreement governing our revolving credit facility and 2017 term loan contain 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 and term loan facilities being terminated.

The credit agreement also contains certain customer covenants, including financial covenants.

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.

Additionally, the 2017 term loan financial covenants require Ingevity to maintain on a consolidated basis a maximum total gross 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 gross and net leverage for the four consecutive quarters ended March 31, 2021 were 2.9 and 2.4 , respectively, and our actual interest coverage for the four consecutive quarters ended March 31, 2021 was 12.2 .

We were in compliance with all covenants at March 31, 2021.

Our actual gross and net leverage for the four consecutive quarters ended June 30, 2021 were 2.6 and 2.2 , respectively, and our actual interest coverage for the four consecutive quarters ended June 30, 2021 was 11.7 .

We were in compliance with all covenants at June 30, 2021.

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

March 31, 2021

June 30, 2021

The tables below provide a roll forward of equity.

11 unchanged sentences

Balance at March 31, 2021 43,034 $ 0.4 $ 124.8 $ 726.7 $ 13.2 $ ( 204.0 ) $ 661.1

Net income (loss) — — — 44.3 — — 44.3

Other comprehensive income (loss) — — — — 5.4 — 5.4

Common stock issued 19 — — — — — —

Exercise of stock options, net 32 — 1.5 — — — 1.5

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

Share repurchase program — — — — — ( 28.7 ) ( 28.7 )

Share-based compensation plans — — 4.0 — — 0.9 4.9

Balance at June 30, 2021 43,085 $ 0.4 $ 130.3 $ 771.0 $ 18.6 $ ( 231.8 ) $ 688.5

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

June 30, 2021

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

10 unchanged sentences

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

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

March 31, 2021

June 30, 2021

Accumulated other comprehensive income (loss)

Three Months Ended March 31,

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

In millions 2021 2020 2021 2020

19 unchanged sentences

Beginning balance $ ( 4.8 ) $ ( 3.0 ) $ ( 4.8 ) $ ( 3.0 )

Unrealized actuarial gains (losses) and prior service (costs) credits — — — —

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 —

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 $ ( 4.7 ) $ ( 3.0 ) $ ( 4.7 ) $ ( 3.0 )

Total AOCI ending balance at March 31 $ 13.2 $ ( 44.1 )

Total AOCI ending balance at June 30 $ 18.6 $ ( 48.2 ) $ 18.6 $ ( 48.2 )

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

June 30, 2021

Reclassifications of accumulated other comprehensive income (loss)

Three Months Ended March 31,

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

In millions 2021 2020 2021 2020

1 unchanged sentence

Currency exchange contracts (1)

$ — $ 0.2 $ — $ 0.2

Natural gas contracts (2)

— ( 0.5 ) 0.1 ( 0.6 )

Total before tax — ( 0.3 ) 0.1 ( 0.4 )

1 unchanged sentence

Amount included in net income (loss) $ — $ ( 0.2 ) $ 0.1 $ ( 0.3 )

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.

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

March 31, 2021

Share Repurchases

At March 31, 2021, $ 372.6 million remained unused under our Board-authorized repurchase program.

During the three months ended March 31, 2021, we repurchased $ 39.4 million in common stock, representing 527,550 shares of our common stock at a weighted average cost per share of $ 74.64 .

At June 30, 2021, $ 344.0 million remained unused under our Board-authorized repurchase program.

During the three and six months ended June 30, 2021, we repurchased $ 28.7 million and $ 68.1 million in common stock, representing 356,116 and 883,666 shares of our common stock at a weighted average cost per share of $ 80.50 and $ 77.00 , respectively.

Our 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.

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

June 30, 2021

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

9 unchanged sentences

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

Six Months Ended June 30,

Pensions Other Benefits

In millions 2021 2020 2021 2020

Components of net periodic benefit cost (income):

Service cost (1)

$ 0.9 $ 0.8 $ — $ —

Interest cost (2)

Expected return on plan assets (2)

( 0.7 ) ( 0.6 ) — —

Amortization of prior service cost (credit) (1)

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

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

_______________

(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.

1 unchanged sentence

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, 2021.

We did no t make any voluntary cash contributions to our Union Hourly defined benefit pension plan in the six months ended June 30, 2021.

There are no required cash contributions to our Union Hourly defined benefit pension plan in 2021, and we currently have no plans to make any voluntary cash contributions in 2021.

1 unchanged sentence

Notes to the Condensed Consolidated Financial Statements

March 31, 2021

June 30, 2021

Restructuring and Other (Income) Charges, net

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 2021 2020 2021 2020

5 unchanged sentences

Restructuring charges

2020-2021 activities

During the three months ended March 31, 2021, we recorded $ 0.1 million in severance and other employee-related costs related to the cost reduction initiative announced in the second quarter of 2020 to realign our cost structure in response to reduced demand for some of our products in response to the COVID-19 pandemic.

During the three months ended March 31, 2020, we recorded $ 0.2 million in severance and other employee-related costs related to the reorganization announced in the third quarter of 2019 as part of an effort to improve our Performance Chemical’s workflow and efficiency to best serve our customers’ needs and reduce costs.

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 due to the COVID-19 pandemic.

As a result of this cost reduction initiative, we recorded severance and other employee-related costs of zero and $ 0.1 million during the three and six months ended June 30, 2021, respectively, and $ 5.8 million in in the three months ended June 30, 2020.

During the six months ended June 30, 2020, we recorded severance and other employee-related costs of $ 6.0 million, which included $ 0.2 million associated with the reorganization initiated in the third quarter of 2019.

