Ingevity Corp 10-Q

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Introduction Management's discussion and analysis of Ingevity Corporation's ( " Ingevity, " " the company " " we, " " us " or " our " ) financial condition and results of operations ( " MD&A " ) is provided as a supplement to the Condensed Consolidated Financial Statements and related notes included elsewhere herein to help provide an understanding of our financial condition, changes in financial condition and results of our operations. The following discussion should be read in conjunction with Ingevity's consolidated financial statements as of and for the year ended December 31, 2024, filed on February 19, 2025, with the Securities and Exchange Commission ("SEC") as part of the company's Annual Reporting on Form 10-K ("2024 Annual Report") and the unaudited interim Condensed Consolidated Financial Statements and notes to the unaudited interim Condensed Consolidated Financial Statements, which are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). All references to notes (herein referred to as "Note") in this section refer to the notes accompanying the Condensed Consolidated Financial Statements included in Item 1 within this Form 10-Q. Investors are cautioned that the forward-looking statements contained in this section and other parts of this Quarterly Report on Form 10-Q involve both risk and uncertainty. Several important factors could cause actual results to differ materially from those anticipated by these statements. Many of these statements are macroeconomic in nature and are, therefore, beyond the control of management. See "Cautionary Statements About Forward-Looking Statements" below and at the beginning of our 2024 Annual Report. Unless otherwise indicated, the information in MD&A refer only to our continuing operations. See Note 1 and 16 for more information. Cautionary Statements Regarding Forward-Looking Statements This section and other parts of this Quarterly Report on Form 10-Q contain forward-looking statements, within the meaning of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the Private Securities Litigation Reform Act of 1995 that reflect our current expectations, beliefs, plans or forecasts with respect to, among other things, future events and financial performance. Forward-looking statements are often characterized by words or phrases such as "may," "will," "could," "should," "would," "anticipate," "estimate," "expect," "outlook," "project," "intend," "plan," "believe," "target," "prospects," "potential" and "forecast," and other words, terms and phrases of similar meaning. Forward-looking statements involve estimates, expectations, projections, goals, forecasts, assumptions, risks and uncertainties. We caution readers that a forward-looking statement is not a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking statement. Such risks and uncertainties include, among others, those discussed in Part I, Item 1A. Risk Factors of our 2024 Annual Report, as well as in our unaudited Condensed Consolidated Financial Statements, related notes, and the other information appearing elsewhere in this report and our other filings with the SEC. We do not intend, and undertake no obligation, to update any of our forward-looking statements after the date of this report to reflect actual results or future events or circumstances. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. In addition to any such risks, uncertainties and other factors discussed elsewhere herein, risks, uncertainties and other factors that could cause or contribute to actual results differing materially from those expressed or implied by the forward-looking statements include, but are not limited to the following: • the anticipated timing, charges, costs and results of any current or future repositioning of our Performance Chemicals segment, including the announced sale of substantially all of the assets that relate to or are used in connection with our industrial specialties product line and our North Charleston crude tall oil refinery (the "Divestiture"), the oleo-based product refining transition and the closure of our plants in DeRidder, Louisiana and Crossett, Arkansas, may differ materially from our estimates due to events that may occur as a result of, or in connection with, such repositioning efforts; • the Divestiture may not be consummated and, if consummated, may not yield the expected results or benefits; • the risks that are associated with the co-located businesses following consummation of the Divestiture and potential impacts to our plant operations; 34 • we may be adversely affected by general global economic, geopolitical, and financial conditions beyond our control, including inflation, the Russia-Ukraine war, and the conflict in the Middle East; • leadership transitions within our organization; • we are exposed to risks related to our international sales and operations, including changes in tariffs; • adverse conditions in the automotive market have and may continue to negatively impact demand for our automotive carbon products; • if more stringent air quality standards worldwide are not adopted, our growth could be impacted; • we face competition from substitute products, new technologies, and new or emerging competitors; • we may be adversely affected by a decrease in government infrastructure spending; • adverse conditions in cyclical end markets may continue to adversely affect demand for our products; • lack of access to raw materials upon which we depend would impact our ability to produce our products; • the inability to make or effectively integrate future acquisitions and other investments may negatively affect our results; • we are dependent upon third parties for the provision of certain critical operating services at several of our facilities; • we may continue to be adversely affected by disruptions in our supply chain; • the occurrence of natural disasters and extreme weather or other unanticipated problems such as labor difficulties (including work stoppages), equipment failure, or unscheduled maintenance and repair, planned and unplanned production slowdowns and shutdowns, turnarounds and outages, which could result in operational disruptions of varied duration; • we are dependent upon attracting and retaining key personnel; • we are dependent on certain large customers; • from time to time, we are and may be engaged in legal actions associated with our intellectual property rights; • if we are unable to protect our