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Item 7. Management’s Discussion and Analysis

2026-02-26 compared with 2025-02-19 · 320 added, 256 removed, 314 unchanged (65% of the section changed)

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Item 8 within this Form 10-K.

Unless otherwise noted, discussion within Part II relates to continuing operations.

Refer to Note 20 of the Notes to the Consolidated Financial Statements included in Part II.

Item 8 within this Form 10-K for further information regarding discontinued operations.

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.

Our products are used in a variety of demanding applications, including automotive gasoline vapor emissions control systems, food, water and chemical filtration, asphalt paving, agrochemical dispersants, bioplastics, coatings, elastomers, and paint for road markings.

We operate in three reportable segments:

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Recent Developments

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.

Measurement Alternative Investments

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.

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.

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.

Performance Chemicals Repositioning and Industrial Specialties Divestiture

Beginning in 2023, following a sharp decline in volumes in the industrial end markets served by our Performance Chemicals industrial specialties product line, we announced a series of strategic initiatives designed to right-size our cost structure, streamline our footprint, and strengthen the overall resilience of the Company.

Collectively, these initiatives are referred to as the Performance Chemicals ("PC") Repositioning Actions.

The PC Repositioning Actions were designed to:

• Prioritize growth in our higher-margin Performance Chemicals product lines, such as pavement technologies;

• Improve the financial performance of the industrial specialties product line;

• Reduce exposure to lower-margin, more cyclical end-use markets, including adhesives, publication inks, and oilfield applications, which historically represented approximately 45 percent of our industrial specialties product line's pre-2023 annualized net sales.

The actions completed through fiscal year 2024 successfully enhanced the financial performance of the industrial specialties product line and positioned that business for strategic alternatives.

As a result, on January 16, 2025, we announced our intention to pursue a potential sale of the product line.

On September 3, 2025, Ingevity entered into a sales agreement to sell substantially all of the assets, rights, and liabilities associated with the industrial specialties product line and the CTO refinery, (collectively, the "Divestiture").

Upon execution of the sales agreement, the industrial specialties product line and the CTO refinery included in the Divestiture met the criteria for classification as discontinued operations.

As such, the results of operations of the Divestiture have been reclassified and presented as discontinued operations for all periods presented.

The sale was completed on January 1, 2026.

PC Repositioning Status and Charges To Date

We have substantially completed all activities associated with the restructuring program and expect the plan to be completed in 2026.

The PC Repositioning Actions restructuring program is expected to result in total charges of approximately $370 million, consisting primarily of:

• ~$255 million in non-cash asset-related charges;

• ~$115 million in cash charges, including:

▪ ~$25 million in severance and other employee-related costs, and

▪ ~$90 million in other restructuring costs, including decommissioning, dismantling, and removal charges, and contract termination costs.

We expect to incur approximately $10 million of additional cash charges during 2026.

Through December 31, 2025, we have incurred $353.7 million in total charges, including $248.3 million of non-cash asset-related charges and $105.4 million in cash charges.

As of December 31, 2025, we have paid $91.3 million of the cash charges.

The charges expected in connection with these actions are subject to several assumptions and risks, and actual results may differ materially.

Additional charges may arise from events related to or resulting from these actions.

Savings and Impact

The combined PC Repositioning Actions were expected to generate realized savings of approximately $95 million to $110 million.

As of December 31, 2025, we have captured substantially all of the anticipated savings.

Inclusive of continuing and discontinued operations, since November of 2023, we have realized approximately $105 million in cash savings.

These savings were recognized in the following financial statement captions:

• ~75 percent in Cost of sales,

• ~20 percent in Selling, general, and administrative expenses, and

• ~5 percent in Research and technical expenses

The savings also included approximately $15 million of annualized run-rate savings from corporate and shared service model changes that will continue to benefit New Ingevity, following the Divestiture.

In addition to the cash savings, we realized approximately $12 million in lower full year depreciation and intangible amortization expenses.

Long Lived Asset Impairment Charge - Performance Chemicals' Road Markings Asset Group

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.

As a result of the advanced diligence completed in the fourth quarter of 2025 as part of our pursuit of a sale of the Performance Chemicals' road markings asset group, we concluded that a triggering event occurred.

The triggering event required us to conduct an impairment analysis of the Performance Chemicals road markings long-lived assets, which included significant assumptions such as the revenue growth rates, earnings before interest, taxes, depreciation, and amortization ("EBITDA") margins, and discount rate, which are judgmental.

Variations in any assumptions could result in materially different calculations of fair value.

Based on the results of the quantitative analysis, which was based on both quoted market prices in active markets and a discounted value of estimated future cash flows, we concluded that the carrying value of the Performance Chemicals road markings asset group exceeded its fair value.

As a result, we recorded a non-cash impairment charge of $109.3 million.

The charge is included within "Long lived asset impairment charge" on the consolidated statements of operations for the twelve months ended December 31, 2025, and was allocated between "Property, plant, and equipment, net" and "Other intangibles, net" on the consolidated balance sheets in the amount of $25.2 million, and $84.1 million, respectively.

Interim Goodwill Impairment Charge - Advanced Polymer Technologies

During the second quarter of 2025, the announcements and subsequent modifications of international tariffs escalated global trade tensions and contributed to increased consumer uncertainty, which negatively impacted parts of our businesses, particularly Advanced Polymer Technologies ("APT").

As a result, we conducted an analysis of the APT reporting unit's goodwill and long-lived assets.

This analysis incorporated revised expectations regarding the pace and strength of industrial demand recovery in key markets.

In addition, the macroeconomic changes experienced during the quarter contributed to unfavorable movements in key valuation inputs, including an increase in the risk-free rate used in calculating the discount rate.

Our analysis included significant assumptions such as the revenue growth rates, EBITDA margins, and discount rate, which are judgmental.

Variations in any assumptions could result in materially different calculations of fair value.

Based on the results of the quantitative analysis, we concluded that the carrying value of the APT reporting unit exceeded its fair value.

As a result, we recorded a non-cash goodwill impairment charge of $183.8 million, representing all of the goodwill associated with the APT reporting unit.

The charge is included within "Goodwill impairment charge" on the consolidated statements of operations for the twelve months ended December 31, 2025.

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.

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.

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.

As of 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.

The total 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.

Expected Savings and Impact

The Performance Chemicals' repositioning, which began in November 2023, was focused on reducing exposure to lower margin end-use markets of our industrial specialties product line, such as adhesives, publication inks, and oilfield.

Sales into these end-use markets represented approximately 45 percent of our industrial specialties product line historical annualized net sales.

As a result of this initiative, we expect to realize savings of approximately $95 million to $110 million.

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

During the year ended December 31, 2024, we realized cash savings of approximately $84.0 million, including $68.0 million in Cost of sales, $12.0 million in Selling, general, and administrative expenses, and $4.0 million in Research and technical expenses, respectively.