Rollforward of Restructuring Reserves

14 unchanged sentences

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, 2021 and 2020, of $ 3.8 million and $ 0.3 million, respectively, represent costs directly associated with the business transformation initiative that, in accordance with GAAP, cannot be capitalized.

Costs incurred, during the three and six months ended June 30, 2021, of $ 4.3 million and $ 8.1 million, respectively, and 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 $ 30 - 35 million of non-capitalizable costs, $ 18 - 20 million of which we expect to be incurred in 2021.

1 unchanged sentence

Notes to the Condensed Consolidated Financial Statements

March 31, 2021

June 30, 2021

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,

2021 2020 2021 2020

Effective tax rate (1)

39.9 % 20.5 % 31.4 % 18.7 %

_______________

(1) The increase in the effective tax rate in the three and six months ended June 30, 2021 was driven by a legislative tax rate change.

We determine our interim tax provision using an Estimated Annual Effective Tax Rate methodology (“EAETR”).

7 unchanged sentences

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

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

Three Months Ended March 31,

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

June 30, 2021

The below tables provide a reconciliation between our reported effective tax rates and the EAETR.

Three Months Ended June 30,

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

3 unchanged sentences

Acquisition and other-related costs (2)

Legislative tax rate changes (3)

— ( 14.7 ) — —

Other tax only discrete items

— 0.1 — ( 0.1 )

Total discrete items — ( 14.6 ) 7.7 1.7

Consolidated operations, before discrete items $ 73.7 $ 14.8 $ 33.1 $ 6.9

Quarterly effect of changes in the EAETR 20.1 % 20.8 %

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 $ 135.5 $ 42.5 31.4 % $ 80.6 $ 15.1 18.7 %

Discrete items:

Restructuring and other (income) charges, net (1)

0.1 — 7.8 1.8

Acquisition and other-related costs (2)

Legislative tax rate changes (3)

— ( 14.7 ) — —

Other tax only discrete items — 0.2 — 1.2

Total discrete items 0.1 ( 14.5 ) 9.5 3.4

Consolidated operations, before discrete items $ 135.6 $ 28.0 $ 90.1 $ 18.5

20.6 % 20.5 %

_______________

(1) See Note 12 for more information on our restructuring and other (income) charges, net.

(2) Costs incurred to integrate the Perstorp Capa business into our Performance Chemicals segment.

(3) Increase in EAETR for the three months ended March 31, 2021, as compared to March 31, 2020, is due to an overall increase and a change in the mix of forecasted earnings in various tax jurisdictions with varying rates.

(2) Costs incurred to integrate the Perstorp Capa business into our Performance Ch emicals segment.

(3) Legislative tax rate changes, enacted in the United Kingdom ("UK"), resulted in discrete tax expense of $ 14.7 million related to the revaluation of our net deferred tax liability associated with our UK operations.

The corporate tax rate in the UK increased from 19.0 % to 25.0 %.

(4) Increase in EAETR for the six months ended June 30, 2021, as compared to June 30, 2020, is due to an overall increase and a change in the mix of forecasted earnings in various tax jurisdictions with varying rates.

This increase in earnings was partially offset by an increased benefit associated with foreign-derived intangible income deduction.

Increase limitation associated with the officer’s compensation as well as a reduced benefit associated with the generation of state tax credits further contributed to the higher rate.

At March 31, 2021 and December 31, 2020, we had deferred tax assets of $ 8.0 million and $ 8.4 million, respectively, resulting from certain historical net operating losses from our Brazilian operations and U.S.

At June 30, 2021 and December 31, 2020, we had deferred tax assets of $ 9.0 million and $ 8.4 million, respectively, resulting from certain historical net operating losses from our Brazilian and Chinese operations and U.S.

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

1 unchanged sentence

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, 2021, 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

As of June 30, 2021, 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

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

March 31, 2021

evidence becomes available to allow us to reach a conclusion that the valuation allowance will no longer be needed.

June 30, 2021

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.

6 unchanged sentences

Notes to the Condensed Consolidated Financial Statements

March 31, 2021

June 30, 2021

Segment Information

Three Months Ended March 31,

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

In millions 2021 2020 2021 2020

24 unchanged sentences

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

For the three months ended March 31, 2021, charges of $ 1.7 million relate to the Performance Materials segment and charges of $ 2.2 million relate to the Performance Chemicals segment.

For the three months ended March 31, 2020, charges of $ 0.1 million relate to the Performance Materials segment and charges of $ 0.4 million relate to the Performance Chemicals segment.

For the three and six months ended June 30, 2021, charges of $ 1.7 million and $ 3.4 million relate to the Performance Materials segment and charges of $ 2.6 million and $ 4.8 million relate to the Performance Chemicals segment, respectively.

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

For more detail on the charges incurred see Note 12.

(4) Costs incurred to integrate the Perstorp Capa business into our Performance Chemicals segment.

(4) For the three and six months ended June 30, 2021, charges of $ 0.2 million and $ 0.2 million relate to the acquisition of a strategic investment in the Performance Materials segment and charges of $ 0.2 million and $ 0.5 million relate to the integration of the Perstorp Capa business into our Performance Chemicals segment, respectively.

For the three and six months ended June 30, 2020, all charges relate to the integration of the Perstorp Capa business into our Performance Chemicals segment.

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

March 31, 2021

June 30, 2021

Earnings (Loss) per Share

2 unchanged sentences

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

Three Months Ended March 31,

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

In millions, except share and per share data 2021 2020 2021 2020

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 2021 2020 2021 2020

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