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Item 1. Financial Statements

2023-08-03 compared with 2023-05-04 · 236 added, 122 removed, 593 unchanged (38% of the section changed)

2 unchanged sentences

Condensed Consolidated Statements of Operations (Unaudited)

Three Months Ended March 31,

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

In millions, except per share data 2023 2022 2023 2022

17 unchanged sentences

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

Three Months Ended March 31,

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

In millions 2023 2022 2023 2022

3 unchanged sentences

Foreign currency translation adjustment 4.0 ( 53.0 ) 14.5 ( 69.6 )

Unrealized gain (loss) on net investment hedges, net of tax provision (benefit) of zero and $ 0.4

Total foreign currency adjustments, net of tax provision (benefit) of zero and $ 0.4

Unrealized gain (loss) on net investment hedges, net of tax provision (benefit) of zero , $ 1.8 , zero , $ 2.2

Total foreign currency adjustments, net of tax provision (benefit) of zero , $ 1.8 , zero , $ 2.2

4.0 ( 47.0 ) 14.5 ( 62.3 )

Derivative instruments:

Unrealized gain (loss), net of tax provision (benefit) of $( 0.7 ) and $ 2.0

Reclassifications of deferred derivative instruments (gain) loss, included in net income (loss), net of tax (provision) benefit of $( 0.1 ) and $( 0.4 )

Unrealized gain (loss), net of tax provision (benefit) of zero , $ 0.7 , $( 0.7 ), $ 2.7

( 0.1 ) 2.4 ( 2.4 ) 8.7

Total derivative instruments, net of tax provision (benefit) of $( 0.8 ) and $ 1.6

Other comprehensive income (loss), net of tax provision (benefit) of $( 0.8 ) and $ 2.0

Reclassifications of deferred derivative instruments (gain) loss, included in net income (loss), net of tax (provision) benefit of $ 0.5 , $( 0.6 ), $ 0.4 , $( 1.0 )

1.3 ( 2.2 ) 1.1 ( 3.3 )

Total derivative instruments, net of tax provision (benefit) of $ 0.5 , $ 0.1 , $( 0.3 ), $ 1.7

1.2 0.2 ( 1.3 ) 5.4

Pension & other postretirement benefits:

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

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

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 $ 0.5 , $ 1.9 , $( 0.3 ), $ 3.9

5.3 ( 46.7 ) 13.3 ( 56.8 )

Comprehensive income (loss) $ 40.8 $ 13.1 $ 99.5 $ 63.8

2 unchanged sentences

Condensed Consolidated Balance Sheets

In millions, except share and par value data March 31, 2023 December 31, 2022

In millions, except share and par value data June 30, 2023 December 31, 2022

Assets (Unaudited)

43 unchanged sentences

Condensed Consolidated Statements of Cash Flows (Unaudited)

Three Months Ended March 31,

Six Months Ended June 30,

In millions 2023 2022

5 unchanged sentences

Deferred income taxes ( 1.0 ) ( 0.6 )

Disposal/impairment of assets 5.8 1.0

LIFO reserve 40.7 10.7

6 unchanged sentences

Prepaid and other current assets ( 6.5 ) ( 5.2 )

Planned major maintenance outage ( 9.9 ) ( 4.4 )

Accounts payable 27.7 49.1

14 unchanged sentences

Payments on long-term borrowings — ( 628.1 )

Debt issuance costs — ( 3.0 )

Debt repayment costs — ( 3.8 )

Finance lease obligations, net ( 0.5 ) ( 0.4 )

9 unchanged sentences

$ 68.6 $ 131.8

(1) Includes restricted cash of $ 0.5 million and $ 0.6 million and cash and cash equivalents of $ 77.9 million and $ 222.6 million at March 31, 2023 and 2022, respectively.

(1) Includes restricted cash of $ 0.6 million and $ 0.5 million and cash and cash equivalents of $ 68.0 million and $ 131.3 million at June 30, 2023 and 2022, 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

March 31, 2023

June 30, 2023

Description of Business

2 unchanged sentences

During the first quarter of 2023, we realigned our segment reporting structure to increase transparency for our investors and better align with how our chief operating decision maker intends to measure segment operating performance and allocate resources across our operating segments.

We separated our February 2019 acquisition, engineered polymers, from the Performance Chemicals reportable segment into its own reportable segment, Advanced Polymer Technologies.

We separated our engineered polymers product line from the Performance Chemicals reportable segment into its own reportable segment, Advanced Polymer Technologies.

This reportable segment change also resulted in our Performance Chemicals reporting unit for goodwill being split into two separate reporting units for the purposes of goodwill impairment testing.

3 unchanged sentences

and Performance Materials, which includes activated carbon.

