What changed in this filing

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Item 1. Financial Statements

2021-10-28 compared with 2021-07-29 · 174 added, 123 removed, 701 unchanged (30% of the section changed)

2 unchanged sentences

Condensed Consolidated Statements of Operations (Unaudited)

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

Three Months Ended September 30, Nine Months Ended September 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 June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

In millions 2021 2020 2021 2020

10 unchanged sentences

2.8 0.7 5.3 ( 4.5 )

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

Reclassifications of deferred derivative instruments (gain) loss, included in net income (loss), net of tax (provision) benefit of $( 0.1 ), $ 0.1 , $( 0.1 ), and $ 0.2

( 0.1 ) 0.4 ( 0.2 ) 0.7

4 unchanged sentences

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

— 0.1 0.1 0.1

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

— 0.1 0.1 0.1

Other comprehensive income (loss), net of tax provision (benefit) of $ 1.6 , $( 1.6 ), $ 3.4 , and $( 2.0 )

4 unchanged sentences

Condensed Consolidated Balance Sheets

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

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

Assets (Unaudited)

42 unchanged sentences

Condensed Consolidated Statements of Cash Flows (Unaudited)

Six Months Ended June 30,

Nine Months Ended September 30,

In millions 2021 2020

16 unchanged sentences

Operating leases ( 15.3 ) ( 13.8 )

Litigation expense 85.0 —

Changes in other operating assets and liabilities, net ( 4.5 ) ( 8.5 )

2 unchanged sentences

Capital expenditures $ ( 66.4 ) $ ( 51.0 )

Finance lease expenditures — ( 23.8 )

Purchase of strategic investments ( 16.5 ) —

17 unchanged sentences

$ 269.9 $ 200.4

(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.

(1) Includes restricted cash of $ 0.5 million and $ 2.2 million and cash and cash equivalents of $ 269.4 million and $ 198.2 million at September 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

June 30, 2021

September 30, 2021

Description of Business and Basis of Presentation

23 unchanged sentences

We adopted the new guidance effective January 1, 2021.

The adoption of the new guidance did not have a material impact.

The adoption of the new guidance did not have a material impact on the consolidated financial statements.

Recently Issued Accounting Pronouncements

4 unchanged sentences

Notes to the Condensed Consolidated Financial Statements

June 30, 2021

September 30, 2021

prospectively until December 31, 2022.

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

As of September 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 June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

In millions 2021 2020 2021 2020

12 unchanged sentences

Similarly, the Oilfield Technologies product line has been combined with the Industrial Specialties product line within the Performance Chemicals segment.

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

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

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

Three Months Ended September 30, Nine Months Ended September 30,

In millions 2021 2020 2021 2020

12 unchanged sentences

Notes to the Condensed Consolidated Financial Statements

June 30, 2021

September 30, 2021

Contract Asset

September 30,

In millions 2021 2020

10 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.

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

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

In millions Level 1 (1)

June 30, 2021

September 30, 2021

Deferred compensation plan investments (4)

16 unchanged sentences

Notes to the Condensed Consolidated Financial Statements

June 30, 2021

September 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 $ 12.9 million and $ 10.8 million at June 30, 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 $ 13.4 million and $ 10.8 million at September 30, 2021 and December 31, 2020 respectively.

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

2 unchanged sentences

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.

During the second quarter of 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.

1 unchanged sentence

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.

The carrying value of our strategic equity investment was $ 16.5 million at September 30, 2021.

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

Restricted Investment

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.

At September 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 $ 75.5 million and $ 73.6 million, net of an allowance for credit losses of $ 0.5 million and $ 0.9 million, and included cash of $ 4.1 million and $ 2.4 million, respectively.

The fair value at September 30, 2021 and December 31, 2020 was $ 80.9 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

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

September 30, 2021 $ 13.4 10.6 24.2 13.3 10.4 $ 71.9

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

Debt Obligations

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 $ 337.5 million and $ 353.4 million as of June 30, 2021 and December 31, 2020, respectively.

At September 30, 2021 and December 31, 2020, the carrying value of finance lease obligations was $ 102.6 million and $ 103.1 million, respectively, and the fair value was $ 120.4 million and $ 127.0 million, respectively.