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

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

We expect to realize the remaining savings in 2025.

In addition to the cash savings, we expect to realize approximately $15 million to $17 million in depreciation and intangible amortization expenses, respectively.

During the year ended December 31, 2024, we realized savings of approximately $10 million.

We expect to realize the remaining savings in 2025.

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

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.

Our analysis included significant assumptions such as the revenue growth rates, EBITDA margins, and EBITDA exit multiple, which are judgmental.

Variations in any assumptions could result in materially different calculations of undiscounted cash flows.

Strategic Investments

Equity Method Investments

During the year ended December 31, 2025, we sold a strategic equity method investment for $6.8 million, resulting in a $7.1 million loss, recorded within "Other (income) expense, net" on the consolidated statement of operations for the twelve months ended December 31, 2025.

We recognized an additional $0.1 million gain associated with an equity method investment sale during the year ended December 31, 2025.

Measurement Alternative Investments

During the year ended December 31, 2025, the Company identified triggering events indicating that investments being accounted for under the measurement alternative may be impaired, and recognized impairment charges of $11.9 million, recorded in "Other (income) expense, net" on the consolidated statement of operations for the twelve months ended December 31, 2025.

Proxy Contest

On March 30, 2025, the Company entered into a cooperation agreement (the "Cooperation Agreement") with Vision One Fund, L.P.

and its affiliates ("Vision One"), a stockholder of the company.

Pursuant to the Cooperation Agreement, our Board of Directors ("Board") agreed to appoint a new member to the Company's Board within one day of the 2025 annual meeting of stockholders ("Annual Meeting"), and Vision One agreed to withdraw its nominees for election at the Annual Meeting and to abide by certain customary standstill restrictions, mutual non-disparagement provisions, voting commitments and other obligations until the opening of the nomination window for the company's 2026 annual meeting of stockholders.

In connection with the Cooperation Agreement, Vision One was entitled to the reimbursement of certain of its reasonable and documented out-of-pocket fees and expenses.

During the year ended December 31, 2025, we incurred costs of approximately $8.2 million in connection with our response to the proxy contest.

These costs, which were included within "Other (income) expense, net" on the consolidated statements of operations, include legal and other professional service fees as well as incremental proxy solicitation costs related to the Annual Meeting.

On July 4, 2025, the United States enacted into law the legislation formally titled "An Act to provide for reconciliation pursuant to title II of H.

14," and commonly referred to as the One Big Beautiful Bill ("OBBB"), which provides for the permanent extension of several expiring provisions of the 2017 Tax Cuts and Jobs Act and includes a comprehensive tax reform package that significantly modifies U.S.

federal tax policy and the international tax framework.

Based on the analysis performed by the Company, the OBBB will have an impact on cash taxes as a result of the ability to accelerate deductions.

This increase to the one-time deductibility of previously amortizable expenses is driving down our benefit from the foreign-derived intangible income deduction, thus negatively impacting the effective tax rate for the year ended December 31, 2025.

Results of Operations

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Goodwill impairment charge 183.8 306.6 —

Long lived asset impairment charge 109.3 — —

Acquisition-related costs — 0.3 3.6

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Interest income (5.2) (7.7) (6.3)

Income (loss) before income taxes (535.6) (10.1) 269.6

Provision (benefit) for income taxes (105.3) (4.7) 58.0

Income (loss) from continuing operations before income taxes (142.1) (140.5) 130.0

Provision (benefit) for income taxes on continuing operations 8.2 (19.1) 24.2

Net income (loss) from continuing operations (150.3) (121.4) 105.8

Income (loss) from discontinued operations, net of income taxes (16.8) (308.9) (111.2)

Net income (loss) $ (167.1) $ (430.3) $ (5.4)

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2025 Performance Summary

The Net sales decrease was driven primarily by the Performance Chemicals industrial specialties product line due to repositioning actions that have resulted in the reduction of sales to lower margin end-use markets, therefore reducing Net sales during the year by approximately $210 million.

Also contributing to the lower sales was unfavorable weather in key North American regions impacting the Performance Chemicals road technologies product line contributing to the decline in Net sales of $27.5 million, continued weakness in certain industrial end markets that negatively impacted sales in the Performance Chemicals industrial specialties product line that contributed to the reduction in Net sales of $56.4 million, and lower sales in our Advanced Polymer Technologies reportable segment of $15.4 million, partially offset by an increase in our Performance Materials reportable segment of $23.6 million.

The Net sales decrease of $32.5 million was driven primarily by the APT reportable segment as continued weak industrial demand, indirect tariff impacts negatively impacted customer end markets demand and increased China competition pressured sales.

The decrease was partially offset by slight growth (less than one percent) in the pavement technologies product line.

Performance Materials maintained sales year over year despite supply chain disruptions in the automobile industry.

Year Ended December 31, 2025 vs.

The Net sales decrease in 2024 was driven by volume decline of $274.9 million (16 percent), unfavorable foreign exchange impacts of $9.8 million (one percent), and unfavorable pricing and sales mix of $1.0 million (zero percent).

The Net sales decrease in 2025 was driven by a volume decline of $41.2 million (three percent), partially offset by favorable pricing and sales mix of $6.9 million (one percent) and favorable foreign exchange impacts of $1.8 million (zero percent).

Year Ended December 31, 2024 vs.

The Net sales increase in 2023 was driven by favorable pricing and sales mix of $142.3 million (nine percent), primarily attributed to an increase in Performance Chemicals of $93.1 million, partially offset by volume decline of $106.3 million (six percent), and unfavorable foreign exchange impacts of $12.2 million (one percent).

The Net sales decrease in 2024 was driven by a volume decline of $8.7 million (one percent), and unfavorable foreign exchange impacts of $9.0 million (one percent), partially offset by favorable pricing and sales mix of $2.3 million (zero percent).

Year Ended December 31, 2025 vs.

Gross profit decrease of $17.2 million was driven by unfavorable sales volume of $35.8 million, unfavorable pricing and sales mix of $6.4 million, and unfavorable foreign exchange impacts of $2.9 million, partially offset by decreased manufacturing costs of $27.9 million.

Gross profit includes the realized savings of $68.0 million from the Performance Chemicals repositioning action initiated in 2023.

Gross profit decrease of $3.3 million was driven by improved operating efficiencies of $23.4 million, favorable pricing and sales mix of $6.8 million, and favorable foreign exchange impacts of $2.8 million, offset by unfavorable sales volume of $20.0 million and LIFO impact of $16.3 million.

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

Year Ended December 31, 2024 vs.