Our products are used in a variety of demanding applications, including adhesives, agrochemicals, asphalt paving, bioplastics, coatings, elastomers, lubricants, pavement markings, publication inks, oil exploration and production and automotive components that reduce gasoline vapor emissions.

Basis of Consolidation and Presentation

10 unchanged sentences

We consider the applicability and impact of all ASUs.

ASUs not listed below were assessed and determined to be either not applicable or are not expected to have a material impact on the consolidated financial statements.

Recently issued ASUs that are not listed within this Form 10-Q have been assessed and determined to be either not applicable or are not expected to have a material impact on the consolidated financial statements.

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

March 31, 2023

June 30, 2023

Disaggregation of Revenue

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

Three Months Ended March 31,

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

In millions 2023 2022 2023 2022

6 unchanged sentences

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

Three Months Ended March 31,

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

In millions 2023 2022 2023 2022

25 unchanged sentences

Notes to the Condensed Consolidated Financial Statements

March 31, 2023

June 30, 2023

fair value between the three-level fair value hierarchy during the periods reported.

In millions Level 1 (1)

March 31, 2023

June 30, 2023

Deferred compensation plan investments (4)

18 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 $ 13.8 million and $ 13.3 million at March 31, 2023 and December 31, 2022, respectively.

COLI is recorded at cash surrender value and included in "Other assets" on the condensed consolidated balance sheets in the amount of $ 14.3 million and $ 13.3 million at June 30, 2023 and December 31, 2022, respectively.

Nonrecurring Fair Value Measurements

There were no nonrecurring fair value measurements in the condensed consolidated balance sheet during the quarters ended March 31, 2023, and December 31, 2022.

There were no nonrecurring fair value measurements in the condensed consolidated balance sheet during the quarters ended June 30, 2023, and December 31, 2022.

Strategic Investments

Equity Method Investments

The aggregate carrying value of all strategic equity method investments totaled $ 15.7 million and $ 28.2 million at March 31, 2023 and December 31, 2022, respectively.

During the three months ended March 31, 2023, we sold a strategic equity method investment for $ 31.4 million, resulting in a $ 19.2 million gain, recorded within "Other (income) expense, net" on the condensed consolidated statement of operations.

There were no adjustments to the carrying value of equity method investments for impairment for the periods ended March 31, 2023 and December 31, 2022.

The aggregate carrying value of all strategic equity method investments totaled $ 16.2 million and $ 28.2 million at June 30, 2023 and December 31, 2022, respectively.

During the first quarter of 2023, we sold a strategic equity method investment for $ 31.4 million, resulting in a $ 19.2 million gain, recorded within "Other (income) expense, net" on the condensed consolidated statement of operations.

There were no adjustments to the carrying value of equity method investments for impairment for the periods ended June 30, 2023 and December 31, 2022.

Measurement Alternative Investments

The aggregate carrying value of all measurement alternative investments where fair value is not readily determinable totaled $ 83.2 million and $ 80.8 million at March 31, 2023 and December 31, 2022, respectively.

There were no adjustments to the carrying value of the measurement alternative method investments for impairment or observable price changes for the periods ended March 31, 2023 and December 31, 2022.

The aggregate carrying value of all measurement alternative investments where fair value is not readily determinable totaled $ 83.2 million and $ 80.8 million at June 30, 2023 and December 31, 2022, respectively.

There were no adjustments to the carrying value of the measurement alternative method investments for impairment or observable price changes for the periods ended June 30, 2023 and December 31, 2022.

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

March 31, 2023

June 30, 2023

Restricted Investment

At March 31, 2023 and December 31, 2022, the carrying value of our restricted investment, which is accounted for as held-to-maturity ("HTM") and therefore recorded at amortized costs, was $ 78.8 million and $ 78.0 million, net of an allowance for credit losses of $ 0.4 million and $ 0.6 million, and included cash of $ 7.7 million and $ 7.0 million, respectively.

The fair value at March 31, 2023 and December 31, 2022 was $ 76.4 million and $ 74.7 million, respectively, based on Level 1 inputs.

At June 30, 2023 and December 31, 2022, the carrying value of our restricted investment, which is accounted for as held-to-maturity ("HTM") and therefore recorded at amortized costs, was $ 79.5 million and $ 78.0 million, net of an allowance for credit losses of $ 0.3 million and $ 0.6 million, and included cash of $ 8.3 million and $ 7.0 million, respectively.

The fair value at June 30, 2023 and December 31, 2022 was $ 76.1 million and $ 74.7 million, respectively, based on Level 1 inputs.

The following table shows the total amortized cost of our HTM debt securities by credit rating, excluding the allowance for credit losses and cash.