The carrying amount, excluding debt issuance fees, of our variable interest rate long-term debt was $ 332.8 million and $ 353.4 million as of September 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 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.

At September 30, 2021 and December 31, 2020, the carrying value of our fixed rate debt was $ 850.0 million and the fair value was $ 855.9 million and $ 864.1 million, respectively, based on Level 2 inputs.

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

June 30, 2021

September 30, 2021

Contingent Consideration

1 unchanged sentence

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.

The fair value of the Revenue Earn-out consideration was $ 0.8 million at September 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 June 30, 2021

In millions September 30, 2021

Beginning balance $ 0.8

6 unchanged sentences

Inventories, net

In millions June 30, 2021 December 31, 2020

In millions September 30, 2021 December 31, 2020

Raw materials $ 41.5 $ 39.1

5 unchanged sentences

Property, Plant, and Equipment, net

In millions June 30, 2021 December 31, 2020

In millions September 30, 2021 December 31, 2020

Machinery and equipment $ 1,100.7 $ 1,065.5

7 unchanged sentences

Notes to the Condensed Consolidated Financial Statements

June 30, 2021

September 30, 2021

Goodwill and Other Intangible Assets, net

3 unchanged sentences

Foreign currency translation ( 4.6 ) — ( 4.6 )

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.

September 30, 2021 $ 436.4 $ 4.3 $ 440.7

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

Other Intangible Assets

June 30, 2021 December 31, 2020

September 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 June 30, 2021 December 31, 2020

In millions September 30, 2021 December 31, 2020

Performance Materials $ 2.0 $ 2.1

2 unchanged sentences

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

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

Three Months Ended September 30, Nine Months Ended September 30,

In millions 2021 2020 2021 2020

7 unchanged sentences

Notes to the Condensed Consolidated Financial Statements

June 30, 2021

September 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 $( 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.

The fair value of the fixed-to-fixed cross currency interest rate swap was a net asset (liability) of $( 0.7 ) million and $( 8.6 ) million at September 30, 2021 and December 31, 2020 , respectively.

During the three and nine months ended September 30, 2021, we recognized net interest income associated with this financial instrument of $ 0.1 million and $ 0.3 million, respectively, and during the three and nine months ended September 30, 2020, we recognized net interest income associated with this financial instrument of $ 0.2 million and $ 1.5 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 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.

As of September 30, 2021, there were $ 4.8 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 September 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 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.

As of September 30, 2021, we had 1.2 million and 0.9 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 September 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 September 30, 2021 and December 31, 2020 was a net asset (liability) of $ 3.0 million and $( 0.1 ) million, respectively.

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

June 30, 2021

September 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 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.

As of September 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 $( 6.7 ) million and $( 8.9 ) million at June 30, 2021 and December 31, 2020, respectively.

The fair value of the interest rate swap was an asset (liability) of $( 6.0 ) million and $( 8.9 ) million at September 30, 2021 and December 31, 2020, respectively.

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

June 30, 2021

September 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 June 30,

Three Months Ended September 30,

2021 2020 2021 2020

4 unchanged sentences

Total $ 3.6 $ 0.9 $ ( 0.2 ) $ ( 0.5 )

Amount of Gain (Loss) Recognized in AOCI Amount of Gain (Loss) Recognized in Income on Derivative

In millions Amount of Gain (Loss) Recognized in AOCI Amount of Gain (Loss) Recognized in Income on Derivative

(Amount Excluded from Effectiveness Testing) Location of Gain or (Loss) Recognized in Income on Derivative

1 unchanged sentence

Effectiveness Testing)

Three Months Ended June 30,

Three Months Ended September 30,

2021 2020 2021 2020

4 unchanged sentences

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,

Nine Months Ended September 30,

2021 2020 2021 2020

4 unchanged sentences

Total $ 6.9 $ ( 5.9 ) $ ( 0.3 ) $ ( 0.9 )

Amount of Gain (Loss) Recognized in AOCI Amount of Gain (Loss) Recognized in Income on Derivative

In millions Amount of Gain (Loss) Recognized in AOCI Amount of Gain (Loss) Recognized in Income on Derivative

(Amount Excluded from Effectiveness Testing) Location of Gain or (Loss) Recognized in Income on Derivative

1 unchanged sentence

Effectiveness Testing)

Six Months Ended June 30,

Nine Months Ended September 30,

2021 2020 2021 2020

4 unchanged sentences

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

Gains and losses would be reclassified from AOCI to Other (income) expense, net.