Gross profit decrease of $98.2 million was driven by increased manufacturing costs of $158.6 million primarily due to significant CTO raw material cost pressure within our industrial specialties product line in our Performance Chemicals reportable segment, unfavorable sales volume of $46.9 million, inventory charges of $19.7 million, and unfavorable foreign currency exchange impacts of $0.9 million, partially offset by favorable pricing and sales mix of $127.9 million.

Gross profit increase of $19.8 million was driven by decreased manufacturing costs of $46.6 million and favorable sales volume of $0.5 million, partially offset by LIFO impact of $16.4 million, unfavorable pricing and sales mix of $3.2 million, and unfavorable foreign currency exchange impacts of $7.7 million.

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

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Selling, general, and administrative ("SG&A") expenses were $171.2 million (15 percent of Net sales) and $157.8 million (13 percent of Net sales) for the years ended December 31, 2025 and 2024, respectively.

Overall, SG&A decreased by approximately $17.0 million or nine percent.

Our Performance Chemicals' repositioning actions resulted in a non-cash reduction of intangible amortization expense of $11.4 million and $12.0 million in cash savings.

These combined savings were partially offset by increased spending on commercial activities of $1.0 million and increased variable incentive compensation of $5.4 million, driven by adjustments recognized in the year ended December 31, 2023, that did not repeat in 2024.

Overall, SG&A increased by approximately $13.4 million or eight percent.

The higher SG&A was driven by improved business performance that drove increased variable incentive compensation expense of $12.9 million, and increased amortization expense of $0.5 million.

Year Ended December 31, 2024 vs.

SG&A expenses were $157.8 million (13 percent of Net sales) and $161.8 million (13 percent of Net sales) for the years ended December 31, 2024 and 2023, respectively.

The decrease in SG&A expenses is primarily due to lower employee-related costs of $18.4 million, and decreased travel and other miscellaneous costs of $6.9 million, partially offset by increased amortization expense of $10.2 million due to the Ozark Materials acquisition.

The decrease in SG&A expenses is primarily due decreased travel and other miscellaneous costs of $8.6 million, and decreased amortization expense of $1.6 million, partially offset by increased employee-related costs of $6.2 million.

Research and technical expenses

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

Overall, Research and technical expense decreased by $3.7 million in 2024, compared to 2023, which included approximately $4.0 million realized from the Performance Chemicals repositioning actions initiated in 2023.

Overall, Research and technical expense increased by $3.9 million in 2025, compared to 2024, primarily driven by an increase within our Performance Materials reportable segment.

Restructuring and other (income) charges, net

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In millions 2025 2024 2023

Work force reductions and other $ 2.3 $ 12.5 $ —

Workforce reductions and other $ 10.7 $ 2.3 $ 11.5

Performance Chemicals' repositioning 2.1 4.6 23.7

Restructuring charges $ 12.8 $ 6.9 $ 35.2

Alternative feedstock transition — 22.1 —

North Charleston plant transition — 11.2 10.5

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Years Ended December 31, 2025, 2024, and 2023

Goodwill impairment charge of $349.1 million for the year ended December 31, 2024 within our Performance Chemicals reporting unit.

The goodwill impairment charge of $183.8 million for the year ended December 31, 2025 was recognized within our Advanced Polymer Technologies reporting unit.

The goodwill impairment charge of $306.6 million for the year ended December 31, 2024 was recognized within our Performance Chemicals reporting unit.

See Note 8 for more information.

Long lived asset impairment charge

Years Ended December 31, 2025, 2024, and 2023

The long lived asset impairment charge of $109.3 million for the year ended December 31, 2025 was driven by the road markings asset group within our Performance Chemicals segment.

See Note 7 and Note 8 for more information.

Acquisition-related costs

Years Ended December 31, 2025, 2024, and 2023

Acquisition costs were $0.3 million, $3.6 million, and $5.0 million for the years ended December 31, 2024, 2023, and 2022, respectively.

For the twelve months ended December 31, 2024, 2023, and 2022, all charges related to the integration of Ozark Materials into our Performance Chemicals segment.

See Note 16 for more information.

Acquisition costs were zero, $0.3 million, and $3.6 million for the years ended December 31, 2025, 2024, and 2023, respectively.

For the twelve months ended December 31, 2024, and 2023, all charges related to the integration of Ozark Materials into our Performance Chemicals reportable segment.

Other (income) expense, net

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CEO severance charges — 4.8 —

Loss on CTO resales (2)

CTO supply contract termination charges (2)

Proxy contest charges (2)

Portfolio realignment costs (2)

Other (income) expense, net (5.3) (3.2) (0.6)

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Litigation related interest expense (3)

Other 1.2 1.2 0.6

Total Interest expense $ 78.3 $ 97.8 $ 93.3

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(1) See Note 13 for more information.

(2) The increase in interest expense was driven by higher average debt levels during 2024 and 2023 due to the October 2022, $325.0 million acquisition of Ozark Materials, as well as higher average interest rates compared to prior years.

(2) See Note 10 for more information.

(4) See Note 18 for more information.q

(3) See Note 17 for more information.

Interest income

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$ 2.0 $ 2.6 $ 2.4

Fixed-to-fixed cross-currency interest rate swap (2)

Floating-to-fixed interest rate swaps (2)

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For the years ended December 31, 2025, 2024, and 2023, our effective tax rate was (5.7) percent, 13.6 percent, and 18.5 percent respectively.

An explanation of the change in the effective tax rate is presented in Note 17.

The decrease in our effective tax rate from 2024 to 2025 was mainly driven by the mix of earnings, with U.K.

losses, due to the APT goodwill impairment (see Note 8), driving an overall global loss with net tax expense creating a negative effective tax rate in 2025.

Additionally, the foreign-derived intangible income deduction decreased in 2025 compared to 2024 as a result of the OBBB signed into law on July 4, 2025, which allowed immediate deductibility of previously amortizable expenses.

Additionally, a significant decrease in the Federal Research and Development credit in 2025, further increased total tax expense as compared to 2024.

Segment Operating Results

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We have excluded the following items from segment EBITDA:

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

interest expense associated with corporate debt facilities, interest income, income taxes, depreciation, amortization, restructuring and other income (charges), net, goodwill impairment charges, long lived asset impairment charges, acquisition and other-related income (costs), gain (loss) on strategic investments, proxy contest charges, portfolio realignment costs, pension and postretirement settlement and curtailment income (charges), net, indirect costs allocated to Divestiture, and Corporate and other costs.

In general, the accounting policies of the segments are the same as those described in the Summary of Significant Accounting Policies in Note 2.

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2025 Performance Summary

Performance Materials delivered record Net sales, Segment EBITDA, and Segment EBITDA margins.

Sales growth of four percent was driven by higher volume and improved price and mix.

There are two components to mix that are key to understanding this reportable segment.

