Ingevity Corp 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA INDEX TO THE FINANCIAL STATEMENTS Description Page No. Management's Report on Internal Control over Financial Reporting 49 Report of Independent Registered Public Accounting Firm (PCAOB ID: 238 ) 50 Consolidated Statements of Operations 52 Consolidated Statements of Comprehensive Income (Loss) 53 Consolidated Balance Sheets 54 Consolidated Statements of Stockholders' Equity 55 Consolidated Statements of Cash Flows 56 Notes to the Consolidated Financial Statements 58 48 Ingevity Corporation Management's Report on Internal Control over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. The Company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. The Company's internal control over financial reporting includes those policies and procedures that: i. pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; ii. provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP and that receipts and expenditures of the Company are being made only in accordance with authorization of management and directors of the Company; and iii. provide reasonable assurance regarding prevention or timely detection of unauthorized acquisitions, use or disposition of the Company's assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2024, based on criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013). Based on its assessment and those criteria, management concluded that the Company maintained effective internal control over financial reporting as of December 31, 2024. PricewaterhouseCoopers LLP, an independent registered public accounting firm, has audited the effectiveness of the Company's internal control over financial reporting as of December 31, 2024, as stated in their report, which is presented on the following page. Date: February 19, 2025 By: /S/ LUIS FERNANDEZ-MORENO /S/ MARY DEAN HALL Luis Fernandez-Moreno Mary Dean Hall Interim President and Chief Executive Officer Executive Vice President and Chief Financial Officer 49 Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of Ingevity Corporation Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of Ingevity Corporation and its subsidiaries (the "Company") as of December 31, 2024 and 2023, and the related consolidated statements of operations, of comprehensive income (loss), of stockholders’ equity and of cash flows for each of the three years in the period ended December 31, 2024, including the related notes and financial statement schedule listed in the index appearing under Item 15(a)(2) (collectively referred to as the "consolidated financial statements"). We also have audited the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO. Basis for Opinions The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. 50 Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Annual Goodwill Impairment Assessment – Advanced Polymer Technologies Reporting Unit As described in Notes 2 and 8 to the consolidated financial statements, the Company’s consolidated goodwill balance was $175.2 million as of December 31, 2024, of which $170.9 million relates to the Advanced Polymer Technologies reporting unit. Management conducts an annual review of goodwill for potential impairment at October 1, or sooner if events or changes in circumstances indicate that the fair value of a reporting unit is below its carrying value. The fair value of the reporting unit was determined by management using both the income approach and market approach. The income approach determines fair value based on a discounted cash flow model derived from a reporting unit’s long-term forecasted cash flows, and the market approach determines fair value based on the application of earnings multiples of comparable companies to projected earnings of the reporting unit. The amount of impairment loss is measured as the difference between the carrying value and the fair value of a reporting unit but is limited to the total amount of goodwill allocated to a reporting unit. The calculated estimated fair value of the reporting unit reflects a number of significant management assumptions and estimates including forecasted revenue growth rates, forecasted Earnings before Interest, Taxes, Depreciation and Amortization (“EBITDA”) margins, and discount rate. Management concluded that there was no impairment for the year ended December 31, 2024. The principal considerations for our determination that performing procedures relating to the annual goodwill impairment assessment of the Advanced Polymer Technologies reporting unit is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the reporting unit; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to forecasted revenue growth rates, forecasted EBITDA margins, and discount rate used in the discounted cash flow model; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s annual goodwill impairment assessment, including controls over the valuation of the Advanced Polymer Technologies reporting unit. These procedures also included, among others (i) testing management’s process for developing the fair value estimate of the reporting unit; (ii) evaluating the appropriateness of the income and market approaches; (iii) testing the completeness and accuracy of underlying data used in the discounted cash flow model; and (iv) evaluating the reasonableness of the significant assumptions used by management related to the forecasted revenue growth rates, forecasted EBITDA margins, and discount rate. Evaluating management’s significant assumptions related to the forecast of forecasted revenue growth rates and forecasted EBITDA margins involved evaluating whether the significant assumptions used by management were reasonable considering (i) the current and past performance of the Advanced Polymer Technologies reporting unit; (ii) the consistency with external market data; and (iii) whether these significant assumptions were consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the Company’s discounted cash flow model and (ii) the reasonableness of the discount rate. /s/ PricewaterhouseCoopers LLP Charlotte, North Carolina February 19, 2025 We have served as the Company’s auditor since 2015. 51 INGEVITY CORPORATION Consolidated Statements of Operations Years Ended December 31, In millions, except per share data 2024 2023 2022 Net sales $ 1,406.4 $ 1,692.1 $ 1,668.3 Cost of sales 951.7 1,220.2 1,098.2 Gross profit 454.7 471.9 570.1 Selling, general, and administrative expenses 166.7 183.7 198.8 Research and technical expenses 28.1 31.8 30.3 Restructuring and other (income) charges, net 186.2 170.2 13.8 Goodwill impairment charge 349.1 — — Acquisition-related costs 0.3 3.6 5.0 Other (income) expense, net 169.8 5.7 ( 1.7 ) Interest expense 97.8 93.3 61.8 Interest income ( 7.7 ) ( 6.3 ) ( 7.5 ) Income (loss) before income taxes ( 535.6 ) ( 10.1 ) 269.6 Provision (benefit) for income taxes ( 105.3 ) ( 4.7 ) 58.0 Net income (loss) $ ( 430.3 ) $ ( 5.4 ) $ 211.6 Per share data Basic earnings (loss) per share $ ( 11.85 ) $ ( 0.15 ) $ 5.54 Diluted earnings (loss) per share ( 11.85 ) ( 0.15 ) 5.50 The accompanying notes are an integral part of these financial statements. 52 INGEVITY CORPORATION Consolidated Statements of Comprehensive Income (Loss) Years Ended December 31, In millions 2024 2023 2022 Net income (loss) $ ( 430.3 ) $ ( 5.4 ) $ 211.6 Other comprehensive income (loss), net of tax: Foreign currency adjustments: Foreign currency translation adjustment ( 18.6 ) 20.2 ( 74.9 ) Reclassification of foreign currency translation losses ( 0.2 ) — — Unrealized gain (loss) on net investment hedges, net of tax provision (benefit) of zero , zero , and $ 3.2 — — 10.7 Total foreign currency adjustments, net of tax provision (benefit) of zero , zero , and $ 3.2 ( 18.8 ) 20.2 ( 64.2 ) Derivative instruments: Unrealized gain (loss), net of tax provision (benefit) of $ 0.1 , $( 1.0 ), and $ 2.6 0.3 ( 3.2 ) 8.5 Reclassifications of deferred derivative instruments (gain) loss, included within net income (loss), net of tax (provision) benefit of $ 0.6 , $ 0.9 , and $( 2.4 ) 1.8 3.0 ( 7.8 ) Total derivative instruments, net of tax provision (benefit) of $ 0.7 , $( 0.1 ), and $ 0.2 2.1 ( 0.2 ) 0.7 Pension & other postretirement benefits: Unrealized actuarial gains (losses) and prior service (costs) credits, net of tax provision (benefit) of $ 0.5 , zero , and $ 1.0 1.8 0.1 3.4 Reclassifications of net actuarial and other (gain) loss, amortization of prior service cost, and settlement and curtailment (income) charges, included within net income, net of tax (provision) benefit of $ 0.1 , $ 0.1 , and $ 0.1 0.2 — 0.2 Total pension and other postretirement benefits, net of tax provision (benefit) of $ 0.6 , $ 0.1 , and $ 1.1 2.0 0.1 3.6 Other comprehensive income (loss), net of tax provision (benefit) of $ 1.3 , zero , and $ 4.5 ( 14.7 ) 20.1 ( 59.9 ) Comprehensive income (loss) $ ( 445.0 ) $ 14.7 $ 151.7 The accompanying notes are an integral part of these financial statements. 53 INGEVITY CORPORATION Consolidated Balance Sheets December 31, In millions, except share and par value data 2024 2023 Assets Cash and cash equivalents $ 68.0 $ 95.9 Accounts receivable, net of allowance of $ 0.6 million - 2024 and $ 1.1 million - 2023 141.0 182.0 Inventories, net 226.8 308.8 Prepaid and other current assets 57.4 71.9 Current assets 493.2 658.6 Property, plant, and equipment, net 658.9 762.2 Operating lease assets, net 50.4 67.1 Goodwill 175.2 527.5 Other intangibles, net 278.8 336.1 Deferred income taxes 117.9 11.6 Restricted investment, net of allowance of $ 0.2 million - 2024 and $ 0.2 million - 2023 81.6 79.1 Strategic investments 87.3 99.2 Other assets 79.3 81.9 Total Assets $ 2,022.6 $ 2,623.3 Liabilities Accounts payable $ 94.5 $ 158.4 Accrued expenses 58.1 72.3 Accrued payroll and employee benefits 27.7 19.9 Current operating lease liabilities 16.9 18.7 Notes payable and current maturities of long-term debt 61.3 84.4 Income taxes payable 5.6 9.2 Current liabilities 264.1 362.9 Long-term debt including finance lease obligations 1,339.7 1,382.8 Noncurrent operating lease liabilities 36.8 48.6 Deferred income taxes 56.2 70.9 Other liabilities 130.6 126.7 Total Liabilities 1,827.4 1,991.9 Commitments and contingencies (Note 18) Equity Preferred stock (par value $ 0.01 per share; 50,000,000 shares authorized; zero issued and outstanding at 2024 and 2023) — — Common stock (par value $ 0.01 per share; 300,000,000 shares authorized; 43,630,211 and 43,446,513 issued and 36,350,425 and 36,233,092 outstanding at 2024 and 2023, respectively) 0.4 0.4 Additional paid-in capital 176.8 164.9 Retained earnings 572.0 1,002.3 Accumulated other comprehensive income (loss) ( 41.4 ) ( 26.7 ) Treasury stock, common stock, at cost ( 7,279,786 shares - 2024 and 7,213,421 shares - 2023) ( 512.6 ) ( 509.5 ) Total Equity 195.2 631.4 Total Liabilities and Equity $ 2,022.6 $ 2,623.3 The accompanying notes are an integral part of these financial statements. 54 INGEVITY CORPORATION Consolidated Statements of Stockholders' Equity Ingevity Stockholders' Common Stock In millions, shares in thousands Shares Amount Additional paid-in capital Retained earnings Accumulated other comprehensive income (loss) Treasury stock Total Equity Balance at December 31, 2021 43,102.0 $ 0.4 $ 136.3 $ 796.1 $ 13.1 $ ( 272.1 ) $ 673.8 Net income (loss) — — — 211.6 — — 211.6 Other comprehensive income (loss) — — — — ( 59.9 ) — ( 59.9 ) Common stock issued 82.9 — — — — — — Exercise of stock options, net 43.2 — 1.6 — — — 1.6 Tax payments related to vested restricted stock units — — — — — ( 2.2 ) ( 2.2 ) Share repurchase program — — — — — ( 145.2 ) ( 145.2 ) Share-based compensation plans — — 15.1 — — 3.5 18.6 Balance at December 31, 2022 43,228.1 $ 0.4 $ 153.0 $ 1,007.7 $ ( 46.8 ) $ ( 416.0 ) $ 698.3 Net income (loss) — — — ( 5.4 ) — — ( 5.4 ) Other comprehensive income (loss) — — — — 20.1 — 20.1 Common stock issued 177.2 — — — — — — Exercise of stock options, net 41.2 — 2.2 — — — 2.2 Tax payments related to vested restricted stock units — — — — — ( 4.9 ) ( 4.9 ) Share repurchase program — — — — — ( 92.1 ) ( 92.1 ) Share-based compensation plans — — 9.7 — — 3.5 13.2 Balance at December 31, 2023 43,446.5 $ 0.4 $ 164.9 $ 1,002.3 $ ( 26.7 ) $ ( 509.5 ) $ 631.4 Net income (loss) — — — ( 430.3 ) — — ( 430.3 ) Other comprehensive income (loss) — — — — ( 14.7 ) — ( 14.7 ) Common stock issued 183.7 — — — — — — Tax payments related to vested restricted stock units — — — — — ( 3.1 ) ( 3.1 ) Share-based compensation plans — — 11.9 — — — 11.9 Balance at December 31, 2024 43,630.2 $ 0.4 $ 176.8 $ 572.0 $ ( 41.4 ) $ ( 512.6 ) $ 195.2 The accompanying notes are an integral part of these financial statements. 55 INGEVITY CORPORATION Consolidated Statements of Cash Flows Years Ended December 31, In millions 2024 2023 2022 Cash provided by (used in) operating activities: Net income (loss) $ ( 430.3 ) $ ( 5.4 ) $ 211.6 Adjustments to reconcile net income (loss) to cash provided by operating activities: Depreciation and amortization 108.3 122.8 108.8 Non cash operating lease costs 19.1 18.6 16.1 Deferred income taxes ( 121.4 ) ( 44.7 ) ( 5.0 ) Disposal/impairment of assets 1.3 4.3 2.5 Restructuring and other (income) charges, net 186.2 170.2 13.8 CTO resales 52.7 22.0 — LIFO reserve ( 18.7 ) 72.9 10.0 Share-based compensation 11.9 10.6 16.1 (Gain) loss on strategic investment 11.4 ( 19.3 ) — Pension and other postretirement benefit costs 1.5 1.6 1.4 Goodwill impairment charge 349.1 — — Other non-cash items 17.0 36.2 18.4 Changes in operating assets and liabilities, net of effect of acquisitions: Accounts receivable, net 38.2 42.7 ( 42.1 ) Inventories, net 86.2 ( 75.6 ) ( 63.7 ) Prepaid and other current assets 7.7 ( 28.6 ) ( 0.8 ) Planned major maintenance outage ( 6.5 ) ( 12.8 ) ( 9.1 ) Accounts payable ( 63.4 ) ( 14.6 ) 42.7 Accrued expenses ( 1.0 ) ( 7.7 ) 0.8 Accrued payroll and employee benefits 8.0 ( 33.5 ) 5.4 Income taxes ( 13.8 ) 6.4 4.9 Operating leases ( 21.7 ) ( 22.5 ) ( 18.8 ) Restructuring and other spending ( 59.3 ) ( 44.0 ) ( 13.8 ) CTO resales ( 46.1 ) ( 10.6 ) — Changes in all other operating assets and liabilities, net 12.2 16.1 14.2 Net cash provided by (used in) operating activities $ 128.6 $ 205.1 $ 313.4 Cash provided by (used in) investing activities: Capital expenditures ( 77.6 ) ( 109.8 ) ( 142.5 ) Payments for acquired businesses, net of cash acquired — — ( 344.5 ) Proceeds from sale of strategic investment — 31.5 — Net investment hedge settlement — — 14.7 Purchase of strategic investments ( 0.3 ) ( 2.4 ) ( 77.4 ) Other investing activities, net ( 1.6 ) 3.4 ( 2.2 ) Net cash provided by (used in) investing activities $ ( 79.5 ) $ ( 77.3 ) $ ( 551.9 ) The accompanying notes are an integral part of these financial statements. INGEVITY CORPORATION 56 Consolidated Statements of Cash Flows (continued) Years Ended December 31, In millions 2024 2023 2022 Cash provided by (used in) financing activities: Proceeds from revolving credit facility and other borrowings 404.5 376.3 1,164.7 Payments on revolving credit facility and other borrowings ( 470.6 ) ( 382.9 ) ( 336.7 ) Payments on long-term borrowings — — ( 628.1 ) Debt issuance costs — ( 0.4 ) ( 3.0 ) Debt repayment costs — — ( 3.8 ) Financing lease obligations, net ( 1.0 ) ( 0.7 ) ( 0.9 ) Tax payments related to withholdings on vested equity awards ( 3.1 ) ( 4.8 ) ( 2.2 ) Proceeds and withholdings from share-based compensation plans, net — 4.7 4.1 Repurchases of common stock under publicly announced plan — ( 92.1 ) ( 145.2 ) Other financing activities, net — — ( 0.8 ) Net cash provided by (used in) financing activities $ ( 70.2 ) $ ( 99.9 ) $ 48.1 Increase (decrease) in cash, cash equivalents, and restricted cash ( 21.1 ) 27.9 ( 190.4 ) Effect of exchange rate changes on cash ( 4.2 ) ( 0.3 ) ( 6.0 ) Change in cash, cash equivalents, and restricted cash ( 25.3 ) 27.6 ( 196.4 ) Cash, cash equivalents, and restricted cash at beginning of period 111.9 84.3 280.7 Cash, cash equivalents, and restricted cash at end of period (1) $ 86.6 $ 111.9 $ 84.3 _______________ (1) Includes restricted cash of $ 18.6 million, $ 16.0 million, and $ 7.6 million and cash and cash equivalents of $ 68.0 million, $ 95.9 million, and $ 76.7 million for the years ended December 31, 2024, 2023, and 2022, respectively. Restricted cash is included within "Prepaid and other current assets" and "Restricted investment" within the consolidated balance sheets. Supplemental cash flow information: Cash paid for interest, net of capitalized interest $ 85.4 $ 82.7 $ 54.8 Cash paid for income taxes, net of refunds 26.9 29.7 54.8 Purchases of property, plant, and equipment in accounts payable 2.4 2.8 4.9 Leased assets obtained in exchange for new finance lease liabilities — 0.2 — Leased assets obtained in exchange for new operating lease liabilities 6.0 29.1 23.7 The accompanying notes are an integral part of these financial statements. 57 Ingevity Corporation Notes to the Consolidated Financial Statements December 31, 2024 INDEX Note Page No. 1 Background 59 2 Summary of Significant Accounting Policies 59 3 New Accounting Guidance 66 4 Net Sales 67 5 Fair Value Measurements 68 6 Inventories, net 70 7 Property, Plant, and Equipment, net 70 8 Goodwill and Other Intangible Assets, net 71 9 Financial Instruments and Risk Management 73 10 Debt, including Finance Lease Obligations 76 11 Share-based Compensation 78 12 Equity 81 13 Leases 83 14 Retirement Plans 85 15 Restructuring and Other (Income) Charges, net 90 16 Acquisitions 93 17 Income Taxes 94 18 Commitments and Contingencies 98 19 Segment Information 99 20 Earnings (Loss) per Share 103 21 Supplemental Information 104 58 Index Ingevity Corporation Notes to the Consolidated Financial Statements December 31, 2024 Note 1: Background Description of Business Ingevity Corporation ("Ingevity," "the Company," "we," "us," or "our") provides products and technologies that purify, protect, and enhance the world around us. 