What changed in this filing

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Item 1. Financial Statements

2022-11-03 compared with 2022-08-03 · 174 added, 161 removed, 684 unchanged (33% 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 2022 2021 2022 2021

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 2022 2021 2022 2021

10 unchanged sentences

2.7 2.8 11.4 5.3

Reclassifications of deferred derivative instruments (gain) loss, included in net income (loss), net of tax (provision) benefit of $( 0.6 ), zero , $( 1.0 ), zero

Reclassifications of deferred derivative instruments (gain) loss, included in net income (loss), net of tax (provision) benefit of $( 0.7 ), $( 0.1 ), $( 1.7 ), $( 0.1 )

( 2.4 ) ( 0.1 ) ( 5.7 ) ( 0.2 )

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 0.1

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

0.1 0.1 0.1 0.1

Other comprehensive income (loss), net of tax provision (benefit) of $ 1.1 , $ 1.6 , $ 5.0 , $ 3.4

4 unchanged sentences

Condensed Consolidated Balance Sheets

In millions, except share and par value data June 30, 2022 December 31, 2021

In millions, except share and par value data September 30, 2022 December 31, 2021

Assets (Unaudited)

42 unchanged sentences

Condensed Consolidated Statements of Cash Flows (Unaudited)

Six Months Ended June 30,

Nine Months Ended September 30,

In millions 2022 2021

16 unchanged sentences

Income taxes 10.1 ( 4.6 )

Litigation verdict charge — 85.0

Operating leases ( 15.5 ) ( 15.3 )

4 unchanged sentences

Purchase of strategic investments ( 62.8 ) ( 16.5 )

Net investment hedge settlement 14.7 —

Other investing activities, net ( 3.3 ) ( 0.5 )

18 unchanged sentences

$ 72.8 $ 269.9

(1) Includes restricted cash of $ 0.5 million and $ 0.6 million and cash and cash equivalents of $ 131.3 million and $ 233.3 million at June 30, 2022 and 2021, respectively.

(1) Includes restricted cash of $ 0.5 million and $ 0.5 million and cash and cash equivalents of $ 72.3 million and $ 269.4 million at September 30, 2022 and 2021, respectively.

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

7 unchanged sentences

Notes to the Condensed Consolidated Financial Statements

June 30, 2022

September 30, 2022

Description of Business

3 unchanged sentences

Our Performance Materials segment manufactures products in the form of powder, granular, extruded pellets, extruded honeycombs, and activated carbon sheets.

Automotive technologies products are sold into the gasoline vapor emission control applications within the automotive industry, while process purification products are sold into the food, water, beverage, and chemical purification industries.

Automotive technologies products are sold into gasoline vapor emission control applications within the automotive industry, while process purification products are sold into the food, water, beverage, and chemical purification industries.

Our Performance Chemicals segment consists of our pavement technologies, industrial specialties, and engineered polymers product lines.

Performance Chemicals manufactures products derived from crude tall oil ("CTO") and lignin extracted from the kraft pulping process as well as caprolactone monomers and derivatives derived from cyclohexanone and hydrogen peroxide.

Performance Chemicals products serve as critical inputs used in a variety of high performance applications, including warm mix paving, pavement preservation, and pavement reconstruction and recycling (pavement technologies product line), adhesives, agrochemicals, lubricants, printing inks, industrial intermediates, and oilfield (industrial specialties product line), coatings, resins, elastomers, adhesives, bio-plastics, and medical devices (engineered polymers product line).

adhesives, agrochemicals, lubricants, printing inks, industrial intermediates, and oilfield (industrial specialties product line);

and coatings, resins, elastomers, adhesives, bio-plastics, and medical devices (engineered polymers product line).

Basis of Consolidation and Presentation

16 unchanged sentences

Notes to the Condensed Consolidated Financial Statements

June 30, 2022

September 30, 2022

expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates.

This guidance became effective beginning on March 12, 2020, and we may elect to apply the amendments prospectively until December 31, 2022.

As of June 30, 2022, we have not yet elected any optional expedients provided in the standard.

As of September 30, 2022, we have not yet elected any optional expedients provided in the standard.

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

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 2022 2021 2022 2021

7 unchanged sentences

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,

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

In millions 2022 2021 2022 2021

11 unchanged sentences

Contract Asset

September 30,

In millions 2022 2021

7 unchanged sentences

Notes to the Condensed Consolidated Financial Statements

June 30, 2022

September 30, 2022

Fair Value Measurements

4 unchanged sentences

In millions Level 1 (1)

June 30, 2022

September 30, 2022

Deferred compensation plan investments (4)

20 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 $ 13.4 million and $ 14.0 million at June 30, 2022 and December 31, 2021, respectively.

