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Item 2. Management’s Discussion and Analysis

2024-10-30 compared with 2024-08-01 · 190 added, 193 removed, 295 unchanged (56% of the section changed)

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In addition to any such risks, uncertainties and other factors discussed elsewhere herein, risks, uncertainties and other factors that could cause or contribute to actual results differing materially from those expressed or implied by the forward-looking statements include, but are not limited to the following:

• the anticipated timing, charges and costs of the Performance Chemicals manufacturing consolidation and closure of our Crossett, Arkansas and DeRidder, Louisiana plants may differ materially from our estimates due to events that may occur as a result of, or in connection with, such consolidation or plant closures;

• the anticipated timing, charges and costs of the Performance Chemicals manufacturing consolidation and closures of our Crossett, Arkansas and DeRidder, Louisiana plants may differ materially from our estimates due to events that may occur as a result of, or in connection with, such consolidation or plant closures;

• the anticipated timing, charges and costs associated with the repositioning of our Performance Chemicals reportable segment and crude tall oil (“CTO”) resales may differ materially from our estimates due to events that may occur as a result of, or in connection with, such actions;

• we may be adversely affected by general global economic, geopolitical, and financial conditions beyond our control, including inflation, the Russia-Ukraine war, and the Israel-Gaza war;

• we may be adversely affected by general global economic, geopolitical, and financial conditions beyond our control, including inflation, the Russia-Ukraine war, and the conflict in the Middle East;

• we are exposed to risks related to our international sales and operations;

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Through a diverse team of talented and experienced people, we develop, manufacture, and bring to market solutions that are largely renewably sourced and help customers solve complex problems while making the world more sustainable.

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

We operate in three reportable segments:

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Recent Developments and Updates

Goodwill Impairment Charge

Beginning in fiscal year 2023, we began to see depressed volumes in our industrial end markets, constraining our ability to offset the continued CTO price inflation we were experiencing, and negatively impacting earnings and cash flow outlook within our Performance Chemicals’ reporting unit, particularly in our industrial specialties product line.

As a result, we concluded that a triggering event occurred in the third quarter of 2023.

Our third quarter 2023 impairment analysis included significant assumptions, such as the execution of several measures in 2023 to pursue greater cost efficiency, including a reorganization to streamline certain functions and reduce ongoing costs, and expectations of decreased CTO costs beginning in the second half of 2024.

We concluded that no impairment was necessary as a result of that third quarter 2023 interim analysis or at our annual impairment test, dated October 1, 2023.

During the second quarter of 2024, our supplier provided new information regarding the cost of CTO for the second half of 2024, which significantly exceeded our forecasted costs, resulting in a triggering event for our Performance Chemicals’ reporting unit.

We performed an analysis of the reporting unit’s goodwill, intangibles, and long-lived assets.

Our analysis included significant assumptions such as:

revenue growth rate, earnings before interest, taxes, depreciation and amortization

("EBITDA") margin, and discount rate, which are judgmental, and variations in any assumptions could result in materially different calculations of fair value.

Our analysis reassessed the expected cash flows in light of current performance and expected lack of near term recovery in our industrial specialties product line, resulting in lower volume and profitability expectations.

As a result, the company concluded that the carrying amount of the Performance Chemicals’ reporting unit exceeded its fair value, resulting in a non-cash goodwill impairment charge of $349.1 million, which represents all of the goodwill within the Performance Chemicals' reportable segment.

The charge was recorded within “Goodwill impairment charge” on the condensed consolidated statements of operations for the quarter ended June 30, 2024.

CTO Supply Contract Termination Agreement

On July 1, 2024, we entered into a termination agreement and release (the “Termination Agreement”), to terminate our long-term crude tall oil supply agreement with GP Pine Chemicals, LLC, (“Georgia-Pacific”), as amended (the“CTO Supply Agreement”), pursuant to which we were obligated to purchase and receive CTO produced by certain Georgia-Pacific facilities.

Pursuant to the Termination Agreement, as consideration for the termination of the CTO Supply Agreement, we made a cash payment to Georgia-Pacific in the amount of $50.0 million on July 1, 2024 and agreed to make an additional cash payment to Georgia-Pacific in the amount of $50.0 million by October 15, 2024.

Interest Rate Risk Management

During the three months ended September 30, 2024, we entered into a floating-to-fixed interest rate swap with a notional amount of $200.0 million to manage the variability of cash flows in the interest rate payments associated with our existing Secured Overnight Financing Rate ("SOFR") based interest payments, effectively converting $200.0 million of our floating rate debt to a fixed rate.

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

dollar SOFR and in return are obligated to pay interest at a fixed rate of 3.84 percent until August 2026.

The fair value of the interest rate swap was an asset (liability) of $(1.7) million and zero at September 30, 2024 and December 31, 2023, respectively.

Measurement Alternative Investments

During the first and third quarters of 2024, the company identified triggering events indicating that investments being accounted for under the measurement alternative may be impaired.

For the three and nine months ended September 30, 2024, the company recognized an impairment of $6.7 million and $11.5 million, respectively, recorded in Other (income) expense, net on the condensed consolidated statements of operations.

Annual Goodwill Test

We conduct a required annual review of goodwill for potential impairment at October 1st, or sooner if events or changes in circumstances indicate that the fair value of a reporting unit is below its carrying value.

Our reporting units are our operating segments, i.e., Performance Materials, Performance Chemicals, and Advanced Polymer Technologies ("APT").

If the carrying value of a reporting unit that includes goodwill exceeds its fair value, which is determined using both the income approach and market approach, goodwill is considered impaired.

During the second quarter of 2024, we recorded a full impairment of our Performance Chemicals reporting unit goodwill.

The remaining balance of our goodwill, is primarily related to our APT reporting unit.

There have been no events or changes in circumstances during the third quarter that have required interim testing of our goodwill for impairment.

We are currently testing our remaining goodwill balance as part of our required annual October 1st goodwill impairment testing.

The preliminary results have calculated that our APT reporting unit headroom, defined as the percentage difference between the fair value of a reporting unit and its carrying value, is between 10 and 15 percent.

Since the fair value of our APT reporting unit is higher than the carrying value, we have concluded that no impairment to goodwill is necessary.

Our analysis includes significant assumptions such as revenue growth rate, Earnings before Interest, Taxes, Depreciation and Amortization ("EBITDA") margin, and discount rate, which are judgmental, and variations in any assumptions could result in materially different calculations of fair value.

The below table shows how changes in certain significant assumptions utilized in our preliminary annual goodwill testing, specific to our APT reporting unit, impacts the calculated headroom.

Advanced Polymer Technologies Reporting Unit - Headroom Sensitivity Analysis

Reporting Unit

Fair Value Revenue Growth Rate declines by 100 Bps EBITDA Margin declines by 100 Bps Discount Rate

increases by 100 Bps

Preliminary Headroom 10 - 15% 3 - 8% 3 - 8% (3) - 2%

Performance Chemicals' Repositioning

On November 1, 2023, we announced a number of strategic actions designed to reposition our Performance Chemicals reportable segment to improve profitability and reduce the cyclicality of the company as a whole.