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, paint for road markings, oil drilling, and automotive components. We operate in three reportable segments: Performance Materials, Performance Chemicals and Advanced Polymer Technologies. Our Performance Materials segment manufactures products in the form of powder, granular, extruded pellets, extruded honeycombs, and activated carbon sheets. Performance Materials engineers, manufactures, and sells hardwood-based, chemically activated carbon products which are produced through a highly technical and specialized process primarily for use in gasoline vapor emission control systems in internal combustion engines and hybrid electric vehicles including cars, trucks, motorcycles, and boats. To maximize the productivity of our manufacturing assets, we also produce several other activated carbon products for food, water, beverage, and chemical purification applications. Our Performance Chemicals segment consists of our road technologies and industrial specialties product lines. Performance Chemicals products serve as critical inputs used in a variety of high-performance applications, including pavement construction, pavement preservation, pavement reconstruction and recycling, and paint for road markings (road technologies product line), as well as agrochemical dispersants, lubricants, certain adhesives, rubber, and other diverse industrial uses (industrial specialties product line). Our Advanced Polymer Technologies segment produces caprolactone and caprolactone-based specialty polymers for use in coatings, resins, elastomers, adhesives, bioplastics, and medical devices. Basis of Consolidation and Presentation The accompanying Consolidated Financial Statements of Ingevity were prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The significant accounting policies described in Note 2, together with the other notes that follow, are an integral part of the Consolidated Financial Statements. The Consolidated Financial Statements include the accounts of Ingevity and subsidiaries in which a controlling interest is maintained. Note 2: Summary of Significant Accounting Policies Estimates and assumptions: We are required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Our estimates are based on historical experiences, facts, and circumstances available at the time and various other assumptions that we believe are reasonable. Actual results may differ from those estimates. Cash equivalents: Highly liquid securities with an original maturity of three months or less are considered cash equivalents. Accounts receivable, net of allowance: Accounts receivable, net on the consolidated balance sheets are comprised of trade receivables less allowances for doubtful accounts and credit losses (herein referred to as "credit losses"). Trade receivables consist of amounts owed to Ingevity from customer sales and are recorded at the invoiced amounts when revenue is recognized and generally do not bear interest. The allowance for credit losses is our best estimate of the amount of probable loss in the existing accounts receivable. We determine the allowance based on our expected future credit losses, which is partly based on historical write-off experience, current collection trends, and external business factors such as economic factors, including regional bankruptcy rates and political factors. Past-due balances over a specified amount are reviewed individually for collectability. Account balances are charged off against the allowance when it is probable that the receivable will not be recovered. Allowance for credit losses at December 31, 2024 and 2023, were $ 0.6 million and $ 1.1 million, respectively. Concentration of credit risk: The financial instruments that potentially subject Ingevity to concentrations of credit risk are accounts receivable. We limit our credit risk by performing ongoing credit evaluations and, when necessary, requiring 59 Index Ingevity Corporation Notes to the Consolidated Financial Statements December 31, 2024 letters of credit, guarantees, or collateral. Our largest customer as of December 31, 2024 had accounts receivable of $ 8.3 million and $ 7.5 million as of December 31, 2024 and 2023, respectively. Sales to our largest customer were approximately six percent of total Net sales for the year ended December 31, 2024, and four percent of total Net sales for the years ended December 31, 2023, and 2022, respectively. Sales to the automotive industry, which represents our largest industry concentration, were approximately 40 percent of our consolidated Net sales. No customers individually accounted for greater than 10 percent of Ingevity's consolidated Net sales. Inventories, net: We value our U.S. inventories at the lower of cost or market, with cost for the majority of our U.S. inventories determined using the last-in first-out (“LIFO”) basis. We value all other inventories at the lower of cost and net realizable value, with cost determined using methods that approximate cost computed on a first-in first-out inventory valuation (“FIFO”) basis. Elements of cost in inventories include raw materials, direct labor, and manufacturing overhead. We routinely assess inventory for both potential obsolescence and potential declines in anticipated selling prices to derive a market value for the inventory on hand. This review also includes an analysis of potentially obsolete, unmarketable, slow-moving, or overvalued inventory. If necessary, we will impair any inventories by an amount equal to the difference between the value of the held inventory (i.e., cost) and its estimated net realizable value for FIFO and average cost inventories and market value for LIFO inventories. Property, plant, and equipment: Owned assets are recorded at cost. Also included in the cost of these assets is interest on funds borrowed during the construction period. When assets are sold, retired or disposed of, their cost and related accumulated depreciation are removed from the consolidated balance sheet, and any resulting gain or loss is reflected within the consolidated statement of operations. Repair and maintenance costs that materially add to the value of the asset or prolong its useful life are capitalized and depreciated based on the extension of the useful life. Repair and maintenance costs: We expense routine repair and maintenance costs as we incur them. We defer expenses incurred during planned major maintenance activities and record these amounts to Prepaid and other current assets on our consolidated balance sheets. Deferred amounts are recognized as expense ratably over the shorter of the estimated interval until the next major maintenance activity or the life of the deferred item. The cash outflows related to these costs are included in operating activities within the consolidated statement of cash flows. The timing of this maintenance can vary by manufacturing plant and has a significant impact on our results of operations in the period performed primarily due to lost production during the maintenance period. Depreciation: The cost of property, plant, and equipment is depreciated, utilizing the straight-line method, over the estimated useful lives of the assets, the majority of which range from 20 to 40 years for buildings and leasehold improvements and 5 to 30 years for machinery and equipment. The following table provides details on the useful lives and proportion of our machinery and equipment (“M&E”) in each useful life category. Percent of M&E Cost Depreciable Life in Years Types of Assets 27 5 to 10 Production control system equipment and hardware, laboratory testing equipment 13 15 Control systems, instrumentation, metering equipment 37 20 Production vessels and kilns, storage tanks, piping 6 25 to 30 Blending equipment, storage tanks, piping, shipping equipment and platforms, safety equipment 2 40 Machinery & equipment support structures and foundations 15 Various Various Leases: We lease various assets for use in our operations that are classified as both operating and financing leases. At contract inception, we determine that a lease exists if the contract conveys the right to control an identified asset for a period of time in exchange for consideration. Control is considered to exist when the lessee has the right to obtain substantially all of the economic benefits from the use of an identified asset as well as the right to direct the use of that asset. If a contract is considered to be a lease, we recognize a lease liability based on the present value of the future lease payments, with an offsetting entry to recognize a right-of-use asset. As a majority of our leases do not provide an explicit rate within the lease, an incremental borrowing rate is used, which is based on information available at the commencement date. The determination of the incremental borrowing rate for each individual lease was impacted by the following assumptions: lease term, currency, and the economic environment for the physical location of the leased asset. 60 Index Ingevity Corporation Notes to the Consolidated Financial Statements December 31, 2024 Our operating leases principally relate to the following leased asset classes: Leased Asset Class Remaining Lease Term Administrative offices 2 to 15 years Manufacturing buildings 4 to 50 years Manufacturing and office equipment 1 to 11 years Warehousing and storage facilities 3 to 10 years Rail cars 0 to 10 years Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheets. Lease expense is recognized on a straight-line basis over the expected lease term. Some of our leases include options to extend the lease term at our sole discretion. We account for lease and non-lease components together as a single component for all lease asset classes. The depreciable life of assets and leasehold improvements is limited by the expected lease term unless there is a transfer of title or purchase option reasonably certain of exercise. Certain leases provide for escalation of the lease payments, as well as maintenance costs and taxes increase. Asset retirement obligations: We record asset retirement obligations (“AROs”) at fair value at the time the liability is incurred if we can reasonably estimate the settlement date. The associated AROs are capitalized as part of the carrying amount of related long-lived assets. In future periods, the liability is accreted to its present value and the capitalized cost is depreciated over the useful life of the related asset. We also adjust the liability for changes resulting from the passage of time and/or revisions to the timing or the amount of the original estimate. Upon the retirement of the long-lived asset, we either settle the obligation for its recorded amount or incur a gain or loss. The carrying amounts for the AROs for the years ended December 31, 2024 and 2023 are $ 16.3 million and $ 12.9 million , respectively, and are included in Accrued expenses and Other liabilities on the consolidated balance sheets. Impairment of long-lived assets: We periodically evaluate whether current events or circumstances indicate that the carrying value of our long-lived assets, including intangible assets, to be held and used may not be recoverable. If such circumstances are determined to exist, an estimate of undiscounted future cash flows produced by the long-lived asset, or the appropriate grouping of assets, is compared to carrying value to determine whether impairment exists. If an asset is determined to be impaired, the loss is measured based on quoted market prices in active markets, if available. If quoted market prices are not available, the estimate of fair value is based on various valuation techniques, including a discounted value of estimated future cash flows. We report an asset to be disposed of at the lower of its carrying value or its estimated net realizable value. Goodwill and other intangible assets: Goodwill represents the excess of cost of an acquired business over the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed in a business combination. We conduct a required annual review of goodwill for potential impairment at October 1, 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. 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. The income approach determines fair value based on discounted cash flow model derived from a reporting unit’s long-term forecasted cash flows. The market approach determines fair value based on the application of earnings multiples of comparable companies to projected earnings of the reporting unit. The amount of impairment loss is measured as the difference between the carrying value and the fair value of a reporting unit but is limited to the total amount of goodwill allocated to the reporting unit. In performing the fair value analysis, management makes various judgments, estimates and assumptions, the most significant of which are the assumptions related to revenue growth rates, Earnings before Interest, Taxes, Depreciation and Amortization ("EBITDA") margin, and discount rate. The factors we considered in developing our estimates and projections for cash flows include, but are not limited to, the following: (i) macroeconomic conditions; (ii) industry and market considerations; (iii) costs, such as increases in raw materials, labor, or other costs; (iv) our overall financial performance; and (v) other relevant entity-specific events that impact our reporting units. 61 Index Ingevity Corporation Notes to the Consolidated Financial Statements December 31, 2024 The determination of whether goodwill is impaired involves a significant level of judgment in the assumptions underlying the approach used to determine the estimated fair values of our reporting units. We believe that the estimates and assumptions used in our impairment assessment are reasonable; however, these assumptions are judgmental and variations in any assumptions could result in materially different calculations of fair value. We will continue to evaluate goodwill on an annual basis as of October 1, and whenever events or changes in circumstances, such as significant adverse changes in operating results, market conditions, or changes in management’s business strategy indicate that there may be a probable indicator of impairment. It is possible that the assumptions used by management related to the evaluation may change or that actual results may vary significantly from management’s estimates. Other intangible assets are comprised of finite-lived intangible assets consisting primarily of brands (representing trademarks, trade names and know-how), customer contracts and relationships, and developed technology. Other intangible assets are amortized over their estimated useful lives which range from 3 to 20 years. Any potential impairment for definite-lived intangible assets will be calculated in the same manner as disclosed under impairment of property, plant, and equipment. Customer relationships are amortized in a manner that reflects the pattern in which the economic benefits of the intangible asset are consumed. Capitalized software: Capitalized software for internal use is included within Other assets on the consolidated balance sheets. Amounts capitalized are presented in Capital expenditures on our consolidated statements of cash flow. Capitalized software is amortized using the straight-line over the estimated useful lives ranging from 3 to 15 years. Amortization is recorded to Costs of sales on our consolidated statements of operations for software directly used in the production of inventory and Selling, general, and administrative expenses on our consolidated statements of operations for software used for non-production related activities. Strategic investments: We have a variety of strategic investments that are classified as long-term assets on the consolidated balance sheets. Our strategic investments are accounted for under either the equity method of accounting or the measurement alternative, where fair value is not readily determinable. We use the equity method of accounting for investments that we do not control, but for which we have the ability to exercise significant influence. For strategic investments that are accounted for under the equity method of accounting, our initial investment is recorded at cost. Subsequently, the carrying value for these investments will be impacted by our proportionate share of undistributed earnings or loss, distributions, amortization or accretion of basis differences, and other-than-temporary impairments. Subsequent adjustments to our initial investment are recorded within Other (income) expense, net on the consolidated statement of operations. Strategic investments accounted for under the measurement alternative, where fair value is not readily determinable, are accounted for at cost. Adjustments for observable changes in prices or impairments are recognized in Other (income) expense, net in our consolidated statements of operations. At each reporting period, we evaluate each investment to determine whether events or changes in business circumstances indicate that the carrying value of the investment may not be fully recoverable. Legal liabilities: We recognize a liability for legal contingencies when a loss is probable and reasonably estimable. Third-party fees for legal services are expensed as incurred. If only a range of estimated losses can be determined, we accrue an amount that reflects the most likely outcome; if none of the estimates within that range is a better estimate than any other amount, we accrue the low end of the range. If an unfavorable outcome is reasonably possible but not probable, we will disclose an estimate of the reasonably possible loss or range of loss. If we cannot estimate the loss or range of losses arising from a legal proceeding, we will disclose that an estimate cannot be made. In assessing the materiality of a legal proceeding, we evaluate, among other factors, the amount of monetary damages claimed, as well as the potential impact of non-monetary remedies sought by plaintiffs that may require us to change our business practices in a manner that could have a material adverse impact on our business. Revenue recognition: Our revenue is derived from contracts with customers, and substantially all our revenue is recognized when products are either shipped from our manufacturing and warehousing facilities or delivered to the customer. Revenue, net of returns and customer incentives, is based on the sale of manufactured products. Revenues are recognized when performance obligations under the terms of a contract with our customer are satisfied; generally, this occurs with the transfer of control of our products. For certain limited contracts, where we are producing goods with no alternative use and for which we have an enforceable right to payment for performance completed to date, we are recognizing revenue as goods are 62 Index Ingevity Corporation Notes to the Consolidated Financial Statements December 31, 2024 manufactured, rather than when they are shipped. Revenues are presented as Net sales on the consolidated statements of operations. Since Net sales are derived from product sales only, we have disaggregated our Net sales by our product lines within each reportable segment. Net sales are measured as the amount of consideration we expect to receive in exchange for transferring goods. Sales, value add, and other taxes we collect concurrent with revenue-producing activities are excluded from revenue. Sales returns and allowances are not a normal practice in the industry and are not significant. Certain customers may receive cash-based incentives, including discounts and volume rebates, which are accounted for as variable consideration and included within Net sales. Shipping and handling fees billed to customers are included within Net sales. If we pay for the freight and shipping, we recognize the cost when control of the product has transferred to the customer as an expense within Cost of sales on the consolidated statements of operations. Payment terms with our customers are typically in the range of zero to sixty days . Because the period between when we transfer a promised good to a customer and when the customer pays for that good will be one year or less, we elect not to adjust the promised amount of consideration for the effects of any financing component, as it is not significant. Cost of sales: Costs primarily consist of the cost of inventory sold and other production related costs. These costs include raw materials, direct labor, manufacturing overhead, packaging costs, and maintenance costs. Shipping and handling costs are recorded within Cost of sales on the consolidated statements of operations. Royalty expense: We have licensing agreements with third parties requiring us to pay royalties for certain technologies we use in the manufacturing of our products. Royalty expense is recognized as incurred and recorded within Cost of sales on the consolidated statements of operations. Selling, general, and administrative expenses: Costs are expensed as incurred and primarily include employee compensation costs related to sales and office personnel, office expenses, and other expenses not directly related to our manufacturing operations. Costs also include advertising and promotional costs. Research and technical expenses: Costs are expensed as incurred and primarily include employee compensation, technical equipment costs, material testing, and innovation-related expenses. Restructuring and other (income) charges, net: We regularly perform strategic reviews and assess the return on our operations, which sometimes results in a plan to restructure the business. The cost and benefit of these strategic restructuring initiatives are recorded within Restructuring and other (income) charges, net on the consolidated statement of operations. These costs are excluded from our operating segment results. We record an accrual for severance and other costs under the provisions of the relevant accounting guidance. Additionally, in some restructuring plans, write-downs of long-lived assets may occur. Two types of assets are impacted: assets to be disposed of by sale and assets to be abandoned. Assets to be