Gains and losses if recognized would be reclassified from AOCI to Other (income) expense, net.

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

1 unchanged sentence

Notes to the Condensed Consolidated Financial Statements

June 30, 2021

September 30, 2021

Fair Value Measurements

The following information is presented for derivative assets and liabilities that are recorded in the condensed consolidated balance sheets at fair value measured on a recurring basis.

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

There were no nonrecurring fair value measurements related to derivative assets and liabilities on the condensed consolidated balance sheets as of 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.

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

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

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

In millions Level 1 (1)

June 30, 2021

September 30, 2021

Currency exchange contracts (4)

1 unchanged sentence

Natural gas contracts (4)

Net investment hedge (5)

Total assets $ — $ 3.8 $ — $ 3.8

19 unchanged sentences

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

(5) Included within "Other assets" on the condensed consolidated balance sheet.

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

2 unchanged sentences

Notes to the Condensed Consolidated Financial Statements

June 30, 2021

September 30, 2021

Debt including Finance Lease Obligations

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

June 30, 2021

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

September 30, 2021

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

Variable Rate Debt:

13 unchanged sentences

______________

(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.

(1) Letters of credit outstanding under the revolving credit facility were $ 2.3 million and $ 2.3 million and undrawn capacity under the facility was $ 497.7 million and $ 497.7 million at September 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.

1 unchanged sentence

Our indentures 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).

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 June 30, 2021.

The occurrence of an event of default under the 2026 Senior Note or 2028 Senior Note 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 September 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.

3 unchanged sentences

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 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.

Our actual gross and net leverage for the four consecutive quarters ended September 30, 2021 were 2.6 and 2.1 , respectively, and our actual interest coverage for the four consecutive quarters ended September 30, 2021 was 12.5 .

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

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

June 30, 2021

September 30, 2021

The tables below provide a roll forward of equity.

19 unchanged sentences

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

Net income (loss) — — — ( 4.2 ) — — ( 4.2 )

Other comprehensive income (loss) — — — — ( 11.1 ) — ( 11.1 )

Common stock issued 5 — — — — — —

Exercise of stock options, net 2 — 0.1 — — — 0.1

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

Share repurchase program — — — — — ( 32.2 ) ( 32.2 )

Share-based compensation plans — — 3.0 — — 0.5 3.5

Balance at September 30, 2021 43,092 $ 0.4 $ 133.4 $ 766.8 $ 7.5 $ ( 263.6 ) $ 644.5

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

June 30, 2021

September 30, 2021

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

17 unchanged sentences

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

Net income (loss) — — — 69.9 — — 69.9

Other comprehensive income (loss) — — — — 22.6 — 22.6

Common stock issued 3.0 — — — — — —

Exercise of stock options, net 1.0 — — — — — —

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

Share-based compensation plans — — 0.5 — — 1.2 1.7

Balance at September 30, 2020 42,895 $ 0.4 $ 116.8 $ 632.0 $ ( 25.6 ) $ ( 106.6 ) $ 617.0

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

June 30, 2021

September 30, 2021

Accumulated other comprehensive income (loss)

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

Three Months Ended September 30, Nine Months Ended September 30,

In millions 2021 2020 2021 2020

27 unchanged sentences

Ending balance $ ( 4.7 ) $ ( 2.9 ) $ ( 4.7 ) $ ( 2.9 )

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

Total AOCI ending balance at September 30 $ 7.5 $ ( 25.6 ) $ 7.5 $ ( 25.6 )

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

June 30, 2021

September 30, 2021

Reclassifications of accumulated other comprehensive income (loss)

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

Three Months Ended September 30, Nine Months Ended September 30,

In millions 2021 2020 2021 2020

17 unchanged sentences

Share Repurchases

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.

At September 30, 2021, $ 311.7 million remained unused under our Board-authorized repurchase program.

During the three and nine months ended September 30, 2021, we repurchased $ 32.2 million and $ 100.3 million in common stock, representing 414,501 and 1,298,167 shares of our common stock at a weighted average cost per share of $ 77.77 and $ 77.25 , respectively.