These actions increase our focus on growing our most profitable Performance Chemicals' product lines, such as road technologies, and accelerate our transition to non-CTO based fatty acids.

This initiative will focus on reducing exposure to lower margin end-use markets of our industrial specialties product line, such as adhesives, publication inks, and oilfield, representing approximately 45 percent of our industrial specialties product line historical annualized net sales.

This initiative included the permanent closure of our Performance Chemicals' CTO refinery and the closure of our manufacturing plant located in DeRidder, Louisiana (the “DeRidder Plant”), including the polyol production assets associated with the Advanced Polymer Technologies (“APT”) reportable segment.

These actions increased our focus on growing our most profitable Performance Chemicals' product lines, such as road technologies, and accelerate our transition to non-CTO based fatty acids.

This initiative focused on reducing exposure to lower margin end-use markets of our industrial specialties product line, such as adhesives, publication inks, and oilfield, representing approximately 45 percent of our industrial specialties product line historical annualized net sales.

All production at the DeRidder Plant ceased in the first quarter of 2024.

The Performance Chemicals’ repositioning initiative included additional corporate and business cost reduction actions executed in November 2023.

The actions referenced above, when combined with other targeted workforce reduction initiatives during 2023, resulted in the reduction of Ingevity's global workforce by almost 20 percent.

Additionally, in July 2024, we announced plans to transition the refining of oleo-based products manufactured for our Performance Chemicals reportable segment from our Crossett, Arkansas manufacturing plant (the “Crossett Facility”) to our North Charleston, South Carolina manufacturing plant.

This action included the closure of the Crossett Facility, as well as additional corporate and business cost reduction actions.

We ceased production at the Crossett Facility in the third quarter of 2024.

The actions referenced above, when combined with other targeted workforce reduction initiatives during 2023 and 2024, resulted in the reduction of Ingevity's global workforce by 23 percent.

Specific to Performance Chemicals, the reduction represented approximately 40 percent of the reportable segment's workforce.

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We expect to incur aggregate charges of approximately $350 million associated with the Performance Chemicals' repositioning.

This is a reduction of approximately $30 million from prior expectations due to lower than estimated plant cleaning costs.

Total expected charges now consist of approximately $185 million in asset-related charges, approximately $15 million in severance and other employee-related costs, and approximately $50 million in other restructuring costs, including decommissioning, dismantling and removal charges, and contract termination costs.

Through June 30, 2024, we have incurred $207.6 million associated with these actions, including $182.0 million of non-cash asset-related charges and $25.6 million of charges to be settled in cash.

As of June 30, 2024, $21.3 million of the charges to be settled in cash have been paid.

We expect approximately $185 million of the total charges to be non-cash and $65 million to be settled in cash.

The remainder of the non-cash and 50-60 percent of cash charges are expected to be recognized in 2024.

This is an increase of approximately $100 million from prior expectations due to the closure of the Crossett Facility.

Total expected charges now consist of approximately $250 million in asset-related charges, approximately $25 million in severance and other employee-related costs, and approximately $75 million in other restructuring costs, including

decommissioning, dismantling and removal charges, and CTO supply contract termination costs.

Through September 30, 2024, we have incurred $297.0 million associated with these actions, including $250.8 million of non-cash asset-related charges and $46.2 million of charges to be settled in cash.

As of September 30, 2024, $41.0 million of the charges to be settled in cash have been paid and all non-cash charges have been incurred.

In total, we expect approximately $100 million of cash charges, including approximately $10-$15 million during the fourth quarter of 2024 and approximately $20-$25 million during 2025.

Inventory Charges

The company believes the collective actions of workforce, operational, and regional business exits will hinder our ability to dispose of the associated inventory on hand.

As a result, we recorded zero and $2.5 million of non-cash, lower of cost or market, inventory charges during the three and six months ended June 30, 2024, respectively, to adjust the carrying value of the impacted inventory to what we expect to realize upon disposal, less disposal costs.

These inventory charges are recorded to Cost of sales on the condensed consolidated statement of operations.

As a result, we recorded $3.8 million and $6.3 million of non-cash, lower of cost or market, inventory charges during the three and nine months ended September 30, 2024, respectively, to adjust the carrying value of the impacted inventory to what we expect to realize upon disposal, less disposal costs.

These inventory charges are recorded to Cost of sales on the condensed consolidated statements of operations.

CTO Resale Activity

The DeRidder Plant closure, and the corresponding reduced CTO refining capacity, significantly reduced our CTO volume requirements.

However, we were obligated, under an existing CTO supply contract, to purchase CTO volumes through 2025 at amounts in excess of our required CTO volumes needed to support our business operations.

The DeRidder Plant closure, and the corresponding reduction in CTO refining capacity, significantly reduced our CTO volume requirements.

However, we were obligated under an existing CTO supply contract to purchase CTO volumes through 2025 at amounts in excess of the CTO volumes needed to support our business operations.

To manage this excess inventory, we sold CTO volumes (herein referred to as "CTO resales") in the open market.

For the three and six months ended June 30, 2024, we have incurred $23.5 million and $50.0 million of CTO resale losses, which are recorded as Other (income) expense, net on the condensed consolidated statements of operations.

As of July 1, 2024, as further described in Note 16, we have terminated the CTO supply contract that resulted in these excess CTO volumes.

For the three and nine months ended September 30, 2024, we have incurred $0.8 million and $50.8 million, respectively, of CTO resale losses, which are recorded as Other (income) expense, net on the condensed consolidated statements of operations.

As of July 1, 2024, we terminated the CTO supply contract that resulted in these excess CTO volumes.

As consideration for the termination of the CTO supply contract, we made a cash payment in the amount of $50.0 million on July 1, 2024 and an additional cash payment in the amount of $50.0 million.

The total charge of $100.0 million was recorded within Other (income) expense, net on the condensed consolidated statements of operations for the nine months ended September 30, 2024.

As a result of the termination of this supply contract, the purchases under the CTO supply contract ended effective June 30, 2024.

Therefore, we are no longer required to purchase this excess CTO volume through 2025, and as such, we expect to end our CTO resale activity by the end of 2024 and to incur no more than $5.0 million in additional costs as we liquidate the excess CTO resale volumes on hand as of June 30, 2024.

Crossett, Arkansas Plant Closure

On July 31, 2024, we announced plans to transition the refining of oleo-based products manufactured for our Performance Chemicals reportable segment from our Crossett, Arkansas manufacturing plant (the “Crossett Facility”) to our North Charleston, South Carolina manufacturing plant.

In connection with this action, on July 29, 2024, the Board of Directors approved the closure of the Crossett Facility, as well as additional corporate and business cost reduction actions.

Ingevity plans to close the Crossett Facility in August 2024 and will continue to evaluate options for the site.

We expect to realize net operational savings of approximately $20-$25 million per year from the closure of the Crossett Facility, as well as annual savings of approximately $10 million from the corporate and business-related cost reduction actions.

The company expects to realize the full benefit of these savings beginning in 2025.