disposed of by sale are measured at the lower of carrying amount or estimated net proceeds from the sale. Assets to be abandoned with no remaining future service potential are written down to amounts expected to be recovered. The useful lives of assets to be abandoned that have a remaining future service potential are adjusted and depreciation is recorded over the adjusted useful life. Non-operating income and expense: Non-operating income and expenses are included within Other (income) expense, net on the consolidated statement of operations. Included within Other (income) expense, net, among other items, are gains and losses associated with crude tall oil ("CTO") resales and CTO supply contract termination charges. As further described in Note 15, due to the actions taken and the corresponding reduced CTO refining capacity, we were obligated, under an existing CTO supply contract, to purchase CTO volumes through 2025 at amounts in excess of required CTO volumes. To manage this excess inventory, we sold CTO volumes (herein referred to as "CTO resales") in the open market. Our Performance Chemicals reportable segment is in the business of producing, primarily from CTO-based feedstocks, derivative specialty chemicals for sale to third-party customers. As a result of the Performance Chemicals repositioning, we sold excess CTO volumes, which is outside of the ordinary course of business, that is, not a normal ongoing part of our operations and not core to our business. The excess CTO volumes, calculated as the volume directly attributable to reduced CTO refining capacity as defined under the contractual terms of the CTO supply contract, on hand at period end will be valued at the lower of cost or expected selling price, less costs to sell. Volumes on hand at period end and any pending CTO resale receivables will be recorded to Other current assets on the consolidated balance sheets. Any payables associated with the purchases of the excess CTO volumes will be recorded to Accrued expenses on the consolidated balance sheets. We will 63 Index Ingevity Corporation Notes to the Consolidated Financial Statements December 31, 2024 recognize the net gains or losses associated with the CTO resale activities within Other (income) expenses, net on the consolidated statement of operations. On July 1, 2024, we terminated our last long-term CTO supply contract. As a result of the termination, the purchases under the CTO supply contract ended effective June 30, 2024. The CTO resale activity described above ended in 2024 and no excess CTO volumes were on hand at December 31, 2024. Income taxes: We are subject to income taxes in the U.S. and numerous foreign jurisdictions, including China and the United Kingdom ("UK"). The provision for income taxes includes income taxes paid, currently payable or receivable, and deferred taxes. We follow the asset and liability method of accounting for income taxes in accordance with current accounting standards regarding the accounting for income taxes. Under this method, deferred income taxes are recognized based on the temporary differences between the financial reporting and tax bases of assets and liabilities, and are measured using the enacted tax rates and laws in effect at the time the underlying assets or liabilities are recovered or settled. The ability to realize deferred tax assets is evaluated through the forecasting of taxable income, historical and projected future operating results, the reversal of existing temporary differences, and the availability of tax planning strategies. Valuation allowances are recognized to reduce deferred tax assets when it is more-likely-than-not that a tax benefit will not be realized. We do not provide income taxes on undistributed earnings of consolidated foreign subsidiaries, as it is our intention that such earnings will remain invested in those companies. We recognize income tax positions that are more-likely-than-not to be realized and accrue interest related to unrecognized income tax positions, which is included as a component of the income tax provision, on the consolidated statements of operations. Earnings per Share: Basic earnings (loss) per share is computed by dividing net income (loss) for the period by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share reflects the dilution that could occur if the outstanding stock-based compensation awards, including any unvested awards, were vested and exercised, resulting in the issuance of common stock as determined under the treasury stock method. Diluted earnings (loss) per share is computed by dividing net income (loss) for the period by the weighted average number of shares of common stock and potentially dilutive common stock outstanding for the period. The calculation of diluted net income per share excludes all anti-dilutive common shares. In periods where we incur a net loss, stock-based compensation awards are excluded from the calculation of earnings per share as their inclusion would have an anti-dilutive effect. Pension and postretirement benefits: We provide both qualified and non-qualified pension and postretirement benefit plans to our employees. The expense related to the current employees, as well as the expense related to retirees, are included within the Consolidated Financial Statements. The costs (or benefits) and obligations related to these benefits reflect key assumptions related to general economic conditions, including interest (discount) rates, healthcare cost trend rates, and expected return on plan assets. The costs (or benefits) and obligations for these benefit programs are also affected by other assumptions, such as average retirement age, mortality rates, employee turnover, and plan participation. To the extent our plans' actual experience, as influenced by changing economic and financial market conditions or by changes to our own plans' demographics, differs from these assumptions, the costs and obligations for providing these benefits, as well as the plans' funding requirements, could increase or decrease. When actual results differ from our assumptions, the difference is typically recognized over future periods. In addition, the unrealized gains and losses related to our pension and postretirement benefit obligations may also affect periodic benefit costs (or benefits) in future periods. Share-based compensation: We recognize compensation expense within our Consolidated Financial Statements for all share-based compensation arrangements. Share-based compensation cost is measured at the date of grant, based on the fair value of the award, and expense is recognized over the grantee's requisite service period; forfeitures are recognized as they occur. We calculate the fair value of our stock options using the Black-Scholes option pricing model. The fair value of restricted stock units ("RSUs"), non-employee director deferred stock units ("DSUs"), and performance-based restricted stock units ("PSUs") is determined using our closing stock price on the date of the grant. Beginning in 2023, certain granted PSUs include a market condition, relative total shareholder return ("rTSR"), which requires that the fair value of the award be calculated using a Monte Carlo simulation. Substantially all compensation expense related to share-based awards is recorded as a component of Selling, general and administrative expenses within the consolidated statements of operations. Operating segments: Our operating segments are Performance Materials, Performance Chemicals, and Advanced Polymer Technologies. Our operating segments were determined based upon the nature of the products produced, the nature of 64 Index Ingevity Corporation Notes to the Consolidated Financial Statements December 31, 2024 the production process, the type of customer for the products, the similarity of economic characteristics, and the manner in which management reviews results. Our chief operating decision maker evaluates the business at the segment level when making decisions about allocating resources and assessing the performance of Ingevity as a whole. Fair value measurements: We have categorized our assets and liabilities that are recorded at fair value, based on the priority of the inputs to the valuation technique, into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure the assets and liabilities fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. The carrying value of our financial instruments: cash and cash equivalents, other receivables, other payables, and accrued liabilities, approximate their fair values due to the short-term nature of these financial instruments. Derivative financial instruments: We are exposed to market risks, such as the impact of changes in interest rates on our floating rate debt, foreign currency exchange rates due to transactions denominated in a variety of foreign currencies, and commodity prices due to purchases of certain raw materials and inputs. Changes in these rates and prices may have an impact on our future cash flow and earnings. We formally document all relationships between the derivative financial instrument and the hedged item, as well as the risk management objective and strategy for undertaking various hedge transactions. We do not hold or issue derivative financial instruments for speculative or trading purposes. We enter into derivative financial instruments which are governed by policies, procedures, and internal processes set forth by our Board of Directors. Our risk management program also addresses counterparty credit risk by selecting only major financial institutions with investment grade ratings. Once the derivative financial instrument is entered into, we continuously monitor the financial institutions’ credit ratings and our credit risk exposure held by the financial institution. When appropriate, we reallocate exposures across multiple financial institutions to limit credit risk. If a counterparty fails to fulfill its performance obligations under the derivative financial instrument, then Ingevity is exposed to credit risk equal to the fair value of the financial instrument. Derivative assets and liabilities are recorded on our consolidated balance sheets at fair value and are presented on a gross basis. Due to our proactive mitigation of these potential credit risks, we anticipate performance by our counterparties to these contracts, and therefore, no material loss is expected. In order to mitigate the impact of market risks, we have and may enter into both net investment hedges and cash flow hedges. Cash flow hedges: Cash flow hedges are derivative financial instruments designated as and used to hedge the exposure to variability in expected future cash flows that are attributable to a particular risk. The derivative financial instruments that are designated and qualify as a cash flow hedge are recorded on the consolidated balance sheetsat fair value, and the changes in fair value of these hedging instruments are offset in part or in whole by corresponding changes in the anticipated cash flows of the underlying exposures being hedged. The gains and losses arising from qualifying hedging instruments are reported as a component of Accumulated other comprehensive income (loss) (“AOCI”) located within the consolidated balance sheets and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. The reclassification gains or losses of the hedge from AOCI are recorded in the same financial statement caption on the consolidated statements of operations as the hedged item. For example, designated cash flow hedges entered to minimize foreign currency exchange risk of forecasted revenue transactions are recorded to Net sales on the consolidated statements of operations when the forecasted transaction occurs. Designated commodity cash flow hedges gains or losses recorded in AOCI are recognized within Cost of sales on the consolidated statements of operations when the inventory is sold. Designated interest rate cash flow hedge gains or losses are recorded in Accumulated other comprehensive income (loss) AOCI and are recognized in Interest expense on the consolidated statements of operations on a straight-line basis over the remaining maturity of the underlying debt. Net investment hedges: Net investment hedges are defined as derivative or non-derivative instruments, which are designated as and used to hedge the foreign currency exposure of the net investment in certain foreign operations. The net of the change in the hedge instrument and the item being hedged against for qualifying net investment hedges is reported as a component of the foreign currency adjustments ("CTA") within AOCI on the consolidated balance sheets. The gains (losses) on net investment hedges are reclassified to earnings only when the related CTA are required to be reclassified, usually upon the sale or liquidation of the investment. 65 Index Ingevity Corporation Notes to the Consolidated Financial Statements December 31, 2024 Treasury stock: We record shares of common stock repurchased at cost as treasury stock, resulting in a reduction of stockholders’ equity on the consolidated balance sheets. When the treasury shares are contributed under our employee benefit plans or issued for option exercises, we use a first-in, first-out (“FIFO”) method for determining cost. The difference between the cost of the shares and the market price at the time of contribution to an employee benefit plan is added to or deducted from Additional paid-in capital on the consolidated balance sheets. Translation of foreign currencies: The local currency is the functional currency for all of our significant operations outside the U.S., consisting primarily of the euro, the Japanese yen, the pound sterling, and the Chinese renminbi. The assets and liabilities of our foreign subsidiaries are translated into U.S. dollars using period-end exchange rates, and adjustments resulting from these financial statement translations are reported as a component of CTA within AOCI on the consolidated balance sheets. Revenues and expenses are translated at average rates prevailing during each period. Business combinations: Accounting for business combinations which requires, among other things, the acquiring entity in a business combination to recognize the fair value of the assets acquired and liabilities assumed; the recognition of acquisition-related costs within the consolidated results of operations; the recognition of restructuring costs within the consolidated results of operations for which the acquirer becomes obligated after the acquisition date; and contingent purchase consideration to be recognized at fair value on the acquisition date with subsequent adjustments recognized on the consolidated statement of operations. We generally use qualified third-party consultants to assist management in determining the fair value of assets acquired and liabilities assumed. This includes, when necessary, assistance with the determination of lives and valuation of tangible property, plant, and equipment and identifiable intangibles, assisting management in determining the fair value of obligations associated with employee-related liabilities, and assisting management in assessing obligations associated with legal and environmental claims. The purchase price allocation process allows us to refine these estimates over a measurement period not to exceed one year to reflect new information obtained surrounding facts and circumstances existing at the acquisition date. The fair value assigned to identifiable intangible assets acquired is determined primarily by using an income approach, which is based on assumptions and estimates made by management. Significant assumptions utilized in the income approach are the attrition rate, revenue growth rates, EBITDA margins, royalty rates, and the discount rate. These assumptions are based on company-specific information and projections, which are not observable in the market and are therefore considered Level 2 and Level 3 measurements. The excess of the purchase price over the fair value of the identified assets and liabilities is recorded as goodwill. Based on the acquired business’ end markets and products, as well as how the chief operating decision maker will review the business results, determines the most appropriate operating segment for which to integrate the acquired business. Goodwill acquired, if any, is allocated to the reporting unit within or at the operating segment for which the acquired business will be integrated. Selection of the appropriate reporting unit is based on the level at which discrete financial information is available and reviewed by business management post-integration. Operating results of the acquired entity are reflected within the Consolidated Financial Statements from the date of acquisition. Reclassifications: Certain prior year amounts have been reclassified to conform with the current year's presentation. Note 3: New Accounting Guidance The Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC" or "Codification") is the sole source of authoritative GAAP other than the U.S. Securities and Exchange Commission ("SEC") issued rules and regulations that apply only to SEC registrants. The FASB issues an Accounting Standards Update ("ASU") to communicate changes to the Codification. 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 Accounting Pronouncements In November 2023, the FASB issued ASU 2023-07, “Segment Reporting: Improvements to Reportable Segment Disclosures,” which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The purpose of the amendment is to provide readers of the financial statements with information to better understand an entity’s overall performance and assess potential future cash flows. We adopted this standard which is effective beginning with our 2024 fiscal year Form 10-K, and it has been applied to all prior periods presented in the Consolidated Financial Statements. 66 Index Ingevity Corporation Notes to the Consolidated Financial Statements December 31, 2024 In December 2023, the FASB issued ASU 2023-09, “Improvements to Income Tax Disclosures,” which is intended to enhance income tax disclosures around the rate reconciliation and income taxes paid. The purpose of the amendment is to provide readers of the financial statements with information to better assess the differences between the effective tax rate and the statutory tax rate across multiple jurisdictions, enabling them to understand tax implications around operational opportunities and potential future cash flows. The guidance is effective beginning with our 2025 fiscal year Consolidated Financial Statements. We are currently evaluating the potential impact of adopting this new guidance on our Consolidated Financial Statements and related disclosures. In November 2024, the FASB issued ASU 2024-03, “Disaggregation of Income Statement Expenses,” which is intended to enhance disclosures regarding significant expenses. The purpose of the amendment is to provide readers of the financial statements with information to better understand an entity’s overall performance, assess potential future cash flows, and compare an entity's performance over time and with that of other entities. The guidance is effective beginning with our 2027 fiscal year Consolidated Financial Statements. We are currently evaluating the potential impact of adopting this new guidance on our Consolidated Financial Statements and related disclosures. Note 4: Net Sales Disaggregation of Net sales The following table presents our Net sales disaggregated by reportable segment and product line. Years Ended December 31, In millions 2024 2023 2022 Performance Materials segment $ 609.6 $ 586.0 $ 548.5 Road Technologies product line 342.3 369.8 241.3 Industrial Specialties product line (1) 265.9 532.3 633.8 Performance Chemicals segment $ 608.2 $ 902.1 $ 875.1 Advanced Polymer Technologies segment $ 188.6 $ 204.0 $ 244.7 Net sales $ 1,406.4 $ 1,692.1 $ 1,668.3 _______________ (1) The reduction in the industrial specialties product line from 2023 to 2024 was due to the repositioning action taken to improve the Performance Chemicals reportable segment, refer to Note 15 for more information. The following table presents our Net sales disaggregated by geography, based on the delivery address of our customer. Years Ended December 31, In millions 2024 2023 2022 North America (1) $ 820.9 $ 1,069.5 $ 983.2 Asia Pacific (1) 346.0 364.0 398.7 Europe, Middle East, and Africa 187.0 215.5 242.2 South America 52.5 43.1 44.2 Net sales $ 1,406.4 $ 1,692.1 $ 1,668.3 _______________ (1) Countries with Net sales in excess of 10 percent of consolidated Net sales for the years ended December 31, 2024, 2023, and 2022 are the U.S., which totaled $ 736.0 million, $ 972.1 million, and $ 897.1 million, respectively, and China, which totaled $ 184.3 million, $ 202.7 million, and $ 220.6 million, respectively. Contract Balances The contract assets primarily relate to our rights to consideration for products produced but not billed at the reporting date from contracts with certain customers. The contract assets are recognized as accounts receivables when we have an enforceable right to payment for performance completed to date and the customer has been billed. Contract liabilities represent obligations to transfer goods to a customer for which we have received consideration from our customer. For all periods presented, we had no contract liabilities. 