3 unchanged sentences

In millions AA+ AA AA- A A- BBB+ Total

March 31, 2023 $ 13.4 — 10.4 13.2 14.1 20.4 $ 71.5

June 30, 2023 $ 13.3 — 10.4 13.2 24.5 10.1 $ 71.5

December 31, 2022 $ 13.4 — 10.5 13.2 14.1 20.4 $ 71.6

Debt and Finance Lease Obligations

At March 31, 2023 and December 31, 2022, the carrying value of finance lease obligations was $ 101.6 million and $ 101.9 million, respectively, and the fair value was $ 106.8 million and $ 106.2 million, respectively.

At June 30, 2023 and December 31, 2022, the carrying value of finance lease obligations was $ 101.4 million and $ 101.9 million, respectively, and the fair value was $ 104.8 million and $ 106.2 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 $ 858.0 million and $ 828.0 million as of March 31, 2023 and December 31, 2022, respectively.

The carrying amount, excluding debt issuance fees, of our variable interest rate long-term debt was $ 881.0 million and $ 828.0 million as of June 30, 2023 and December 31, 2022, respectively.

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

At March 31, 2023 and December 31, 2022, the carrying value of our fixed rate debt was $ 550.0 million and $ 550.0 million, respectively, and the fair value was $ 478.9 million and $ 471.8 million, respectively, based on Level 2 inputs.

At June 30, 2023 and December 31, 2022, the carrying value of our fixed rate debt was $ 550.0 million and $ 550.0 million, respectively, and the fair value was $ 470.9 million and $ 471.8 million, respectively, based on Level 2 inputs.

Inventories, net

In millions March 31, 2023 December 31, 2022

In millions June 30, 2023 December 31, 2022

Raw materials $ 146.3 $ 106.7

5 unchanged sentences

Property, Plant, and Equipment, net

In millions March 31, 2023 December 31, 2022

In millions June 30, 2023 December 31, 2022

Machinery and equipment $ 1,218.3 $ 1,162.7

7 unchanged sentences

Notes to the Condensed Consolidated Financial Statements

March 31, 2023

June 30, 2023

Goodwill and Other Intangible Assets, net

9 unchanged sentences

Foreign currency translation — 0.1 8.5 8.6

March 31, 2023 $ 4.3 $ 349.2 $ 168.5 $ 522.0

June 30, 2023 $ 4.3 $ 349.3 $ 173.5 $ 527.1

Other Intangible Assets

4 unchanged sentences

Foreign currency translation 7.7 3.2 3.1 14.0

March 31, 2023 $ 391.6 $ 90.5 $ 89.8 $ 571.9

June 30, 2023 $ 396.2 $ 92.4 $ 91.6 $ 580.2

Accumulated Amortization

2 unchanged sentences

Foreign currency translation ( 1.9 ) ( 0.6 ) ( 1.2 ) ( 3.7 )

March 31, 2023 $ ( 121.1 ) $ ( 25.6 ) $ ( 26.5 ) $ ( 173.2 )

June 30, 2023 $ ( 129.0 ) $ ( 27.4 ) $ ( 29.6 ) $ ( 186.0 )

Other intangibles, net $ 267.2 $ 65.0 $ 62.0 $ 394.2

2 unchanged sentences

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

In millions March 31, 2023 December 31, 2022

In millions June 30, 2023 December 31, 2022

Performance Materials $ 1.5 $ 1.7

3 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 months ended March 31, 2023 and 2022, we recognized amortization expense of $ 10.3 million and $ 8.1 million, respectively.

During the three and six months ended June 30, 2023, we recognized

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

March 31, 2023

June 30, 2023

amortization expense of $ 10.5 million and $ 20.9 million, respectively, and during the three and six months ended June 30, 2022, we recognized amortization expense of $ 7.8 million and $ 15.9 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

During the three and six months ended June 30, 2023, we recognized net interest income associated with this financial instrument of zero and zero , respectively, and 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.

In the third quarter of 2022, we terminated our fixed-to-fixed cross-currency interest rate swaps, accounted for as net investment hedges.

During the three months ended March 31, 2023 and 2022, we recognized net interest income associated with this financial instrument of zero and $ 0.2 million, respectively.

Cash Flow Hedges

Foreign Currency Exchange Risk Management

As of March 31, 2023, there were $ 14.1 million open foreign currency derivative contracts.

The fair value of the designated foreign currency hedge contracts was an asset (liability) of $( 0.7 ) million and $( 0.5 ) million at March 31, 2023 and December 31, 2022, respectively.

As of June 30, 2023, there were $ 11.7 million open foreign currency derivative contracts.

The fair value of the designated foreign currency hedge contracts was a net asset (liability) of $( 0.3 ) million and $( 0.5 ) million at June 30, 2023 and December 31, 2022, respectively.

Commodity Price Risk Management

As of March 31, 2023, we had 1.6 million and 0.4 million mm BTUS (millions of British Thermal Units) in aggregate notional volume of outstanding natural gas commodity swap contracts and zero cost collar option contracts, respectively, designated as cash flow hedges.

As of March 31, 2023, open commodity contracts hedge forecasted transactions until March 2024.

The fair value of the outstanding designated natural gas commodity hedge contracts as of March 31, 2023 and December 31, 2022, was a net asset (liability) of $( 2.8 ) million and $( 1.6 ) million, respectively.

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

March 31, 2023

As of June 30, 2023, we had 1.0 million and 0.4 million mm BTUS (millions of British Thermal Units) in aggregate notional volume of outstanding natural gas commodity swap contracts and zero cost collar option contracts, respectively, designated as cash flow hedges.

As of June 30, 2023, open commodity contracts hedge forecasted transactions until March 2024.

The fair value of the outstanding designated natural gas commodity hedge contracts as of June 30, 2023 and December 31, 2022, was a net asset (liability) of $( 1.4 ) million and $( 1.6 ) million, respectively.

Interest Rate Risk Management

1 unchanged sentence

In the second quarter of 2022, we terminated the 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.

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

June 30, 2023

Effect of Cash Flow and Net Investment Hedge Accounting on AOCI

In millions Amount of Gain (Loss) Recognized in AOCI Amount of Gain (Loss) Reclassified from AOCI into Net income Location of Gain (Loss) Reclassified from AOCI in Net income

Three Months Ended March 31,

Three Months Ended June 30,

2023 2022 2023 2022

4 unchanged sentences

Total $ ( 0.1 ) $ 3.1 $ ( 1.8 ) $ 2.8

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

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

(Amount Excluded from

Effectiveness Testing)

Three Months Ended June 30,

2023 2022 2023 2022

Net investment hedging derivative

Currency exchange contracts (1)

$ — $ 7.8 $ — $ 2.5 Interest expense, net

Total $ — $ 7.8 $ — $ 2.5

In millions Amount of Gain (Loss) Recognized in AOCI Amount of Gain (Loss) Reclassified from AOCI into Net income Location of Gain (Loss) Reclassified from AOCI in Net income

Six Months Ended June 30,

2023 2022 2023 2022

Cash flow hedging derivatives

Currency exchange contracts $ ( 0.1 ) $ 1.3 $ ( 0.5 ) $ 0.8 Net sales

Natural gas contracts ( 3.0 ) 4.4 ( 1.0 ) 1.8 Cost of sales

Interest rate swap contracts — 5.7 — 1.7 Interest expense, net

Total $ ( 3.1 ) $ 11.4 $ ( 1.5 ) $ 4.3

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

2 unchanged sentences

Effectiveness Testing)

Three Months Ended March 31,

Six Months Ended June 30,

2023 2022 2023 2022

6 unchanged sentences

Within the next twelve months, we expect to reclassify $ 3.4 million of net gains from AOCI to income, before taxes.

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

June 30, 2023

Fair Value Measurements

1 unchanged sentence

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

There were no nonrecurring fair value measurements related to derivative assets and liabilities on the condensed consolidated balance sheets as of March 31, 2023, or December 31, 2022.

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

March 31, 2023

There were no nonrecurring fair value measurements related to derivative assets and liabilities on the condensed consolidated balance sheets as of June 30, 2023, or December 31, 2022.

June 30, 2023

In millions Level 1 (1)

1 unchanged sentence

$ — $ 0.3 $ — $ 0.3

Natural gas contracts (4)

Total assets $ — $ 0.4 $ — $ 0.4

16 unchanged sentences

Notes to the Condensed Consolidated Financial Statements

March 31, 2023

June 30, 2023

Debt, including Finance Lease Obligations

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

In millions, except percentages March 31, 2023 December 31, 2022

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

Revolving Credit Facility and other lines of credit (1)

8 unchanged sentences

______________

(1) Letters of credit outstanding under the revolving credit facility were $ 2.3 million and $ 2.3 million and available funds under the facility were $ 139.7 million and $ 169.7 million at March 31, 2023 and December 31, 2022, respectively.

(1) Letters of credit outstanding under the revolving credit facility were $ 2.3 million and $ 2.3 million and available funds under the facility were $ 116.7 million and $ 169.7 million at June 30, 2023 and December 31, 2022, 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.

Debt Covenants

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 Ingevity and our restricted subsidiaries, taken as a whole) and events of default (subject in certain cases to customary exceptions, as well as grace and cure periods).

Our Senior Notes indenture contains certain customary covenants (including covenants limiting Ingevity's and its restricted subsidiaries’ ability to grant or permit liens on certain property securing debt, declare or pay dividends, make distributions on or repurchase or redeem capital stock, make investments in unrestricted subsidiaries, engage in sale and lease-back transactions, and engage in a consolidation or merger, or sell, transfer or otherwise dispose of all or substantially all of the assets of Ingevity and our restricted subsidiaries, taken as a whole) and events of default (subject in certain cases to customary exceptions, as well as grace and cure periods).

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

We were in compliance with all covenants under the indenture as of March 31, 2023.

We were in compliance with all covenants under the indenture as of June 30, 2023.

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.

As calculated per the credit agreement, our net leverage for the four consecutive quarters ended March 31, 2023 was 2.6 , and our actual interest coverage for the four consecutive quarters ended March 31, 2023 was 8.9 .

We were in compliance with all covenants under the credit agreement at March 31, 2023.

As calculated per the credit agreement, our net leverage for the four consecutive quarters ended June 30, 2023 was 2.6 , and our actual interest coverage for the four consecutive quarters ended June 30, 2023 was 8.1 .

We were in compliance with all covenants under the credit agreement at June 30, 2023.

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

March 31, 2023

June 30, 2023

The tables below provide a roll forward of equity.

11 unchanged sentences

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

Net income (loss) — — — 35.5 — — 35.5

Other comprehensive income (loss) — — — — 5.3 — 5.3

Common stock issued 22 — — — — — —

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

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

Share repurchase program — — — — — ( 58.7 ) ( 58.7 )

Noncontrolling interest distributions — — — — — — —

Share-based compensation plans — — 4.7 — — 1.6 6.3

Balance at June 30, 2023 43,430 $ 0.4 $ 163.6 $ 1,093.9 $ ( 33.5 ) $ ( 510.3 ) $ 714.1

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

June 30, 2023

In millions, shares in thousands Shares Amount Additional paid in capital Retained earnings Accumulated

10 unchanged sentences

Balance at March 31, 2022 43,180 $ 0.4 $ 139.6 $ 856.9 $ 3.0 $ ( 313.8 ) $ 686.1

Net income (loss) — — — 59.8 — — 59.8

Other comprehensive income (loss) — — — — ( 46.7 ) — ( 46.7 )

Common stock issued 18 — — — — — —

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

Tax payments related to vested restricted stock units — — — — — ( 0.2 ) ( 0.2 )

Share repurchase program — — — — — ( 49.5 ) ( 49.5 )

Share-based compensation plans — — 3.3 — — 1.4 4.7

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

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

March 31, 2023

June 30, 2023

Accumulated other comprehensive income (loss)

Three Months Ended March 31,

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

In millions 2023 2022 2023 2022

19 unchanged sentences

Beginning balance $ 0.4 $ ( 3.2 ) $ 0.4 $ ( 3.2 )

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

tax provision (benefit) — — — —

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

Amortization of actuarial and other (gains) losses, prior service cost (credits), and settlement and curtailment (income) charge reclassified to net income 0.1 0.1 0.1 0.1

tax (provision) benefit — — — —

Net actuarial and other (gains) losses, amortization of prior service cost (credits), and settlement and curtailment (income) charge reclassified to net income 0.1 0.1 0.1 0.1

Other comprehensive income (loss), net of tax 0.1 0.1 0.1 0.1

Ending balance $ 0.5 $ ( 3.1 ) $ 0.5 $ ( 3.1 )

Total AOCI ending balance at March 31 $ ( 38.8 ) $ 3.0

Total AOCI ending balance at June 30 $ ( 33.5 ) $ ( 43.7 ) $ ( 33.5 ) $ ( 43.7 )

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

June 30, 2023

Reclassifications of accumulated other comprehensive income (loss)

Three Months Ended March 31,

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

In millions 2023 2022 2023 2022

3 unchanged sentences

Natural gas contracts (2)

( 1.5 ) 0.5 ( 1.0 ) 1.8

Net investment hedge contract (3)

Total before tax ( 1.8 ) 2.8 ( 1.5 ) 4.3

1 unchanged sentence

Amount included in net income (loss) $ ( 1.3 ) $ 2.2 $ ( 1.1 ) $ 3.3

Pension and other post retirement benefits

Amortization of prior service costs (2)

$ 0.1 $ 0.1 $ 0.1 $ 0.1

Total before tax 0.1 0.1 0.1 0.1

(Provision) benefit for income taxes — — — —

Amount included in net income (loss) $ 0.1 $ 0.1 $ 0.1 $ 0.1

______________

(1) Included within "Net sales" on the condensed consolidated statement of operations.

(2) Included within "Cost of sales" on the condensed consolidated statement of operations.

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

March 31, 2023

(3) Included within "Interest expense, net" on the condensed consolidated statement of operations.