intellectual property and other proprietary information, we may lose significant competitive advantage; • information technology security breaches and other disruptions; • government policies and regulations, including, but not limited to, those affecting the environment, climate change, tax policies, tariffs, the chemicals industry and subsidies or incentives that may impact key raw materials or products may adversely affect financial results; and • losses due to lawsuits arising out of environmental damage or personal injuries associated with chemical or other manufacturing processes. Overview Ingevity Corporation 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. Recent Developments and Updates Industrial Specialties Divestiture On September 3, 2025, Ingevity entered into an Asset Purchase Agreement (the "Purchase Agreement") with Mainstream Pine Products, LLC, a Delaware limited liability company ("Purchaser"), pursuant to which Purchaser will purchase substantially all of the assets and assume and acquire certain of the rights and liabilities of Ingevity or its applicable affiliates that relate to or are used in connection with (a) Ingevity's industrial specialties product line (other than Ingevity's lignin dispersant and alternative fatty acid based products, road technologies product line and other businesses and products more fully described in the Purchase Agreement) and (b) Ingevity's North Charleston, South Carolina crude tall oil refinery (the "CTO Refinery") and Ingevity's and its affiliates' operations thereof (collectively, the "Divestiture"). The Company has determined that the industrial specialties product line and CTO Refinery included within the Divestiture meet the criteria to be classified as held for sale and that the sale represents a strategic shift that will have a major effect on Ingevity's operations and results. As such, the results of operations of the industrial specialties product line and CTO Refinery, collectively defined above 35 as the Divestiture, are presented as discontinued operations. The Divestiture is expected to close by early 2026. Refer to Note 16 for more information. Performance Chemicals Repositioning We previously 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. 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 historical annualized net sales. See Note 16 for more information. Expected Charges Inclusive of continuing and discontinued operations, as part of the repositioning we expected to incur aggregate charges of approximately $365 million, excluding CTO resale activity, associated with the Performance Chemicals repositioning, consisting of approximately $255 million in asset-related charges, approximately $25 million in severance and other employee-related costs, and approximately $85 million in other restructuring costs, including decommissioning, dismantling and removal charges, and contract termination costs. Through September 30, 2025, we have incurred $344.7 million associated with these actions, including $248.0 million of non-cash asset-related charges, and $96.7 million of charges to be settled in cash. As of September 30, 2025, $83.1 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 $110 million of cash charges, including approximately $5 million during the remainder of 2025. Expected Savings and Impact Inclusive of continuing and discontinued operations, since November of 2023, we have realized total cash savings of approximately $103 million, including $82 million in Cost of sales, $16 million in Selling, general, and administrative expenses, and $5 million in Research and technical expenses, respectively. All cash savings have been realized as of September 30, 2025. These cash savings have been derived from headcount reductions, plant operating efficiencies, and reduced supply chain costs. Collectively, these savings have been realized in the following financial statement captions: approximately 70-80 percent in Cost of sales, approximately 15-25 percent in Selling, general, and administrative expenses, and approximately 5 percent in Research and technical expenses, all presented on our condensed consolidated statements of operations. In addition to the cash savings, we have realized savings of approximately $12 million in lower full year depreciation and intangible amortization expenses, respectively. All savings have been realized as of September 30, 2025. 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. 36 Results of Operations Three Months Ended September 30, Nine Months Ended September 30, In millions 2025 2024 2025 2024 Net sales $ 333.1 $ 333.8 $ 912.5 $ 936.8 Cost of sales 199.2 202.2 538.8 571.9 Gross profit 133.9 131.6 373.7 364.9 Selling, general, and administrative expenses 44.1 37.9 129.6 119.5 Research and technical expenses 7.0 6.2 21.0 18.0 Restructuring and other (income) charges, net 1.0 3.3 10.1 8.3 Goodwill impairment charge — — 183.8 306.6 Acquisition-related costs — (0.1) — — Other (income) expense, net 1.2 6.5 9.5 7.8 Interest expense, net 18.4 23.8 56.4 69.3 Income (loss) from continuing operations before income taxes 62.2 54.0 (36.7) (164.6) Provision (benefit) for income taxes on continuing operations 21.4 6.5 34.8 (23.6) Net income (loss) from continuing operations 40.8 47.5 (71.5) (141.0) Income (loss) from discontinued operations, net of income taxes 2.7 (154.7) (11.0) (305.9) Net income (loss) $ 43.5 $ (107.2) $ (82.5) $ (446.9) Q3 2025 Performance Summary Net sales were flat to the prior year. Increased Net sales in the Performance Chemicals reportable segment's road technologies product line and Performance Materials reportable segment was offset by lower volumes in Advanced Polymer Technologies due to the indirect impact of tariffs. Net sales The table below shows the 2025 Net sales and variances from 2024: Change vs. prior year In millions Prior year Net sales Volume Price/Mix Currency effect Current year Net sales Three months ended September 30, 2025 vs. 2024 $ 333.8 (1.4) (0.3) 1.0 $ 333.1 Nine months ended September 30, 2025 vs. 2024 $ 936.8 (37.3) 11.9 1.1 $ 912.5 Three Months Ended September 30, 2025 vs 2024 The Net sales decrease of $0.7 million in 2025 was driven by a volume decline of $1.4 million (zero percent) and unfavorable pricing and sales mix of $0.3 million (zero percent). This decline was partially offset by favorable foreign currency exchange of $1.0 million (zero percent). Nine Months Ended September 30, 2025 vs. 2024 The Net sales decrease of $24.3 million in 2025 was driven by a volume decline of $37.3 million (four percent). This decline was partially offset by favorable pricing and sales mix of $11.9 million (one percent) and favorable foreign currency exchange of $1.1 million (zero percent). 