Expected Charges

As a result of these actions, Ingevity expects to incur aggregate charges of approximately $100 million, consisting of approximately $65 million in asset-related charges, approximately $10 million in severance and other employee-related costs and approximately $25 million in other restructuring costs, which include decommissioning, dismantling and removal charges and contract termination costs.

We expect approximately $65 million of the total charges to be non-cash.

The majority of non-cash charges and 50-60 percent of cash charges are expected to be recognized by the first half of 2025.

Expected Savings and Impact, Including Crossett, Arkansas Plant Closure

Expected Savings and Impact

The Performance Chemicals' repositioning is focused on reducing exposure to lower margin end-use markets of our industrial specialties product line, such as adhesives, publication inks, and oilfield, representing approximately 45 percent of our industrial specialties product line historical annualized net sales, and as such, we expect annualized net sales to decrease accordingly.

The annualized cash savings we expect to realize from these actions are approximately $95 million to $110 million beginning in 2024.

The annualized cash savings we expect to realize from these actions are approximately $95 million to $110 million of which $65 million to $75 million we expect to realize in 2024.

These cash savings will be derived from headcount reductions, plant operating efficiencies, and reduced supply chain costs.

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Collectively, these savings are expected to be realized in the following financial statement captions:

70-80 percent in Cost of sales, 15-25 percent in Selling, general, and administrative expenses, and ~5 percent in Research and technical expenses, all presented on our condensed consolidated statement of operations.

During the three and six months ended June 30, 2024, we realized cash savings of approximately $22 million and $42 million, including $17 million and $32 million in Cost of sales, $4 million and $8 million in Selling, general, and administrative expenses, and $1 million and $2 million in Research and technical expenses, respectively.

During the three and nine months ended September 30, 2024, we realized cash savings of approximately $18 million and $60 million, including $14 million and $46 million in Cost of sales, $3 million and $11 million in Selling, general, and administrative expenses, and $1 million and $3 million in Research and technical expenses, respectively.

The charges we currently expect to incur and the savings we expect to obtain in connection with these actions are subject to a number of assumptions and risks, and actual results may differ materially.

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Results of Operations

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

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

In millions 2024 2023 2024 2023

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In millions Prior year Net sales Volume Price/Mix Currency effect Current year Net Sales

Three months ended June 30, 2024 vs.

Three months ended September 30, 2024 vs.

$ 446.0 (68.7) 0.4 (0.8) $ 376.9

Six months ended June 30, 2024 vs.

Nine months ended September 30, 2024 vs.

$ 1,320.4 (199.9) (5.2) (7.7) $ 1,107.6

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The Net sales decrease was driven primarily by the Performance Chemicals' industrial specialties product line due to repositioning actions which included the focus on reducing exposure to lower margin end-use markets and therefore reduced sales during the quarter by approximately $51 million.

Also contributing to the lower sales was unfavorable weather in North America impacting our road technologies product line and continued weakness in certain industrial end markets that negatively impacted sales in our industrial specialties product line, slightly offset by an increase in our Performance Materials reportable segment.

Three Months Ended June 30, 2024 vs.

The Net sales decrease of $91.2 million in 2024 was driven by volume declines of $86.2 million (18 percent), primarily in our Performance Chemicals industrial specialties and road technologies product lines.

Also contributing to the lower sales was unfavorable weather in key North American regions impacting our road technologies product line and continued weakness in certain industrial end markets that negatively impacted sales in our industrial specialties product line, slightly offset by an increase in our Advanced Polymer Technologies and Performance Materials reportable segments.

Three Months Ended September 30, 2024 vs.

The Net sales decrease of $69.1 million in 2024 was driven by volume declines of $68.7 million (15 percent), primarily in our Performance Chemicals reportable segment, and unfavorable foreign currency exchange of $0.8 million (zero percent).

This was partially offset by favorable pricing and sales composition (mix) of $0.4 million (zero percent).

Nine Months Ended September 30, 2024 vs.

The Net sales decrease of $212.8 million in 2024 was driven by volume declines of $199.9 million (15 percent), primarily in our Performance Chemicals reportable segment.

Unfavorable pricing and sales composition (mix) of $5.2 million (zero percent) and unfavorable foreign currency exchange of $7.7 million (one percent) also contributed to the decline in Net sales.

Six Months Ended June 30, 2024 vs.

The Net sales decrease of $143.7 million in 2024 was driven by volume declines of $131.2 million (15 percent), primarily in our Performance Chemicals industrial specialties product line and our APT reportable segment.

Unfavorable pricing and sales composition (mix) of $5.7 million (one percent) and unfavorable foreign currency exchange of $6.8 million (one percent) also contributed to the decline in Net sales.

Three Months Ended June 30, 2024 vs.

Gross profit decrease of $29.8 million was driven primarily by unfavorable sales volume of $24.6 million in our Performance Chemicals industrial specialties product line.

The decrease was further driven by unfavorable pricing and sales composition (mix) of $3.1 million, primarily within our APT reportable segment, unfavorable foreign currency exchange of $1.9 million, and increased manufacturing cost of $0.2 million.

Three Months Ended September 30, 2024 vs.

Gross profit increase of $0.9 million was driven primarily by decreased manufacturing costs of $2.8 million, driven by lower input costs in Performance Materials and higher throughput in APT, partially offset by higher CTO costs in Performance Chemicals.

The increase was partially offset by unfavorable sales volume of $0.5 million in our Performance Chemicals industrial specialties product line, unfavorable pricing and sales composition (mix) of $0.5 million, primarily in our APT reportable segment, and unfavorable foreign currency exchange of $0.9 million.

Gross profit includes the realized savings of $14.0 million from the Performance Chemicals repositioning actions initiated in 2023.

Refer to the Segment Operating Results section included within this MD&A for more information on the drivers to the changes in gross profit period over period for all segments.

Six Months Ended June 30, 2024 vs.

Gross profit decrease of $60.5 million was driven primarily by unfavorable sales volume of $40.7 million in our Performance Chemicals industrial specialties product line and our APT reportable segment, and increased manufacturing costs of $8.5 million.

Nine Months Ended September 30, 2024 vs.

Gross profit decrease of $59.6 million was driven primarily by unfavorable sales volume of $27.7 million in our Performance Chemicals industrial specialties product line, and increased manufacturing costs of $22.5 million, mainly driven by higher CTO costs in Performance Chemicals which were partially offset by lower input costs in Performance Materials and higher throughput in APT.

The decrease was further driven by unfavorable pricing and sales composition (mix) of $7.9 million primarily within our APT reportable segment, and unfavorable foreign currency exchange of $1.5 million.

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Selling, general and administrative expenses

Three Months Ended June 30, 2024 vs.

Selling, general and administrative expenses ("SG&A") were $41.4 million (11 percent of Net sales) and $51.7 million (11 percent of Net sales) for the three months ended June 30, 2024 and 2023, respectively.

Overall, SG&A decreased by approximately $4.0 million or 10 percent due to cost savings initiatives implemented last year and $6.3 million due to decreased spending on commercial activities.

Six Months Ended June 30, 2024 vs.