Share Repurchases

1 unchanged sentence

Shares may be purchased through open market or privately negotiated transactions at the discretion of management based on its evaluation of market prevailing conditions and other factors, 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 months ended March 31, 2023 and 2022, we repurchased $ 33.4 million, inclusive of $ 0.2 million in excise tax, and $ 40.4 million in common stock, representing 449,475 and 610,447 shares of our common stock at a weighted average cost per share of $ 73.86 and $ 66.26 , respectively.

At March 31, 2023, $ 411.5 million remained unused under our Board-authorized repurchase program.

During the three and six months ended June 30, 2023, we repurchased $ 58.7 million, inclusive of $ 0.6 million in excise tax, and $ 92.1 million, inclusive of $ 0.8 million in excise tax, in common stock, representing 819,898 and 1,269,373 shares of our common stock at a weighted average cost per share of $ 70.87 and $ 71.93 , respectively.

At June 30, 2023, $ 353.4 million remained unused under our Board-authorized repurchase program.

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.

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

June 30, 2023

Restructuring and Other (Income) Charges, net

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

Three Months Ended March 31,

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

In millions 2023 2022 2023 2022

Severance and other employee-related costs (1)

$ 4.4 $ — $ 7.4 $ —

Restructuring charges 7.0 — 10.1 —

Alternative Feedstock Transition

North Charleston Plant Transition 2.9 — 2.9 —

Business transformation costs 2.7 3.7 5.2 7.3

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Restructuring Charges

During the quarter, we initiated a reorganization to streamline certain functions and reduce ongoing costs.

As a result, we recorded $ 3.0 million in severance and other employee-related costs for the three months ended March 31, 2023.

In the first quarter of 2023, we initiated several measures to pursue greater cost efficiency which included a reorganization to streamline certain functions and reduce ongoing costs.

During the second quarter, we took further actions to reorganize our operations.

The combined restructuring program is expected to cost approximately $ 12 - 14 million and is expected to be completed over the remainder of 2023.

During the three and six months ended June 30, 2023, we recorded $ 4.4 million and $ 7.4 million in severance and other employee-related costs and $ 2.6 million and $ 2.7 million in other restructuring charges, including asset write-offs associated with our reorganization.

Restructuring Reserves

Restructuring reserves which are included within Accrued expenses on the consolidated balance sheets were $ 0.6 million and $ 0.5 million at March 31, 2023 and December 31, 2022, respectively.

Restructuring reserves which are included within Accrued expenses on the condensed consolidated balance sheets were $ 5.9 million and $ 0.5 million at June 30, 2023 and December 31, 2022, respectively.

Other (income) charges, net

Alternative Fatty Acid Transition

In April 2023, we began the feedstock transition of our Crossett, Arkansas manufacturing plant (“Crossett”).

This transition will convert Crossett from a crude tall oil (“CTO”) based feedstock production facility to produce fatty acids from alternative plant based feedstocks.

To initiate this transition, we halted all production at Crossett in April.

During the three and six months ended June 30, 2023, we incurred $ 6.6 million in costs.

We expect to incur approximately $ 20 - 25 million of expense in 2023, representing non-capital retooling and stranded costs, with modest levels of capital expenditure.

North Charleston Plant Transition

Our North Charleston, South Carolina Performance Chemicals manufacturing plant is co-located with a WestRock Company (“WestRock”) paper mill.

WestRock provides certain critical operating services to us including steam, water and wastewater.

WestRock also disposes of brine, a by-product resulting from our conversion of black liquor soap skimmings into CTO and provides other non-critical services that support our operations.

In May 2023, WestRock announced that it will permanently cease operating its North Charleston paper mill by August 31, 2023 and notified us that it is terminating the shared services in accordance with our operating agreement.

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

March 31, 2023

Other (income) charges, net

June 30, 2023

We expect to incur approximately $ 15 - 20 million of non-capital transition costs in 2023 as we continue to transition those shared services and minimize disruption to our operations and are continuing to evaluate the future impact.

During the three and six months ended June 30, 2023, we incurred $ 2.9 million in costs.

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 embarked upon a business transformation initiative that includes the implementation of an upgraded enterprise resource planning ("ERP") system.

The implementation of our new ERP occurred in multiple phases beginning with our pilot deployment which occurred during the first quarter of 2022 and concluded with our final deployment in the first quarter of 2023.

Costs incurred, during the three months ended March 31, 2023 and 2022, of $ 2.5 million and $ 3.6 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, which we expect to complete in 2023, we anticipate incurring approximately $ 90 - 95 million of total costs, including $ 5 - 6 million during the remainder of 2023, and $ 45 - 50 million of non-capitalizable costs.

Costs incurred, during the three and six months ended June 30, 2023, of $ 2.7 million and $ 5.2 , respectively, and during the three and six months ended June 30, 2022, of $ 3.7 million and $ 7.3 million, respectively.