The segment benefits from larger vehicles, such as trucks and sport utility vehicles, as well as more hybrids and internal combustion engine vehicles versus all electric vehicles, as these vehicles contain more of our activated carbon content.

Regional mix is also important as North America, which is nearly 50 percent of Performance Material sales, is our most profitable region due to the typica lly larger size of vehicles requiring more content, and this region also has the highest emissions control standards in the world requiring more advanced forms of our activated carbon product.

Asia Pacific is also an important region, representing about 40 percent of total Performance Materials net sales.

Within Asia Pacific, about half of our net sales are in China and the remaining are made up primarily of South Korea and Japan.

All of these countries have strict emissions control standards or strong export markets where our activated carbon plays an important role in meeting regulations.

Europe is our least impactful region due to the regulatory environment favoring electric vehicles, and also because European emissions standards lag behind North America and Asia Pacific.

Segme nt EBITDA for Performance Materials increased 11 percent to $319.1 million, with Segment EBITDA margins for the year of 52.3 percent.

This record result was primarily driven by operational improvements that enabled our production operations to run more efficiently which reduced our input costs by using less natural gas and also improved yields.

Sales of $606.9 million dollars were in line with the prior year, which is a strong result given that 2024 was a record year for the business.

Throughout 2025, the automotive industry faced significant disruption from tariff uncertainty, fires, and chip shortages.

Against that backdrop, the resilience of our Performance Materials business becomes more evident.

While these dynamics led to slightly lower volumes, disciplined pricing actions helped to offset the impact, allowing us to hold year-over-year sales essentially flat.

Segment EBITDA declined 2% year over year due to lower volume and higher SG&A.

Despite this, Segment EBITDA margin remained strong at 53.8 percent.

In millions Years Ended December 31,

10 unchanged sentences

Segment net sales.

The increase of $23.6 million in 2024 was driven by favorable pricing and sales mix of $17.3 million (three percent), and a volume increase of $11.2 million (two percent), partially offset by unfavorable foreign currency exchange impacts of $4.9 million (one percent).

The decrease of $2.7 million in 2025 was driven by a volume decline of $3.7 million (one percent), partially offset by favorable pricing and sales mix of $0.8 million (zero percent), and favorable foreign currency exchange impacts of $0.2 million (zero percent).

Segment EBITDA.

The increase of $32.5 million in 2024 was driven by decreased manufacturing costs of $26.0 million, pricing and sales mix of $11.9 million, and favorable volume of $6.3 million.

The increase was partially offset by higher SG&A expenses and research and technical costs of $10.9 million, and unfavorable foreign currency exchange and other charges of $0.8 million.

The decrease of $6.9 million in 2025 was driven by increased SG&A expenses and research and technical costs of $6.0 million, volume decline of $5.6 million, and LIFO impact of $3.4 million, partially offset by favorable foreign currency exchange and other charges of $3.7 million, decreased manufacturing costs of $3.6 million, and favorable pricing and sales mix of $0.8 million.

Year Ended December 31, 2024 vs.

Segment net sales.

The increase in 2023 was driven by favorable pricing and sales mix of $32.2 million (six percent), and a volume increase of $17.3 million (three percent), partially offset by unfavorable foreign currency exchange impacts of $12.0 million (two percent).

Segment EBITDA.

Segment EBITDA increased by $34.4 million due to pricing and sales mix of $21.1 million, decreased SG&A expenses and research and technical costs of $11.6 million, and favorable volume of $10.9 million.

The increase was partially offset by higher manufacturing costs of $8.8 million, and unfavorable foreign currency exchange impacts of $0.4 million.

The increase of $30.1 million in 2024 was driven by decreased manufacturing costs of $23.9, favorable pricing and sales mix of $11.9 million, favorable volume of $6.3 million, and a LIFO impact of $2.1 million.

The increase was partially offset by higher SG&A expenses and research and technical costs of $13.2 million, and unfavorable foreign currency exchange and other charges of $0.9 million.

Performance Chemicals

2025 Performance Summary

Performance Chemicals net sales of $608.2 million declined almost $300 million, a 33 percent decline, versus the prior year primarily as a result of our repositioning actions.

Approximately $210 million of the decline in net sales reflects the exit of lower-margin end markets in our industrial specialties product line as we continue to focus on maximizing profitability.

The remaining net sales decline was due primarily to lost sales as customers sought alternative suppliers in light of our repositioning actions and lower road technologies product line sales attributed to adverse weather in the key states within the U.S.

The segment generated Segment EBITDA of $14.7 million for the year.

T he year over year decline in Segment EBITDA was driven by higher CTO costs and lower volumes, particularly in the road technologies product line, partially offset by cost savings realized due to the Performance Chemicals repositioning.

Performance Chemicals net sales of $400.5 million were flat versus the prior year.

Pavement Technologies product line 2025 sales remained flat to 2024 as volume growth in the NAFTA region was largely offset by lower infrastructure investment in South America.

The product line also benefited from pricing and favorable mix shift.

While adverse wet weather impacted results in the first half of 2025, demand shifted into the second half, and most projects were ultimately completed within the year.

Road Markings product line continued to experience price pressure from competition, although volumes grew slightly.

The reportable segment generated Segment EBITDA of $60.3 million for the year was supported by improved pricing, favorable mix, and lower raw material costs, partially offset by volume declines and higher SG&A.

Years Ended December 31,

In millions 2025 2024 2023

Total Performance Chemicals - Net sales $ 608.2 $ 902.1 $ 875.1

Road Technologies product line 342.3 369.8 241.3

Industrial Specialties product line 265.9 532.3 633.8

Performance Chemicals - Net sales $ 400.5 $ 401.9 $ 425.5

Pavement Technologies product line 302.6 300.9 312.1

Road Markings product line 97.9 101.0 113.4

Segment EBITDA $ 60.3 $ 53.7 $ 71.1

3 unchanged sentences

$ 401.9 (9.1) 7.8 (0.1) $ 400.5

Road Technologies product line 369.8 (30.8) 3.7 (0.4) 342.3

Industrial Specialties product line 532.3 (262.4) (3.2) (0.8) 265.9

Pavement Technologies product line 300.9 (10.8) 12.6 (0.1) 302.6

Road Markings product line 101.0 1.7 (4.8) — 97.9

Year Ended December 31, 2024 vs 2023

$ 425.5 (26.9) 3.7 (0.4) $ 401.9

Road Technologies product line 241.3 98.4 30.4 (0.3) 369.8

Industrial Specialties product line 633.8 (163.7) 62.7 (0.5) 532.3

Pavement Technologies product line 312.1 (17.8) 7.0 (0.4) 300.9

Road Markings product line 113.4 (9.1) (3.3) — 101.0

Year Ended December 31, 2025 vs.

Segment net sales.