67 Index Ingevity Corporation Notes to the Consolidated Financial Statements December 31, 2024 The following table provides information about contract assets from contracts with certain customers. Year Ended December 31, In millions 2024 2023 Contract asset at beginning of period $ 11.2 $ 6.4 Additions 15.3 18.1 Reclassification to accounts receivable, billed to customers ( 20.0 ) ( 13.3 ) Contract asset at end of period (1) $ 6.5 $ 11.2 _______________ (1) Included within "Prepaid and other current assets" on the consolidated balance sheets. Note 5: Fair Value Measurements Recurring Fair Value Measurements The following information is presented for assets and liabilities that are recorded on the consolidated balance sheets at fair value measured on a recurring basis. There were no transfers of assets and liabilities that are recorded at fair value between the three-level fair value hierarchy during the periods reported. In millions Level 1 (1) Level 2 (2) Level 3 (3) Total December 31, 2024 Assets: Deferred compensation plan investments (4) $ 3.7 $ — $ — $ 3.7 Total assets $ 3.7 $ — $ — $ 3.7 Liabilities: Deferred compensation arrangement (4) $ 15.9 $ — $ — $ 15.9 Total liabilities $ 15.9 $ — $ — $ 15.9 In millions Level 1 (1) Level 2 (2) Level 3 (3) Total December 31, 2023 Assets: Deferred compensation plan investments (4) $ 3.0 $ — $ — $ 3.0 Total assets $ 3.0 $ — $ — $ 3.0 Liabilities: Deferred compensation arrangement (4) $ 15.5 $ — $ — $ 15.5 Total liabilities $ 15.5 $ — $ — $ 15.5 _______________ (1) Quoted prices in active markets for identical assets. (2) Quoted prices for similar assets and liabilities in active markets. (3) Significant unobservable inputs. (4) Consists of a deferred compensation arrangement through which we hold various investment securities recognized on our consolidated balance sheets. Both the asset and liability related to investment securities are recorded at fair value and are included within "Other assets" and "Other liabilities" on the consolidated balance sheets, respectively. In addition to the investment securities, we also had company-owned life insurance related to the deferred compensation arrangement recorded at cash surrender value in "Other assets" of $ 16.5 million and $ 14.9 million at December 31, 2024 and 2023, respectively. 68 Index Ingevity Corporation Notes to the Consolidated Financial Statements December 31, 2024 Nonrecurring Fair Value Measurements There were no nonrecurring fair value measurements on the consolidated balance sheetsduring the years ended December 31, 2024 and 2023. Strategic Investments Equity Method Investments The aggregate carrying value of all strategic equity method investments was $ 15.4 million and $ 16.0 million at December 31, 2024 and 2023, respectively. As of December 31, 2024 and 2023, respectively, we had approximately $ 5.3 million and $ 5.6 million of unfunded commitments, associated with a venture capital fund investment accounted for under the equity method of accounting, which we anticipate will be paid over a period of 10 years. During the first quarter of 2023, we sold a strategic equity method investment for $ 31.5 million, resulting in a $ 19.3 million gain, recorded within "Other (income) expense, net" on the consolidated statement of operations. We recognized an additional $ 0.1 million gain associated with the equity method investment sale during the period ended December 31, 2024. There were no adjustments to the carrying value of equity method investments for impairment for the periods ended, December 31, 2024 and 2023. Measurement Alternative Investments The aggregate carrying value of all measurement alternative investments where fair value is not readily determinable totaled $ 71.9 million and $ 83.2 million at December 31, 2024 and 2023, respectively. For the year ended December 31, 2024, the Company identified triggering events indicating that investments being accounted for under the measurement alternative may be impaired, and recognized impairment charges of $ 11.5 million, recorded in Other (income) expense, net on the consolidated statement of operations. There were no adjustments to the carrying value of the measurement alternative method investments for impairment or observable price changes for the periods ended December 31, 2023. Restricted Investment Our restricted investment is a trust managed in order to secure repayment of the finance lease obligation associated with Performance Materials' Wickliffe, Kentucky, manufacturing plant at maturity. The trust, presented as Restricted investment on our consolidated balance sheets, originally purchased long-term bonds that mature through 2026. The principal received at maturity of the bonds, along with interest income that is reinvested in the trust, are expected to be equal to or more than the $ 80.0 million finance lease obligation that is due in 2027. Because the provisions of the trust provide us the ability, and it is our intent, to hold the investments to maturity, the investments held by the trust are accounted for as held to maturity ("HTM"); therefore, they are held at their amortized cost. The investments held by the trust earn interest at the stated coupon rate of the invested bonds. Interest earned on the investments held by the trust is recognized and presented as Interest income on our consolidated statement of operations. As interest from the bonds is received and as bonds mature, any proceeds not reinvested are held in highly liquid securities and treated as restricted cash. At December 31, 2024 and 2023, the carrying value of our restricted investment was $ 81.6 million and $ 79.1 million, net of an allowance for credit losses of $ 0.2 million and $ 0.2 million, and included restricted cash of $ 18.2 million and $ 15.4 million, respectively. The fair value at December 31, 2024 and 2023 was $ 80.3 million and $ 76.7 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. The primary factor in our expected credit loss calculation is the composite bond rating. As the rating decreases, the risk present in holding the bond is inherently increased, leading to an increase in expected credit losses. HTM Debt Securities In millions AA+ AA- A A- BBB+ Total December 31, 2024 $ 13.2 10.3 23.3 6.8 10.0 $ 63.6 December 31, 2023 $ 13.3 10.4 13.2 17.0 10.0 $ 63.9 69 Index Ingevity Corporation Notes to the Consolidated Financial Statements December 31, 2024 Debt and Finance Lease Obligations At December 31, 2024 and 2023, the carrying value of finance lease obligations was $ 100.0 million and $ 101.1 million, respectively, and the fair value was $ 102.2 million and $ 105.7 million, respectively. The fair value of our finance lease obligation associated with our Performance Materials' Wickliffe, Kentucky manufacturing plant, 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 value of our variable rate debt, excluding debt issuance fees and adjusted for our $ 200.0 million floating-to-fixed interest rate swap, was $ 555.2 million, and $ 821.4 million as of December 31, 2024 and 2023, respectively. The carrying value of our variable rate debt is a reasonable estimate of the fair value. At December 31, 2024 and 2023, the carrying value of our fixed rate debt was $ 550.0 million and $ 550.0 million, respectively, and the fair value was $ 503.2 million and $ 494.6 million, respectively, based on Level 2 inputs. Note 6: Inventories, net December 31, In millions 2024 2023 Raw materials $ 97.6 $ 128.3 Production materials, stores and supplies 25.0 26.0 Finished and in-process goods 186.2 255.2 Subtotal $ 308.8 $ 409.5 Less: LIFO reserve ( 82.0 ) ( 100.7 ) Inventories, net $ 226.8 $ 308.8 As of December 31, 2024, approximately 41 percent, 11 percent, and 48 percent of our Inventories, net, were accounted for under the FIFO, average cost, and LIFO methods, respectively. As of December 31, 2023, approximately 27 percent, 8 percent, and 65 percent of our Inventories, net, were accounted for under the FIFO, average cost, and LIFO methods, respectively. The repositioning actions taken to improve our Performance Chemicals reportable segment has reduced overall LIFO inventory (refer to Note 15 for more detail). During the year ended December 31, 2024, inventory quantities carried on a LIFO basis, primarily in our Performance Chemicals reportable segment domestic inventory, were reduced which led to liquidations of LIFO inventory quantities. These reductions resulted in a pre-tax decrease of $ 6.9 million, recorded in Cost of sales on our consolidated statement of operations. No such reductions occurred during the year ended December 31, 2023. Note 7: Property, Plant, and Equipment, net December 31, In millions 2024 2023 Machinery and equipment $ 1,296.4 $ 1,244.6 Buildings and leasehold improvements 224.3 217.4 Land and land improvements 26.2 26.3 Construction in progress 68.9 92.8 Total cost $ 1,615.8 $ 1,581.1 Less: accumulated depreciation (1) ( 956.9 ) ( 818.9 ) Property, plant, and equipment, net (2) $ 658.9 $ 762.2 _______________ (1) As a result of the Performance Chemicals repositioning, as further described in Note 15, we accelerated the depreciation of certain property, plant, and equipment assets in 2024 and 2023. This resulted in $ 92.6 million and $ 46.3 million of additional expense for the years ended December 31, 2024 and 2023, respectively, which is included in Restructuring and other (income) charges, net within the consolidated statement of operations. 70 Index Ingevity Corporation Notes to the Consolidated Financial Statements December 31, 2024 (2) Includes finance leases related to machinery and equipment of $ 93.7 million and $ 94.2 million, and net carrying value of $ 20.3 million and $ 22.7 million; buildings and leasehold improvements of $ 39.2 million and $ 39.2 million, and net carrying value of $ 29.9 million and $ 32.3 million, respectively. Amortization expense associated with these finance leases is included within depreciation expense. The payments remaining under these finance lease obligations are included within Note 13. Depreciation expense, excluding accelerated depreciation included in Restructuring and other (income) charges, net, was $ 71.6 million, $ 81.5 million, and $ 70.9 million for the years ended December 31, 2024, 2023, and 2022, respectively. Note 8: Goodwill and Other Intangible Assets, net Goodwill Reporting Units In millions Performance Materials Performance Chemicals Advanced Polymer Technologies Total Balance as of December 31, 2022 $ 4.3 $ 514.2 $ — $ 518.5 Segment change reallocation — ( 165.0 ) 165.0 — Foreign currency translation — 0.2 8.8 9.0 Balance as of December 31, 2023 $ 4.3 $ 349.4 $ 173.8 $ 527.5 Goodwill impairment charge — ( 349.1 ) — ( 349.1 ) Foreign currency translation — ( 0.3 ) ( 2.9 ) ( 3.2 ) Balance as of December 31, 2024 Goodwill 4.3 349.1 170.9 524.3 Accumulated impairment losses — ( 349.1 ) — ( 349.1 ) $ 4.3 $ — $ 170.9 $ 175.2 Impairment Assessment(s) and Goodwill Impairment Charge Impairment Assessment Our fiscal year 2024 annual goodwill impairment assessment was performed as of October 1, 2024. We determined that the fair value of our reporting units were in excess of their carrying value and therefore concluded that no goodwill impairment existed. The results of our October 1st annual review 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 12 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. There were no events or circumstances indicating that goodwill might be impaired as of December 31, 2024. 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 crude tall oil (“CTO”) price inflation we were experiencing, and negatively impacting earnings and cash flow 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 assessment, dated October 1, 2023. 71 Index Ingevity Corporation Notes to the Consolidated Financial Statements December 31, 2024 During the second quarter of 2024, our contracted long-term supplier of CTO 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, 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, we 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 represented all of the goodwill within the Performance Chemicals' reportable segment. The charge was is included within Goodwill impairment charge on the consolidated statements of operations for the year ended December 31, 2024. Specific to our long-lived assets, we determined that the undiscounted cash flows were in excess of the carrying values and therefore concluded that no impairment existed. Other Intangible Assets In millions Customer contracts and relationships Brands (1) Developed Technology Total Gross Asset Value December 31, 2022 $ 388.5 $ 89.2 $ 88.5 $ 566.2 Foreign currency translation 8.0 3.4 3.2 14.6 December 31, 2023 396.5 92.6 91.7 580.8 Retirements (2) ( 129.0 ) — ( 1.9 ) ( 130.9 ) Foreign currency translation ( 2.6 ) ( 1.2 ) ( 1.1 ) ( 4.9 ) December 31, 2024 $ 264.9 $ 91.4 $ 88.7 $ 445.0 Accumulated Amortization December 31, 2022 $ ( 113.8 ) $ ( 23.9 ) $ ( 23.7 ) $ ( 161.4 ) Amortization (4) ( 63.5 ) ( 5.7 ) ( 10.1 ) ( 79.3 ) Foreign currency translation ( 2.1 ) ( 0.7 ) ( 1.2 ) ( 4.0 ) December 31, 2023 ( 179.4 ) ( 30.3 ) ( 35.0 ) ( 244.7 ) Amortization (4) ( 38.9 ) ( 5.5 ) ( 9.9 ) ( 54.3 ) Retirements (2) 129.0 — 1.9 130.9 Foreign currency translation 0.9 0.4 0.6 1.9 December 31, 2024 $ ( 88.4 ) $ ( 35.4 ) $ ( 42.4 ) $ ( 166.2 ) Other intangibles, net (3) $ 176.5 $ 56.0 $ 46.3 $ 278.8 _______________ (1) Represents trademarks, trade names, and know-how. (2) As a result of the Performance Chemicals repositioning, as further described in Note 15, we retired certain customer contract and relationships, and developed technology finite-lived intangible assets. (3) The weighted average amortization period remaining for all intangibles is 10.7 years, while the weighted average amortization period remaining for customer contracts and relationships, brands, and developed technology is 11.8 years, 10.4 years, and 7.0 years, respectively. (4) As a result of the Performance Chemicals repositioning, as further described in Note 15, we accelerated the amortization of certain customer contract and relationship finite-lived intangible assets. This resulted in $ 22.1 million and $ 37.4 million of additional expense for the years ended December 31, 2024 and 2023, which is included in Restructuring and other (income) charges, net within the consolidated statements of operations. 72 Index Ingevity Corporation Notes to the Consolidated Financial Statements December 31, 2024 Intangible assets subject to amortization were allocated among our business segments as follows: December 31, In millions 2024 2023 Performance Materials $ 1.2 $ 1.5 Performance Chemicals (1) 102.5 137.5 Advanced Polymer Technologies 175.1 197.1 Other intangibles, net $ 278.8 $ 336.1 _______________ (1) Refer to footnote 4 in the preceding Other Intangible Assets table for more information on the change in amortization in 2024. The amortization expense related to our intangible assets in the table above is shown in the table below. Years Ended December 31, In millions 2024 2023 2022 Selling, general, and administrative expenses $ 32.2 $ 41.9 $ 33.6 Restructuring and other (income) charges, net (1) 22.1 37.4 — Total amortization expense $ 54.3 $ 79.3 $ 33.6 _______________ (1) Amounts recorded to Restructuring and other (income) charges, net are not included within segment depreciation and amortization. Based on the current carrying values of intangible assets, estimated pre-tax amortization expense for the next five years is as follows: 2025 - $ 30.0 million, 2026 - $ 29.3 million, 2027 - $ 29.3 million, 2028 - $ 29.3 million and 2029 - $ 29.3 million. The estimated pre-tax amortization expense may fluctuate due to changes in foreign currency exchange rates. Note 9: Financial Instruments and Risk Management Net Investment Hedges During 2022, we terminated our fixed-to-fixed cross-currency interest rate swaps, accounted for as net investment hedges, and received net proceeds of $ 14.7 million. The proceeds are presented within cash provided by investing activities within the consolidated statement of cash flows. The $ 14.7 million gain is reported as a component of the CTA within AOCI on the consolidated balance sheet. Gains from net investment hedges are reclassified to earnings only when the related CTA are required to be reclassified, usually upon the sale or liquidation of the investment (i.e., the legal entity). The fair value of our net investment hedge was a net asset (liability) of zero at December 31, 2024 and 2023. During the years ended December 31, 2024, 2023, and 2022, we recognized net interest income associated with this financial instrument of zero , zero , and $ 1.1 million, respectively. Cash Flow Hedges Foreign Currency Exchange Risk Management We manufacture and sell our products in several countries throughout the world and thus, we are exposed to changes in foreign currency exchange rates. To manage the volatility relating to these exposures, we net the exposures on a consolidated basis to take advantage of natural offsets. To manage the remaining exposure, from time to time, we utilize forward currency exchange contracts and zero cost collar option contracts to minimize the volatility to earnings and cash flows resulting from the effect of fluctuating foreign currency exchange rates on export sales denominated in foreign currencies (principally the euro). These contracts are generally designated as cash flow hedges. As of December 31, 2024, open foreign currency exchange contracts hedge a portion of forecasted transactions until January 2026. Designated cash flow hedges entered to minimize foreign currency exchange risk of forecasted revenue transactions are recorded to Net sales on the consolidated statement of operations when the forecasted transaction occurs. As of December 31, 2024, there were $ 6.5 million in open foreign currency derivative contracts. The fair value of the designated foreign currency hedge contracts was an asset (liability) of $ 0.1 million and zero as of December 31, 2024 and 2023, respectively. 