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

2 unchanged sentences

Notes to the Condensed Consolidated Financial Statements

June 30, 2021

September 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 June 30,

Three Months Ended September 30,

Pensions Other Benefits

9 unchanged sentences

Net periodic benefit cost (income) $ 0.4 $ 0.5 $ — $ —

Six Months Ended June 30,

Nine Months Ended September 30,

Pensions Other Benefits

13 unchanged sentences

Contributions

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.

We did no t make any voluntary cash contributions to our Union Hourly defined benefit pension plan in the nine months ended September 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

June 30, 2021

September 30, 2021

Restructuring and Other (Income) Charges, net

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

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

Three Months Ended September 30, Nine Months Ended September 30,

In millions 2021 2020 2021 2020

Severance and other employee-related costs $ — $ 0.3 $ 0.1 $ 6.3

Other — 1.7 — 1.7

Restructuring charges — 2.0 0.1 8.0

4 unchanged sentences

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.

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 nine months ended September 30, 2021.

During the three and nine months ended September 30, 2020, we recorded severance and other employee-related costs of $ 0.3 million and $ 6.3 million, respectively.

Additionally, during the three and nine months ended September 30, 2020, we recorded $ 1.7 million related to an impairment of an operating lease asset that is no longer in use.

Rollforward of Restructuring Reserves

8 unchanged sentences

Other (income) charges, net

Business transformation initiative costs

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.

Business transformation costs

In 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 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 and to provide our management team with real-time information important to the operation of our business.

The implementation of our new ERP is expected to occur in multiple phases beginning in fiscal year 2022.

This business transformation 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 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.

Costs incurred during the three and nine months ended September 30, 2021, of $ 4.1 million and $ 12.2 million, respectively, and during the three and nine months ended September 30, 2020, of $ 3.5 million and $ 5.3 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, approximately $ 18 million of which we expect to be incurred in 2021.

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

June 30, 2021

September 30, 2021

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

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

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

2 unchanged sentences

_______________

(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.

(1) The effective tax rate (“ETR”) in the three months ended September 30, 2021 was primarily impacted by the litigation expense recorded during the period.

The ETR for the nine months ended September 30, 2021 was impacted by the litigation expense and legislative tax rate change recorded during the period.

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

9 unchanged sentences

Notes to the Condensed Consolidated Financial Statements

June 30, 2021

September 30, 2021

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

Three Months Ended June 30,

Three Months Ended September 30,

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

4 unchanged sentences

Legislative tax rate changes (3)

Litigation expense (4)

85.0 19.7 — —

4 unchanged sentences

Quarterly effect of changes in the EAETR 20.4 % 20.3 %

Six Months Ended June 30,

Nine Months Ended September 30,

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

6 unchanged sentences

— ( 14.6 ) — —

Litigation expense (4)

85.0 19.7 — —

Other tax only discrete items — 0.7 — 1.0

3 unchanged sentences

_______________

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

(1) Refer to Note 12 for additional information.

(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 $ 14.6 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.

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.

The corporate tax rate in the UK increased from 19.0 % to 25.0 % on April 1, 2023.

Impact for the three months ended September 30, 2021 are a result of currency translation.

(4) Refer to Note 14 for additional information.

(5) Increase in EAETR for the nine months ended September 30, 2021, as compared to September 30, 2020, is due to an overall change in the mix of forecasted earnings in various tax jurisdictions with varying rates.

At September 30, 2021 and December 31, 2020, we had deferred tax assets of $ 8.5 million and $ 8.4 million, respectively, resulting from certain historical net operating losses from our Brazil and China operations and U.S.

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

The ultimate realization of these deferred tax assets depends on the generation of future taxable income during the periods in which these net operating losses and tax credits are available to be used.

In evaluating the realizability of these deferred tax assets, we consider projected future taxable income and tax planning strategies in making our assessment.

As of 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

In evaluating the realizability of these deferred tax assets, we consider projected future taxable income and tax planning

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

June 30, 2021

of these allowances.

September 30, 2021

strategies in making our assessment.

As of September 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 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.

3 unchanged sentences

Legal Proceedings

We are, from time to time, involved in routine litigation and other legal matters incidental to our operations.