COLI is recorded at cash surrender value and included in "Other assets" on the condensed consolidated balance sheets in the amount of $ 12.7 million and $ 14.0 million at September 30, 2022 and December 31, 2021, respectively.

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

Nonrecurring Fair Value Measurements

There were no nonrecurring fair value measurements in the condensed consolidated balance sheet during the quarters ended June 30, 2022 and December 31, 2021.

There were no nonrecurring fair value measurements in the condensed consolidated balance sheet during the quarters ended September 30, 2022 and December 31, 2021.

Strategic Investments

During the first quarter of 2022, we acquired a strategic investment in a privately-held company for $ 2.0 million, which is accounted for under the measurement alternative method.

The aggregate carrying value of all measurement alternative investments where fair value is not readily determinable totaled $ 20.8 million and $ 18.8 million at June 30, 2022 and December 31, 2021, respectively.

There were no adjustments to the carrying value of the measurement alternative method investments for impairment or observable price changes for the period ended June 30, 2022.

During the second quarter of 2021, we acquired a strategic investment in a privately-held company for $ 16.5 million, which is accounted for under the equity method of accounting.

The carrying value of our strategic equity investment was $ 15.5 million and $ 16.5 million at June 30, 2022 and December 31, 2021, respectively.

During the first and third quarters of 2022, we acquired two strategic investments in privately-held companies for $ 2.0 million and $ 60.0 million respectively, which are accounted for under the measurement alternative method.

The aggregate carrying value of all measurement alternative investments where fair value is not readily determinable totaled $ 80.8 million and $ 18.8 million at September 30, 2022 and December 31, 2021, respectively.

There were no adjustments to the carrying value of the measurement alternative method investments for impairment or observable price changes for the period ended September 30, 2022.

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

June 30, 2022

September 30, 2022

During the second quarter of 2021, we acquired a strategic investment in a privately-held company for $ 16.5 million, which is accounted for under the equity method of accounting.

The carrying value of our strategic equity investment was $ 14.5 million and $ 16.5 million at September 30, 2022 and December 31, 2021, respectively.

During the third quarter of 2022, we entered into an investment with a venture capital fund for $ 0.8 million, which is accounted for under the equity method of accounting.

As of September 30, 2022, we had approximately $ 6.8 million of unfunded commitments which we anticipate will be paid over a period of 10 years.

The carrying value of our strategic equity investment was $ 0.8 million at September 30, 2022.

Restricted Investment

At June 30, 2022 and December 31, 2021, the carrying value of our restricted investment, which is accounted for as held-to-maturity ("HTM") and therefore recorded at amortized costs, was $ 77.1 million and $ 76.1 million, net of an allowance for credit losses of $ 0.5 million and $ 0.5 million, and included cash of $ 5.8 million and $ 4.7 million, respectively.

The fair value at June 30, 2022 and December 31, 2021 was $ 75.2 million and $ 80.0 million, respectively, based on Level 1 inputs.

At September 30, 2022 and December 31, 2021, the carrying value of our restricted investment, which is accounted for as held-to-maturity ("HTM") and therefore recorded at amortized cost, was $ 77.5 million and $ 76.1 million, net of an allowance for credit losses of $ 0.6 million and $ 0.5 million, and included cash of $ 6.4 million and $ 4.7 million, respectively.

The fair value at September 30, 2022 and December 31, 2021 was $ 73.5 million and $ 80.0 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 AA- A A- BBB+ Total

June 30, 2022 $ 13.4 — 10.5 13.3 14.1 20.5 $ 71.8

September 30, 2022 $ 13.4 — 10.5 13.3 14.1 20.4 $ 71.7

December 31, 2021 $ 13.4 — 10.6 13.3 14.1 20.5 $ 71.9

Debt and Finance Lease Obligations

At June 30, 2022 and December 31, 2021, the carrying value of finance lease obligations was $ 102.1 million and $ 102.4 million, respectively, and the fair value was $ 109.3 million and $ 118.6 million, respectively.

At September 30, 2022 and December 31, 2021, the carrying value of finance lease obligations was $ 101.8 million and $ 102.4 million, respectively, and the fair value was $ 107.1 million and $ 118.6 million, respectively.