The decrease of $293.9 million in 2024 was driven by a volume decrease of $293.2 million (33 percent), as a result of a decrease in industrial specialties ($262.4 million) and road technologies ($30.8 million), and unfavorable foreign currency exchange of $1.2 million (zero percent).

The decrease was partially offset by favorable pricing

and sales mix of $0.5 million (zero percent), comprised of road technologies ($3.7 million), offset by industrial specialties ($3.2 million).

The decrease of $1.4 million in 2025 was driven by a volume decline of $9.1 million (two percent), as a result of a decrease in pavement technologies ($10.8 million), partially offset by growth in road markings ($1.7 million), and unfavorable foreign currency exchange of $0.1 million (zero percent), partially offset by favorable pricing and sales mix of $7.8 million (two percent), comprised of pavement technologies ($12.6 million), offset by road markings ($4.8 million).

Segment EBITDA.

The decrease of $51.0 million in 2024 was driven by a volume decrease of $45.0 million, higher manufacturing costs of $21.4 million, primarily due to higher cost CTO, and unfavorable foreign currency exchange and other charges of $5.1 million.

The decrease was partially offset by favorable pricing and sales mix of $0.5 million and lower SG&A expenses of $20.0 million, which benefited from the Performance Chemicals' repositioning and cost savings initiatives implemented in 2023.

The increase of $6.6 million in 2025 was driven by decreased manufacturing costs of $18.3 million, favorable pricing and sales mix of $7.8 million, primarily due to higher cost CTO in the prior year, and favorable foreign currency exchange and other charges of $1.9 million.

The decrease was partially offset by LIFO impact of $12.9 million, higher SG&A expenses of $4.5 million, and a volume decline of $4.0 million.

Year Ended December 31, 2024 vs.

Segment net sales.

The sales increase was driven by favorable pricing and sales mix of $93.1 million (11 percent), comprised of industrial specialties ($62.7 million) and road technologies product lines ($30.4 million), respectively.

The increase was partially offset by a volume decline of $65.3 million (seven percent), driven by a decline in industrial specialties ($163.7 million), partially offset by growth in road technologies ($98.4 million).

Unfavorable foreign currency exchange also impacted Net sales by $0.8 million (zero percent).

The decrease of $23.6 million in 2024 was driven by a volume decline of $26.9 million (six percent), as a result of a decrease in pavement technologies ($17.8 million) and road markings ($9.1 million), and unfavorable

foreign currency exchange of $0.4 million (zero percent), partially offset by favorable pricing and sales mix of $3.7 million (one percent), comprised of pavement technologies ($7.0 million), offset by road markings ($3.3 million).

Segment EBITDA.

Segment EBITDA decreased $94.7 million, mainly due to higher manufacturing costs of $157.8 million primarily due to increased CTO cost, a volume decline of $34.1 million, and unfavorable foreign currency exchange impacts of $0.1 million, These increases were partially offset by favorable pricing and sales mix of $89.7 million, and decreased SG&A expenses of $7.6 million.

The decrease of $17.4 million in 2024 was driven by LIFO impact of $18.5 million, a volume decline of $8.7 million, and unfavorable foreign currency exchange and other charges of $2.6 million.

The decrease was partially offset by decreased manufacturing costs of $8.5 million, favorable pricing and sales mix of $3.7 million, and decreased SG&A expenses of $0.2 million.

Advanced Polymer Technologies

2025 Performance Summary

Advanced Polymer Technologies generated higher volumes year over year as the segment made progress in end markets such as elastomers, adhesives, and coatings;

however, unfavorable overall product mix and selective price concessions contributed to a revenue decline of eight percent.

The segment benefited from lower energy costs and an improvement in utilization rates as a result of higher volumes but these cost savings were more than offset by the revenue decline, resulting in segment EBITDA of $35.2 million and a segment EBITDA margin of 18.7 percent.

Advance d Polymer Technologies ("APT") sales of $160.2 million declined 15 percent year over year.

During 2025 APT faced headwinds from the indirect impact of tariffs, combined with the continued weak demand, particularly across the automotive, footwear and industrial end markets.

In addition, competitive dynamics in China continued to pressure sales, most notably in the paint protective film markets.

As a result, sales declined 15% and segment EBITDA was 18% lower year over year due to lower volumes that more than offset improved operating efficiency.

Despite these pressures, we held pricing and maintained a stable mix.

The team remained focused on operational discipline, which drove more reliable plant production and reduced operating expenses.

Favorable foreign exchange also supported results, enabling strong EBITDA margins at 20.0%.

In millions Years Ended December 31,

10 unchanged sentences

Segment net sales.

The decrease of $15.4 million in 2024 was driven by unfavorable pricing and sales mix of $18.8 million (nine percent), and unfavorable foreign currency exchange of $3.7 million (two percent), partially offset by volume growth of $7.1 million (three percent).

The decrease of $28.4 million in 2025 was driven by a volume decline of $28.5 million (fifteen percent), and unfavorable pricing and sales mix of $1.7 million (one percent), partially offset by favorable foreign currency exchange and other charges $1.8 million (one percent).

Segment EBITDA.

The decrease of $9.3 million in 2024 was driven by unfavorable pricing and sales mix of $18.8 million, and unfavorable foreign currency exchange impacts and other charges of $2.8 million.

The decrease was partially offset by lower manufacturing costs of $8.8 million, volume growth of $2.9 million, and lower SG&A expenses of $0.6 million.

The decrease of $6.9 million in 2025 was driven by a volume decline of $10.4 million, unfavorable pricing and sales mix of $1.8 million, and higher SG&A expenses of $1.5 million.

The decrease was partially offset by lower manufacturing costs of $3.7 million, and favorable foreign currency exchange impacts and other charges of $3.1 million.

Year Ended December 31, 2024 vs.

Segment net sales.

The sales decrease was driven by a volume decline of $58.3 million (24 percent), partially offset by favorable pricing and sales mix of $17.0 million (seven percent), and favorable foreign currency exchange of $0.6 million (zero percent).

The decrease of $15.4 million in 2024 was driven by unfavorable pricing and sales mix of $18.7 million (nine percent) and unfavorable foreign currency exchange of $3.7 million (two percent), partially offset by volume growth of $7.0 million (3 percent).

Segment EBITDA.

Segment EBITDA increased $4.5 million, mainly due to favorable pricing and sales mix of $17.1 million, decreased manufacturing costs of $9.9 million, and decreased SG&A expenses of $5.9 million.

These increases were partially offset by volume declines of $23.7 million, and unfavorable foreign currency exchange impacts and other miscellaneous charges of $4.7 million.

The decrease of $10.0 million in 2024, was driven by unfavorable pricing and sales mix of $18.8 million, and unfavorable foreign currency exchange impacts and other charges of $2.9 million.

The decrease was partially offset by decreased manufacturing costs of $8.8 million, and volume growth of $2.9 million.