None of the litigation or other legal matters in which we are currently involved, individually or in the aggregate, is material to our consolidated financial condition, liquidity, or results of operations, nor are we aware of any material pending or contemplated proceedings.

On July 19, 2018, Ingevity filed suit against BASF Corporation (“BASF”) in the United States District Court for the District of Delaware (the “Delaware Proceeding”) alleging BASF infringed Ingevity’s patent covering canister systems used in the control of automotive gasoline vapor emissions (U.S.

RE38,844) (the “’844 Patent”).

On February 14, 2019, BASF asserted counterclaims against Ingevity in the Delaware Proceeding, alleging two claims for violations of U.S.

antitrust law (one for exclusive dealing and the other for tying) as well as a claim for tortious interference with an alleged prospective business relationship between BASF and a BASF customer (the “BASF Counterclaims”).

The BASF Counterclaims relate to Ingevity’s enforcement of the ‘844 Patent and Ingevity’s entry into several supply agreements with customers of its fuel vapor canister honeycombs.

District Court dismissed Ingevity’s patent infringement claims on November 18, 2020, and the case proceeded to trial on the BASF Counterclaims in September 2021.

15, 2021, a jury in the Delaware Proceeding issued a verdict in favor of BASF on the BASF Counterclaims and awarded BASF damages of approximately $ 28.3 million, which will be trebled under U.S.

antitrust law to approximately $ 85 million.

In addition, BASF may seek pre- and post-judgment interest and attorneys’ fees and costs in amounts that they will have to support at a future date.

We disagree with the outcome, including the court’s application of the law, and we intend to seek judgment as a matter of law in the Delaware Proceeding post-trial briefing stage and on appeal, if necessary.

In addition, we intend to challenge the U.S.

District Court’s November 2020 dismissal of our patent infringement claims against BASF.

Ingevity believes in the strength of its intellectual property and the merits of its position and intends to pursue all legal relief available to challenge these outcomes in the Delaware Proceeding.

Final resolution of these matters could take several months up to two years.

As of September 30, 2021, we have accrued a total of $ 85 million, the full amount of the jury’s verdict.

The amount accrued for this matter is included in Other liabilities on the condensed consolidated balance sheet as of September 30, 2021, and the charge is included in Other (income) expense, net on the condensed consolidated statement of operations for the three and nine months ended September 30, 2021.

The amount of any liability Ingevity may ultimately incur related to the Delaware Proceeding could be more or less than the amount accrued.

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

June 30, 2021

September 30, 2021

Segment Information

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

Three Months Ended September 30, Nine Months Ended September 30,

In millions 2021 2020 2021 2020

16 unchanged sentences

( 0.2 ) — ( 0.9 ) ( 1.7 )

Litigation expense (5)

( 85.0 ) — ( 85.0 ) —

Net income (loss) $ ( 4.2 ) $ 69.9 $ 88.8 $ 135.4

4 unchanged sentences

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) charges, net.

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

(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, 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) 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.

For the three and nine months ended September 30, 2021, charges of $ 1.1 million and $ 4.5 million relate to the Performance Materials segment and charges of $ 3.0 million and $ 7.8 million relate to the Performance Chemicals segment, respectively.

For the three and nine months ended September 30, 2020, charges of $ 2.6 million and $ 5.4 million relate to the Performance Materials segment and charges of $ 2.9 million and $ 7.9 million relate to the Performance Chemicals segment, respectively.

For more detail on the charges incurred refer to Note 12.

(4) For the three and nine months ended September 30, 2021, charges of zero and $ 0.2 million relate to the acquisition of a strategic investment in the Performance Materials segment and charges of $ 0.2 million and $ 0.7 million relate to the integration of the Perstorp Capa business into our Performance Chemicals segment, respectively.

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

(5) For the three and nine months ended September 30, 2021, litigation expense relates to the Performance Materials segment.

Refer to Note 14 for additional information.

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

June 30, 2021

September 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 June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

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

6 unchanged sentences

Weighted average additional shares assuming conversion of potential common shares (1)

— 175 245 179

Shares - diluted basis (1)

39,537 41,451 40,238 41,579

_______________

(1) For the three months ended September 30, 2021, all potentially dilutive common shares were excluded from the calculation of diluted earnings (loss) per share as we had a net loss for the period.

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 June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 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