Costs are directly associated with the business transformation initiative that, in accordance with GAAP, cannot be capitalized.

We expect to complete this initiative by the end of 2023 and anticipate incurring an additional $ 3 - 4 million in non-capitalizable costs.

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

Three Months Ended March 31,

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

2023 2022 2023 2022

Effective tax rate 25.6 % 21.8 % 22.9 % 21.7 %

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Notes to the Condensed Consolidated Financial Statements

March 31, 2023

June 30, 2023

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

Three Months Ended March 31,

Three Months Ended June 30,

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

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

Legislative tax rate changes — — — 0.1

Other tax only discrete items

— ( 0.8 ) — ( 0.2 )

Total discrete items 4.4 0.2 — ( 0.1 )

Consolidated operations, before discrete items $ 52.1 $ 12.4 $ 76.5 $ 16.6

23.8 % 21.7 %

Six Months Ended June 30,

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

Consolidated operations $ 111.8 $ 25.6 22.9 % $ 154.1 $ 33.5 21.7 %

Discrete items:

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

Sale of strategic investment (2)

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(2) See Note 4 for further information.

(3) Increase in EAETR for the three months ended March 31, 2023, as compared to March 31, 2022, is due to an overall change in the mix of forecasted earnings in various tax jurisdictions with varying rates, an increase in the foreign earnings deemed taxable in the U.S., and the corporate tax rate in the UK increasing from 19% to 25% on April 1, 2023.

At March 31, 2023 and December 31, 2022, we had deferred tax assets of $ 9.5 million and $ 9.2 million, respectively, resulting from certain historical net operating losses from our Brazilian and Chinese operations and U.S.

(3) Increase in EAETR for the three and six months ended June 30, 2023, as compared to June 30, 2022, is due to an overall change in the mix of forecasted earnings in various tax jurisdictions with varying rates, an increase in the foreign earnings deemed taxable in the U.S., and the corporate tax rate in the UK increasing from 19% to 25% on April 1, 2023.

At June 30, 2023 and December 31, 2022, we had deferred tax assets of $ 10.1 million and $ 9.2 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.

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

As of March 31, 2023, we cannot objectively assert that these deferred tax assets are more likely than not to be realized and therefore we have maintained a valuation allowance.

As of June 30, 2023, 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.

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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.

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

June 30, 2023

Undistributed earnings of Ingevity’s foreign subsidiaries have historically been indefinitely reinvested offshore.

Management does not currently expect to repatriate cash earnings from our foreign operations to fund U.S.

however, during the second quarter, we determined that the current year's earnings of our China subsidiaries are no longer permanently reinvested.

No deferred tax liability was recorded as a result of this change in our assertion, as the impacts will be captured in the year current earnings are distributed.

Commitments and Contingencies

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

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

The BASF Counterclaims relate to our enforcement of the 844 Patent and our entry into several supply agreements with customers of our fuel vapor canister honeycombs.

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

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

antitrust law to approximately $ 85.0 million when the court enters judgment.

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.

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

March 31, 2023

We disagree with the verdict, 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.

antitrust law to approximately $ 85.0 million.

On May 18, 2023, the court in the Delaware Proceeding entered judgment on the jury’s verdict, which commenced the post-trial briefing stage.

In addition, BASF is seeking pre-judgment interest and has indicated it will seek attorneys’ fees and costs in amounts that they will have to support at a future date.

Unless the judgment is set aside, BASF will be entitled to post-judgment interest pursuant to the rate provided under federal law.

We disagree with the verdict, including the court’s application of the law and entry of judgment, and are seeking judgment as a matter of law, or a new trial in the alternative, in the Delaware Proceeding post-trial briefing stage and intend to do so on appeal, if necessary.

In addition, we may challenge the U.S.

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

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Final resolution of these matters could take up to 30 months.

As of March 31, 2023, there has been no progress in the post-trial proceedings to warrant any change to our conclusions as disclosed within our 2022 Annual Report.

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

The full amount of the trebled jury's verdict, $ 85.0 million, is accrued in Other liabilities on the condensed consolidated balance sheet as of March 31, 2023.

The amount of any liability we 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

March 31, 2023

As of June 30, 2023, nothing has occurred in the post-trial proceedings to warrant any change to our conclusions as disclosed within our 2022 Annual Report.

The full amount of the trebled jury's verdict, $ 85.0 million, is accrued in Other liabilities on the condensed consolidated balance sheet as of June 30, 2023.

In addition, as a result of entering the judgment on May 18, 2023, we have started accruing for the post-judgment interest.

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

Segment Information

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We have recast the data below to reflect the changes in our reportable segments to conform to the current year presentation.