Discontinued Operations

Reconciliation of Net Income (Loss) from discontinued operations to EBITDA from discontinued operations (Non-GAAP)

Years Ended December 31,

In millions 2025 2024 2023

Net income (loss) from discontinued operations (GAAP) $ (16.8) $ (308.9) $ (111.2)

Provision (benefit) for income taxes on discontinued operations (2.8) (86.2) (28.9)

Depreciation and amortization 1.2 8.7 25.4

Restructuring and other (income) charges, net (2)

42.9 168.1 116.8

Goodwill impairment charge (3)

Loss on CTO resales (4)

CTO supply contract termination charges (5)

(Gain) loss on strategic investments (6)

Inventory charges (7)

Indirect costs allocated to Divestiture (8)

(14.5) (22.1) (37.9)

EBITDA from discontinued operations (Non-GAAP) (1)(9)

$ 10.0 $ (29.6) $ 5.9

_______________

(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, gain (loss) on sale of strategic investments, loss on CTO resales, CTO supply contract termination charges, indirect costs allocated to Divestiture.

(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 twelve months ended December 31, 2024 and 2023, respectively, 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 20 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.

(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.

Years Ended December 31,

In millions 2025 2024 2023

Net sales from discontinued operations $ 121.6 $ 206.3 $ 476.6

Income (loss) from discontinued operations, net of income taxes (16.8) (308.9) (111.2)

EBITDA from discontinued operations $ 10.0 $ (29.6) $ 5.9

Net Sales Comparison of Years Ended December 31, 2025, 2024, and 2023

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

Year Ended December 31, 2025 vs 2024

$ 206.3 (81.5) (3.0) (0.2) $ 121.6

Year Ended December 31, 2024 vs 2023

$ 476.6 (266.3) (3.2) (0.8) $ 206.3

Year Ended December 31, 2025 vs.

Net sales from discontinued operations.

The decrease of $84.7 million in 2025 was driven by volume decline of $81.5 million (40 percent), unfavorable pricing and sales mix of $3.0 million (one percent), and unfavorable foreign currency exchange of $0.2 million (zero percent).

EBITDA from discontinued operations.

The increase of $39.5 million in 2025 was driven by lower manufacturing costs of $25.2 million and LIFO liquidation benefit of $20.7 million, favorable foreign currency exchange and other charges of $4.1 million, which included a one time insurance settlement of $1.0 million in 2025, and lower SG&A costs of $3.7 million.

The increase was partially offset by a volume decline of $11.2 million, and unfavorable pricing and sales mix of $3.0 million.

Year Ended December 31, 2024 vs.

Net sales from discontinued operations.

The decrease of $270.3 million in 2024 was driven by a volume decline of $266.3 million (56 percent), unfavorable pricing and sales mix of $3.2 million (one percent), and unfavorable foreign currency exchange of $0.8 million (zero percent).

EBITDA from discontinued operation.

The decrease of $35.5 million in 2024 was driven by a volume decline of $36.3 million, increased manufacturing costs of $17.8 million, unfavorable price and sales mix of $3.2 million, and unfavorable foreign currency exchange and other charges of $2.7 million.

The decrease was partially offset by lower SG&A costs of $18.1 million, and a LIFO liquidation benefit of $6.4 million.

Use of Non-GAAP Financial Measures

Ingevity has presented the financial measure, Adjusted EBITDA, defined below, which has not been prepared in accordance with U.S.

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.

Adjusted EBITDA is not meant to be considered in isolation nor as a substitute for the most directly comparable financial measure calculated in accordance with GAAP.

Adjusted EBITDA is utilized by management as a measure of profitability.

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

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

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

A reconciliation of Adjusted EBITDA to net income is set forth within this section.

Reconciliation of Net Income (Loss) to Adjusted EBITDA

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, interest income, provision (benefit) for income taxes, depreciation, amortization, restructuring and other (income) charges, net, goodwill impairment charges, long lived asset impairment charge, acquisition and other-related (income) costs, litigation verdict charges, (gain) loss on strategic investments, proxy contest charges, portfolio realignment costs, 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, interest income, 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.

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)

Years Ended December 31,

In millions 2025 2024 2023

Net income (loss) (GAAP)

Net income (loss) from continuing operations (GAAP)

$ (150.3) $ (121.4) $ 105.8

1 unchanged sentence

Interest income (5.2) (7.7) (6.3)

Provision (benefit) for income taxes (105.3) (4.7) 58.0

Provision (benefit) for income taxes on continuing operations 8.2 (19.1) 24.2

Depreciation and amortization (1)

3 unchanged sentences

Goodwill impairment charge (3)

183.8 306.6 —

Acquisition and other-related costs (4)

(Gain) loss on strategic investments (5)

19.6 2.1 (19.3)

Long lived assets impairment charge (6)

Proxy contest charges (7)

Portfolio realignment costs (8)

Pension and postretirement settlement and curtailment charges (income), net (9)

Adjusted EBITDA from continuing operations (Non-GAAP)

$ 373.0 $ 376.5 $ 353.0

Net income (loss) from discontinued operations (GAAP)

$ (16.8) $ (308.9) $ (111.2)

Provision (benefit) for income taxes on discontinued operations (2.8) (86.2) (28.9)

Interest expense, net — — —

Depreciation and amortization (1)

Restructuring and other (income) charges, net (2)

42.9 168.1 116.8

Goodwill impairment charge (3)

Loss on CTO resales (10)

1 unchanged sentence

(Gain) loss on strategic investments (5)

Adjusted EBITDA from discontinued operations (Non-GAAP)

$ 24.5 $ (13.8) $ 24.1

Pension and postretirement settlement and curtailment charges (income), net (8)

Adjusted EBITDA (Non-GAAP)

Total Adjusted EBITDA (Non-GAAP)

$ 397.5 $ 362.7 $ 377.1

_______________

(1) Refer to Note 19 for more information.

(1) Refer to Note 18 and Note 20 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 15 for more information on the charges.

(3) Refer to Note 8 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.

Refer to Note 16 for more information.

(5) 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 at amounts in excess of required CTO volumes.

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

As a result of the termination of this contract the purchases under the CTO supply contract ended, effective June 30, 2024, and we ended our CTO resale activity as of December 31, 2024.

Since these CTO resale activities

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

For the years ended December 31, 2024 and 2023, the loss on CTO resales relates to the Performance Chemicals segment.

Refer to Note 15 and Note 20 for more information.

(6) As consideration for the termination of the CTO supply contract, we made cash payments totaling $100.0 million during 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.

(3) Refer to Note 8 and Note 20 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.

2 unchanged sentences

Refer to Note 5 for more information.

(6) For the year ended December 31, 2025, charge relates to the Performance Chemicals reportable segment.

Refer to Note 7 and Note 8 for more information.