37 Gross Profit Three Months Ended September 30, 2025 vs. 2024 Gross profit increase of $2.3 million was driven primarily by decreased manufacturing costs of $5.4 million, favorable foreign currency exchange of $2.8 million, favorable pricing and sales mix of $0.5 million, and favorable sales volume of $0.2 million. This increase was partially offset by LIFO charges of $6.6 million. Nine Months Ended September 30, 2025 vs. 2024 Gross profit increase of $8.8 million was driven primarily by decreased manufacturing costs of $22.7 million, favorable pricing and sales mix of $12.1 million, and favorable foreign currency exchange of $4.7 million. This increase was partially offset by LIFO charges of $16.2 million, and unfavorable sales volume of $14.5 million. Selling, general and administrative expenses Three Months Ended September 30, 2025 vs 2024 SG&A was $44.1 million (13 percent of Net sales) and $37.9 million (11 percent of Net sales) for the three months ended September 30, 2025 and 2024, respectively. Overall, SG&A increased by $6.2 million (16 percent), primarily driven by increased variable incentive compensation of $6.4 million, partially offset by decreased spending on commercial activities of $0.2 million. Nine Months Ended September 30, 2025 vs. 2024 SG&A was $129.6 million (14 percent of Net sales) and $119.5 million (13 percent of Net sales) for the nine months ended September 30, 2025 and 2024, respectively. Overall, SG&A increased by $10.1 million (eight percent), driven by increased variable incentive compensation of $10.2 million, partially offset by decreased spending on commercial activities of $0.1 million. Research and technical expenses Three Months Ended September 30, 2025 vs 2024 Research and technical expenses as a percentage of Net sales was 2.1 percent and 1.9 percent for the three months ended September 30, 2025 and 2024, respectively. Overall, Research and technical expenses increased by $0.8 million, compared to the prior year quarter, primarily driven by an increase within our Performance Materials reportable segment. Nine Months Ended September 30, 2025 vs. 2024 Research and technical expenses as a percentage of Net sales was 2.3 percent and 1.9 percent for the nine months ended September 30, 2025 and 2024, respectively. Research and technical expenses as a percentage of Net sales increased due to lower sales. Overall, Research and technical expenses increased by $3.0 million, compared to the prior year, primarily driven by an increase within our Performance Materials reportable segment. 38 Restructuring and other (income) charges, net Three and Nine Months Ended September 30, 2025 vs. 2024 Three Months Ended September 30, Nine Months Ended September 30, In millions 2025 2024 2025 2024 Work force reductions and other $ 0.3 $ — $ 8.0 $ — Performance Chemicals repositioning 0.7 2.0 2.1 3.4 Restructuring charges $ 1.0 $ 2.0 $ 10.1 $ 3.4 North Charleston plant transition — 1.3 — 4.9 Other (income) charges, net $ — $ 1.3 $ — $ 4.9 Restructuring and other (income) charges, net (1) $ 1.0 $ 3.3 $ 10.1 $ 8.3 _______________ (1) See Note 11 for more information. Goodwill impairment charge Three and Nine Months Ended September 30, 2025 vs. 2024 Goodwill impairment charge of zero and $183.8 million for the three and nine months ended September 30, 2025, respectively, within our Advanced Polymer Technologies reportable segment. Goodwill impairment charge of zero and $306.6 million for the three and nine months ended September 30, 2024, respectively, within our Performance Chemicals reportable segment. See Note 7 for more information. Acquisition-related costs Three and Nine Months Ended September 30, 2025 vs. 2024 Acquisition-related (income) costs were zero for the three and nine months ended September 30, 2025, and $(0.1) million and zero for the three and nine months ended September 30, 2024, respectively. All charges relate to the integration of Ozark Materials into our Performance Chemicals reportable segment. Other (income) expense, net Three and Nine Months Ended September 30, 2025 vs. 2024 Three Months Ended September 30, Nine Months Ended September 30, In millions 2025 2024 2025 2024 Foreign currency transaction (gain) loss $ 0.2 $ 1.0 $ (1.3) $ 3.1 (Gain) loss on strategic investments (1) — 2.2 2.5 2.1 CEO severance charges — 4.8 — 4.8 Proxy contest charges (2) — — 8.2 — Portfolio review expenses (2) 1.1 — 1.1 — Other (income) expense, net (0.1) (1.5) (1.0) (2.2) Total Other (income) expense, net $ 1.2 $ 6.5 $ 9.5 $ 7.8 _______________ (1) See Note 4 for more information. (2) See Note 14 for more information. 39 Interest expense, net Three and Nine Months Ended September 30, 2025 vs. 2024 Three Months Ended September 30, Nine Months Ended September 30, In millions 2025 2024 2025 2024 Accounts receivable securitization (1) $ 1.3 $ 1.7 $ 3.1 $ 4.5 Finance lease obligations (1) 1.8 1.8 5.4 5.4 Interest rate swap (2) (0.2) (0.4) (0.7) (0.4) Litigation related interest expense (3) 1.4 1.3 3.9 3.9 Revolving Credit Facility and other lines of credit (1) 9.5 14.5 31.2 41.7 Senior notes (1) 5.6 5.6 16.8 16.8 Other interest (income) expense, net (1.0) (0.7) (3.3) (2.6) Total Interest expense, net $ 18.4 $ 23.8 $ 56.4 $ 69.3 _______________ (1) See Note 9 for more information. (2) See Note 8 for more information. (3) See Note 13 for more information. Provision (benefit) for income taxes on continuing operations Three and Nine Months Ended September 30, 2025 vs. 2024 For the three months ended September 30, 2025 and 2024, our effective tax rate was 34.4 percent and 12.0 percent, respectively. Excluding discrete items, the effective rate was 31.6 percent compared to 24.9 percent in the three months ended September 30, 2025 and 2024, respectively. See Note 12 for more information. For the nine months ended September 30, 2025 and 2024, our effective tax rate was (94.8) percent and 14.3 percent, respectively. Excluding discrete items, the effective rate was 25.4 percent compared to 22.7 percent in the nine months ended September 30, 2025 and 2024, respectively. See Note 12 for more information. Income (loss) from discontinued operations, net of income taxes Three and Nine Months Ended September 30, 2025 vs. 2024 Income (loss) from discontinued operations, net of income taxes was $2.7 million and $(11.0) million for the three and nine months ended September 30, 2025, respectively. Income (loss) from discontinued operations, net of income taxes was $(154.7) million and $(305.9) million for the three and nine months ended September 30, 2024, respectively. See Note 16 for more information. 40 Segment Operating Results In addition to the information discussed above, the following sections discuss the results of operations for Ingevity's reportable segments. Our segments are (i) Performance Materials, (ii) Performance Chemicals and (iii) Advanced Polymer Technologies. Segment Earnings before Interest, Taxes, Depreciation and Amortization ("EBITDA") is the primary measure used by the company's chief operating decision maker to evaluate the performance of and allocate resources among our reportable segments. 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, goodwill impairment charges, acquisition and other-related income (costs), gain (loss) on strategic investments, proxy contest charges, portfolio review expenses, pension and postretirement settlement and curtailment income (charges), net, and indirect costs allocated to Divestiture. In general, the accounting policies of the segments are the same as those described in the Summary of Significant Accounting Policies in the Annual Consolidated Financial Statements included in our 2024 Annual Report. Performance Materials Q3 2025 Performance Summary Performance Materials Net sales increased three percent compared to the prior year quarter reflecting improved global automobile production. Segme nt EBITDA for Performance Materials decreased $0.7 million or one percent, and Segment EBITDA margin declined to 51.5 percent. The margin was lower due to higher variable compensation and foreign currency exchange, which offset the benefits from increased volumes and price. In millions Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Total Performance Materials - Net sales $ 155.0 $ 151.1 $ 455.7 $ 453.4 Segment EBITDA $ 79.9 $ 80.6 $ 236.1 $ 240.8 Net Sales Comparison of Three and Nine Months Ended September 30, 2025 and September 30, 2024: Change vs. prior year In millions Prior year Net sales Volume Price/Mix Currency effect Current year Net sales Three months ended September 30, 2025 vs. 2024 $ 151.1 4.6 (0.7) — $ 155.0 Nine months ended September 30, 2025 vs. 2024 $ 453.4 (1.1) 3.4 — $ 455.7 Three Months Ended September 30, 2025 vs. 2024 Segment net sales. The increase of $3.9 million in 2025 was driven by volume growth of $4.6 million (three percent), partially offset by unfavorable pricing and sales mix of $0.7 million (zero percent). Segment EBITDA. The decrease of $0.7 million in 2025 was driven by increased SG&A and research and technical expenses of $2.2 million, increased manufacturing costs of $1.9 million, and LIFO charges of $0.2 million. The decrease was partially offset by volume growth of $2.8 million, favorable pricing and sales mix of $0.6 million, and favorable foreign currency exchange and other charges of $0.2 million. Nine Months Ended September 30, 2025 vs. 2024 Segment net sales. The increase of $2.3 million in 2025 was driven by favorable pricing and sales mix of $3.4 million (one percent), partially offset by a volume decline of $1.1 million (zero percent). 41 Segment EBITDA. The decrease of $4.7 million in 2025 was driven by increased SG&A and research and technical expenses of $7.9 million, LIFO charges of $2.5 million, volume decline of $0.7 million, and increased manufacturing costs of $0.6 million. The decrease was partially offset by favorable pricing and sales mix of $4.0 million, and favorable foreign currency exchange and other charges of $3.0 million. Performance Chemicals Q3 2025 Performance Summary Performance Chemicals Net sales in creased $6.0 million (four percent) compared to the prior year quarter, primarily due to higher sales in the North American pavement market within our road technologies product line. Segment EBITDA increased $0.5 million or two percent. Segment EBITDA margin was down to 17.7%, primarily due to lower pricing in road markings products within our road technologies product line to address competitive pressures. Three Months Ended September 30, Nine Months Ended September 30, In millions 2025 2024 2025 2024 Total Performance Chemicals - Net sales $ 139.9 $ 133.9 $ 333.1 $ 338.7 Segment EBITDA $ 24.8 $ 24.3 $ 55.1 $ 45.3 Net Sales Comparison of Three and Nine Months Ended September 30, 2025 and September 30, 2024: Change vs. prior year In millions Prior year Net sales Volume Price/Mix Currency effect Current year Net sales Three months ended September 30, 2025 vs. 2024 $ 133.9 4.5 1.5 — $ 139.9 Nine months ended September 30, 2025 vs. 2024 $ 338.7 (17.0) 11.6 (0.2) $ 333.1 Three Months Ended September 30, 2025 vs. 2024 Segment net sales. The increase of $6.0 million in 2025 was driven by volume growth of $4.5 million (three percent), and favorable pricing and sales mix of $1.5 million (one percent). Segment EBITDA. The increase of $0.5 million in 2025 was driven by lower manufacturing costs of $5.8 million, favorable pricing and sales mix of $1.5 million, volume growth of $1.3 million, and favorable foreign currency exchange and other charges of $1.5 million. The increase was partially offset by LIFO charges of $6.4 million, and increased SG&A of $3.2 million. Nine Months Ended September 30, 2025 vs. 2024 Segment net sales. The decrease of $5.6 million in 2025 was driven by a volume decline of $17.0 million (five percent), and unfavorable foreign currency exchange of $0.2 million (zero percent). This was partially offset by favorable pricing and sales mix of $11.6 million (three percent). Segment EBITDA. The increase of $9.8 million in 2025 was driven by decreased manufacturing costs of $20.9 million, favorable pricing and sales mix of $11.7 million, and favorable foreign currency exchange and other charges of $3.1 million. The increase was partially offset by LIFO charges of $13.7 million, a volume decline of $6.6 million, and increased SG&A of $5.6 million. 42 Advanced Polymer Technologies Q3 2025 Performance Summary Advance d Polymer Technologies Net sales decreased 22 percent compared to the prior year quarter reflecting continued pressure from indirect tariff impacts that depressed demand in customers’ end markets, continued weak industrial demand, and increased competition in China. S egment EBITDA increased by one percent, driven by lower raw material costs, improved operational efficiencies, and favorable foreign currency exchange. In millions Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Total Advanced Polymer Technologies - Net sales $ 38.2 $ 48.8 $ 123.7 $ 144.7 Segment EBITDA $ 9.9 $ 9.8 $ 23.3 $ 29.1 Net Sales Comparison of Three and Nine Months Ended September 30, 2025 and September 30, 2024: Change vs. prior year In millions Prior year Net sales Volume Price/Mix Currency effect Current year Net sales Three months ended September 30, 2025 vs. 2024 $ 48.8 (10.5) (1.1) 1.0 $ 38.2 Nine months ended September 30, 2025 vs. 2024 $ 144.7 (19.2) (3.1) 1.3 $ 123.7 Three Months Ended September 30, 2025 vs. 2024 Segment net sales. The decrease of $10.6 million in 2025 was driven by a volume decline of $10.5 million (22 percent) and unfavorable pricing and sales mix of $1.1 million (two percent). The decrease was partially offset by favorable foreign currency exchange of $1.0 million (two percent). Segment EBITDA. The increase of $0.1 million in 2025 was driven by decreased manufacturing costs of $3.7 million, and favorable foreign currency exchange and other charges of $2.8 million. The increase was partially offset by a volume decline of $3.9 million, unfavorable pricing and sales mix of $1.6 million, and increased SG&A of $0.9 million. Nine Months Ended September 30, 2025 vs. 2024 Segment net sales. The decrease of $21.0 million in 2025 was driven by a volume decline of $19.2 million (13 percent) and unfavorable pricing and sales mix of $3.1 million (two percent). The decrease was partially offset by favorable foreign currency exchange of $1.3 million (one percent). Segment EBITDA. The decrease of $5.8 million in 2025 was driven by a volume decline of $7.2 million, unfavorable pricing and sales mix of $3.6 million, and increased SG&A of $2.1 million. The decrease was partially offset by decreased manufacturing costs of $4.8 million and favorable foreign currency exchange and other charges of $2.3 million. 43 Discontinued Operations Reconciliation of Net Income (Loss) from discontinued operations to EBITDA from discontinued operations (Non-GAAP) Three Months Ended September 30, Nine Months Ended September 30, In millions 2025 2024 2025 2024 Net income (loss) from discontinued operations (GAAP) $ 2.7 $ (154.7) $ (11.0) $ (305.9) Provision (benefit) for income taxes on discontinued operations (1.0) (37.2) (4.3) (73.9) Depreciation and amortization 0.3 1.0 1.1 8.1 Restructuring and other (income) charges, net (2) 8.8 83.6 33.9 154.5 Goodwill impairment charge (3) — — — 42.5 Loss on CTO resales (4) — 0.8 — 50.8 CTO supply contract termination charges (5) — 100.0 — 100.0 (Gain) loss on strategic investments (6) — 4.5 — 9.3 Inventory charges (7) — 3.8 — 6.3 Indirect costs allocated to Divestiture (8) (4.2) (6.3) (11.7) (18.5) EBITDA from discontinued operations (Non-GAAP) (1)(9) $ 6.6 $ (4.5) $ 8.0 $ (26.8) _______________ (1) EBITDA from discontinued operations is defined as net sales from discontinued operations less operating expenses from discontinued operations (operating expenses from discontinued operations 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 EBITDA from discontinued operations: income taxes, depreciation, amortization, restructuring and other income (charges), net, inventory lower of cost or market charges associated with restructuring actions, goodwill impairment charges, 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. (2) We regularly perform strategic reviews and assess the return on our operations, which sometimes results in a plan to restructure the business. These costs are excluded from our EBITDA from discontinued operations. (3) During the second quarter of 2024, the company concluded that the carrying value of the Performance Chemicals reporting unit exceeded its fair value, resulting in a non-cash goodwill impairment charge. (4) Due to the DeRidder Plant closure and the corresponding reduced CTO refining capacity, we were obligated, under an existing CTO supply contract, to purchase CTO through 2025 at amounts in excess of required CTO volumes. On July 1, 2024, the CTO supply contract that resulted in these excess CTO volumes was terminated. 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. (5) As consideration for the termination of the CTO supply contract, we made a cash payment in the amount of $50.0 million on July 1, 2024 and an additional cash payment in the amount of $50.0 million on October 8, 2024. Since this contract termination is directly attributable to the Performance Chemicals’ repositioning, that is, it does not represent normal, recurring expenses necessary to operate our business, we have excluded the CTO supply contract termination charges for the purposes of calculating our non-GAAP financial performance measures. (6) We exclude gains and losses from strategic investments from our segment results, as well as our non-GAAP financial measures, because we do not consider such gains or losses to be directly associated with the operational performance of the segment. 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 EBITDA from discontinued operations. (7) For the three and nine months ended September 30, 2024, 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 profitability used by our CODM and are therefore excluded from EBITDA from discontinued operations. Amounts are included in Cost of sales from discontinued operations. See Note 16 for more information. (8) EBITDA from discontinued operations includes indirect costs that were previously allocated to the Divestiture but not eligible for discontinued operations accounting treatment. 