73 Index Ingevity Corporation Notes to the Consolidated Financial Statements December 31, 2024 Commodity Price Risk Management Certain energy sources used in our manufacturing operations are subject to price volatility caused by weather, supply and demand conditions, economic variables, and other unpredictable factors. This volatility is primarily related to the market pricing of natural gas. To mitigate expected fluctuations in market prices and the volatility to earnings and cash flow resulting from changes to the pricing of natural gas purchases, from time to time, we will enter into swap contracts and zero cost collar option contracts and designate these contracts as cash flow hedges. As of December 31, 2024, we had 1.8 million mmBTUS (millions of British Thermal Units) in open natural gas derivative contracts, designated as cash flow hedges. As of December 31, 2024, open natural gas derivative contracts hedge a portion of forecasted transactions until December 2025. The fair value of the open natural gas derivative contracts was a net asset (liability) of $ 0.3 million and $( 0.9 ) million as of December 31, 2024 and 2023, respectively. Interest Rate Risk Management During the third quarter of 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 outstanding interest rate instruments at December 31, 2024 and 2023 was an asset of $ 0.6 million and zero , respectively. During 2022, we had floating-to-fixed interest rate swaps with a combined notional amount of $ 166.2 million to manage the variability of cash flows in the interest rate payments associated with our existing LIBOR-based interest payments, effectively converting $ 166.2 million of our floating rate debt to a fixed rate. Per the terms of these instruments, we received floating rate interest payments based upon a three-month U.S. dollar LIBOR and in return, were obligated to pay interest at a fixed rate of 3.79 percent until July 2023. Due to the repayment of our term loan (refer to Note 10 for more information), during the second quarter of 2022, we terminated these interest rate swap instruments. Upon termination of the interest rate swap instruments, we reclassified a $ 1.7 million gain from AOCI into Interest income on the consolidated statement of operations. 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 into Net income Years Ended December 31, 2024 2023 2022 2024 2023 2022 Cash flow hedging derivatives Currency exchange contracts $ 0.2 $ ( 0.1 ) $ 0.9 $ 0.1 $ ( 0.7 ) $ 2.0 Net sales Natural gas contracts ( 0.4 ) ( 4.1 ) 4.4 ( 2.5 ) ( 3.2 ) 6.5 Cost of sales Interest rate swap contracts 0.6 — 5.8 — — 1.7 Interest income Total $ 0.4 $ ( 4.2 ) $ 11.1 $ ( 2.4 ) $ ( 3.9 ) $ 10.2 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) Years Ended December 31, 2024 2023 2022 2024 2023 2022 Net investment hedging derivative Currency exchange contracts (1) $ — $ — $ 13.9 $ — $ — $ 1.1 Interest income Total $ — $ — $ 13.9 $ — $ — $ 1.1 _______________ (1) Reclassifications from AOCI to Net Income were zero for all periods presented. Gains and losses would be reclassified from AOCI to Other (income) expense, net. 74 Index Ingevity Corporation Notes to the Consolidated Financial Statements December 31, 2024 Within the next twelve months, we expect to reclassify $ 0.2 million of losses from AOCI to earnings before taxes. Fair-Value Measurements The following information is presented for derivative assets and liabilities that are recorded on the consolidated balance sheets at fair value measured on a recurring basis. There were no transfers of assets and liabilities that were recorded at fair value between Level 1 and Level 2 during the periods reported. There were no non-recurring fair value measurements related to derivative assets and liabilities on our consolidated balance sheetsduring the fiscal years ending December 31, 2024, 2023, or 2022, respectively. December 31, 2024 In millions Level 1 (1) Level 2 (2) Level 3 (3) Total Assets: Natural gas contracts (4) $ — $ 0.4 $ — $ 0.4 Currency exchange contracts (4) — 0.2 — 0.2 Interest rate swap contracts (5) — 0.6 — 0.6 Total assets $ — $ 1.2 $ — $ 1.2 Liabilities: Natural gas contracts (6) $ — $ 0.1 $ — $ 0.1 Currency exchange contracts (6) — 0.1 — 0.1 Total liabilities $ — $ 0.2 $ — $ 0.2 December 31, 2023 In millions Level 1 (1) Level 2 (2) Level 3 (3) Total Assets: Currency exchange contracts (4) $ — $ 0.5 $ — $ 0.5 Total assets $ — $ 0.5 $ — $ 0.5 Liabilities: Natural gas contracts (6) $ — $ 0.9 $ — $ 0.9 Currency exchange contracts (6) — 0.5 — 0.5 Total liabilities $ — $ 1.4 $ — $ 1.4 _______________ (1) Quoted prices in active markets for identical assets. (2) Quoted prices for similar assets and liabilities in active markets. (3) Significant unobservable inputs. (4) Included within "Prepaid and other current assets" on the consolidated balance sheets. (5) Included within "Other assets" on the consolidated balance sheets. (6) Included within "Accrued expenses" on the consolidated balance sheets. 75 Index Ingevity Corporation Notes to the Consolidated Financial Statements December 31, 2024 Note 10: Debt, including Finance Lease Obligations Current and long-term debt including finance lease obligations consisted of the following: December 31, In millions, except percentages 2024 2023 Revolving Credit Facility (1) $ 695.0 $ 738.0 3.88 % Senior Notes due 2028 550.0 550.0 Finance lease obligations (2) 100.0 101.1 Accounts receivable securitization 58.3 81.3 Other notes payable 1.9 2.1 Total debt including finance lease obligations $ 1,405.2 $ 1,472.5 Less: debt issuance costs 4.2 5.3 Total debt including finance lease obligations, net of debt issuance costs $ 1,401.0 $ 1,467.2 Less: debt maturing within one year (3) 61.3 84.4 Long-term debt including finance lease obligations $ 1,339.7 $ 1,382.8 _______________ (1) Letters of credit outstanding under the revolving credit facility were $ 2.6 million and $ 2.5 million and available funds under the facility were $ 302.4 million and $ 259.5 million at December 31, 2024 and 2023, respectively. (2) Refer to Note 13 for more information on finance lease obligations. At December 31, 2024 and 2023, $ 80.0 million of the finance lease obligation upon maturity will be settled utilizing liquid assets that have been placed into a trust established strictly for this purpose. The trust is presented as Restricted investments on the consolidated balance sheets in the amount of $ 81.6 million and $ 79.1 million as of December 31, 2024 and 2023, respectively. (3) Debt maturing within one year is included within "Notes payable and current maturities of long-term debt" on the consolidated balance sheets. Revolving Credit Facility On June 23, 2022, we entered into an Amendment and Restatement Agreement (the “Amendment”) together with the other parties named therein, which amends and restates our existing credit agreement, dated as of March 7, 2016, as amended, supplemented or otherwise modified. Among other things, the Amendment (a) extends the maturity date from October 28, 2025 to June 23, 2027 and increases the aggregate principal amount of revolving commitments thereunder from $ 500 million to $ 1 billion, (b) adds Ingevity UK as a borrower under the revolving credit facility, and (c) modifies certain leverage ratio tests and thresholds. Borrowings under the revolving credit facility bear interest at a rate per annum equal to either (a) the Secured Overnight Financing Rate ("SOFR"), subject to a zero floor, or (b) a base rate, in each case, plus an applicable margin of 1 percent to 1.75 percent for term benchmark loans and 0.00 percent to 0.75 percent for base rate loans. The weighted average interest rate associated with our revolving credit facility, exclusive of any floating-to-fixed interest rate instrument, was 6.69 percent and 6.36 percent for the periods ended December 31, 2024, and 2023, respectively. Fees of zero , zero , and $ 3.0 million were incurred in 2024, 2023, and 2022, respectively, to secure the various amendments associated with our revolving credit facility. These fees have been deferred and will be amortized over the term of the facility. Term Loan Repayment During 2022, we repaid our outstanding term loan in an aggregate principal amount of $ 323.0 million. Upon repayment, we recognized $ 1.3 million in outstanding interest and $ 0.4 million in repayment fees and accelerated the remaining deferred finance fees of $ 0.4 million. The interest, fees, and accelerated deferred finance fees were recorded to Interest expense on the consolidated statements of operations. Legal expenses associated with this repayment have been recorded as incurred. 76 Index Ingevity Corporation Notes to the Consolidated Financial Statements December 31, 2024 Senior Notes Senior Note due 2026 On April 27, 2022, we redeemed the $ 300 million outstanding aggregate principal balance of our 4.50 % Senior Notes due in 2026 prior to maturity. The redemption was primarily funded utilizing the outstanding capacity under our revolving credit facility. At redemption, we recognized a $ 3.4 million redemption premium and accelerated the remaining deferred finance fees of $ 2.7 million. Both the redemption premium and accelerated deferred finance fees were recorded to Interest expense on the consolidated statements of operations. Legal expenses associated with this redemption have been recorded as incurred. Senior Note due 2028 On October 28, 2020, we issued $ 550 million aggregate principal amount of 3.88 % senior unsecured notes due 2028 (the “2028 Notes”). The 2028 Notes were issued pursuant to an indenture dated as of October 28, 2020, by and among Ingevity, the subsidiary guarantors party thereto and U.S. Bank National Association, as trustee. The net proceeds from the sale of the 2028 Notes, after deducting deferred financing fees of $ 8.8 million, were used to repay the existing term loan and the outstanding balances under our revolving credit facility. Interest payments on the 2028 Notes are due semiannually in arrears on November 1st and May 1st of each year, at a rate of 3.88 percent per year. The 2028 Notes mature on November 1, 2028. Accounts Receivable Securitization On October 2, 2023, we entered into a revolving accounts receivable securitization facility (“Facility”). The Facility enables us to borrow, on a revolving basis, up to a maximum of $ 100.0 million based upon eligible trade receivables. The program's effective borrowing cost is based upon an asset-backed commercial paper conduit rate plus a negotiated margin. In addition, a fee is assessed for any undrawn portion of the facility. The Facility required the establishment of a bankruptcy-remote special purpose entity (“SPE”), wholly owned and fully consolidated by Ingevity Corporation. Trade receivables will be sold to this SPE and held as secured collateral for the borrowings under the Facility. Ingevity maintains continuing involvement as it acts as the servicer for the eligible trade receivables and guarantees payment to the bank. Such receivables, recorded on the consolidated balance sheet, totaled $ 58.3 million and $ 81.3 million as of December 31, 2024 and 2023, respectively. The borrowings are presented on the consolidated balance sheets as short-term debt, and cash flows will be presented as financing on our cash flow statement. Fees of $ 0.4 million were incurred in 2023 to secure the Facility. These fees have been deferred and will be amortized over the term of the Facility. The weighted average interest rate associated with our Facility was 5.35 percent and 5.61 percent for the periods ended December 31, 2024 and 2023, respectively. Debt Covenants Our 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 December 31, 2024. The credit agreement governing our revolving credit facility contains customary default provisions, including defaults for non-payment, breach of representations and warranties, insolvency, non-compliance with covenants and cross-defaults to other material indebtedness. The occurrence of an uncured event of default under the credit agreement could result in all loans and other obligations becoming immediately due and payable and our revolving credit facility being terminated. The credit agreement also contains certain customary covenants, including financial covenants. The revolving credit facility financial covenants require Ingevity to maintain on a consolidated basis a maximum total net leverage ratio of 4.0 to 1.0 (which may be increased to 4.5 to 1.0 under certain circumstances) and a minimum interest coverage ratio of 3.0 to 1.0. As calculated per the credit agreement, our net leverage for the four consecutive quarters ended December 31, 2024 was 3.1 and our actual interest coverage for the four consecutive quarters ended December 31, 2024 was 4.7 . We were in compli ance with all covenants at December 31, 2024. 77 Index Ingevity Corporation Notes to the Consolidated Financial Statements December 31, 2024 Note 11: Share-based Compensation Equity Incentive Plan The Ingevity Corporation 2016 Omnibus Incentive Plan, adopted on May 15, 2016, grants certain corporate officers, key employees, and non-employee directors of Ingevity and subsidiaries different forms of benefits, including stock options, Restricted Stock Units ("RSUs"), Director Stock Units ("DSUs"), and Performance-based restricted Stock Units ("PSUs"). The Ingevity Corporation 2016 Omnibus Incentive Plan has a maximum shares reserve of 4,000,000 for the grant of equity awards. As of December 31, 2024, 1,817,417 shares under the Ingevity Corporation 2016 Omnibus Incentive Plan are still available to be granted, assuming that Ingevity performs at the target performance level in each year of the three-year performance period for PSU awards. The Talent and Compensation Committee of Ingevity's Board of Directors ("Compensation Committee") determines the long-term incentive mix, including stock options, RSUs, and PSUs, and may authorize new grants annually. We typically issue new common shares for the vesting of awards under our equity incentive plan. Employee Stock Purchase Plan On December 9, 2016, our Compensation Committee and Board of Directors approved the 2017 Ingevity Corporation Employee Stock Purchase Plan ("ESPP"), which was approved by Ingevity’s stockholders on April 27, 2017. The ESPP allows eligible employee participants to purchase no more than 5,000 shares of our common stock at a discount through payroll deductions up to 15 percent of their compensation deducted during the purchase period. However, no participant shall be permitted to purchase common stock with a value greater than $ 25,000 in any calendar year. The ESPP is a tax-qualified plan under Section 423 of the Internal Revenue Code. The ESPP consists of a one-month enrollment period preceding the three-month purchase period. Employees purchase shares in each purchase period at 85 percent of the market value of our common stock at either the beginning of the offering period or the end of the purchase period, whichever price is lower. On April 27, 2023, the ESPP was amended to add an additional 300,000 shares of Ingevity's common stock, increasing the total amount of shares under the ESPP to 550,000 shares, those additional shares were registered with the SEC on May 4, 2023. The shares are reserved and authorized for issuance to participating U.S. employees, as defined by the ESPP, excluding certain officers of Ingevity. We typically issue treasury shares for issuances under the ESPP. As of December 31, 2024, 319,611 shares under the ESPP are still available for issuance. During fiscal year 2024, there were zero shares issued under the ESPP as all purchases under the ESPP were suspended during the third quarter of 2023. Our share-based compensation and ESPP expense is included in the table below. Years Ended December 31, In millions 2024 2023 2022 Stock option expense $ 0.1 $ 0.6 $ 1.5 ESPP expense — 0.5 0.7 RSU, DSU and PSU expense 11.8 9.5 13.9 Total share-based compensation expense (1) $ 11.9 $ 10.6 $ 16.1 Income tax benefit ( 2.6 ) ( 2.3 ) ( 3.1 ) Total share-based compensation expense, net of tax $ 9.3 $ 8.3 $ 13.0 _______________ (1) Substantially all compensation expense related to share-based awards is recorded as a component of Selling, general and administrative expenses within the consolidated statements of operations. 78 Index Ingevity Corporation Notes to the Consolidated Financial Statements December 31, 2024 Stock Options All stock options vest in accordance with vesting conditions set by the Compensation Committee. The Compensation Committee, with the addition of rTSR to the PSUs, did not grant stock options in 2024 or 2023. Stock options granted to date have vesting periods of one to three years from the date of grant. Incentive and non-qualified options granted under the Plan expire no later than 10 years from the grant date. Expense related to stock options granted is based on the assumptions shown in the table below: Years Ended December 31, Weighted-average assumptions used to calculate expense for stock options 2024 2023 2022 Risk-free interest rate — % — % 1.8 % Average life of options (years) 0.0 0.0 6.0 Volatility — % — % 40.0 % Dividend yield — — — Fair value per stock option $ — $ — $ 28.80 The following table summarizes Ingevity's stock option activity. Number of Options (in thousands) Weighted-average exercise price (per share) Weighted-average remaining contractual term (years) Aggregate intrinsic value (in thousands) Outstanding, December 31, 2023 278 $ 63.86 5.1 $ 863 Granted — Exercised ( 1 ) 37.19 Forfeited ( 20 ) 75.02 Cancelled — Outstanding, December 31, 2024 257 $ 63.12 3.0 $ 510 Exercisable, December 31, 2024 248 $ 62.94 2.8 $ 510 The aggregate intrinsic values in the table above represent the total pre-tax intrinsic value (the difference between Ingevity's closing stock price on the last trading day of the period and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their in-the-money options at each year end. The amount changes based on the fair market value of Ingevity's stock. As of December 31, 2024, there is no remaining unrecognized compensation expense related to stock options. Restricted Stock Units, Deferred Stock Units, and Performance-based Restricted Stock Units All RSUs, DSUs, and PSUs vest in accordance with vesting conditions set by the Compensation Committee. RSUs and DSUs granted to date have vesting periods ranging from less than one year to three years from the date of grant. PSUs granted to date have vesting periods of three years from the date of grant, including grants that have a cumulative three-year performance period, subject to the satisfaction of the applicable performance goals established for the respective grant. We periodically assess the probability of achievement of the performance criteria and adjust the amount of compensation expense accordingly. Beginning in 2023, certain granted PSUs include a rTSR modifier that, when combined with the performance criteria could modify the final PSU payout by +/- 15 to 30 percent depending on the Company's rTSR performance over a three year performance period. The rTSR component of the 2024 PSU awards is a market condition requiring the use of a Monte Carlo simulation on the grant date to estimate the fair value. The assumptions utilized to calculate the fair value of the 2024 PSUs are shown in the table below. Compensation expense is recognized over the vesting period and adjusted for the probability of achievement of the performance criteria. 