(7) Charges represent legal and other professional service fees as well as incremental proxy solicitation costs related to a proxy contest.

(8) Charges represent professional service fees related to a review of the company's portfolio.

(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.

2 unchanged sentences

Refer to Note 14 for more information.

Revision to Previously Reported Adjusted EBITDA (Non-GAAP)

We revised our December 31, 2023 non-GAAP Adjusted EBITDA calculation to remove previous adjustments of $19.7 million related to inventory lower of cost or market charges associated with the Company's Performance Chemicals repositioning.

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

The following table presents the twelve months ended December 31, 2023 as previously reported and as revised.

Reconciliation of Net Income (Loss) to Adjusted EBITDA

Twelve Months Ended December 31, 2023

In millions As previously reported As revised

Net income (loss) (GAAP)

$ (5.4) $ (5.4)

Interest expense 93.3 93.3

Interest income (6.3) (6.3)

Provision (benefit) for income taxes (4.7) (4.7)

Depreciation and amortization 122.8 122.8

Restructuring and other (income) charges, net 189.9 170.2

Acquisition and other-related costs

Loss on CTO resales 22.0 22.0

Gain on sale of strategic investment (19.3) (19.3)

Adjusted EBITDA (Non-GAAP)

$ 396.8 $ 377.1

(10) 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 at amounts in excess of required CTO volumes.

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

As a result of the termination of this contract the purchases under the CTO supply contract ended, effective June 30, 2024, and we ended our CTO resale activity as of December 31, 2024.

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

For the years ended December 31, 2024 and 2023, the loss on CTO resales relates to the Performance Chemicals segment.

Refer to Note 20 for more information.

(11) As consideration for the termination of the CTO supply contract, we made cash payments totaling $100.0 million during 2024.

Refer to Note 20 for more information.

Adjusted EBITDA

Year Ended December 31, 2024, 2023 and 2022

Years Ended December 31, 2025, 2024, and 2023

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

Current Full Year Company Outlook vs.

Our outlook includes a full year of operating results for the Advanced Polymer Technologies reportable segment and the Performance Chemicals road markings product line.

Our outlook excludes the divested industrial specialties product line, as the sale closed on January 1, 2026.

Net sales are expected to be between $1.1 billion and $1.2 billion for 2026.

We expect growth in our Performance Materials reportable segment due to increased pricing on select products while global automotive production remains flat compared to the prior year.

For our Performance Chemicals reportable segment, we expect the industrial specialties product line to deliver Net sales between $160 and $200 million, which reflects the impact of our repositioning actions to improve profitability by focusing on higher margin end markets, as well as continued weak industrial demand.

Additionally, we expect our road technologies product line Net sales to improve compared to 2024 as adverse weather conditions experienced in key states within the U.S.

negatively impacted 2024.

Our Advanced Polymer Technologies reportable segment anticipates modest growth as industrial demand recovery will be tempered by continued competitive dynamics, particularly in Asia.

We expect Net sales in our Performance Materials reportable segment to grow low-single digits as increased pricing on select products partially offsets forecasted decline in global automotive production for ICE powertrains compared to the prior year.

We expect Net sales in our Performance Chemicals reportable segment, inclusive of the road markings product line, to grow mid-single digits through continued adoption of our warm mix asphalt products in our pavement technologies product line.

For our Advanced Polymer Technologies reportable segment, we expect Net sales to grow low-single digits, reflecting a mild recovery in industrial end markets.

Adjusted EBITDA is expected to be between $380 million and $400 million for 2026.

We expect modest improvement in our Performance Materials reportable segment EBITDA, while maintaining segment EBITDA margins around 50 percent, as improved pricing and continued operational efficiencies will be muted by expected higher input costs, particularly energy, and higher spend on innovation activities.

In our Performance Chemicals reportable segment, we expect improved segment EBITDA, with segment EBITDA margins in the mid-to-high single digits.

The segment will benefit from revenue growth in our road technologies product line and further savings from our repositioning actions.

While we expect to benefit from lower CTO costs in the latter part of the year, we expect these benefits to be offset by price concessions to align with market pricing.

We anticipate that our Advanced Polymer Technologies segment EBITDA will improve versus prior year as our enacted pricing and mix strategies will produce segment EBITDA margins of around 20 percent.

A reconciliation of net income to adjusted EBITDA as projected for 2025 is not provided.

We expect our Performance Materials reportable segment to maintain segment EBITDA margins consistent with 2025, as revenue growth is partially offset by selective growth opportunities.

In our Performance Chemicals reportable segment, we expect segment EBITDA margins in the mid-teens.

The segment is expected to benefit from revenue growth in our pavement technologies product line but will be burdened by stranded costs from the divested industrial specialties product line.

We anticipate that our Advanced Polymer Technologies segment EBITDA will improve versus prior year as volume growth is partially offset by defensive pricing actions to maintain segment EBITDA margins of around 20 percent.

Corporate and Other costs are expected to be consistent 2025.

Additionally, we expect to fully eliminate the $15 million of stranded costs, resulting from the divested industrial specialties product line over the course of 2026.

As we accumulate the savings, we expect around $8 million to $12 million to burden the Company in 2026, the majority of which will be absorbed by our Performance Chemicals reportable segment.

We expect that the full run rate from these savings will be achieved in 2027.

Our effective tax rate is expected to be between 22 to 24 percent.

Adjusted Earnings Per Share is expected to be between $4.80 and $5.20.

A reconciliation of net income from continuing operations, to adjusted EBITDA from continuing operations, as projected for 2026 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;

These components, net of tax, include further restructuring and other

income (charges), net;

additional acquisition and other-related income (costs);

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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, that have a similar impact on comparability of periods, and which are not known at this time, may exist and impact adjusted EBITDA.

Further, in the future, other items with similar characteristics to those currently included in adjusted EBITDA from continuing operations, 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.

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.

We expect our cash flow provided by operations combined with cash on hand and available capacity under our revolving credit facility and revolving accounts receivable securitization 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 December 31, 2025, our undrawn capacity under our revolving credit facility was $474.0 million.

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

debt principal repayments, interest payments, capital expenditures, income 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 15.

In addition, we may also evaluate and consider purchases pursuant to our stock repurchase program (and related excise tax payments), strategic acquisitions, joint ventures, or other transactions to create stockholder value and enhance financial performance.

interest payments, capital expenditures, income tax payments, purchases pursuant to our stock repurchase program (and related excise tax payments), BASF litigation verdict, including post-judgment interest and potentially legal fees and costs, and restructuring activities as further described within Note 15.

In addition, we may also evaluate and consider strategic investments, divestitures, 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.

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

As of December 31, 2025, we determined that the earnings of some of our subsidiaries are no longer permanently reinvested due to global volatility.