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 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 $ 532.0 million and $ 328.1 million as of June 30, 2022 and December 31, 2021, respectively.

The carrying amount, excluding debt issuance fees, of our variable interest rate long-term debt was $ 509.0 million and $ 328.1 million as of September 30, 2022 and December 31, 2021, 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, 2022 and December 31, 2021, the carrying value of our fixed rate debt was $ 550.0 million and $ 850.0 million, respectively, and the fair value was $ 462.7 million and $ 843.9 million, respectively, based on Level 2 inputs.

At September 30, 2022 and December 31, 2021, the carrying value of our fixed rate debt was $ 550.0 million and $ 850.0 million, respectively, and the fair value was $ 452.4 million and $ 843.9 million, respectively, based on Level 2 inputs.

Contingent Consideration

1 unchanged sentence

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 June 30, 2022 and December 31, 2021, respectively.

The fair value of the five-year Revenue Earn-out consideration was $ 0.8 million at September 30, 2022 and December 31, 2021, respectively.

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

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

September 30, 2022

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

Contingent Consideration

In millions June 30, 2022 December 31, 2021

In millions September 30, 2022 December 31, 2021

Beginning balance $ 0.8 $ 0.8

5 unchanged sentences

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

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

June 30, 2022

Inventories, net

In millions June 30, 2022 December 31, 2021

In millions September 30, 2022 December 31, 2021

Raw materials $ 71.6 $ 48.8

5 unchanged sentences

Property, Plant, and Equipment, net

In millions June 30, 2022 December 31, 2021

In millions September 30, 2022 December 31, 2021

Machinery and equipment $ 1,119.5 $ 1,113.3

10 unchanged sentences

Foreign currency translation ( 54.4 ) — ( 54.4 )

June 30, 2022 $ 406.5 $ 4.3 $ 410.8

There were no interim triggering events or circumstances indicating that goodwill might be impaired as of June 30, 2022.

September 30, 2022 $ 383.3 $ 4.3 $ 387.6

There were no interim triggering events or circumstances indicating that goodwill might be impaired as of September 30, 2022.

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

September 30, 2022

Other Intangible Assets

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

In millions Gross Accumulated amortization Net Gross Accumulated amortization Net

5 unchanged sentences

$ 418.5 $ 146.3 $ 272.2 $ 472.2 $ 134.6 $ 337.6

_______________

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

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

June 30, 2022

(2) The majority of our Other intangibles, net are held in British Pound Sterling (GBP) and changes period over period are primarily driven by foreign currency fluctuations between GBP and USD.

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

In millions June 30, 2022 December 31, 2021

In millions September 30, 2022 December 31, 2021

Performance Materials $ 1.7 $ 1.9

2 unchanged sentences

Amortization expense related to our intangible assets is included in Selling, general and administrative expenses on the condensed consolidated statement of operations.

During the three and six months ended June 30, 2022, we recognized amortization expense of $ 7.8 million and $ 15.9 million, respectively, and during the three and six months ended June 30, 2021, we recognized amortization expense of $ 8.4 million and $ 16.8 million, respectively.

During the three and nine months ended September 30, 2022, we recognized amortization expense of $ 7.9 million and $ 23.8 million, respectively, and during the three and nine months ended September 30, 2021, we recognized amortization expense of $ 8.3 million and $ 25.1 million, respectively.

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

3 unchanged sentences

Net Investment Hedges

We have fixed-to-fixed cross-currency interest rate swaps with an aggregate notional amount of $ 166.2 million and a maturity date of July 2023.

We designated the swaps to hedge a portion of our net investment in a euro functional currency denominated subsidiary against foreign currency fluctuations.

These contracts involve the exchange of fixed U.S.

dollars with fixed euro interest payments periodically over the life of the contract and an exchange of the notional amount at maturity.

This effectively converts a portion of our U.S.

dollar denominated fixed-rate debt from a weighted average rate of 3.79 percent to a euro denominated weighted average fixed rate of 1.63 percent.

The difference between the fixed interest rate on the U.S.

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 $ 10.6 million and $ 1.0 million at June 30, 2022 and December 31, 2021, respectively.

During the three and six months ended June 30, 2022, we recognized net interest income associated with this financial instrument of $ 2.5 million and $ 2.7 million, respectively, and 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.

During the third quarter of 2022, we terminated our fixed-to-fixed cross currency interest rate swaps, accounted for as net investment hedges, and received net proceeds of $ 14.7 million.

The proceeds are presented within cash provided by investing activities within the condensed consolidated statement of cash flows.

The $ 14.7 million gain is reported as a component of the foreign currency adjustments (“CTA”) within Accumulated other comprehensive income (loss) ("AOCI") on the condensed consolidated balance sheet.

The gain on net investment hedges are reclassified to earnings only when the related CTA are required to be reclassified, usually upon sale or liquidation of the investment.

The fair value of our net investment hedge was a net asset (liability) of zero and $ 1.0 million at September 30, 2022 and December 31, 2021, respectively.

During the three and nine months ended September 30, 2022, we recognized net interest income associated with this financial instrument of $ 0.1 million and $ 2.8 million, respectively, and during the three and nine months ended September 30, 2021, we recognized net interest income associated with this financial instrument of $ 0.1 million and $ 0.3 million, respectively.

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

September 30, 2022

Cash Flow Hedges

2 unchanged sentences

To manage the volatility relating to these exposures, we net the exposures on a consolidated basis to take advantage of natural offsets.

To manage the remaining exposure, from time to time, we utilize forward currency exchange contracts and zero cost collar option contracts to minimize the volatility to earnings and cash flows resulting from the effect of fluctuating foreign currency exchange rates on export sales denominated in foreign currencies (principally the euro).

To manage the remaining exposure, from time to time, we utilize forward currency exchange contracts to minimize the volatility to earnings and cash flows resulting from the effect of fluctuating foreign currency exchange rates on export sales denominated in foreign currencies (principally the euro).

These contracts are generally designated as cash flow hedges.

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

As of June 30, 2022, there were $ 12.0 million open foreign currency derivative contracts.

The fair value of the designated foreign currency hedge contracts was an asset (liability) of $ 1.1 million and $ 0.5 million at June 30, 2022 and December 31, 2021, respectively.

As of September 30, 2022, there were $ 5.6 million open foreign currency derivative contracts.

The fair value of the designated foreign currency hedge contracts was an asset (liability) of $ 0.9 million and $ 0.5 million at September 30, 2022 and December 31, 2021, 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, 2022, we had 1.7 million and 0.7 million mm BTUS (millions of British Thermal Units) in aggregate notional volume of outstanding natural gas commodity swap contracts

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

June 30, 2022

and zero cost collar option contracts, respectively, designated as cash flow hedges.

As of June 30, 2022, open commodity contracts hedge forecasted transactions until December 2023.

The fair value of the outstanding designated natural gas commodity hedge contracts as of June 30, 2022 and December 31, 2021 was a net asset (liability) of $ 1.2 million and $( 0.6 ) million, respectively.

As of September 30, 2022, we had 1.4 million and 0.4 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, 2022, open commodity contracts hedge forecasted transactions until December 2023.

The fair value of the outstanding designated natural gas commodity hedge contracts as of September 30, 2022 and December 31, 2021 was a net asset (liability) of $ 1.9 million and $( 0.6 ) 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 interest rate derivative instruments.

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

These instruments are designated as cash flow hedges.

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.

We had floating-to-fixed interest rate swaps with a combined notional amount of $ 166.2 million to manage the variability of cash flows in the interest rate payments associated with our existing LIBOR-based interest payments, effectively converting $ 166.2 million of our floating rate debt to a fixed rate.

Per the terms of these instruments, we receive floating rate interest payments ba sed 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.

Due to the repayment of our term loan (refer to Note 9 for more information), during the three months ended June 30, 2022, we terminated these interest rate swap instruments.

During the year we had floating-to-fixed interest rate swaps with a combined notional amount of $ 166.2 million to manage the variability of cash flows in the interest rate payments associated with our existing LIBOR-based interest payments, effectively converting $ 166.2 million of our floating rate debt to a fixed rate.

Per the terms of these instruments, we received floating rate interest payments ba sed upon three-month U.S.

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

Due to the repayment of our term loan (refer to Note 9 for more information), during the second quarter of 2022, we terminated these interest rate swap instruments.

Upon termination of the interest rate swap instruments, we reclassified a $ 1.7 million gain from AOCI into Interest expense, net on the condensed consolidated statement of operations.

The fair value of outstanding interest rate instruments at June 30, 2022 and December 31, 2021 was an asset (liability) of zero and $( 4.0 ) million, respectively.

The fair value of outstanding interest rate instruments at September 30, 2022 and December 31, 2021 was an asset (liability) of zero and $( 4.0 ) million, respectively.

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

June 30, 2022

September 30, 2022

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,

2022 2021 2022 2021

8 unchanged sentences

Effectiveness Testing)

Three Months Ended June 30,

Three Months Ended September 30,

2022 2021 2022 2021

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,

2022 2021 2022 2021

8 unchanged sentences

Effectiveness Testing)

Six Months Ended June 30,

Nine Months Ended September 30,

2022 2021 2022 2021

8 unchanged sentences

Notes to the Condensed Consolidated Financial Statements

June 30, 2022

September 30, 2022

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 June 30, 2022 or December 31, 2021.

June 30, 2022

There were no nonrecurring fair value measurements related to derivative assets and liabilities on the condensed consolidated balance sheets as of September 30, 2022 or December 31, 2021.

September 30, 2022

In millions Level 1 (1)

2 unchanged sentences

Natural gas contracts (4)

Net investment hedge (5)

— 10.6 — 10.6

Total assets $ — $ 3.0 $ — $ 3.0

22 unchanged sentences

Notes to the Condensed Consolidated Financial Statements

June 30, 2022

September 30, 2022

Debt, including Finance Lease Obligations

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

In millions, except percentages June 30, 2022 December 31, 2021

In millions, except percentages September 30, 2022 December 31, 2021

Revolving Credit Facility and other lines of credit (1)

9 unchanged sentences

______________

(1) Letters of credit outstanding under the revolving credit facility were $ 1.8 million and $ 2.5 million and available funds under the facility were $ 466.2 million and $ 497.5 million at June 30, 2022 and December 31, 2021, respectively.

(1) Letters of credit outstanding under the revolving credit facility were $ 2.3 million and $ 2.5 million and available funds under the facility were $ 488.7 million and $ 497.5 million at September 30, 2022 and December 31, 2021, 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 redemption was primarily funded utilizing the outstanding capacity under our revolving credit facility.

At redemption, we recognized a $ 3.4 million redemption premium and accelerated the remaining deferred finance fees of $ 2.7 million.

Both the redemption premium and accelerated deferred finance fees were recorded to Interest Expense, net on the condensed consolidated statements of operations during the three months ended June 30, 2022.

At redemption, we recognized a $ 3.4 million redemption premium and accelerated the remaining deferred finance fees of $ 2.7 million, both the redemption premium and accelerated deferred finance fees were recorded to Interest Expense, net on the condensed consolidated statements of operations.

Legal expenses associated with this redemption have been recorded as incurred.

1 unchanged sentence

On June 23, 2022, we entered into an Amendment and Restatement Agreement (the “Amendment”) together with the other parties named therein, which amends and restates our existing credit agreement, dated as of March 7, 2016, as amended, supplemented or otherwise modified.

Among other things, the Amendment (a) extends the maturity date from October 28, 2025 to June 23, 2027 and increased the aggregate principal amount of revolving commitments thereunder from $ 500 million to $ 1 billion, (b) adds the Ingevity UK as a borrower under the revolving credit facility, and (c) modifies certain leverage ratio tests and thresholds.

Among other things, the Amendment (a) extends the maturity date from October 28, 2025 to June 23, 2027 and increases the aggregate principal amount of revolving commitments thereunder from $ 500 million to $ 1 billion, (b) adds Ingevity UK as a borrower under the revolving credit facility, and (c) modifies certain leverage ratio tests and thresholds.

Borrowings under the revolving credit facility bear interest at a rate per annum equal to either (a) the applicable term benchmark rate, subject to a zero floor, or (b) a base rate, in each case, plus an applicable margin of 1.00 percent to 1.75 percent for term benchmark loans and 0.00 percent to 0.75 percent for base rate loans.

Fees of $ 3.0 million were incurred to secure the Amendment.

These fees have been deferred and will be amortized over the term of the facility.

These fees have been deferred and will be amortized over the term of the facility and recorded to Interest Expense, net on the condensed consolidated statement of operations.

Term Loan Repayment

1 unchanged sentence

Upon repayment, we recognized $ 1.3 million in outstanding interest, $ 0.4 million in repayment fees and accelerated the remaining deferred finance fees of $ 0.4 million.

The interest, fees, and accelerated deferred finance fees were recorded to Interest Expense, net on the condensed consolidated statements of operations du ring the three months ended June 30, 2022.

Legal expenses associated with this redemption have been recorded as incurred.

The interest, fees, and accelerated deferred finance fees were recorded to Interest Expense, net on the condensed consolidated statements of operations .

Legal expenses associated with this repayment have been recorded as incurred.

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

June 30, 2022

September 30, 2022

Debt Covenants

1 unchanged sentence

The occurrence of an event of default under the 2028 Senior Notes could result in the acceleration of the note of such series and could cause a cross-default resulting in the acceleration of other indebtedness of Ingevity and its subsidiaries.

We were in compliance with all covenants under the indenture as of June 30, 2022.

We were in compliance with all covenants under the indenture as of September 30, 2022.

The credit agreements governing our revolving credit facility 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.

2 unchanged sentences

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.

Our actual gross and net leverage, as calculated per the credit agreement, for the four consecutive quarters ended June 30, 2022 were 2.3 and 2.0 , respectively, and our actual interest coverage for the four consecutive quarters ended June 30, 2022 was 9.3 .

We were in compliance with all covenants at June 30, 2022.

As calculated per the credit agreement, our net leverage for the four consecutive quarters ended September 30, 2022 was 2.0 , and our interest coverage for the four consecutive quarters ended September 30, 2022 was 10.7 .

We were in compliance with all covenants at September 30, 2022.

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

September 30, 2022

The tables below provide a roll forward of equity.

20 unchanged sentences

Balance at June 30, 2022 43,200 $ 0.4 $ 143.0 $ 916.7 $ ( 43.7 ) $ ( 362.1 ) $ 654.3

Net income (loss) — — — 75.4 — — 75.4

Other comprehensive income (loss) — — — — ( 51.6 ) — ( 51.6 )

Common stock issued 8 — — — — ( 0.2 ) ( 0.2 )

Exercise of stock options, net 5 — 0.3 — — — 0.3

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

Share repurchase program — — — — — ( 49.3 ) ( 49.3 )

Share-based compensation plans — — 4.2 — — 0.8 5.0

Balance at September 30, 2022 43,213 $ 0.4 $ 147.5 $ 992.1 $ ( 95.3 ) $ ( 410.8 ) $ 633.9

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

June 30, 2022

September 30, 2022

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

18 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, 2022

September 30, 2022

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 2022 2021 2022 2021

27 unchanged sentences

Ending balance $ ( 3.1 ) $ ( 4.7 ) $ ( 3.1 ) $ ( 4.7 )

Total AOCI ending balance at June 30 $ ( 43.7 ) $ 18.6 $ ( 43.7 ) $ 18.6

Total AOCI ending balance at September 30 $ ( 95.3 ) $ 7.5 $ ( 95.3 ) $ 7.5

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

June 30, 2022

September 30, 2022

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 2022 2021 2022 2021

5 unchanged sentences

Interest rate swap contracts (3)

( 1.7 ) — ( 1.7 ) —

Total before tax 3.1 0.2 7.4 0.3

12 unchanged sentences

Share Repurchases

On March 2, 2020, our Board of Directors authorized the repurchase of up to $ 500 million of our common stock (the "2020 Authorization"), and rescinded the prior two outstanding repurchase authorizations.

Under the 2020 Authorization, s hares were permitted to be purchased through open market or privately negotiated transactions at the discretion of management based on its evaluation of market prevailing conditions and other factors, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended.

During the three and six months ended June 30, 2022, we repurchased $ 49.5 million and $ 89.9 million in common stock, representing 719,236 and 1,329,683 shares of our common stock at a weighted average cost per share of $ 68.72 and $ 67.59 , respectively.

At June 30, 2022, $ 212.7 million remained unused under our 2020 Authorization.

As described in Note 17 (Subsequent Events) to the Condensed Consolidated Financial Statements included within Part I.

Item 1 of this Form 10-Q, the 2020 Authorization was rescinded by our Board of Directors on July 25, 2022 and replaced by a new share repurchase authorization of up to $ 500 million of our common stock.

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.

On July 25, 2022, our Board of Directors authorized the repurchase of up to $ 500.0 million of our common stock (the "2022 Authorization"), and rescinded the prior outstanding repurchase authorization with respect to the shares that remained unused under the prior authorization.

Shares under the 2022 Authorization may be purchased through open market or privately negotiated transactions at the discretion of management based on its evaluation of market prevailing conditions and other factors, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended.

During the three and nine months ended September 30, 2022, we repurchased $ 49.3 million and $ 139.2 million in common stock, representing 697,523 and 2,027,206 shares of our common stock at a weighted average cost per share of $ 70.75 and $ 68.68 , respectively.

At September 30, 2022, $ 450.7 million remained unused under our 2022 Authorization.

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

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

June 30, 2022

September 30, 2022

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) $ 0.3 $ 0.4 $ — $ —

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, 2022.

We did no t make any voluntary cash contributions to our Union Hourly defined benefit pension plan in the nine months ended September 30, 2022.

There are no required cash contributions to our Union Hourly defined benefit pension plan in 2022, and we currently have no plans to make any voluntary cash contributions in 2022.

1 unchanged sentence

Notes to the Condensed Consolidated Financial Statements

June 30, 2022

September 30, 2022

Restructuring and Other (Income) Charges, net

5 unchanged sentences

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, 2022, of $ 3.7 million and $ 7.3 million, respectively, and during the three and six months ended June 30, 2021, of $ 4.3 million and $ 8.1 million, respectively, represent costs directly associated with the business transformation initiative that, in accordance with GAAP, cannot be capitalized.

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

Costs incurred, during the three and nine months ended September 30, 2022, of $ 3.3 million and $ 10.6 million, respectively, and during the three and nine months ended September 30, 2021, of $ 4.1 million and $ 12.2 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 $ 90 - 95 million of total costs, which includes $ 45 - 50 million of non-capitalizable costs, $ 12 - 14 million of which we expect to be incurred in 2022.

10 unchanged sentences

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,

2022 2021 2022 2021

2 unchanged sentences

_______________

(1) The decrease in the effective tax rate in the three and six months ended June 30, 2022 was driven by a one-time legislative tax rate change in 2021.

(1) The decrease in the effective tax rate in the three and nine months ended September 30, 2022 was driven by a one-time legislative tax rate change in 2021.

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, 2022

September 30, 2022

The below table provides 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

1 unchanged sentence

Discrete items:

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

Acquisition and other-related costs — — — —

Legislative tax rate changes (1)

Litigation verdict charge (2)

— — 85.0 19.7

3 unchanged sentences

21.0 % 20.4 %

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

4 unchanged sentences

— — — ( 14.6 )

Litigation verdict charge (2)

— — 85.0 19.7

Other tax only discrete items — ( 1.1 ) — 0.7

4 unchanged sentences

(1) Legislative tax rate changes in 2021, enacted in the United Kingdom ("UK"), resulted in discrete tax expense of $ 14.6 million related to the revaluation of our net deferred tax liability associated with our UK operations.

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

(2) Increase in EAETR for the three and six months ended June 30, 2022, as compared to June 30, 2021, is due to an overall change in the mix of forecasted earnings in various tax jurisdictions with varying rates, as well as an increase in foreign earnings deemed taxable in the US.

At June 30, 2022 and December 31, 2021, we had deferred tax assets of $ 9.4 million and $ 8.8 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 will increase from 19.0% to 25.0% on April 1, 2023.

(2) Refer to Note 14 for additional information.

(3) Increase in EAETR for the three and nine months ended September 30, 2022, as compared to September 30, 2021, is due to an overall change in the mix of forecasted earnings in various tax jurisdictions with varying rates, as well as an increase in foreign earnings deemed taxable in the U.S.

At September 30, 2022 and December 31, 2021, we had deferred tax assets of $ 9.2 million and $ 8.8 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 June 30, 2022, 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 September 30, 2022, we cannot objectively assert that these deferred tax assets are more likely than not to be realized and therefore we have maintained a valuation allowance.

We intend to continue maintaining a valuation allowance on these deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances.

A release of all or a portion of the valuation allowance could be possible, if we determine that sufficient positive evidence becomes available to allow us to reach a conclusion that the valuation allowance will no longer be needed.

A release of the valuation allowance would result in the recognition of certain deferred tax assets and a reduction to income tax expense for the period the release is recorded.

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

A release of the valuation allowance would result in the recognition of certain deferred tax assets and a reduction to income tax

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

June 30, 2022

September 30, 2022

expense for the period the release is recorded.

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

Commitments and Contingencies

14 unchanged sentences

Final resolution of these matters could take up to eighteen months .

As of June 30, 2022, there has been no progress in the post-trial proceedings to warrant any change to our conclusions as disclosed within our 2021 Annual Report.

As of September 30, 2022, there has been no progress in the post-trial proceedings to warrant any change to our conclusions as disclosed within our 2021 Annual Report.

As such, no changes to our reserve were made during this quarter.

The full amount of the jury's verdict, $ 85.0 million, is accrued in Other liabilities on the condensed consolidated balance sheet as of June 30, 2022.

The full amount of the jury's verdict, $ 85.0 million, is accrued in Other liabilities on the C ondensed Consolidated Balance Sheet as of September 30, 2022.

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

1 unchanged sentence

Notes to the Condensed Consolidated Financial Statements

June 30, 2022

September 30, 2022

Segment Information

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

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

In millions 2022 2021 2022 2021

16 unchanged sentences

( 1.9 ) ( 0.2 ) ( 1.9 ) ( 0.9 )

Litigation verdict charge (5)

— ( 85.0 ) — ( 85.0 )

Net income (loss) $ 75.4 $ ( 4.2 ) $ 196.0 $ 88.8

7 unchanged sentences

(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, 2022, charges of $ 1.3 million and $ 2.6 million relate to the Performance Materials segment and charges of $ 2.4 million and $ 4.7 million relate to the Performance Chemicals segment, respectively.

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 nine months ended September 30, 2022, charges of $ 1.1 million and $ 3.7 million relate to the Performance Materials segment and charges of $ 2.2 million and $ 6.9 million relate to the Performance Chemicals segment, respectively.

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 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.

(4) For the three and nine months ended September 30, 2022, all acquisition costs relate to the integration of the Ozark Materials business into our Performance Chemicals segment.

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

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

Refer to Note 14 for additional information.

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

June 30, 2022

September 30, 2022

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 2022 2021 2022 2021

6 unchanged sentences

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

295 — 269 245

Shares - diluted basis (1)

38,134 39,537 38,720 40,238

_______________

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

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 2022 2021 2022 2021

1 unchanged sentence

Subsequent Events

Share Repurchase

On July 25, 2022, our Board of Directors authorized the repurchase of up to $ 500 million of our common stock (the "2022 Authorization"), and rescinded the prior outstanding 2020 Authorization with respect to the shares that remained unused under the 2020 Authorization.

Ozark Materials Acquisition

On July 31, 2022, we entered into an Equity Purchase Agreement (the “Purchase Agreement”), with Ozark Holdings, Inc.

(“Seller”), Ozark Materials, LLC, (“OM”), and Ozark Logistics, LLC, (“OL” and, together with OM, “Ozark Materials”), pursuant to which, among other things, we will acquire all of the issued and outstanding limited liability company membership interests of Ozark Materials (the “Acquisition”).

Ozark Materials is a leading producer of pavement marking materials, including thermoplastic pavement markings, waterborne traffic paints, and preformed thermoplastics.

The purchase price for the Acquisition is $ 325 million, subject to a customary adjustment for working capital, indebtedness and transaction expenses.

We expect to finance the Acquisition through a combination of borrowings under our existing credit facilities and cash on hand.

The Purchase Agreement contains representations, warranties and covenants and conditions to closing that the Company believes are customary for a transaction of this size and type (including all required consents, approvals and waivers

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

June 30, 2022

under applicable antitrust laws).

Seller does not have a material relationship with us and the Acquisition will not be an affiliated transaction.

The closing of the Acquisition is subject to satisfaction of certain customary conditions, including regulatory approvals, but is not subject to any financing or similar condition.

The Acquisition is expected to close early in the fourth quarter of 2022.

The Purchase Agreement contains customary termination rights for Ingevity and the Seller.

On October 3, 2022, we completed our previously announced acquisition of Ozark Materials, LLC (“OM”), and Ozark Logistics, LLC (“OL” and, together with OM, “Ozark Materials”), pursuant to that certain Equity Purchase Agreement (the “Purchase Agreement”), by and among Ingevity, Ozark Materials and Ozark Holdings, Inc.

In accordance with the Purchase Agreement, we acquired from Seller, all of the issued and outstanding limited liability company membership interests of Ozark Materials for a purchase price of $ 325 million, subject to customary adjustments for working capital, indebtedness and transaction expenses (the "Acquisition").

We funded the Acquisition through a combination of borrowings under our existing credit facilities and cash on hand.

Ozark Materials is considered a business under business combinations accounting guidance, and therefore we will apply acquisition accounting to the Acquisition.

Acquisition accounting requires, among other things, that acquired assets and assumed liabilities be recognized at their fair values as of the acquisition date.

The net assets of the Acquisition will be recorded at the estimated fair values, primarily using Level 2 and Level 3 inputs.

Our preliminary purchase price valuation is still in process and we will include the required details in our future filings once complete.

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