79 Index Ingevity Corporation Notes to the Consolidated Financial Statements December 31, 2024 Weighted-average assumptions used to calculate expense for PSUs Year Ended December 31, 2024 Risk-free interest rate 4.4 % Average life of options (years) 3.0 Volatility 38.0 % Dividend yield — Fair value per PSU $ 48.37 The following table summarizes Ingevity's RSUs, DSUs, and PSUs activity. RSUs and DSUs PSUs Number of Units (in thousands) (1) Weighted average grant date fair value (per share) Number of Units (in thousands) (1) Weighted average grant date fair value (per share) Nonvested, December 31, 2023 350 $ 72.06 263 $ 72.02 Granted 179 42.48 127 45.22 Vested ( 145 ) 74.55 ( 35 ) 69.65 Forfeited ( 76 ) 60.38 ( 142 ) 58.58 Nonvested, December 31, 2024 (2) 308 $ 56.52 213 $ 65.44 _______________ (1) The number granted represents the number of shares issuable upon vesting of RSUs and DSUs. For PSUs, the number granted represents the number of shares issuable upon vesting, assuming that Ingevity performs at the target performance level in each year of the three-year performance period. (2) Excludes 19,068 non-employee director shares that were vested but unissued at December 31, 2024. As of December 31, 2024, $ 11.6 million of unrecognized share-based compensation expense related to RSUs, DSUs and PSUs is expected to be recognized over a weighted-average period of 1 year. 80 Index Ingevity Corporation Notes to the Consolidated Financial Statements December 31, 2024 Note 12: Equity Accumulated other comprehensive income (loss) Summarized below is the roll forward of AOCI, net of tax. Years Ended December 31, In millions 2024 2023 2022 Foreign currency translation Beginning balance $ ( 25.6 ) $ ( 45.8 ) $ 18.4 Net gains (losses) on foreign currency translation ( 18.6 ) 20.2 ( 74.9 ) Reclassification of foreign currency translation losses ( 0.2 ) — — Gains (losses) on net investment hedges — — 13.9 Less: tax provision (benefit) — — 3.2 Net gains (losses) on net investment hedges — — 10.7 Other comprehensive income (loss), net of tax ( 18.8 ) 20.2 ( 64.2 ) Ending balance $ ( 44.4 ) $ ( 25.6 ) $ ( 45.8 ) Derivative instruments Beginning balance $ ( 1.6 ) $ ( 1.4 ) $ ( 2.1 ) Gains (losses) on derivative instruments 0.4 ( 4.2 ) 11.1 Less: tax provision (benefit) 0.1 ( 1.0 ) 2.6 Net gains (losses) on derivative instruments 0.3 ( 3.2 ) 8.5 (Gains) losses reclassified to net income 2.4 3.9 ( 10.2 ) Less: tax (provision) benefit 0.6 0.9 ( 2.4 ) Net (gains) losses reclassified to net income 1.8 3.0 ( 7.8 ) Other comprehensive income (loss), net of tax 2.1 ( 0.2 ) 0.7 Ending balance $ 0.5 $ ( 1.6 ) $ ( 1.4 ) Pension and other postretirement benefits Beginning balance $ 0.5 $ 0.4 $ ( 3.2 ) Unrealized actuarial gains (losses) and prior service (costs) credits 2.3 0.1 4.4 Less: tax provision (benefit) 0.5 — 1.0 Net actuarial gains (losses) and prior service (costs) credits 1.8 0.1 3.4 Amortization of actuarial and other (gains) losses, prior service cost (credits), and settlement and curtailment (income) charge reclassified to net income 0.3 0.1 0.3 Less: tax (provision) benefit 0.1 0.1 0.1 Net actuarial and other (gains) losses, amortization of prior service cost (credits), and settlement and curtailment (income) charge reclassified to net income 0.2 — 0.2 Other comprehensive income (loss), net of tax 2.0 0.1 3.6 Ending balance $ 2.5 $ 0.5 $ 0.4 Total AOCI ending balance at December 31 $ ( 41.4 ) $ ( 26.7 ) $ ( 46.8 ) 81 Index Ingevity Corporation Notes to the Consolidated Financial Statements December 31, 2024 Reclassifications of accumulated other comprehensive income (loss) The table below provides details about the reclassifications from AOCI and the affected line items on the consolidated statement of operations for each of the periods presented. Years Ended December 31, In millions 2024 2023 2022 Foreign currency Foreign currency translation adjustment (1) $ 0.2 $ — $ — Total before tax 0.2 — — (Provision) benefit for income taxes — — — Amount included within net income (loss) $ 0.2 $ — $ — Derivative Instruments Currency exchange contracts (2) $ 0.1 $ ( 0.7 ) $ 2.0 Natural gas contracts (3) ( 2.5 ) ( 3.2 ) 6.5 Interest rate swaps (5) — — 1.7 Total before tax ( 2.4 ) ( 3.9 ) 10.2 (Provision) benefit for income taxes 0.6 0.9 ( 2.4 ) Amount included within net income (loss) $ ( 1.8 ) $ ( 3.0 ) $ 7.8 Pension and other postretirement benefits Amortization of prior service credit (costs) (3) $ ( 0.1 ) $ ( 0.1 ) $ ( 0.1 ) Amortization of unrecognized net actuarial and other gains (losses) (4) — — — Recognized gain (loss) due to curtailment and settlement (3) ( 0.2 ) — ( 0.2 ) Total before tax ( 0.3 ) ( 0.1 ) ( 0.3 ) (Provision) benefit for income taxes 0.1 0.1 0.1 Amount included within net income (loss) $ ( 0.2 ) $ — $ ( 0.2 ) _______________ (1) Included within "Restructuring and other (income) charges, net" on the consolidated statements of operations. (2) Included within "Net sales" on the consolidated statements of operations. (3) Included within "Cost of sales" on the consolidated statements of operations. (4) Included within "Other (income) expense, net" on the consolidated statements of operations. (5) Included within "Interest income" on the consolidated statements of operations. Share Repurchases On July 25, 2022, our Board of Directors authorized the repurchase of up to $ 500.0 million of our common stock (the "2022 Authorization"), and rescinded the prior outstanding repurchase authorization with respect to the shares that remained unused under the prior authorization. Shares under the 2022 Authorization may be purchased through open market or privately negotiated transactions at the discretion of management based on its evaluation of market prevailing conditions and other factors, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. During the year ended December 31, 2024, we repurchased zero common stock. At December 31, 2024, $ 353.4 million remained unused under our Board-authorized repurchase program. During the years ended December 31, 2023 and 2022, we repurchased $ 92.1 million (inclusive of $ 0.8 million in excise tax) and $ 145.2 million in common stock, representing 1,269,373 and 2,112,463 shares of our common stock at a weighted average cost per share of $ 71.93 and $ 68.73 , respectively. 82 Index Ingevity Corporation Notes to the Consolidated Financial Statements December 31, 2024 Note 13: Leases We have both operating and finance leases, with the majority being operating lease agreements related to rail cars, tanks, equipment, and real estate. Supplemental consolidated balance sheet information related to our leases is as follows: December 31, In millions Financial Statement Caption 2024 2023 Assets Operating lease assets, net (1) Operating lease assets, net $ 50.4 $ 67.1 Finance lease assets, net (2) Property, plant, and equipment, net 50.2 55.0 Finance lease assets, net (2) Other assets, net — 0.1 Total lease assets $ 100.6 $ 122.2 Liabilities Current Operating lease liabilities (3) Current operating lease liabilities $ 16.9 $ 18.7 Finance lease liabilities Notes payable and current maturities of long-term debt 1.1 1.1 Noncurrent Operating lease liabilities Noncurrent operating lease liabilities 36.8 48.6 Finance lease liabilities Long-term debt including finance lease obligations 98.9 100.0 Total lease liabilities $ 153.7 $ 168.4 _______________ (1) Operating lease assets, net are recorded net of accumulated amortization of $ 49.9 million and $ 40.7 million as of December 31, 2024, and 2023, respectively. (2) Finance lease assets, net are recorded net of accumulated amortization in Property, plant, and equipment, net and Other assets, net of $ 81.4 million and $ 1.4 million, as of December 31, 2024, and $ 78.4 million and $ 1.5 million, as of December 31, 2023. (3) Operating lease liabilities include $ 0.2 million and $ 0.5 million of accrued interest, as of December 31, 2024 and 2023, respectively. Finance Leases Our finance lease obligations of $ 100.0 million and $ 101.1 million at December 31, 2024 and 2023, respectively, primarily consist of two leases. The first obligation of $ 80.0 million, at December 31, 2024, is owed to the city of Wickliffe, Kentucky, associated with Performance Materials' Wickliffe, Kentucky, manufacturing plant, which is due at maturity in 2027. This obligation will be settled upon maturity utilizing liquid assets that have been placed into a trust established strictly for this purpose. The trust is presented as Restricted investment on the consolidated balance sheet in the amount of $ 81.6 million as of December 31, 2024, see Note 5 for more information. The remaining obligation of $ 20.0 million, at December 31, 2024, is primarily owed to the lessor of our corporate headquarters in North Charleston, South Carolina. The lease commenced in July 2020, with a term of 15 years, and is structured as a traditional rental with payments due on a monthly basis. We also have a finance lease obligation due in 2031 for certain assets located at our Performance Materials' Waynesboro, Georgia, manufacturing plant. The lease is with the Development Authority of Burke County (“Authority”). The Authority established the sale-leaseback of these assets by issuing an industrial development revenue bond. The bond was purchased by Ingevity and the obligations under the finance lease remain with Ingevity. Accordingly, we offset the finance lease obligation and bond on our consolidated balance sheets. 83 Index Ingevity Corporation Notes to the Consolidated Financial Statements December 31, 2024 Components of lease cost are as follows: Years Ended December 31, In millions Financial Statement Caption 2024 2023 2022 Operating lease cost (1) Cost of sales $ 20.3 $ 21.0 $ 19.9 Selling, general, and administrative expenses 1.3 1.2 1.4 Finance lease cost Amortization of leased assets Cost of sales $ 3.2 $ 3.2 $ 3.0 Selling, general, and administrative expenses 1.6 1.6 1.6 Interest on lease liabilities Interest expense, net 7.3 7.3 7.5 Net lease cost (2) $ 33.7 $ 34.3 $ 33.4 _______________ (1) Includes short-term leases and variable lease costs, which are immaterial. (2) Only on the rare occasion do we sublease our leased assets; as a result, this amount excludes sublease income which is immaterial. Maturity of Lease Liabilities December 31, 2024 In millions Operating leases Finance leases Total 2025 $ 19.9 $ 8.3 $ 28.2 2026 15.2 8.4 23.6 2027 11.6 85.4 97.0 2028 6.7 2.4 9.1 2029 4.0 2.4 6.4 2030 and thereafter 3.5 15.2 18.7 Total lease payments $ 60.9 $ 122.1 $ 183.0 Less: Interest 7.2 22.1 29.3 Present value of lease liabilities (1) $ 53.7 $ 100.0 $ 153.7 _______________ (1) As of December 31, 2024, we have zero operating lease commitments that have not yet commenced related to manufacturing and office equipment leases. Lease Term and Discount Rate December 31, In millions, except percentages and years 2024 2023 Weighted-average remaining lease term (years) Operating leases 4.0 4.5 Finance leases 10.9 11.9 Weighted-average discount rate Operating leases 5.95 % 5.66 % Finance leases 5.44 % 7.21 % 84 Index Ingevity Corporation Notes to the Consolidated Financial Statements December 31, 2024 Other Information Years Ended December 31, In millions 2024 2023 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 21.7 $ 22.5 $ 18.8 Operating cash flows from finance leases 7.3 7.3 7.5 Financing cash flows from finance leases 1.0 0.7 0.9 Note 14: Retirement Plans Defined Contribution Plans Eligible employees may participate in our retirement savings plan ("Plan"), a qualified salary-reduction plan under Section 401(k) of the U.S. Internal Revenue Code by contributing a portion of their compensation. For non-union eligible employees participating in the Plan, Ingevity makes matching contributions up to six percent of the employee deferral. In addition to the matching contributions, Ingevity also makes a non-elective contribution of three percent of eligible compensation per payroll for non-union employees. For eligible union employees participating in the Plan, Ingevity makes matching contributions up to 100 percent of the first three percent of the employee deferrals and 50 percent on the next two percent of deferrals. Employee contributions, as well as Ingevity’s match contributions, are made to funds designated by the participant, none of which are based on Ingevity’s common stock. Charges associated with employer contributions to the Plan were $ 9.6 million, $ 11.4 million, and $ 11.2 million for the years ended December 31, 2024, 2023, and 2022, respectively. Defined Benefit Pension and Postretirement Plans Ingevity has both established qualified and non-qualified benefit plans to provide pension and post-retirement benefits to certain employees and retirees. Our retirement obligations consist of accrued defined benefit obligations earned by Ingevity domestic hourly union employees; accrued obligations from a frozen non-qualified defined benefit pension plan for certain salaried and former salaried employees of Ingevity; and other post-retirement medical and life insurance benefits. We are required to recognize on our consolidated balance sheets the overfunded and underfunded status of our defined benefit postretirement plans. The overfunded and underfunded status is defined as the difference between the fair value of plan assets and the projected benefit obligation. We are also required to recognize, as a component of other comprehensive income, the actuarial gains and losses and the prior service costs and credits that arise during the period. 85 Index Ingevity Corporation Notes to the Consolidated Financial Statements December 31, 2024 The following tables summarize the weighted average assumptions used and components of our defined benefit postretirement plans at December 31, 2024 and 2023. Pensions Other Benefits December 31, In millions, except percentages 2024 2023 2024 2023 Following are the weighted average assumptions used to determine the benefit obligations at December 31: Discount rate - qualified benefit plans 5.50 % 4.80 % — % — % Discount rate - non-qualified benefit plans 5.45 % 4.80 % 5.35 % 4.70 % Rate of compensation increase N/A N/A N/A N/A Change in projected benefit obligation Projected benefit obligation at January 1 $ 35.5 $ 32.8 $ 0.7 $ 0.7 Service cost 1.2 1.1 — — Interest cost 1.7 1.6 — — Actuarial loss (gain) ( 3.4 ) 1.0 — 0.1 Plan amendments — 0.3 — — Benefit payments ( 1.5 ) ( 1.3 ) — ( 0.1 ) Projected benefit obligation at December 31 (1) 33.5 35.5 0.7 0.7 Change in plan assets Fair value of plan asset at January 1 26.6 23.1 — — Actual return on plan assets 0.6 2.6 — — Company contributions 0.3 2.2 — — Benefit payments ( 1.5 ) ( 1.3 ) — — Fair value of plan assets at December 31 26.0 26.6 — — Funded Status Net Funded Status of the Plan (Liability) $ ( 7.5 ) $ ( 8.9 ) $ ( 0.7 ) $ ( 0.7 ) Pensions Other Benefits December 31, In millions 2024 2023 2024 2023 Amount recognized on the consolidated balance sheets: Pension and other postretirement benefit asset (2) $ — $ — $ — $ — Pension and other postretirement benefit (liability) (2) ( 7.5 ) ( 8.9 ) ( 0.7 ) ( 0.7 ) Total Net Funded Status of the Plan (Liability) $ ( 7.5 ) $ ( 8.9 ) $ ( 0.7 ) $ ( 0.7 ) _______________ (1) The accumulated benefit obligation for all years presented equals the projected benefit obligation for each plan, respectively. (2) Asset balance is included within "Other assets" and liability balances are included within "Other liabilities" on the consolidated balance sheets. 86 Index Ingevity Corporation Notes to the Consolidated Financial Statements December 31, 2024 Amounts Recognized in Other Comprehensive Income (Loss) Changes in plan assets and benefit obligations recognized in other comprehensive income (loss) are as follows: Pensions Other Benefits Total Years Ended December 31, In millions 2024 2023 2022 2024 2023 2022 2024 2023 2022 Current year net actuarial loss (gain) $ ( 2.3 ) $ ( 0.4 ) $ ( 4.7 ) $ — $ — $ ( 0.1 ) $ ( 2.3 ) $ ( 0.4 ) $ ( 4.8 ) Current year prior service cost (credit) — 0.3 0.5 — — ( 0.1 ) — 0.3 0.4 Amortization of net actuarial (loss) gain and prior service (cost) credit ( 0.1 ) ( 0.1 ) ( 0.1 ) — — — ( 0.1 ) ( 0.1 ) ( 0.1 ) Settlement and curtailment (charges) income, net ( 0.2 ) — ( 0.2 ) — — — ( 0.2 ) — ( 0.2 ) Total recognized in other comprehensive (income) loss, before taxes ( 2.6 ) ( 0.2 ) ( 4.5 ) — — ( 0.2 ) ( 2.6 ) ( 0.2 ) ( 4.7 ) Total recognized in other comprehensive (income) loss, after taxes $ ( 2.0 ) $ ( 0.1 ) $ ( 3.4 ) $ — $ — $ ( 0.2 ) $ ( 2.0 ) $ ( 0.1 ) $ ( 3.6 ) Amounts Recognized in Accumulated Other Comprehensive Income (Loss) The amounts in accumulated other comprehensive income (loss) that have not yet been recognized as components of net periodic benefit cost are as follows: Pensions Other Benefits Total December 31, In millions 2024 2023 2024 2023 2024 2023 Net actuarial (gain) loss $ ( 4.2 ) $ ( 2.0 ) $ — $ — $ ( 4.2 ) $ ( 2.0 ) Prior service cost (credit) 1.0 1.4 ( 0.1 ) ( 0.1 ) 0.9 1.3 Accumulated other comprehensive (income) loss, before taxes ( 3.2 ) ( 0.6 ) ( 0.1 ) ( 0.1 ) ( 3.3 ) ( 0.7 ) Accumulated other comprehensive (income) loss, after taxes $ ( 2.4 ) $ ( 0.4 ) $ ( 0.1 ) $ ( 0.1 ) $ ( 2.5 ) $ ( 0.5 ) 87 Index Ingevity Corporation Notes to the Consolidated Financial Statements December 31, 2024 Net Annual Benefit Costs Assumptions The following table summarizes the weighted-average assumptions used for the components of net annual benefit cost: Pensions Other Benefits Years Ended December 31, In millions, except percentages 2024 2023 2022 2024 2023 2022 Discount rate - qualified benefit plans (1) 4.80 % 5.00 % 2.75 % — % — % — % Discount rate - non-qualified benefit plans (1) 4.80 % 5.00 % 2.65 % 4.70 % 4.90 % 2.60 % Expected return on plan assets 6.50 % 5.50 % 5.50 % N/A N/A N/A Components of net annual benefit cost: Service cost (2) $ 1.2 $ 1.1 $ 1.5 $ — $ — $ — Interest cost (3) 1.7 1.6 1.2 — — — Expected return on plan assets (3) ( 1.7 ) ( 1.3 ) ( 1.7 ) — — — Amortization of prior service cost (2) 0.2 0.2 0.2 — — — Amortization of net actuarial and other (gain) loss (3) ( 0.1 ) — — — — — Recognized (gain) loss due to curtailments (2)(4) 0.2 — 0.2 — — — Net annual benefit cost $ 1.5 $ 1.6 $ 1.4 $ — $ — $ — _______________ (1) The discount rate used to calculate pension and other post-retirement obligations was based on a review of available yields on high-quality corporate bonds. In selecting a discount rate, we placed particular emphasis on a discount rate yield-curve provided by our third-party actuary, which takes into consideration the projected cash flows that represent the expected timing and amount of our plans' benefit payments. (2) Amounts are recorded to "Cost of sales" on our consolidated statements of operations consistent with the employee compensation costs that participate in the plan. (3) Amounts are recorded to "Other (income) expense, net" on our consolidated statements of operations. (4) Our pension and postretirement settlement and curtailment (income) charges are related to the acceleration of prior service costs as a result of a reduction in the number of participants within the Union Hourly defined benefit pension plan during 2024 and 2022. Contributions We made zero and $ 2.0 million voluntary cash contributions to our domestic hourly union defined benefit pension plan during the years ended December 31, 2024 and 2023, respectively. There were no voluntary cash contributions to our domestic hourly union defined benefit pension plan in the year ended December 31, 2022. The minimum required contribution to our domestic hourly union defined benefit plan for fiscal year 2025 is $ 1.4 million. Fair Value Hierarchy Following is a description of the valuation methodologies used for the investment measure at fair value. See Note 5 for the definition of fair value and the descriptions of Level 1, 2, and 3 in the fair value hierarchy. • Cash and short-term funds — Cash and quoted short-term instruments are valued at the closing price or the amount held on deposit by the custodian bank. • Mutual Funds — Mutual funds are valued at the closing price reported on the major market on which the individual securities are traded. Substantially all mutual funds are classified within Level 1 of the valuation hierarchy. • Pooled Funds — These investment vehicles are valued using the Net Asset Value (NAV) provided by the fund administrator. The NAV is based on the value of the underlying assets owned by the fund, minus its liabilities, and then divided by the number of shares outstanding. • Other — Other assets are represented by investments in a series limited partnership. These assets are not actively traded and are classified as Level 2. 