44 (9) We believe this non-GAAP financial measure provides management as well as investors, potential investors, securities analysts, and others with useful information to evaluate the performance of the business, because such measure, when viewed together with our financial results computed in accordance with GAAP, provides a more complete understanding of the factors and trends affecting our historical financial performance and projected future results. We believe this measure is useful because it excludes the effects of financing and investment activities as well as non-operating activities. Three Months Ended September 30, Nine Months Ended September 30, In millions 2025 2024 2025 2024 Net sales from discontinued operations $ 29.0 $ 43.1 $ 98.7 $ 170.8 EBITDA from discontinued operations $ 6.6 $ (4.5) $ 8.0 $ (26.8) Net Sales Comparison of Three and Nine Months Ended September 30, 2025 and September 30, 2024: Change vs. prior year In millions Prior year Net sales Volume Price/Mix Currency effect Current year Net sales Three months ended September 30, 2025 vs. 2024 $ 43.1 (10.7) (3.5) 0.1 $ 29.0 Nine months ended September 30, 2025 vs. 2024 $ 170.8 (67.8) (5.2) 0.9 $ 98.7 Three Months Ended September 30, 2025 vs. 2024 Net sales from discontinued operations. The decrease of $14.1 million in 2025 was driven by volume decline of $10.7 million (25 percent), unfavorable pricing and sales mix of $3.5 million (eight percent), partially offset by favorable foreign currency exchange of $0.1 million (zero percent). EBITDA from discontinued operations. The increase of $11.1 million in 2025 was driven by lower manufacturing costs of $6.3 million and LIFO liquidation benefit of $5.7 million, and favorable foreign currency exchange and other charges of $1.6 million, which included a one time insurance settlement of $1.0 million in 2025. The increase was partially offset by volume decline of $1.8 million and unfavorable pricing and sales mix of $0.7 million. Nine Months Ended September 30, 2025 vs. 2024 Net sales from discontinued operations. The decrease of $72.1 million in 2025 was driven by a volume decline of $67.8 million (40 percent), and unfavorable pricing and sales mix of $5.2 million (three percent). This was partially offset by favorable foreign currency exchange of $0.9 million (one percent). EBITDA from discontinued operation. The increase of $34.8 million in 2025 was driven by LIFO liquidation benefit of $23.5 million, decreased manufacturing costs of $13.6 million, and decreased SG&A of $5.6 million, and favorable foreign currency exchange and other charges of $2.5 million, which included one time insurance settlement of $1.0 million in 2025. The increase was partially offset by unfavorable pricing and sales mix of $5.3 million and a volume decline of $5.1 million. 45 Use of Non-GAAP Financial Measures - Total Adjusted EBITDA, Adjusted EBITDA from continuing operations, and Adjusted EBITDA from discontinued operations Ingevity has presented the financial measures, Total Adjusted EBITDA, Adjusted EBITDA from continuing operations, and Adjusted EBITDA from discontinued operations, defined below, which have not been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") and has provided a reconciliation to net income, the most directly comparable financial measure calculated in accordance with GAAP. These measures are not meant to be considered in isolation nor as a substitute for the most directly comparable financial measure calculated in accordance with GAAP. Total Adjusted EBITDA, Adjusted EBITDA from continuing operations, and Adjusted EBITDA from discontinued operations are utilized by management as a measure of profitability. We believe these non-GAAP financial measures provide management as well as investors, potential investors, securities analysts, and others with useful information to evaluate the performance of the business, because such measure, when viewed together with our financial results computed in accordance with GAAP, provides a more complete understanding of the factors and trends affecting our historical financial performance and projected future results. We believe these measures are useful because they exclude the effects of financing and investment activities as well as non-operating activities. Adjusted EBITDA from continuing operations is defined as net income (loss) from continuing operations plus interest expense, net, provision (benefit) for income taxes, depreciation, amortization, restructuring and other (income) charges, net, goodwill impairment charges, acquisition and other-related (income) costs, litigation verdict charges, (gain) loss on strategic investments, proxy contest charges, portfolio review expenses, and pension and postretirement settlement and curtailment (income) charges, net. Adjusted EBITDA from discontinued operations is defined as net income (loss) from discontinued operations plus interest expense, net, provision (benefit) for income taxes, depreciation, amortization, restructuring and other (income) charges, net, goodwill impairment charges, acquisition and other-related (income) costs, (gain) loss on strategic investments, loss on CTO resales, and CTO supply contract termination charges. Total adjusted EBITDA is defined as Adjusted EBITDA from continuing operations and Adjusted EBITDA from discontinued operations. These non-GAAP measures are not intended to replace the presentation of financial results in accordance with GAAP and investors should consider the limitations associated with these non-GAAP measures, including the potential lack of comparability of these measures from one company to another. Reconciliations are set forth within this section. 46 Reconciliation of Net Income (Loss) from Continuing Operations (GAAP) and Net Income (Loss) from Discontinued Operations (GAAP) to Adjusted EBITDA from Continuing Operations (Non-GAAP), Adjusted EBITDA from Discontinued Operations (Non-GAAP), and Total Adjusted EBITDA (Non-GAAP) Three Months Ended September 30, Nine Months Ended September 30, In millions 2025 2024 2025 2024 Net income (loss) from continuing operations (GAAP) $ 40.8 $ 47.5 $ (71.5) $ (141.0) Interest expense, net 18.4 23.8 56.4 69.3 Provision (benefit) for income taxes on continuing operations 21.4 6.5 34.8 (23.6) Depreciation and amortization (1) 27.7 25.2 77.4 75.0 Restructuring and other (income) charges, net (2) 1.0 3.3 10.1 8.3 Goodwill impairment charge (3) — — 183.8 306.6 Acquisition and other-related (income) costs, net (4) — (0.1) — — (Gain) loss on strategic investments (5) — 2.2 2.5 2.1 Proxy contest charges (6) — — 8.2 — Portfolio review expenses (7) 1.1 — 1.1 — Adjusted EBITDA from continuing operations (Non-GAAP) $ 110.4 $ 108.4 $ 302.8 $ 296.7 Net income (loss) from discontinued operations (GAAP) $ 2.7 $ (154.7) $ (11.0) $ (305.9) Provision (benefit) for income taxes on discontinued operations (1.0) (37.2) (4.3) (73.9) Interest expense, net — — — — Depreciation and amortization 0.3 1.0 1.1 8.1 Restructuring and other (income) charges, net (8) 8.8 83.6 33.9 154.5 Goodwill impairment charge (8) — — — 42.5 Acquisition and other-related (income) costs (8) — — — — Loss on CTO resales (8) — 0.8 — 50.8 CTO supply contract termination charges (8) — 100.0 — 100.0 (Gain) loss on strategic investments (8) — 4.5 — 9.3 Adjusted EBITDA from discontinued operations (Non-GAAP) $ 10.8 $ (2.0) $ 19.7 $ (14.6) Total Adjusted EBITDA (Non-GAAP) $ 121.2 $ 106.4 $ 322.5 $ 282.1 _______________ (1) Refer to Note 14 for more information. (2) We regularly perform strategic reviews and assess the return on our operations, which sometimes results in a plan to restructure the business. These costs are excluded from our reportable segment results and for the purposes of calculating our non-GAAP financial performance measures. Refer to Note 11 for more information. (3) Refer to Note 7 for more information. (4) Charges represent costs incurred to complete and integrate acquisitions and other strategic investments, and include the expensing of the inventory fair value step-up resulting from the application of purchase accounting for acquisitions, and certain legal and professional fees associated with the completion of acquisitions and strategic investments. (5) We exclude gains and losses from strategic investments from our segment results, as well as our non-GAAP financial measures, because we do not consider such gains or losses to be directly associated with the operational performance of the segment. 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 4 for more information. (6) Charges represent legal and other professional service fees as well as incremental proxy solicitation costs related to a proxy contest. (7) Charges represent professional service fees related to a review of the company's portfolio. 47 (8) Refer to Note 16 for more information. Adjusted EBITDA from continuing operations Three and Nine Months Ended September 30, 2025 vs. 2024 Adjusted EBITDA from continuing operations is the sum of all reportable segment's EBITDA, less the indirect costs allocated to Divestiture and as such, the factors that impacted adjusted EBITDA from continuing operations period to period are the same factors that affected earnings discussed in the Results of Operations and Segment Operating Results sections included within this MD&A. Current Full Year Company Outlook vs. Prior Year Our outlook below is inclusive of both continuing and discontinued operations. We are revising our 2025 outlook for Net sales, inclusive of both continuing and discontinued operations, to between $1.25 billion and $1.35 billion. We expect Net sales in our Performance Materials reportable segment to be flat to slightly down reflecting current industry forecasts, which project a ~2 percent decline in North America light vehicle production when compared to 2024. For our Advanced Polymer Technologies reportable segment, we expect Net sales to be down mid-teens versus the prior year, reflecting weaker end-market demand due to the continued impact of tariffs and competitive dynamics. We expect our Performance Chemicals reportable segment, inclusive of both continuing and discontinued operations, to generate full-year EBITDA margins in the high-single to low-double digits. The industrial specialties product line, which is now presented as Discontinued Operations, is projected to deliver Net sales of around $130 million, and Adjusted EBITDA margin of approximately six percent, inclusive of indirect costs. We estimate these indirect costs will be approximately $15 million and expect to eliminate these indirect costs by the end of 2026 through operational efficiencies and the associated service agreements executed in conjunction with the Divestiture. Our Total Adjusted EBITDA, inclusive of both continuing and discontinued operations, outlook for 2025 has been revised to reflect continued pressure on the Advanced Polymers Technologies reportable segment due to indirect tariffs and competitive dynamics. We expect Total Adjusted EBITDA, inclusive of both continuing and discontinued operations, to be between $390 million and $405 million. A reconciliation of net income from continuing operations, net income from discontinued operations to adjusted EBITDA from continuing operations, adjusted EBITDA from discontinued operations, and total adjusted EBITDA as projected for 2025 is not provided. Ingevity does not forecast net income as it cannot, without unreasonable effort, estimate or predict with certainty various components of net income. These components, net of tax, include further restructuring and other income (charges), net; additional acquisition and other-related income (costs); additional pension and postretirement settlement and curtailment (income) charges; and revisions due to legislative tax rate changes. Additionally, discrete tax items could drive variability in our projected effective tax rate. All of these components could significantly impact such financial measures. Further, in the future, other items with similar characteristics to those currently included in adjusted EBITDA from continuing operations, adjusted EBITDA from discontinued operations, and total adjusted EBITDA, that have a similar impact on comparability of periods, and which are not known at this time, may exist and impact adjusted EBITDA from continuing operations, adjusted EBITDA from discontinued operations, and total adjusted EBITDA. 48 Liquidity and Capital Resources The primary source of liquidity for our business is the cash flow provided by operating activities. We expect our cash flow provided by operations combined with cash on hand and available capacity under our revolving credit facility to be sufficient to fund our planned operations and meet our interest and other contractual obligations for at least the next twelve months. As of September 30, 2025, our undrawn capacity under our revolving credit facility was $477.0 million. Over the next twelve months, we expect to fund the following: debt principal repayments, interest payments, capital expenditures, income tax payments, purchases pursuant to our stock repurchase program (and related excise tax payments), additional spending associated with our Performance Materials' intellectual property litigation, and restructuring activities such as the repositioning of our Performance Chemicals reportable segment as further described within Note 11. In addition, we may also evaluate and consider strategic acquisitions, joint ventures, or other transactions to create stockholder value and enhance financial performance. In connection with such transactions, or to fund other anticipated uses of cash, we may modify our existing revolving credit facility, redeem all or part of our outstanding senior notes, seek additional debt financing, issue equity securities, or some combination thereof. Cash and cash equivalents totaled $83.4 million at September 30, 2025. We continuously monitor deposit concentrations and the credit quality of the financial institutions that hold our cash and cash equivalents, as well as the credit quality of our insurance providers, customers, and key suppliers. Due to the global nature of our operations, a portion of our cash is held outside the U.S. The cash and cash equivalents balance at September 30, 2025, included $79.7 million held by our foreign subsidiaries. Cash and earnings of our foreign subsidiaries are generally used to finance our foreign operations and their capital expenditures. We believe that our foreign holdings of cash will not have a material adverse impact on our U.S. liquidity. If these earnings were distributed, such amounts could be subject to U.S. federal income tax at the statutory rate less the available foreign tax credits, if any, and could potentially be subject to withholding taxes in the various jurisdictions. The potential tax implications of the repatriation of unremitted earnings are driven by facts at the time of distribution, therefore, it is not practicable to estimate the income tax liabilities that might be incurred if such cash and earnings were repatriated to the U.S. Refer to Note 12 for more information. Debt and Finance Lease Obligations Refer to Note 9 for a summary of our outstanding debt obligations and revolving credit facility. Other Potential Liquidity Needs 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 Exchange Act. During the three and nine months ended September 30, 2025, we repurchased $25.2 million, inclusive of $0.2 million in excise tax, in common stock, representing 445,724 shares of our common stock at a weighted average cost per share of $56.09. At September 30, 2025, $328.4 million remained unused under the 2022 Authorization. During the three and nine months ended September 30, 2024, we repurchased no common stock. Capital Expenditures Projected 2025 capital expenditures are $50-70 million. We have no material commitments associated with these projected capital expenditures as of September 30, 2025 . 49 Cash flow comparison of the Nine Months Ended September 30, 2025 and 2024 Nine Months Ended September 30, In millions 2025 2024 Net cash provided by (used in) operating activities $ 234.1 $ 64.1 Net cash provided by (used in) investing activities (42.4) (51.5) Net cash provided by (used in) financing activities (168.8) 27.4 Cash flows provided by (used in) operating activities Cash provided by operating activities, inclusive of continuing and discontinued operations, consists of net income (loss) adjusted for non-cash items including the cash impact from changes in operating assets and liabilities (i.e., working capital) and totaled $234.1 million for the nine months ended September 30, 2025, which was inclusive of an approximately $40 million benefit related to discontinued operations. Cash provided by operating activities for the nine months ended September 30, 2025, when compared to the nine months ended September 30, 2024, increased by $170.0 million. This increase was driven by a decrease in CTO resale cash outflows of $51.2 million, a decrease in CTO supply contract termination cash outflows of $50.0 million, a net reduction in trade working capital of $19.0 million (including accounts receivable, inventory, and accounts payable), increased cash earnings of $17.0 million, a decrease in tax payments of $16.9 million,lower cash interest paid of $10.3 million, and decreased spending on restructuring initiatives of $8.5 million. Partially offsetting these cash inflows was increased employee compensation payments of $2.9 million. Cash flows provided by (used in) investing activities Cash used in investing activities, inclusive of continuing and discontinued operations, in the nine months ended September 30, 2025 was $42.4 million and was primarily driven by capital expenditures of $34.1 million, and a strategic investment of $21.0 million. In the nine months ended September 30, 2025 and 2024, capital spending included the base maintenance capital supporting ongoing operations, and growth and cost improvement spending. The decrease in Net cash used in investing activities when compared to the prior year period is primarily due to reduced capital expenditures of $18.6 million, and cash provided by other investing activities. Capital expenditure categories Nine Months Ended September 30, In millions 2025 2024 Maintenance $ 20.5 $ 33.8 Safety, health and environment 8.5 2.4 Growth and cost improvement 5.1 16.5 Total capital expenditures $ 34.1 $ 52.7 Cash flows provided by (used in) financing activities Cash used in financing activities, inclusive of continuing and discontinued operations, in the nine months ended September 30, 2025, was $168.8 million and was primarily due to payments on our revolving credit facility and other borrowings of $350.0 million, and repurchases of common stock of $25.2 million, partially offset by proceeds from our revolving credit facility and other borrowings of $209.5 million. Cash provided by financing activities in the nine months ended September 30, 2024 was $27.4 million and was primarily due to proceeds from our revolving credit facility and other borrowings of $150.5 million, partially offset by payments on our revolving credit facility and other borrowings of $119.3 million. New Accounting Guidance Refer to Note 2 for a full description of recent accounting pronouncements including the respective expected dates of adoption and expected effects on our Condensed Consolidated Financial Statements. 50 Critical Accounting Policies and Estimates Our Condensed Consolidated Financial Statements are prepared in conformity with GAAP. The preparation of our financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. We have described our accounting policies in Note 2 to our consolidated financial statements included in our 2024 Annual Report. We have reviewed these accounting policies, identifying those that we believe to be critical to the preparation and understanding of our financial statements. Critical accounting policies are central to our presentation of results of operations and financial condition and require management to make estimates and judgments on certain matters. We base our estimates and judgments on historical experience, current conditions and other reasonable factors. For a description of our critical accounting policies and estimates, refer to Part II, Item 7, Critical Accounting Policies and Estimates in our 2024 Annual Report. Our critical accounting policies have not substantially changed from those described in the 2024 Annual Report.