SG&A was $88.6 million (12 percent of Net sales) and $100.3 million (11 percent of Net sales) for the six months ended June 30, 2024 and 2023, respectively.

SG&A as a percentage of Net sales increased due to lower sales.

Overall, SG&A decreased by approximately $8.0 million or 9 percent due to cost savings initiatives implemented last year and $3.7 million due to decreased spending on commercial activities.

Three Months Ended September 30, 2024 vs.

Selling, general and administrative expenses ("SG&A") were $38.7 million (10 percent of Net sales) and $40.0 million (nine percent of Net sales) for the three months ended September 30, 2024 and 2023, respectively.

Overall, SG&A decreased by approximately $1.3 million or three percent.

Our Performance Chemicals' repositioning actions resulted in non-cash reduction of intangible amortization expense of $3.5 million and $3.0 million in cash savings.

These combined savings were partially offset by increased spending on commercial activities of $0.4 million and $4.8 million of higher variable incentive compensation, driven by adjustments recognized in the three months ended September 30, 2023, that did not repeat in 2024.

Nine Months Ended September 30, 2024 vs.

SG&A was $127.3 million (11 percent of Net sales) and $140.3 million (11 percent of Net sales) for the nine months ended September 30, 2024 and 2023, respectively.

Overall, SG&A decreased by $13.0 million or nine percent driven by our Performance Chemicals' repositioning actions that reduced non-cash intangible amortization expense by $8.6 million and included $11.0 million in cash savings.

These combined savings were partially offset by increased spending on commercial activities of $1.1 million and $5.5 million of higher variable incentive compensation, driven by adjustments recognized in 2023 that did not repeat in 2024.

Research and technical expenses

Three Months Ended June 30, 2024 vs.

Research and technical expenses as a percentage of Net sales remained relatively consistent period over period, increasing to 1.9 percent from 1.7 percent for the three months ended June 30, 2024 and 2023, respectively.

Research and technical expense as a percentage of Net sales increased due to lower sales.

Overall, Research and technical expense decreased by $0.7 million, which included approximately $1.0 million realized from cost savings initiatives implemented last year.

Six Months Ended June 30, 2024 vs.

Research and technical expenses as a percentage of Net sales remained consistent period over period, at 1.9 percent and 1.9 percent for the six months ended June 30, 2024 and 2023, respectively.

Included in the overall $2.7 million decrease is approximately $2.0 million realized from cost savings initiatives implemented last year.

Three Months Ended September 30, 2024 vs.

Research and technical expenses as a percentage of Net sales remained relatively consistent period over period, increasing to 1.8 percent from 1.7 percent for the three months ended September 30, 2024 and 2023, respectively.

Research and technical expenses as a percentage of Net sales increased due to lower sales.

Overall, Research and technical expense decreased by $1.1 million, which included approximately $1.0 million realized from the Performance Chemicals repositioning actions initiated in 2023.

Nine Months Ended September 30, 2024 vs.

Research and technical expenses as a percentage of Net sales remained consistent period over period, at 1.9 percent and 1.9 percent for the nine months ended September 30, 2024 and 2023, respectively.

Included in the overall $3.8 million decrease is approximately $3.0 million realized from the Performance Chemicals repositioning actions initiated in 2023.

Restructuring and other (income) charges, net

Three and Six Months Ended June 30, 2024 vs.

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

Three and Nine Months Ended September 30, 2024 vs.

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

In millions 2024 2023 2024 2023

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Restructuring charges $ 85.6 $ 1.5 $ 157.9 $ 11.6

$ 10.0 $ 7.0 $ 72.3 $ 10.1

Alternative feedstock transition — 11.8 — 18.4

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Other (income) charges, net $ 1.3 $ 23.1 $ 4.9 $ 37.8

$ 3.1 $ 12.2 $ 3.6 $ 14.7

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

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Goodwill impairment charge

Three and Six Months Ended June 30, 2024 vs.

Goodwill impairment charge of $349.1 million for the three and six months ended June 30, 2024 within our Performance Chemicals reportable segment.

Three and Nine Months Ended September 30, 2024 vs.

Goodwill impairment charge of zero and $349.1 million for the three and nine months ended September 30, 2024 within our Performance Chemicals reporting unit.

See Note 7 for more information.

Acquisition-related costs

Three and Six Months Ended June 30, 2024 vs.

Acquisition-related (income) costs were $(0.2) million and $0.1 million for the three and six months ended June 30, 2024, and $1.8 million and $3.7 million three and six months ended June 30, 2023, respectively.

All charges relate to the integration of Ozark Materials into our Performance Chemicals segment.

Three and Nine Months Ended September 30, 2024 vs.

Acquisition-related (income) costs were $(0.1) million and zero for the three and nine months ended September 30, 2024, and $0.1 million and $3.8 million for the three and nine months ended September 30, 2023, respectively.

All charges relate to the integration of Ozark Materials into our Performance Chemicals reportable segment.

Other (income) expense, net

Three and Six Months Ended June 30, 2024 vs.

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

Three and Nine Months Ended September 30, 2024 vs.

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

In millions 2024 2023 2024 2023

Foreign currency transaction (gain) loss $ 1.0 $ 1.7 $ 3.1 $ 4.4

Gain (loss) on strategic investments (1)

(0.1) — 4.7 (19.2)

Loss on CTO resales (1)

CTO supply contract termination charges (1)

100.0 — 100.0 —

(Gain) loss on strategic investments (2)

6.7 (0.1) 11.4 (19.3)

CEO severance charges 4.8 — 4.8 —

Other (income) expense, net (1.5) (0.3) (2.2) 1.0

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_______________

(1) See Note 4 for more information.

(1) See Notes 11 and 14 for more information.

(2) See Note 4 for more information.

Interest expense, net

Three and Six Months Ended June 30, 2024 vs.

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

Three and Nine Months Ended September 30, 2024 vs.

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

In millions 2024 2023 2024 2023

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Finance lease obligations (1)

1.8 1.9 5.4 5.5

Interest rate swap (2)

(0.4) — (0.4) —

Litigation related interest expense (3)

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(2) See Note 8 for more information.

(3) See Note 13 for more information.

Provision (benefit) for income taxes

Three and Six Months Ended June 30, 2024 vs.

For the three months ended June 30, 2024 and 2023, our effective tax rate was 15.2 percent and 25.6 percent, respectively.

Excluding discrete items, the effective rate was 33.5 percent compared to 23.8 percent in the three months ended June 30, 2024 and 2023, respectively.

Three and Nine Months Ended September 30, 2024 vs.

For the three months ended September 30, 2024 and 2023, our effective tax rate was 22.3 percent and 21.5 percent, respectively.

Excluding discrete items, the effective rate was 2.6 percent compared to 28.7 percent in the three months ended September 30, 2024 and 2023, respectively.

See Note 12 for more information.

For the six months ended June 30, 2024 and 2023, our effective tax rate was 16.4 percent and 22.9 percent, respectively.

Excluding discrete items, the effective rate was 34.5 percent compared to 23.3 percent in the six months ended June 30, 2024 and 2023, respectively.

For the nine months ended September 30, 2024 and 2023, our effective tax rate was 17.9 percent and 22.6 percent, respectively.

Excluding discrete items, the effective rate was (33.0) percent compared to 24.6 percent in the nine months ended September 30, 2024 and 2023, respectively.

See Note 12 for more information.

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We have excluded the following items from segment EBITDA:

interest expense associated with corporate debt facilities, interest income, income taxes, depreciation, amortization, restructuring and other income (charges), net, including inventory lower of cost or market charges associated with restructuring actions, goodwill impairment charge, acquisition and other-related income (costs), litigation verdict charges, gain (loss) on strategic investments, loss on CTO resales, and pension and postretirement settlement and curtailment income (charges), net.

interest expense associated with corporate debt facilities, interest income, income taxes, depreciation, amortization, restructuring and other income (charges), net, including inventory lower of cost or market charges associated with restructuring actions, goodwill impairment charge, acquisition and other-related income (costs), litigation verdict charges, gain (loss) on strategic investments, loss on CTO resales, CTO supply contract termination charges, and pension and postretirement settlement and curtailment income (charges), net.

In general, the accounting policies of the segments are the same as those described in the Summary of Significant Accounting Policies in the Annual Consolidated Financial Statements included in our 2023 Annual Report.

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Q3 2024 Performance Summary

Net sales in our Performance Materials reportable segment increased nine percent compared to the prior year quarter as a result of increased pricing and automotive carbon volumes.

Segment EBITDA increased $18.0 million or 28 percent primarily due to lower input costs such as energy and certain raw materials as well as a series of operational efficiencies that improved plant throughput.

In millions Three Months Ended June 30, Six Months Ended June 30,

Net sales in our Performance Materials reportable segment increased three percent compared to the prior year quarter as the segment benefited from increased pricing on select products.

Segment EBITDA increased $6.1 million or eight percent primarily driven by improved operational efficiencies that contributed to lower input costs.

In millions Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

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Segment EBITDA $ 80.6 $ 74.5 $ 240.8 $ 208.5

Net Sales Comparison of Three and Six Months Ended June 30, 2024 and June 30, 2023:

Net Sales Comparison of Three and Nine Months Ended September 30, 2024 and September 30, 2023:

Prior year Net sales Volume Price/Mix Currency effect Current year Net sales

Three months ended June 30, 2024 vs.

Three months ended September 30, 2024 vs.

$ 147.2 (0.3) 3.9 0.3 $ 151.1

Six months ended June 30, 2024 vs.

Nine months ended September 30, 2024 vs.

$ 433.2 10.2 14.1 (4.1) $ 453.4

Three Months Ended June 30, 2024 vs.

Three Months Ended September 30, 2024 vs.

Segment net sales.

The increase of $12.6 million in 2024 was driven by a volume increase of $8.3 million (six percent) and favorable pricing and sales composition (mix) of $6.3 million (four percent).

The increase was partially offset by unfavorable foreign currency exchange of $2.0 million (one percent).

The increase of $3.9 million in 2024 was driven primarily by increased pricing on selected products of $3.9 million (three percent) and favorable foreign currency exchange of $0.3 million (zero percent).

The increase was partially offset by a volume decrease of $0.3 million (zero percent).

Segment EBITDA.

The increase of $18.0 million in 2024 was driven by the increase in sales as noted above, decreased manufacturing costs of $6.9 million, favorable pricing and sales composition (mix) of $4.8 million, a volume increase of $4.7 million, and favorable foreign currency exchange of $1.7 million.

The increase was partially offset by increased SG&A and research and technical expenses of $0.1 million.

Six Months Ended June 30, 2024 vs.

The increase of $6.1 million in 2024 was driven by the increase in sales as noted above, decreased manufacturing costs of $7.7 million, favorable pricing and sales composition (mix) of $3.0 million, and decreased foreign currency exchange and other charges of $0.1 million.

The increase was partially offset by increased SG&A and research and technical expenses of $4.5 million, and a volume decrease of $0.2 million.

Nine Months Ended September 30, 2024 vs.

Segment net sales.

The increase of $16.3 million in 2024 was driven by a volume increase of $10.5 million (four percent) and favorable pricing and sales composition (mix) of $10.2 million (four percent).

The increase was partially offset by unfavorable foreign currency exchange of $4.4 million (two percent).

The increase of $20.2 million in 2024 was driven by favorable pricing and sales composition (mix) of $14.1 million (three percent), and a volume increase of $10.2 million (two percent).

The increase was partially offset by unfavorable foreign currency exchange of $4.1 million (one percent).

Segment EBITDA.

The increase of $26.2 million in 2024 was driven by the increase in sales as noted above, decreased manufacturing costs of $13.9 million, favorable pricing and sales composition (mix) of $8.7 million, a volume increase of $6.1 million, and favorable foreign currency exchange of $0.3 million.

The increase of $32.3 million in 2024 was driven by the increase in sales as noted above, decreased manufacturing costs of $21.8 million, favorable pricing and sales composition (mix) of $11.7 million, a volume increase of $5.7 million, and decreased foreign currency exchange and other charges of $0.4 million.

The increase was partially offset by increased SG&A and research and technical expenses of $7.3 million.

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Q3 2024 Performance Summary

Net sales in our Performance Chemicals reportable segment decreased 35 percent compared to the prior year quarter.

The road technologies product line net sales decrease of $11.8 million was primarily driven by weather related delays.

The industrial specialties product line net sales decrease of $86.7 million was primarily driven by lower volumes as a result of the focus on reducing exposure to lower margin end-use markets as part of the Performance Chemicals' repositioning, which resulted in reduced sales of approximately $78 million, as well as continued weakness in certain industrial end markets.

Contributing to the decline in Segment EBITDA was higher CTO spend, which nearly doubled from last year, and unfavorable plant throughput due to continued weakness in industrial demand, which negatively impacted utilization rates at both our North Charleston, South Carolina and Crossett, Arkansas manufacturing sites.

Net sales in our Performance Chemicals reportable segment decreased 31 percent compared to the prior year quarter, primarily the result of our Performance Chemicals' repositioning actions that are focused on exiting lower-margin end markets for our Industrial Specialties product line.

The road technologies product line net sales decrease of $10.7 million was primarily driven by unfavorable weather conditions in key North American regions.

The industrial specialties product line net sales decrease of $68.3 million was primarily driven by lower volumes as a result of our repositioning actions resulting in reduced sales of approximately $51 million, as well as continued weakness in certain industrial end markets.

Contributing to the decline in Segment EBITDA was higher CTO costs and unfavorable plant throughput due to continued weakness in industrial demand associated with our industrial specialties product line.

Additionally, unfavorable weather conditions in key North American regions impacted our road technologies product line.

Slightly offsetting these elevated costs were cost savings realized during the quarter due to the Performance Chemicals' repositioning.

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

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

In millions 2024 2023 2024 2023

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Segment EBITDA $ 19.8 $ 24.7 $ 18.5 $ 89.9

Net Sales Comparison of Three and Six Months Ended June 30, 2024 and June 30, 2023:

Net Sales Comparison of Three and Nine Months Ended September 30, 2024 and September 30, 2023:

Prior year Net sales Volume Price/Mix Currency effect Current year Net Sales

Three months ended June 30, 2024 vs.