88 Index Ingevity Corporation Notes to the Consolidated Financial Statements December 31, 2024 The following table presents our fair value hierarchy for our major categories of pension plan assets by asset class. In millions December 31, 2024 Level 1 Level 2 Level 3 Investments Measured at Net Asset Value Cash and short-term investments $ 0.1 $ 0.1 $ — $ — $ — Mutual funds 0.8 0.8 — — — Pooled funds 23.1 — — — 23.1 Other 2.0 — 2.0 — — Total assets $ 26.0 $ 0.9 $ 2.0 $ — $ 23.1 In millions December 31, 2023 Level 1 Level 2 Level 3 Investments Measured at Net Asset Value Cash and short-term investments $ 0.2 $ 0.2 $ — $ — $ — Mutual funds 7.9 7.9 — — — Pooled funds 16.6 — — — 16.6 Other 1.9 — 1.9 — — Total assets $ 26.6 $ 8.1 $ 1.9 $ — $ 16.6 Estimated Future Benefit Payments The following table reflects the estimated future benefit payments for our pension and other postretirement benefit plans. These estimates take into consideration expected future service, as appropriate. In millions Pensions Other Benefits 2025 $ 1.3 $ 0.1 2026 1.4 0.1 2027 1.6 0.1 2028 1.8 0.1 2029 1.9 0.1 2030-2034 11.6 0.3 Sensitivity Analysis A one-half percent increase in the assumed discount rate would have decreased our qualified pension benefit obligations by $ 1.9 million at December 31, 2024 and decreased our qualified pension benefit costs by $ 0.1 million for 2024. A one-half percent decrease in the assumed discount rate would have increased our qualified pension obligations by $ 2.1 million at December 31, 2024 and increased our qualified pension benefit cost by $ 0.1 million for 2024. A one-half percent increase in the assumed expected long-term rate of return on plan assets would have decreased our qualified pension costs by $ 0.1 million for 2024. A one-half percent decrease in the assumed expected long-term rate of return on plan assets would have increased our qualified pension costs by $ 0.1 million for 2024. 89 Index Ingevity Corporation Notes to the Consolidated Financial Statements December 31, 2024 Note 15: Restructuring and Other (Income) Charges, net Detail on the restructuring charges and other (income) charges, net is provided below. Years Ended December 31, In millions 2024 2023 2022 Restructuring charges $ 175.0 $ 125.6 $ — Other (income) charges, net 11.2 44.6 13.8 Total Restructuring and other (income) charges, net $ 186.2 $ 170.2 $ 13.8 Restructuring Charges In millions Severance and other employee-related costs Other charges (income) (1) Asset disposal charges (2) Total Performance Chemicals' repositioning $ 9.8 $ 39.7 $ 123.2 $ 172.7 Other (3) 0.3 0.4 1.6 2.3 Year ended December 31, 2024 $ 10.1 $ 40.1 $ 124.8 $ 175.0 Performance Chemicals' repositioning 8.6 1.5 103.0 113.1 Other (3) 9.8 0.1 2.6 12.5 Year ended December 31, 2023 $ 18.4 $ 1.6 $ 105.6 $ 125.6 Other — — — — Year ended December 31, 2022 $ — $ — $ — $ — _______________ (1) Primarily represents costs associated with contract terminations, plant and equipment decommissioning charges and other miscellaneous exit costs. (2) Primarily represents property, plant, and equipment and finite-lived intangible asset write-downs, accelerated depreciation and amortization, and impairment charges on certain assets, which were or are to be disposed of or abandoned. Also included, to the extent incurred, the acceleration effect of re-estimating settlement dates and revised cost estimates associated with asset retirement obligations related to asset disposal charges that are included within restructuring charges. (3) During 2023, we incurred severance and asset charges associated with targeted workforce reduction initiatives. During 2024, we took further steps to streamline our Performance Chemicals cost structure and improve the profitability of the segment, resulting in additional restructuring charges of $ 2.3 million, including $ 1.6 million in asset disposal charges, $ 0.2 million in foreign currency translation adjustments, and $ 0.2 million in other charges. 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 increased our focus on growing our most profitable Performance Chemicals product lines, such as road technologies, and diversifying our raw material stream to non-CTO based fatty acids. The repositioning 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's historical annualized net sales. The repositioning included the permanent closure of our Performance Chemicals CTO refinery and our manufacturing plant located in DeRidder, Louisiana (the “DeRidder Plant”), including the polyol production assets associated with the APT reportable segment. 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. 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. 90 Index Ingevity Corporation Notes to the Consolidated Financial Statements December 31, 2024 The actions referenced above, when combined with other targeted workforce reduction initiatives, during 2024 and 2023 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. Expected Charges We expect to incur total charges of approximately $ 350.0 million, excluding CTO resale activity as described below, associated with the Performance Chemicals repositioning, consisting of approximately $ 250.0 million in asset-related charges, approximately $ 25.0 million in severance and other employee-related costs, and approximately $ 75.0 million in other restructuring costs including decommissioning, dismantling and removal charges, and contract termination costs. We expect approximately $ 250.0 million of the total charges to be non-cash and $ 100.0 million to be settled in cash. Through December 31, 2024, we have incurred $ 311.8 million associated with these actions, including $ 244.8 million of non-cash asset-related charges, excluding $ 7.4 million related to an asset retirement obligation ("ARO"), and $ 67.0 million of charges to be settled in cash, which includes the aforementioned ARO. As of December 31, 2024, $ 54.5 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 $ 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, in the years ended December 31, 2024 and 2023, we recorded $ 6.3 million and $ 19.7 million, respectively, of non-cash, lower of cost or market, inventory charges to adjust the carrying value of the impacted inventory to what we will realize upon disposal, less disposal costs. These inventory charges are recorded to Cost of sales on the consolidated statement of operations. Since these inventory charges 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 such impact from the financial results of our Performance Chemicals reportable segment. Refer to Note 19 for more information. 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 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. During the years ended December 31, 2024 and 2023, we incurred $ 52.7 million and $ 22.0 million of CTO resale losses, which are recorded as Other (income) expense, net on the consolidated statements of operations. Refer to Note 2, under the section: Non-operating income and expense , for more information. On July 1, 2024, we terminated the CTO supply contract that resulted in these excess CTO volumes. As consideration for the early termination of the CTO supply contract, we made cash payments totaling $ 100.0 million during 2024. The charge was recorded within Other (income) expense, net on the consolidated statements of operations for the year ended December 31, 2024. As a result of the termination, the purchases under the CTO supply contract ended effective June 30, 2024. The CTO resale activity described above ended in 2024 and no excess CTO volumes were on hand at December 31, 2024. The charges we currently expect to incur in connection with these actions are subject to a number of assumptions and risks, and actual results may differ materially. We may also incur other material charges not currently contemplated due to events that may occur as a result of, or in connection with, these actions. Other (income) charges, net Alternative feedstock transition In April 2023, we implemented the feedstock transition of our Crossett, Arkansas manufacturing plant (“Crossett”). This transition converted Crossett from a CTO-based feedstock production facility to produce fatty acids from alternative plant-based feedstocks. During the years ended December 31, 2024 and 2023, we incurred zero and $ 22.1 million in costs, including zero and $ 8.8 million in asset disposal costs, respectively. 91 Index Ingevity Corporation Notes to the Consolidated Financial Statements December 31, 2024 North Charleston plant transition Our North Charleston, South Carolina Performance Chemicals manufacturing plant has historically been co-located with a Smurfit WestRock Company (“WestRock”) paper mill. In May 2023, WestRock announced that it would permanently cease operating its North Charleston paper mill by August 31, 2023 and notified us that it was terminating the shared services in accordance with our operating agreement. WestRock ceased production at their North Charleston paper mill in June 2023. During 2023, we executed a transition plan to separate certain critical operating services WestRock had historically provided to us such as steam, water and wastewater treatment. During the years ended December 31, 2024 and 2023, we incurred charges of $ 11.2 million and $ 14.8 million, including $ 4.8 million and $ 4.3 million in asset disposal costs, respectively. Business transformation costs Our enterprise resource planning tool implementation and associated business transformation initiative concluded in the fourth quarter of 2023. Costs incurred, during the years ended December 31, 2024, 2023, and 2022, of zero , $ 7.7 million, and $ 13.8 million, respectively, represent costs directly associated with the business transformation initiative that, in accordance with GAAP, could not be capitalized. Restructuring and Other (Income) Charges, net Reserves The following table shows a roll forward of restructuring reserves that will result in cash spending, the majority of which relate to the Performance Chemicals' repositioning. Balance at Change in Cash Balance at In millions 12/31/2023 (1) Reserve (2) Payments Other (3) 12/31/2024 (1) Severance and other employee-related costs $ 7.3 10.1 ( 13.0 ) ( 0.2 ) $ 4.2 Other charges (income) 0.9 40.1 ( 39.9 ) ( 0.2 ) 0.9 Restructuring 8.2 50.2 ( 52.9 ) ( 0.4 ) 5.1 Other (income) charges, net — 6.4 ( 6.4 ) — — Restructuring and Other (income) charges, net reserves $ 8.2 56.6 ( 59.3 ) ( 0.4 ) $ 5.1 Balance at Change in Cash Balance at In millions 12/31/2022 (1) Reserve (2) Payments Other (3) 12/31/2023 (1) Severance and other employee-related costs $ — 8.6 ( 1.5 ) 0.2 $ 7.3 Other charges (income) 0.5 11.4 ( 11.0 ) — 0.9 Restructuring 0.5 20.0 ( 12.5 ) 0.2 8.2 Other (income) charges, net — 31.5 ( 31.5 ) — — Restructuring and Other (income) charges, net reserves $ 0.5 51.5 ( 44.0 ) 0.2 $ 8.2 _______________ (1) Included in "Accrued expenses" on the consolidated balance sheets. (2) Includes severance and other employee-related costs, exited leases, CTO supply contract terminations and other miscellaneous exit costs. Any asset write-downs including accelerated depreciation and impairment charges are not included in the above table. (3) Primarily foreign currency translation adjustments. 92 Index Ingevity Corporation Notes to the Consolidated Financial Statements December 31, 2024 Note 16: Acquisitions Ozark Materials On October 3, 2022, pursuant to that certain Equity Purchase Agreement (the “Purchase Agreement”), by and among Ingevity, Ozark Materials, LLC (“OM”), Ozark Logistics, LLC (“OL” and, together with OM, “Ozark Materials”) and Ozark Holdings, Inc. (“Seller”), we completed the acquisition of all of the issued and outstanding limited liability company membership interests of Ozark Materials for an aggregate purchase price of $ 344.5 million (the "Acquisition"). The purchase price allocation was finalized in the third quarter of 2023, with no material adjustments recorded. The Acquisition has been integrated into our Performance Chemicals reportable segment and is included within our road technologies product line. 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 Consolidated Financial Statements for all periods presented; therefore, proforma results of operations have not been presented. Acquisition and other-related (income) costs Costs incurred to complete and integrate acquisitions and other strategic investments are expensed as incurred on our consolidated statement of operations. The following table summarizes the costs incurred associated with these combined activities. Years Ended December 31, In millions 2024 2023 2022 Legal and professional service fees $ 0.3 $ 3.6 $ 5.0 Acquisition-related costs 0.3 3.6 5.0 Inventory fair value step-up amortization (1) — 0.9 0.9 Acquisition and other-related (income) costs, net $ 0.3 $ 4.5 $ 5.9 _______________ (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 during each of the years ended December 31, 2023 and 2022, respectively. The expense is included within "Cost of sales" on the consolidated statement of operations. Inventories are accounted for on a FIFO basis of accounting. 93 Index Ingevity Corporation Notes to the Consolidated Financial Statements December 31, 2024 Note 17: Income Taxes Domestic and foreign components of Income (loss) before income taxes are shown below: Years Ended December 31, In millions 2024 2023 2022 Domestic $ ( 473.6 ) $ ( 55.4 ) $ 200.0 Foreign ( 62.0 ) 45.3 69.6 Income (loss) before income taxes $ ( 535.6 ) $ ( 10.1 ) $ 269.6 The provision (benefit) for income taxes consisted of: Years Ended December 31, In millions 2024 2023 2022 Current Federal $ 0.9 $ 25.8 $ 41.7 State and local 0.9 2.9 6.3 Foreign 14.3 11.3 15.0 Total current $ 16.1 $ 40.0 $ 63.0 Deferred Federal $ ( 101.0 ) $ ( 39.7 ) $ ( 4.6 ) State and local ( 16.8 ) ( 4.6 ) ( 1.7 ) Foreign ( 3.6 ) ( 0.4 ) 1.3 Total deferred $ ( 121.4 ) $ ( 44.7 ) $ ( 5.0 ) Provision (benefit) for income taxes $ ( 105.3 ) $ ( 4.7 ) $ 58.0 We recorded $ 1.3 million, zero , and $ 4.5 million of deferred tax provision (benefit) expense within components of other comprehensive income during the years ended December 31, 2024, 2023, and 2022, respectively. 94 Index Ingevity Corporation Notes to the Consolidated Financial Statements December 31, 2024 The following table summarizes the major differences between taxes computed at the U.S. federal statutory rate and the actual income tax provision attributable to operations: Years Ended December 31, In millions, except percentage data 2024 2023 2022 Federal statutory tax rate $ ( 112.5 ) $ ( 2.1 ) $ 56.6 State and local income taxes, net of federal benefit ( 10.3 ) ( 1.0 ) 5.6 Foreign income tax rate differential ( 2.4 ) 1.7 2.2 Changes in valuation allowance 1.4 1.3 0.1 Foreign derived intangible income ( 1.4 ) ( 2.4 ) ( 5.9 ) Officers compensation 0.4 0.9 0.6 Goodwill impairment 26.8 — — Excess share-based compensation 1.0 ( 1.1 ) ( 0.1 ) Federal and state tax credits ( 11.3 ) ( 4.2 ) ( 4.8 ) Legislative tax rate change ( 0.1 ) 0.5 0.8 Sustainably sourced feedstock benefit ( 0.8 ) ( 0.7 ) ( 1.3 ) Uncertain tax positions 1.0 0.5 0.5 Tax on Dividends, Deemed Dividends, and GILTI (1) 1.3 0.5 2.6 Other 1.6 1.4 1.1 Provision (benefit) for income taxes $ ( 105.3 ) $ ( 4.7 ) $ 58.0 Effective tax rate 19.7 % 46.5 % 21.5 % _______________ (1) GILTI is defined as Global Intangible Low Tax Income The decrease in our effective tax rate from 2023 to 2024 was mainly driven by the mix of earnings, with extensive U.S. losses, primarily due to the Performance Chemicals goodwill impairment (see Note 8) and restructuring activities (see Note 15), driving an overall global loss and tax benefit for the year. Approximately 31 % of the goodwill impaired had an impact to the tax rate, offsetting the overall tax benefit. Significant increases in federal and state tax credits further increased the overall tax benefit as compared to prior years. The increase in our effective tax rate from 2022 to 2023 was mainly driven by the mix of earnings, with U.S. losses, primarily due to the restructuring activities during the year (see Note 15), driving an overall global loss and tax benefit for the year. Furthermore, significant decline in U.S. taxable earnings drove a decrease in the foreign derived intangible income benefit as compared to prior years skewing the effective tax rate. 95 Index Ingevity Corporation Notes to the Consolidated Financial Statements December 31, 2024 The significant components of deferred tax assets and liabilities are as follows: December 31, In millions 2024 2023 Deferred tax assets: Employee benefits $ 15.4 $ 13.3 Intangibles (including goodwill) 30.5 — Net operating losses 18.6 10.6 Inventory 11.2 16.9 Leases 15.8 18.7 Litigation verdict accrual 21.4 20.5 Research and experimental expenses 29.9 15.3 Interest limitation 24.5 7.6 Other 21.8 16.3 Total deferred tax assets $ 189.1 $ 119.2 Valuation allowance ( 11.0 ) ( 11.1 ) Total deferred tax assets, net of valuation allowance $ 178.1 $ 108.1 Deferred tax liabilities: Fixed assets $ 96.9 $ 115.9 Intangibles (including goodwill) — 29.3 Leases 14.6 18.4 Other 4.9 3.8 Total deferred tax liabilities $ 116.4 $ 167.4 Net deferred tax asset (liability) (1) $ 61.7 $ ( 59.3 ) _______________ (1) Presentation in the table above is on a gross basis, however, due to jurisdictional netting, our net deferred tax asset and liability recorded on the consolidated balance sheets were $ 117.9 million and $ 56.2 million, respectively, as of December 31, 2024, and $ 11.6 million and $ 70.9 million, respectively, as of December 31, 2023. Our net deferred tax liability changed to an overall net deferred tax asset in 2024 compared to 2023, with a total change of $ 121.0 million. The pre-tax Performance Chemicals reporting unit goodwill impairment charge of $ 349.1 million (refer to Note 8 for more detail) and additional Performance Chemicals repositioning restructuring spending (refer to Note 15 for more detail) during 2024 resulted in a change from a deferred liability to an asset. Due to taxable losses in the U.S. in 2024, additional net operating losses were generated, further increasing the deferred tax asset for the year. As part of Tax Cuts and Jobs Act ("TCJA") enacted in December 2017 under Internal Revenue Code ("IRC") Section 174, we were required to capitalize and amortize research and experimental expenditures. This requirement continued to increase the deferred tax asset for 2024. Also, as modified by TCJA, IRC Section 163(j) limits U.S. business interest expense deductions as a function of adjusted taxable income. In 2024 due to overall taxable losses, Ingevity's interest expense deduction was fully limited, increasing the deferred tax asset for 2024. We have deferred tax assets, including net operating loss and state tax credit carryforwards, which are available to offset future taxable income. A valuation allowance has been provided where management has determined that it is more likely than not that the deferred tax assets will not be realized. In 2024, we recognized tax expense of $ 1.4 million due to our expected inability to recognize the benefit associated with state tax credits prior to their expiration. At December 31, 2024, net operating loss carryforwards totaled $ 64.4 million of which we have recorded deferred tax assets of $ 18.6 million. Of this total, $ 0.1 million will expire in 10 years, $ 0.3 million will expire in 15 years, $ 0.9 million will expire in 20 years, and $ 17.3 million will never expire. 96 Index Ingevity Corporation Notes to the Consolidated Financial Statements December 31, 2024 Due to the global nature of our operations, a portion of our cash is held outside the U.S. The cash and cash equivalent balance at December 31, 2024 included $ 63.9 million held by our foreign subsidiaries. At December 31, 2024, 2023, and 2022, no deferred income taxes have been provided for our share of undistributed net earnings of foreign operations due to management’s intent to reinvest such amounts indefinitely. The determination of the amount of taxes that may be due if earnings are remitted is not practicable because such liability, if any, is dependent on circumstances that exist if and when remittance occurs. The circumstances that would affect the calculations include the source location and amount of the distribution, the underlying tax rate already paid on the earnings, foreign withholding taxes, the opportunity to use foreign tax credits, and the potential impact of future tax reform. Positive undistributed earnings considered to be indefinitely reinvested totaled $ 40.0 million at December 31, 2024. A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows: Years ended December 31, In millions 2024 2023 2022 Balance at beginning of year $ 1.2 $ 0.8 $ 0.3 Additions for tax positions related to prior years 1.2 0.4 0.5 Reduction for lapse of statute of limitation ( 0.3 ) — — Balance at end of year (1) $ 2.1 $ 1.2 $ 0.8 _______________ (1) Included in "Other liabilities" on the consolidated balance sheets. As of December 31, 2024, 2023, and 2022, $ 2.4 million, $ 1.4 million, and $ 0.9 million, respectively, of unrecognized tax benefit, including penalties and interest, would, if recognized, impact our effective tax rate. We recognize interest accrued related to unrecognized tax benefits and penalties as income tax expense. Pillar Two, released by the Organisation for Economic Cooperation and Development (OECD), went into effect on January 1, 2024. Pillar Two’s intent is to create a 15% global minimum tax for all jurisdictions in which multinational enterprises operate. To date, thirteen of our reporting jurisdictions have enacted final legislation adopting Pillar Two. While we do not anticipate that this legislation will have a material impact on our tax provision or effective tax rate, we continue to monitor evolving tax legislation in the jurisdictions in which we operate. No tax impacts of Pillar Two were recorded for the year ended December 31, 2024. 97 Index Ingevity Corporation Notes to the Consolidated Financial Statements December 31, 2024 Note 18: Commitments and Contingencies Legal Proceedings On July 19, 2018, we filed suit against BASF Corporation (“BASF”) in the United States District Court for the District of Delaware (the “Delaware Proceeding”) alleging BASF infringed Ingevity’s patent covering canister systems used in the control of automotive gasoline vapor emissions (U.S. Patent No. RE38,844) (the “844 Patent”). On February 14, 2019, BASF asserted counterclaims against us in the Delaware Proceeding, alleging two claims for violations of U.S. antitrust law (one for exclusive dealing and the other for tying) as well as a claim for tortious interference with an alleged prospective business relationship between BASF and a BASF customer (the “BASF Counterclaims”). The BASF Counterclaims relate to our enforcement of the 844 Patent and our entry into several supply agreements with customers of its fuel vapor canister honeycombs. The U.S. 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 will be trebled under 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. On February 13, 2024, the court in the Delaware Proceeding denied BASF’s motion for pre-judgment interest on its tortious interference claim as well as our motion seeking judgment as a matter of law, or a new trial in the alternative. In addition, BASF has indicated it will seek attorneys’ fees and costs in amounts that they will allege and have to demonstrate 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. Therefore, on March 13, 2024, we appealed the verdict as well as the U.S. District Court’s November 2020 dismissal of our patent infringement claims against BASF. Ingevity believes in the strength of its intellectual property and the merits of its position and intends to pursue all legal relief available to challenge these outcomes in the Delaware Proceeding. Final resolution of these matters could take up to 15 months from the date of this Annual Report on Form 10-K. As of December 31, 2024, nothing has occurred in the post-trial proceedings to warrant any change to our conclusions as disclosed within our 2023 Annual Report. The full amount of the trebled jury verdict, $ 85.0 million, is accrued within Other liabilities on the consolidated balance sheets as of December 31, 2024 and the charge was included within Other (income) expense, net on the consolidated statement of operations for the year ended December 31, 2021. In addition, as a result of the judgment being officially entered on May 18, 2023, we have started accruing for post-judgment interest at the legally mandated interest rate. As of December 31, 2024 and 2023, the total amount accrued, inclusive of post-judgement interest, was $ 91.4 million and $ 87.4 million, respectively. The amount of any liability we may ultimately incur could be more or less than the amount accrued. 98 Index Ingevity Corporation Notes to the Consolidated Financial Statements December 31, 2024 Note 19: Segment Information Ingevity’s operating segments are (i) Performance Materials, (ii) Performance Chemicals, and (iii) Advanced Polymer Technologies. A description of our operating segments is included in Note 1. Our operating segments were determined based upon the nature of the products produced, the nature of the production process, the type of customer for the products, the similarity of economic characteristics, and the manner in which management reviews results. Segment EBITDA is the primary measure used by the chief operating decision maker ("CODM"), the Interim CEO and President of Ingevity, to evaluate the performance of and allocate resources among our operating segments. The CODM utilizes Segment EBITDA for each operating segment in the annual budgeting and forecasting process. Segment EBITDA enables the CODM to compare each business and make informed and consistent resource allocation decisions. Years Ended December 31, In millions 2024 2023 2022 Segment EBITDA (1)(2) Performance Materials $ 319.1 $ 286.6 $ 252.2 Performance Chemicals 14.7 65.7 160.4 Advanced Polymer Technologies 35.2 44.5 40.0 Total Segment EBITDA (1)(2) $ 369.0 $ 396.8 $ 452.6 Interest expense ( 97.8 ) ( 93.3 ) ( 61.8 ) Interest income 7.7 6.3 7.5 (Provision) benefit for income taxes 105.3 4.7 ( 58.0 ) Depreciation and amortization ( 108.3 ) ( 122.8 ) ( 108.8 ) Restructuring and other income (charges), net (3) ( 186.2 ) ( 170.2 ) ( 13.8 ) Goodwill impairment charge (4) ( 349.1 ) — — Acquisition and other-related income (costs), net (5) ( 0.3 ) ( 4.5 ) ( 5.9 ) Inventory charges (6) ( 6.3 ) ( 19.7 ) — Loss on CTO resales (7) ( 52.7 ) ( 22.0 ) — CTO supply contract termination charges (7) ( 100.0 ) — — Gain (loss) on sale of strategic investment (8) ( 11.4 ) 19.3 — Pension and postretirement settlement and curtailment income (charges), net (9) ( 0.2 ) — ( 0.2 ) Net income (loss) $ ( 430.3 ) $ ( 5.4 ) $ 211.6 _______________ (1) Segment EBITDA is defined as segment net sales less segment operating expenses (segment operating expenses consist of costs of sales, selling, general and administrative expenses, research and technical expenses, other (income) expense, net, excluding depreciation and amortization). 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, inventory lower of cost or market charges associated with restructuring actions, acquisition and other-related income (costs), gain (loss) on sale of strategic investments, loss on CTO resales, CTO supply contract termination charges, and pension and postretirement settlement and curtailment income (charges), net. 99 Index Ingevity Corporation Notes to the Consolidated Financial Statements December 31, 2024 (2) Segment expenses included within the primary measure used by our CODM are included within the below table. Years Ended December 31, 2024 2023 2022 In millions, except per share data PM PC APT PM PC APT PM PC APT Net sales (1) $ 609.6 $ 608.2 $ 188.6 $ 586.0 $ 902.1 $ 204.0 $ 548.5 $ 875.1 $ 244.7 Less: Cost of sales (2) (3) 233.9 515.5 129.9 254.2 743.2 135.2 237.6 614.2 180.0 Selling, general, and administrative expenses (2) (4) 56.8 73.3 22.3 46.1 92.8 22.1 58.8 99.6 28.5 Other income (expense), net (2) (5) 0.2 ( 4.7 ) ( 1.2 ) 0.9 ( 0.4 ) ( 2.2 ) 0.1 ( 0.9 ) 3.8 Segment EBITDA $ 319.1 $ 14.7 $ 35.2 $ 286.6 $ 65.7 $ 44.5 $ 252.2 $ 160.4 $ 40.0 _______________ (1) Relates to external customers only. Refer to Note 4 for a reconciliation to consolidated Net sales. (2) Excludes Depreciation and amortization. (3) Inventory charges representing lower of cost or market charges associated with the Performance Chemicals repositioning and restructuring actions were not allocated in the measurement of Performance Chemicals reportable segment profitability used by our CODM. Amounts are included in Cost of sales on the consolidated statements of operations. (4) Includes Research and technical expenses. (5) We have excluded the following items from Other income (expense), net: gain (loss) on sale of strategic investments, loss on CTO resales, CTO supply contract termination charges, depreciation, and amortization. (3) We regularly perform strategic reviews and assess the return on on our operations, which sometimes results in a plan to restructure the business. These costs are excluded from our reportable segment results. The table below provides an allocation of Restructuring and other income (charges), net between our three reportable segments to provide investors, potential investors, securities analysts and others with the information, should they choose, to apply such (income) charges to each respective reportable segment for which the charges relate. Years Ended December 31, In millions 2024 2023 2022 Performance Materials $ 0.9 $ 9.0 $ 4.8 Performance Chemicals 185.1 144.5 7.0 Advanced Polymer Technologies (1) 0.2 16.7 2.0 Restructuring and other (income) charges, net (2) $ 186.2 $ 170.2 $ 13.8 _________________ (1) Included in the charges for the year ended December 31, 2023 was $ 13.3 million of asset disposal charges associated with Advanced Polymer Technologies polyol production assets located at the DeRidder Plant. (2) Refer to Note 15 for more information. (4) For the year ended December 31, 2024, charges relate to the Performance Chemicals reportable segment. Refer to Note 8 for more information. (5) The table below provides an allocation of Acquisition and other-related income (costs), net between our three reportable segments to provide investors, potential investors, securities analysts and others with the information, should they choose, to apply such (income) charges to each respective reportable segment for which the charges relate. For more detail on these charges see Note 16. Years Ended December 31, In millions 2024 2023 2022 Performance Materials $ — $ — $ 0.3 Performance Chemicals 0.3 4.5 5.6 Advanced Polymer Technologies — — — Acquisition and other-related (income) costs, net $ 0.3 $ 4.5 $ 5.9 (6) For the year ended December 31, 2024 and 2023, inventory charges represent lower of cost or market charges associated with the Performance Chemicals’ repositioning and restructuring actions. These charges were not allocated in the measurement of Performance Chemicals reportable segment profitability used by our CODM. Amounts are included in Cost of sales on the consolidated statements of operations. (7) For the year ended December 31, 2024, CTO supply contract termination charges relate to the Performance Chemicals reportable segment. Refer to Note 2, under the section: Non-operating income and expense , for more information. 100 Index Ingevity Corporation Notes to the Consolidated Financial Statements December 31, 2024 (8) We exclude gains and losses from sales of strategic investments from our segment results because we do not consider such gains or losses to be directly associated with the operational performance of the segment. We believe that the inclusion of such gains or losses, would impair the factors and trends affecting the historical financial performance of our reportable segments. We continue to include undistributed earnings or loss, distributions, amortization or accretion of basis differences, and other-than-temporary impairments for equity method investments that we believe are directly attributable to the operational performance of such investments, in our reportable segment results. Refer to Note 5, under the section: Strategic Investments, for more information. Years Ended December 31, In millions 2024 2023 2022 Performance Materials $ ( 0.1 ) $ ( 19.3 ) $ — Performance Chemicals 9.3 — — Advanced Polymer Technologies 2.2 — — (Gain) loss on sale of strategic investment $ 11.4 $ ( 19.3 ) $ — (9) Our pension and postretirement settlement and curtailment charges (income) are related to the acceleration of prior service costs, as a result of a reduction in the number of participants within the Union Hourly defined benefit pension plan. These are excluded from our segment results because we consider these costs to be outside our operational performance. We continue to include the service cost, amortization of prior service cost, interest costs, expected return on plan assets, and amortized actual gains and losses in our segment EBITDA. Years Ended December 31, In millions 2024 2023 2022 Performance Materials $ — $ — $ 0.2 Performance Chemicals 0.2 — — Advanced Polymer Technologies — — — Pension and postretirement settlement and curtailment (income) charges, net $ 0.2 $ — $ 0.2 Depreciation and amortization Years Ended December 31, In millions 2024 2023 2022 Performance Materials $ 38.7 $ 38.3 $ 36.1 Performance Chemicals 38.8 53.2 43.1 Advanced Polymer Technologies 30.8 31.3 29.6 Total depreciation and amortization $ 108.3 $ 122.8 $ 108.8 Capital expenditures Years Ended December 31, In millions 2024 2023 2022 Performance Materials $ 38.5 $ 36.4 $ 59.8 Performance Chemicals 22.9 49.6 62.4 Advanced Polymer Technologies 16.2 23.8 20.3 Total capital expenditures $ 77.6 $ 109.8 $ 142.5 101 Index Ingevity Corporation Notes to the Consolidated Financial Statements December 31, 2024 Property, plant, and equipment, net December 31, In millions 2024 2023 North America (1) $ 482.3 $ 581.0 Asia Pacific (1) 63.3 71.4 Europe, Middle East, and Africa (1) 113.2 109.7 South America 0.1 0.1 Property, plant, and equipment, net $ 658.9 $ 762.2 _______________ (1) The countries with Property, plant, and equipment, net in excess of 10 percent of consolidated Property, plant, and equipment, net at December 31, 2024 and 2023 are the U.S., which totaled $ 482.3 million and $ 581.0 million, the U.K., which totaled $ 112.5 million and $ 108.8 million, and China, which totaled $ 63.2 million and $ 71.3 million, respectively. Total assets December 31, In millions 2024 2023 Performance Materials $ 781.6 $ 738.0 Performance Chemicals (1) 613.0 1,218.1 Advanced Polymer Technologies 565.0 598.0 Total segment assets (2) $ 1,959.6 $ 2,554.1 Corporate and other 63.0 69.2 Total assets $ 2,022.6 $ 2,623.3 _______________ (1) The decline in the Performance Chemicals segment in 2024, as compared to 2023, was driven by our Performance Chemicals repositioning actions and Goodwill impairment charge. Refer to Notes 8 and 15 for more information. (2) Segment assets exclude assets not specifically managed as part of one specific segment herein referred to as "Corporate and other." 102 Index Ingevity Corporation Notes to the Consolidated Financial Statements December 31, 2024 Note 20: Earnings (Loss) per Share Years Ended December 31, In millions (except share (in thousands) and per share data) 2024 2023 2022 Net income (loss) $ ( 430.3 ) $ ( 5.4 ) $ 211.6 Basic and Diluted earnings (loss) per share (1) Basic earnings (loss) per share $ ( 11.85 ) $ ( 0.15 ) $ 5.54 Diluted earnings (loss) per share $ ( 11.85 ) $ ( 0.15 ) $ 5.50 Shares Weighted average number of shares of common stock outstanding - Basic 36,323 36,496 38,179 Weighted average additional shares assuming conversion of potential common shares (2) — — 292 Shares - diluted basis 36,323 36,496 38,471 _______________ (1) Diluted earnings (loss) per share is calculated using net income (loss) available to common stockholders divided by diluted weighted average shares of common shares outstanding during each period, which includes the dilutive effect of outstanding equity awards. (2) For the years ended December 31, 2024 and 2023, all potentially dilutive common shares were excluded from the calculation of diluted earnings (loss) per share as we had a net loss for the period. The following average number of potential common shares were antidilutive and, therefore, were not included in the diluted earnings per share calculation: Years Ended December 31, In thousands 2024 2023 2022 Average number of potential common shares - antidilutive 444 571 204 103 Index Ingevity Corporation Notes to the Consolidated Financial Statements December 31, 2024 Note 21: Supplemental Information The following tables include details of prepaid and other current assets, other assets, accrued expenses and other liabilities as presented on the consolidated balance sheets, as well as other (income) expense, net on the consolidated statement of operations: Prepaid and other current assets: December 31, In millions 2024 2023 Income and value added tax receivables $ 22.1 $ 12.0 Prepaid freight and supply agreements 2.1 2.5 Prepaid insurance 1.2 1.9 Non-trade receivables 2.4 5.8 Advances to suppliers 2.3 1.0 Prepaid software as a service 2.2 4.1 Contract asset (Note 4) 6.5 11.2 Restricted cash 0.4 0.6 CTO resales (Note 2) 6.2 24.2 Planned major maintenance activities 2.3 2.5 Currency exchange and natural gas contracts (Note 9) 0.6 0.5 Assets held for sale 3.7 — Other 5.4 5.6 $ 57.4 $ 71.9 Other assets: December 31, In millions 2024 2023 Deferred financing charges $ 2.8 $ 3.9 Capitalized software, net 40.9 44.8 Land-use rights 4.2 4.4 Deferred software as a service 2.2 2.8 Deferred compensation plan assets (Note 5) 20.2 17.9 Interest rate swap contracts (Note 9) 0.6 — Finance lease assets, net (Note 13) — 0.1 Other 8.4 8.0 $ 79.3 $ 81.9 104 Index Ingevity Corporation Notes to the Consolidated Financial Statements December 31, 2024 Accrued expenses: December 31, In millions 2024 2023 Accrued interest $ 9.8 $ 10.0 Accrued taxes 4.9 7.5 Accrued freight 1.2 1.8 Accrued rebates 13.7 10.4 Restructuring reserves (Note 15) 5.2 8.2 Accrued royalties and commissions 1.2 2.0 Currency exchange and natural gas contracts (Note 9) 0.2 1.4 Accrued energy 1.8 2.3 CTO resales (Note 2) — 13.6 Asset retirement obligations (Note 2) 8.9 5.5 Other 11.2 9.6 $ 58.1 $ 72.3 Other liabilities: December 31, In millions 2024 2023 Deferred compensation arrangements (Note 5) $ 15.9 $ 15.5 Pension & OPEB liabilities (Note 14) 8.2 9.6 Unrecognized tax benefits (Note 17) 2.4 1.4 Litigation verdict accrual (Note 18) 91.4 87.4 Asset retirement obligations (Note 2) 7.4 7.4 Other 5.3 5.4 $ 130.6 $ 126.7 Other (income) expense, net: Years Ended December 31, In millions 2024 2023 2022 (Gain)/loss on sale of strategic investment (Note 5) $ 11.4 $ ( 19.3 ) $ — Foreign currency transaction (gain)/loss 4.2 3.7 2.3 CEO severance charges 4.8 — — Loss on CTO resales (Note 2) 52.7 22.0 — CTO supply contract termination charges (Note 2) 100.0 — — Other (income)/expense, net ( 3.3 ) ( 0.7 ) ( 4.0 ) $ 169.8 $ 5.7 $ ( 1.7 ) 105 INGEVITY CORPORATION SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES FOR YEARS ENDED DECEMBER 31, 2024, 2023, and 2022 Provision/ (Benefit) In millions Balance, Beginning of Year Charged to Costs and Expenses Charged to Other Comprehensive Income Charged to Retained Earnings Write-offs (1) Balance, End of Year December 31, 2024 Accounts receivable credit loss allowance (2) $ 1.1 ( 0.2 ) — — ( 0.3 ) $ 0.6 Held-to-maturity debt securities credit loss allowance (3) $ 0.2 — — — — $ 0.2 Deferred tax valuation allowance $ 11.1 1.4 ( 1.5 ) — — $ 11.0 December 31, 2023 Accounts receivable credit loss allowance (2) $ 0.5 0.6 — — — $ 1.1 Held-to-maturity debt securities credit loss allowance (3) $ 0.6 ( 0.4 ) — — — $ 0.2 Deferred tax valuation allowance $ 9.2 1.3 0.6 — — $ 11.1 December 31, 2022 Accounts receivable credit loss allowance (2) $ 2.0 0.3 — — ( 1.8 ) $ 0.5 Held-to-maturity debt securities credit loss allowance (3) $ 0.5 0.1 — — — $ 0.6 Deferred tax valuation allowance $ 8.8 0.1 0.3 — — $ 9.2 _______________ (1) Write-offs are net of recoveries. (2) Allowance for credit losses on accounts receivable is included within Accounts receivable, net on the consolidated balance sheets. (3) Allowance for credit losses on held-to-maturity debt securities is included within Restricted investment on the consolidated balance sheets. 106 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.