Three Months Ended March 31,

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

June 30, 2023

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

In millions 2023 2022 2023 2022

18 unchanged sentences

Acquisition and other-related costs (4)

( 1.8 ) — ( 4.5 ) —

Gain on sale of strategic investment (5)

7 unchanged sentences

interest expense, net, associated with corporate debt facilities, income taxes, depreciation, amortization, restructuring and other (income) charges, net, acquisition and other related costs, litigation verdict charges, (losses) and gains from the sale of strategic investments, and pension and postretirement settlement and curtailment (income) charges, net.

(3) For the three months ended March 31, 2023, charges of $ 1.7 million relate to the Performance Materials segment, charges of $ 3.1 million relate to the Performance Chemicals segment, and charges of $ 0.8 million relate to the Advanced Polymer Technologies segment.

For the three months ended March 31, 2022, charges of $ 1.3 million relate to the Performance Materials segment, charges of $ 1.8 million relate to the Performance Chemicals segment, and charges of $ 0.5 million relate to the Advanced Polymer Technologies segment.

(3) For the three and six months ended June 30, 2023, charges of $ 4.5 million and $ 6.2 million relate to the Performance Materials segment, charges of $ 12.6 million and $ 15.7 million relate to the Performance Chemicals segment, and charges of $ 1.1 million and $ 1.9 million relate to the Advanced Polymer Technologies segment, respectively.

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, charges of $ 1.9 million and $ 3.7 million relate to the Performance Chemicals segment, and charges of $ 0.5 million and $ 1.0 million relate to the Advanced Polymer Technologies segment, respectively.

For more detail on the charges incurred see Note 11.

(4) For the three months ended March 31, 2023, all charges relate to the acquisition and integration of Ozark Materials into the Performance Chemicals segment.

(4) For the three and six months ended June 30, 2023, all charges relate to the acquisition and integration of Ozark Materials into the Performance Chemicals segment.

For more detail see Note 16.

(5) For the three months ended March 31, 2023, gain on sale of strategic investment relates to the Performance Materials segment.

(5) For the three and six months ended June 30, 2023, gain on sale of strategic investment relates to the Performance Materials segment.

For more detail see Note 4.

(6) Excludes $ 1.0 million of depreciation and amortization for the three and six months ended June 30, 2023, relating to the alternative feedstock transition within our Performance Chemicals reportable segment.

Refer to Note 11 for more information.

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

March 31, 2023

June 30, 2023

Earnings (Loss) per Share

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

Three Months Ended March 31,

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

In millions, except share and per share data 2023 2022 2023 2022

8 unchanged sentences

The following average number of potential common shares were antidilutive, and therefore, were not included in the diluted earnings per share calculation:

Three Months Ended March 31,

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

In thousands 2023 2022 2023 2022

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

The Acquisition is not considered significant to our condensed consolidated financial statements for the three months March 31, 2023;

The Acquisition is not considered significant to our condensed consolidated financial statements for the three months and six months ended June 30, 2023;

therefore, proforma results of operations have not been presented.

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The allocation of the purchase price to the assets acquired and liabilities assumed, including the residual amount allocated to goodwill, is based upon preliminary information and is subject to change within the measurement period (up to one year from the acquisition date) as additional information concerning final asset and liability valuations is obtained.

During the measurement period, if new information is obtained about facts and circumstances that existed as of the acquisition date that, if

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

March 31, 2023

known, would have resulted in revised estimated values of those assets or liabilities as of that date, we will revise the preliminary purchase price allocation.

June 30, 2023

measurement period, if new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have resulted in revised estimated values of those assets or liabilities as of that date, we will revise the preliminary purchase price allocation.

The effect of measurement period adjustments to the estimated fair values will be reflected as if the adjustments had been completed on the acquisition date.

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_______________

(1) Fair value of finished goods inventories acquired included a step-up in the value of $ 1.8 million, of which $ 0.9 million was expensed in the three months ended March 31, 2023.

(1) Fair value of finished goods inventories acquired included a step-up in the value of $ 1.8 million, of which zero and $ 0.8 million was expensed in the three and six months ended June 30, 2023.

The expense is included within "Cost of sales" on the consolidated statement of operations.

Inventories are accounted for on a FIFO basis of accounting.

(2) The aggregate amortization expense was $ 2.7 million for the three months ended March 31, 2023.

(2) The aggregate amortization expense was $ 2.7 million and $ 5.5 million for the three and six months ended June 30, 2023.

Estimated amortization expense is as follows:

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See Note 7 for further information regarding our allocation of goodwill among our reporting units.

INGEVITY CORPORATION

Notes to the Condensed Consolidated Financial Statements

June 30, 2023

Acquisition and other-related costs

1 unchanged sentence

The following table summarizes the costs incurred associated with these combined activities.

Three Months Ended March 31,

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

In millions 2023 2022 2023 2022

6 unchanged sentences

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