Three months ended September 30, 2024 vs.

$ 256.0 (80.2) 1.5 (0.3) $ 177.0

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Industrial Specialties product line 126.3 (71.6) 3.5 (0.2) 58.0

Six months ended June 30, 2024 vs.

Nine months ended September 30, 2024 vs.

$ 725.6 (212.6) (2.6) (0.9) $ 509.5

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Industrial Specialties product line 409.2 (185.9) (7.0) (0.6) 215.7

Three Months Ended June 30, 2024 vs.

Three Months Ended September 30, 2024 vs.

Segment net sales.

The decrease of $98.5 million was driven by a volume decrease of $96.9 million (34 percent), as a result of a decrease in industrial specialties ($81.0 million) and road technologies ($15.9 million), unfavorable pricing and sales composition (mix) of $1.3 million (zero percent), attributable to a decrease in industrial specialties ($5.5 million), partially offset by an increase in road technologies ($4.2 million), and unfavorable foreign currency exchange of $0.3 million (zero percent).

The decrease of $79.0 million was driven by a volume decrease of $80.2 million (31 percent), as a result of a decrease in industrial specialties ($71.6 million) and road technologies ($8.6 million), and unfavorable foreign currency exchange of $0.3 million (zero percent).

This decrease was partially offset by favorable pricing and sales composition (mix) of $1.5 million (one percent), attributable to an increase in industrial specialties ($3.5 million), partially offset by a decrease in road technologies ($2.0 million).

Segment EBITDA.

The decrease of $35.6 million was driven by a volume decrease of $30.3 million, higher manufacturing costs of $10.1 million, primarily due to increased CTO cost, unfavorable pricing and sales composition (mix) of $1.3 million, and unfavorable foreign currency exchange of $0.5 million.

The decrease was partially offset by lower SG&A of $6.6 million, which benefited from the Performance Chemicals' repositioning and cost saving initiatives implemented in 2023.

Six Months Ended June 30, 2024 vs.

The decrease of $4.9 million was driven by a volume decrease of $4.9 million, higher manufacturing costs of $3.5 million, primarily due to higher cost CTO, and increased foreign currency exchange and other charges of $1.8 million.

The decrease was partially offset by lower SG&A of $3.8 million, which benefited from the Performance Chemicals' repositioning and cost saving initiatives implemented in 2023, and favorable pricing and sales composition (mix) of $1.5 million.

Nine Months Ended September 30, 2024 vs.

Segment net sales.

The decrease of $137.1 million was driven by a volume decrease of $132.4 million (28 percent), as a result of a decrease in industrial specialties ($114.3 million) and road technologies ($18.1 million), unfavorable pricing and sales composition (mix) of $4.2 million (one percent), attributable to a decrease in industrial specialties ($10.6 million), partially offset by an increase in road technologies ($6.4 million), and unfavorable foreign currency exchange of $0.5 million (zero percent).

The decrease of $216.1 million was driven by a volume decrease of $212.6 million (29 percent), as a result of a decrease in industrial specialties ($185.9 million) and road technologies ($26.7 million), unfavorable pricing and

sales composition (mix) of $2.6 million (zero percent), attributable to a decrease in industrial specialties ($7.0 million), partially offset by an increase in road technologies ($4.4 million), and unfavorable foreign currency exchange of $0.9 million (zero percent).

Segment EBITDA.

The decrease of $66.5 million was driven by a volume decrease of $43.1 million, higher manufacturing costs of $30.4 million, primarily due to increased CTO cost, unfavorable pricing and sales composition (mix) of $4.1 million, and unfavorable foreign currency exchange of $0.9 million.

The decrease of $71.4 million was driven by higher manufacturing costs of $47.5 million, primarily due to higher cost CTO, a volume decrease of $34.3 million, increased foreign currency exchange and other charges of $2.8 million, and unfavorable pricing and sales composition (mix) of $2.6 million.

The decrease was partially offset by lower SG&A of $15.8 million, which benefited from the Performance Chemicals' repositioning and cost saving initiatives implemented in 2023.

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Q3 2024 Performance Summary

Net sales in our Advanced Polymer Technologies reportable segment decreased 10 percent compared to the prior year quarter as higher volumes were offset by reduced pricing.

Segment EBITDA decreased due to lower price primarily in Asia, partially offset by lower input costs and benefits from the cost savings actions implemented last year.

In millions Three Months Ended June 30, Six Months Ended June 30,

Net sales in our Advanced Polymer Technologies reportable segment increased 14 percent compared to the prior year quarter as volumes recovered from last year's lows.

Segment EBITDA decreased by 12.5 percent as pricing pressure, unfavorable product mix and adverse impacts from foreign currency exchange more than offset the higher sales volumes that drove improved plant utilization rates in the current quarter.

In millions Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

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Segment EBITDA $ 9.8 $ 11.2 $ 29.1 $ 36.6

Net Sales Comparison of Three and Six Months Ended June 30, 2024 and June 30, 2023:

Net Sales Comparison of Three and Nine Months Ended September 30, 2024 and September 30, 2023:

Prior year Net sales Volume Price/Mix Currency effect Current year Net sales

Three months ended June 30, 2024 vs.

Three months ended September 30, 2024 vs.

$ 42.8 11.8 (5.0) (0.8) $ 48.8

Six months ended June 30, 2024 vs.

Nine months ended September 30, 2024 vs.

$ 161.6 2.5 (16.7) (2.7) $ 144.7

Three Months Ended June 30, 2024 vs.

Three Months Ended September 30, 2024 vs.

Segment net sales.

The decrease of $5.3 million in 2024 was driven by unfavorable pricing and sales composition (mix) of $6.6 million (12 percent) and unfavorable foreign currency exchange of $1.1 million (two percent), partially offset by a volume increase of $2.4 million (five percent).

The increase of $6.0 million in 2024 was driven by a volume increase of $11.8 million (28 percent), partially offset by unfavorable pricing and sales composition (mix) of $5.0 million (12 percent), and unfavorable foreign currency exchange of $0.8 million (two percent).

Segment EBITDA.

The decrease of $1.8 million was driven by unfavorable pricing and sales composition (mix) of $6.6 million, partially offset by decreased manufacturing costs of $2.9 million, a volume increase of $1.0 million, decreased SG&A of $0.7 million, and favorable foreign currency exchange of $0.2 million.

Six Months Ended June 30, 2024 vs.

The decrease of $1.4 million was driven by unfavorable pricing and sales composition (mix) of $5.0 million, increased foreign currency exchange and other charges of $2.2 million, and increased SG&A of $0.6 million.

The decrease was partially offset by a volume increase of $4.6 million, and decreased manufacturing costs of $1.8 million.

Nine Months Ended September 30, 2024 vs.

Segment net sales.

The decrease of $22.9 million in 2024 was driven by unfavorable pricing and sales composition (mix) of $11.7 million (10 percent), a volume decline of $9.3 million (eight percent), and unfavorable foreign currency exchange of $1.9 million (two percent).

The decrease of $16.9 million in 2024 was driven by unfavorable pricing and sales composition (mix) of $16.7 million (10 percent), and unfavorable foreign currency exchange of $2.7 million (two percent), partially offset by a volume increase of $2.5 million (two percent).

Segment EBITDA.

The decrease of $6.1 million was driven by unfavorable pricing and sales composition (mix) of $12.0 million, a volume decline of $3.7 million, and unfavorable foreign currency exchange of $0.2 million.

The decrease was partially offset by decreased manufacturing costs of $8.2 million and decreased SG&A of $1.6 million.

The decrease of $7.5 million was driven by unfavorable pricing and sales composition (mix) of $17.0 million, and increased foreign currency exchange and other charges of $2.5 million.

The decrease was partially offset by decreased manufacturing costs of $10.1 million, decreased SG&A of $1.0 million, and a volume increase of $0.9 million.

Use of Non-GAAP Financial Measure - Adjusted EBITDA

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We believe Adjusted EBITDA is a useful measure because it excludes the effects of financing and investment activities as well as non-operating activities.

Adjusted EBITDA is defined as net income (loss) plus interest expense, net, provision (benefit) for income taxes, depreciation, amortization, restructuring and other (income) charges, net, goodwill impairment charge, acquisition and other-related (income) costs, litigation verdict charges, (loss) gain on strategic investments, loss on CTO resales, and pension and postretirement settlement and curtailment (income) charges, net.

Adjusted EBITDA is defined as net income (loss) plus interest expense, net, provision (benefit) for income taxes, depreciation, amortization, restructuring and other (income) charges, net, goodwill impairment charge, acquisition and other-related (income) costs, litigation verdict charges, (loss) gain on strategic investments, loss on CTO resales, CTO supply contract termination charges, and pension and postretirement settlement and curtailment (income) charges, net.

This non-GAAP measure is not intended to replace the presentation of financial results in accordance with GAAP and investors should consider the limitations associated with these non-GAAP measures, including the potential lack of comparability of these measures from one company to another.

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Reconciliation of Net Income (Loss) to Adjusted EBITDA

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

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

In millions 2024 2023 2024 2023

9 unchanged sentences

Goodwill impairment charge (2)

349.1 — 349.1 —

Acquisition and other-related (income) costs, net (3)

1 unchanged sentence

Loss on CTO resales (4)

CTO supply contract termination charges (5)

100.0 — 100.0 —

14 unchanged sentences

Since these CTO resale activities are directly attributable to the Performance Chemicals’ repositioning, that is, they do not represent normal, recurring expenses necessary to operate our business, we have excluded the CTO resale (income) charges for the purposes of calculating our non-GAAP financial performance measures.

For the three and six months ended June 30, 2024, the loss on CTO resales relates to the Performance Chemicals segment.

For the three and nine months ended September 30, 2024, the loss on CTO resales relates to the Performance Chemicals segment.

Refer to Note 11 for more information.

(5) As consideration for the termination of the CTO supply contract, we made a cash payment in the amount of $50.0 million on July 1, 2024 and an additional cash payment in the amount of $50.0 million on October 8, 2024.

Since this contract termination is directly attributable to the Performance Chemicals’ repositioning, that is, it does not represent normal, recurring expenses necessary to operate our business, we have excluded the CTO supply contract termination charges for the purposes of calculating our non-GAAP financial performance measures.

Refer to Note 11 for more information.

(6) We exclude gains and losses from strategic investments from our segment results, as well as our non-GAAP financial measures, because we do not consider such gains or losses to be directly associated with the operational performance of the segment.

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Refer to Note 4 for more information.

Revision to Previously Reported Adjusted EBITDA (Non-GAAP)

We revised our March 31, 2024 non-GAAP Adjusted EBITDA calculation to remove previous adjustments of $2.5 million related to inventory lower of cost or market charges associated with the Company's Performance Chemicals' repositioning actions.

This change was made to address a request from the Securities and Exchange Commission to revise future filings to no longer exclude these adjustments from non-GAAP performance measures.

The following table presents the three months ended March 31, 2024 as previously reported and as revised.

Reconciliation of Net Income (Loss) to Adjusted EBITDA

Three Months Ended March 31, 2024

In millions As previously reported As revised

Net income (loss) (GAAP) $ (56.0) $ (56.0)

Provision (benefit) for income taxes (15.9) (15.9)

Interest expense, net 22.3 22.3

Depreciation and amortization - Performance Materials 9.6 9.6

Depreciation and amortization - Performance Chemicals 12.4 12.4

Depreciation and amortization - Advanced Polymer Technologies 7.6 7.6

Restructuring and other (income) charges, net

Acquisition and other-related (income) costs 0.3 0.3

Loss on CTO resales

(Gain) loss on strategic investments 4.8 4.8

Adjusted EBITDA (Non-GAAP)

$ 76.9 $ 74.4

Adjusted EBITDA

Three and Six Months Ended June 30, 2024 vs.

Three and Nine Months Ended September 30, 2024 vs.

The factors that impacted adjusted EBITDA period to period are the same factors that affected earnings discussed in the Results of Operations and Segment Operating Results sections included within this MD&A.

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Net sales are expected to be between $1.40 billion and $1.50 billion for 2024.

We expect growth in our Performance Materials reportable segment on improved global hybrid automotive production and lower than anticipated Battery Electric Vehicle penetration.

We expect growth in our Performance Materials reportable segment due to increased pricing on select products that benefited from improved global hybrid automotive production and lower than anticipated battery electric vehicle penetration.

The Performance Chemicals reportable segment revenue will reflect the impact of our repositioning to improve profitability by focusing on higher margin end markets, as well as continued weak industrial demand.

We expect our road technologies product line revenue to grow through technology adoption and continued geographic expansion.

Our Advanced Polymer Technologies reportable segment anticipates revenues flat to prior year;

market improvements in Europe are mostly offset by a challenging China economy and industrial demand.

We expect our road technologies product line revenue to decline when compared to the prior year due to unfavorable weather conditions experienced in North America during 2024.

Our Advanced Polymer Technologies reportable segment anticipates revenues flat to the prior year;

market improvements in Europe are mostly expected to be more than offset by a challenging China economy and weak industrial demand.

Adjusted EBITDA is expected to be between $350 million and $360 million for 2024.

We expect growth in our Performance Materials segment EBITDA, as volumes shift to higher-margin automotive carbon due to ongoing hybrid vehicle adoption.

We expect growth in our Performance Materials segment EBITDA, primarily due to improved operational efficiency resulting in lower input costs.

Performance Chemicals will continue to be impacted by elevated CTO costs and the slow industrial market recovery.

We anticipate Advanced Polymer Technologies segment EBITDA will be flat vs prior year as favorable input costs offset lower prices.

We anticipate that our Advanced Polymer Technologies segment EBITDA will be down versus prior year as pricing strategy is expected to drive volume growth resulting in improved utilization rates, which we expect will be more than offset by unfavorable mix and adverse foreign currency impacts.

A reconciliation of net income to adjusted EBITDA as projected for 2024 is not provided.

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additional acquisition and other-related income (costs);

litigation verdict charges;

additional pension and postretirement settlement and curtailment (income) charges;

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We expect our cash flow provided by operations combined with cash on hand and available capacity under our revolving credit facility to be sufficient to fund our planned operations and meet our interest and other contractual obligations for at least the next twelve months.

As of June 30, 2024, our undrawn capacity under our revolving credit facility was $241.7 million.

As of September 30, 2024, our undrawn capacity under our revolving credit facility was $244.4 million.

Over the next twelve months, we expect to fund the following:

interest payments, capital expenditures, debt principal repayments, income tax payments, purchases pursuant to our stock repurchase program (and related excise tax payments), income tax payments, additional spending associated with our Performance Materials' intellectual property litigation, restructuring activities such as the repositioning of our Performance Chemicals reportable segment as further described within Note 11, and consideration for the termination of the CTO Supply Agreement further described within Note 16.

In addition, we may also evaluate and consider strategic acquisitions, joint ventures, or other transactions to create stockholder value and enhance financial performance.

In connection with such transactions, or to fund other anticipated uses of cash, we may modify our existing revolving credit facility, redeem all or part of our outstanding senior notes, seek additional debt financing, issue equity securities, or some combination thereof.

Cash and cash equivalents totaled $107.4 million at June 30, 2024.

Cash and cash equivalents totaled $135.5 million at September 30, 2024.

We continuously monitor deposit concentrations and the credit quality of the financial institutions that hold our cash and cash equivalents, as well as the credit quality of our insurance providers, customers, and key suppliers.

Due to the global nature of our operations, a portion of our cash is held outside the U.S.

The cash and cash equivalents balance at June 30, 2024, included $97.9 million held by our foreign subsidiaries.

The cash and cash equivalents balance at September 30, 2024, included $128.5 million held by our foreign subsidiaries.

Cash and earnings of our foreign subsidiaries are generally used to finance our foreign operations and their capital expenditures.

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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.

During the three and six months ended June 30, 2024, we repurchased no common stock.

At June 30, 2024, $353.4 million remained unused under the 2022 Authorization.

During the three and six months ended June 30, 2023, we repurchased $58.7 million, inclusive of $0.6 million excise tax, and $92.1 million, inclusive of $0.8 million 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.

During the three and nine months ended September 30, 2024, we repurchased no common stock.

At September 30, 2024, $353.4 million remained unused under the 2022 Authorization.

During the three and nine months ended September 30, 2023, we repurchased zero and $92.1 million, inclusive of $0.8 million excise tax, in common stock, representing zero and 1,269,373 shares of our common stock at a weighted average cost per share of zero and $71.93, respectively.

Capital Expenditures

Projected 2024 capital expenditures are $90-$100 million.

We have no material commitments associated with these projected capital expenditures as of June 30, 2024 .

Cash flow comparison of the Six Months Ended June 30, 2024 and 2023

Six Months Ended June 30,

We have no material commitments associated with these projected capital expenditures as of September 30, 2024 .

Cash flow comparison of the Nine Months Ended September 30, 2024 and 2023

Nine Months Ended September 30,

In millions 2024 2023

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Cash flows provided by (used in) operating activities

Cash flows used in operating activities, which consists of net income (loss) adjusted for non-cash items including the cash impact from changes in operating assets and liabilities (i.e., working capital), totaled $17.6 million for the six months ended June 30, 2024.

Cash used in operating activities for the six months ended June 30, 2024, when compared to the six months ended June 30, 2023, decreased by $36.1 million.

This decrease was driven by reduced cash earnings of $107.3 million, CTO resale cash outflows of $45.3 million, and higher cash interest paid of $2.3 million due primarily to rising interest rates when compared to 2023.

Partially offsetting these cash outflows was a net reduction in trade working capital of $69.5 million (including accounts receivable, inventory, and accounts payable), reduced employee compensation payments $34.6 million, a reduction in tax payments of $1.4 million as a result of the lower cash earnings, and reduced spending on restructuring initiatives of $1.9 million.

Cash provided by operating activities, which consists of net income (loss) adjusted for non-cash items including the cash impact from changes in operating assets and liabilities (i.e., working capital), totaled $64.1 million for the nine months ended September 30, 2024.

Cash provided by operating activities for the nine months ended September 30, 2024, when compared to the nine months ended September 30, 2023, decreased by $94.8 million.

This decrease was driven by reduced cash earnings of $123.8 million, CTO supply contract termination payment of $50.0 million, CTO resale cash outflows of $45.0 million, and higher cash interest paid of $3.1 million due primarily to rising interest rates when compared to 2023.

Partially offsetting these cash outflows was a net reduction in trade working capital of $79.8 million (including accounts receivable, inventory, and accounts payable), reduced employee compensation payments of $40.6 million, reduced spending on restructuring initiatives of $2.8 million, and a reduction in tax payments of $3.9 million as a result of the lower cash earnings.

Cash flows provided by (used in) investing activities

Cash used in investing activities in the six months ended June 30, 2024 was $34.1 million and was primarily driven by capital expenditures of $34.7 million.

In the six months ended June 30, 2024 and 2023, capital spending included the base maintenance capital supporting ongoing operations, and growth and cost improvement spending.

Cash used in investing activities in the nine months ended September 30, 2024 was $51.5 million and was primarily driven by capital expenditures of $52.7 million.

In the nine months ended September 30, 2024 and 2023, capital spending included the base maintenance capital supporting ongoing operations, and growth and cost improvement spending.

The decrease in Net cash provided by (used in) investing activities when compared to the prior year period is primarily due to the first quarter 2023 sale of a strategic investment that resulted in a cash inflow of $31.5 million, offset by reduced capital expenditures of $27.9 million.

Capital expenditure categories Six Months Ended June 30,

Capital expenditure categories Nine Months Ended September 30,

In millions 2024 2023

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Cash flows provided by (used in) financing activities

Cash provided by financing activities in the six months ended June 30, 2024, was $33.7 million and was primarily driven by borrowings on our revolving credit facility and other borrowings of $112.3 million, partially offset by payments on our revolving credit facility of $75.2 million.

Cash used in financing activities in the six months ended June 30, 2023 was $40.1 million and was primarily driven by payments on our revolving credit facility of $144.8 million, the repurchase of common stock of $92.1 million, and tax payments related to tax withholdings on restricted stock unit vestings of $4.5 million, partially offset by borrowings on our revolving credit facility of $197.8 million.

Cash provided by financing activities in the nine months ended September 30, 2024, was $27.4 million and was primarily driven by borrowings on our revolving credit facility and other borrowings of $150.5 million, partially offset by payments on our revolving credit facility of $119.3 million.

Cash used in financing activities in the nine months ended September 30, 2023 was $93.4 million and was primarily driven by payments on our revolving credit facility and other borrowings of $240.1 million, and the repurchase of common stock of $92.1 million, partially offset by borrowings on our revolving credit facility of $239.5 million.

New Accounting Guidance

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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 2. Management’s Discussion and Analysis