We believe that our foreign holdings of cash will not have a material adverse impact on our U.S.

If these earnings were distributed, such amounts would be subject to U.S.

federal income tax at the statutory rate less the available foreign tax credits, if any, and would potentially be subject to withholding taxes in the various jurisdictions.

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.

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

Refer to Note 16 for more information.

Debt and Finance Lease Obligations

Refer to Note 10 for a summary of our outstanding debt obligations and revolving credit facility, and Note 13 for details of our lease obligations.

We are in the beginning stages of amending and extending our existing revolving credit facility, which we expect to execute before the end of the second quarter of 2026.

The amendment and extension is expected to have materially consistent provisions to that of the existing credit agreement but with an extended maturity beyond June 23, 2027.

Other Potential Liquidity Needs

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

During the year ended December 31, 2024, we repurchased no common stock.

At December 31, 2024, $353.4 million remained available for purchase under our Board-authorized repurchase program.

During the year ended December 31, 2025, we repurchased $56.3 million (inclusive of $0.4 million in excise tax) common stock, representing 1,061,460 shares of our common stock at a weighted average cost per share of $52.67.

At December 31, 2025, $297.5 million remained unused under our Board-authorized repurchase program.

Capital Expenditures

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Cash flows provided by (used in) operating activities

Cash provided by operating activities, which consists of net income (loss) adjusted for non-cash items including the cash impact from changes in operating assets and liabilities (i.e., working capital), totaled $128.6 million for the year ended December 31, 2024.

Cash provided by operating activities for 2024, when compared to 2023, decreased by $76.5 million.

This decrease was driven by a payment to terminate a Performance Chemicals CTO contract of $100.0 million, reduced cash earnings of $75.8 million, CTO resale cash outflows of $35.5 million, increased spending on restructuring initiatives of $15.3 million, and an increase in cash interest paid of $2.7 million due primarily to rising interest rates when compared to 2023.

Partially offsetting these cash outflows was a net reduction in trade working capital (accounts receivable, inventory, and accounts payable) of $108.5 million, reduced employee variable compensation of $41.5 million, and a reduction in tax payments of $2.8 million.

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), totaled $331.2 million for the year ended December 31, 2025.

Cash provided by operating activities for 2025, when compared to 2024, increased by $202.6 million.

This increase was driven by a decrease in CTO supply contract termination cash outflows of $100.0 million, reduced CTO resale cash outflows of $52.3 million, a reduction in tax payments of $18.2 million, a decrease in cash interest paid of $15.1 million due primarily to lower interest rates and debt levels when compared to 2024, reduced spending on restructuring initiatives of $13.2 million, increased cash earnings of $3.2 million, and an increase in trade working capital (accounts receivable, inventory, and accounts payable) of $1.7 million.

Partially offsetting these cash inflows was increased employee variable compensation of $1.1 million.

Cash provided by operating activities for 2024, when compared to 2023, decreased by $76.5 million.

This decrease was driven by lower cash earnings of $41.4 million, increased employee compensation payments of $38.9 million, increased spending on restructuring initiatives of $30.2 million, an increase in cash interest paid of $27.9 million due to higher average debt levels resulting from the October 2022 acquisition of Ozark Materials and rising interest rates during 2023, and CTO resale cash outflows of $10.6 million.

This was partially offset by a reduction in tax payments of $25.1 million, and a decrease in trade working capital (accounts receivable, inventory, and accounts payable) of $15.6 million.

This decrease was driven by a payment to terminate a Performance Chemicals CTO contract of $100.0 million, CTO resale cash outflows of $35.5 million, increased spending on restructuring initiatives of $15.3 million, a net reduction in trade working capital (accounts receivable, inventory, and accounts payable) of $5.8 million, and an increase in cash interest paid of $2.7 million due primarily to rising interest rates when compared to 2023.

Partially offsetting these cash outflows was increased cash earnings of $38.5 million, reduced employee variable compensation of $41.5 million, and a reduction in tax payments of $2.8 million.

Cash flows provided by (used in) investing activities

Cash used in investing activities for 2024 was primarily driven by capital spending.

Cash used in investing activities for 2025 was primarily driven by capital spending and strategic investment charges (refer to Note 5 for more information).

Capital spending included the base maintenance capital supporting ongoing operations and cost improvement and growth spending.

Cash used in investing activities for 2023 was driven by capital spending, offset partially by the proceeds from the sale of a strategic investment (refer to Note 5 for more information).

Cash used in investing activities for 2024 was driven by capital spending.

Capital spending included the base maintenance capital supporting ongoing operations and cost improvement and growth spending in our Advanced Polymer Technologies segment.

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Cash flows provided by (used in) financing activities

Cash used in financing activities for the year ended December 31, 2025, was $252.2 million and was primarily driven by net payments on the revolving credit facility and other borrowings of $192.3 million, and share repurchases of $56.3 million.

Cash used in financing activities for the year ended December 31, 2024, was $70.2 million and was primarily driven by net payments on the revolving credit facility and other borrowings of $66.1 million.

Cash used in financing activities for the year ended December 31, 2023, was $99.9 million and was driven by share repurchases of $92.1 million, and net payments on the revolving credit facility and other borrowings of $87.9 million, offset by proceeds from our accounts receivable securitization facility of $81.3 million.

New Accounting Guidance

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We report an asset to be disposed of at the lower of its carrying value or its estimated net realizable value.

As part of our broader strategic portfolio review, we are evaluating strategic alternatives for our APT reportable segment, including a potential sale.

We commenced a marketing process for APT in January 2026, subsequent to the December 31, 2025, balance sheet date.

As of December 31, 2025, we had not engaged with prospective buyers, distributed marketing materials, received third-party indications of interest, or otherwise obtained market based information.

Since the APT asset group continued to be classified as held and used at December 31, 2025, the Company assessed whether any indicators of

impairment existed under ASC 360.

Management determined that no such indicators were present as of year-end.

We continue to evaluate strategic alternatives for APT, and the outcome of a potential sale remains uncertain.

Depending on the final terms of any potential transaction or changes in market conditions, we may be required to recognize an impairment charge or loss on sale in future periods.

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.

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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.

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.

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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:

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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.

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.

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

Advanced Polymer Technologies Reporting Unit - Headroom Sensitivity Analysis

Revenue growth rate declines by 100 Bps EBITDA margin declines by 100 Bps Discount rate

increases by 100 Bps

Headroom 2% 3% (6)%

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 statements 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 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

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.

We are subject to income taxes in the U.S.

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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.

During the year ended December 31, 2025, we determined that the earnings of some of our subsidiaries are no longer permanently reinvested due to global trade volatility.

As a result of this change, we recorded $1.3 million of deferred taxes associated with our unremitted China earnings.

The remainder of our subsidiaries remain permanently reinvested.

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.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis