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Item 2. Management’s Discussion and Analysis

2026-07-30 compared with 2026-05-07 · 209 added, 151 removed, 221 unchanged (62% of the section changed)

1 unchanged sentence

Management's discussion and analysis of Ingevity Corporation's ( " Ingevity, " " the company, " " we, " " us, " or " our " ) financial condition and results of operations ( " MD&A " ) is provided as a supplement to the Condensed Consolidated Financial Statements and related notes included elsewhere herein to help provide an understanding of our financial condition, changes in financial condition and results of our operations.

The following discussion should be read in conjunction with Ingevity's consolidated financial statements as of and for the year ended December 31, 2025, filed on February 26, 2026, with the Securities and Exchange Commission ("SEC") as part of the company's Annual Reporting on Form 10-K ("2025 Annual Report") and the unaudited interim Condensed Consolidated Financial Statements and notes to the unaudited interim Condensed Consolidated Financial Statements, which are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP").

The following discussion should be read in conjunction with Ingevity's consolidated financial statements as of and for the year ended December 31, 2025, filed on February 26, 2026, with the Securities and Exchange Commission ("SEC") as part of the company's Annual Report on Form 10-K ("2025 Annual Report") and the unaudited interim Condensed Consolidated Financial Statements and notes to the unaudited interim Condensed Consolidated Financial Statements, which are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP").

All references to notes (herein referred to as "Note") in this section refer to the notes accompanying the Condensed Consolidated Financial Statements included in Item 1 within this Form 10-Q.

4 unchanged sentences

Unless otherwise indicated, the information in MD&A refers only to our continuing operations.

See Note 1 and 16 for more information.

Refer to Notes 1 and 16 for more information.

Cautionary Statements Regarding Forward-Looking Statements

9 unchanged sentences

• our review of strategic alternatives for the Advanced Polymer Technologies ("APT") segment may not result in a transaction;

• any transaction we enter into, including the sale of our road markings product line and our North Charleston crude tall oil ("CTO") refinery assets and the majority of the Performance Chemicals industrial specialties product line, may not yield the expected results or benefits;

• any transaction we enter into, including the sale of our road markings product line and our North Charleston crude tall oil ("CTO") refinery assets and the majority of our former Performance Chemicals industrial specialties product line, may not yield the expected results or benefits;

• if the review of strategic alternatives for APT results in a transaction, we may be adversely impacted if we are unable to adjust our costs and operating structure to reflect the requirements of the business after giving effect to such transaction;

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

Our products are used in a variety of demanding applications, including 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:

Performance Materials, Performance Chemicals and Advanced Polymer Technologies.

Performance Materials, Pavement Technologies and Advanced Polymer Technologies.

Recent Developments and Updates

Reportable Segment Renaming

During 2026, dispositions within our former Performance Chemicals reportable segment resulted in a change to the segment's name.

Historically, our Performance Chemicals reportable segment consisted of the Pavement Technologies, industrial specialties, and road markings product lines.

Following the sale of the industrial specialties product line on January 1, 2026, and the sale of the road markings product line on April 15, 2026, the Pavement Technologies product line became the sole remaining product line within the former Performance Chemicals segment;

refer to Note 16 for additional information regarding these dispositions.

Accordingly, during the second quarter of 2026, we renamed the Performance Chemicals reportable segment to Pavement Technologies to better reflect the segment's operations.

The segment rename did not affect our reportable segment structure, and segment information has been updated to reflect the new segment name, where applicable.

Long-Lived Asset Impairment Charge - Advanced Polymer Technologies 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 the sale process for the Advanced Polymer Technologies segment progressed during the second quarter of 2026, information obtained from potential buyers indicated that its carrying amount may not be recoverable.

Accordingly, we determined that a triggering event had occurred and performed a recoverability assessment of the asset group's long-lived assets.

The assessment indicated that the carrying amount was not recoverable.

Accordingly, we performed an impairment analysis to assess the fair value of the asset group.

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 Advanced Polymer Technologies asset group exceeded its fair value.

As a result, we recorded a non-cash impairment charge of $32.1 million.

The charge is included within "Long-lived asset impairment charge" on the consolidated statements of operations for the three and six months ended June 30, 2026, and was allocated between "Property, plant, and equipment, net" and "Other intangibles, net" on the condensed consolidated balance sheet as of June 30, 2026 in the amount of $13.2 million, and $18.9 million, respectively.

Legal Proceedings

On July 19, 2018, we filed suit against BASF Corporation ("BASF") in the United States District Court for the District of Delaware (the "Delaware Proceeding") alleging BASF infringed Ingevity's patent covering canister systems used in the control of automotive gasoline vapor emissions (U.S.

RE38,844) (the "844 Patent").

On February 14, 2019, BASF asserted counterclaims against us in the Delaware Proceeding, alleging two claims for violations of U.S.

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

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

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

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

antitrust law to approximately $85.0 million.

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

On February 13, 2024, the court in the Delaware Proceeding denied BASF's motion for pre-judgment interest on its tortious interference claim as well as our motion seeking judgment as a matter of law, or a new trial in the alternative.

In addition, BASF indicated it would seek attorneys' fees and costs in amounts that they would allege and have to demonstrate at a future date.

On March 13, 2024, we appealed the verdict as well as the U.S.

District Court's November 2020 dismissal of our patent infringement claims against BASF to the U.S.

Federal Circuit Court of Appeals.

On February 11, 2026, the U.S.

Federal Circuit Court of Appeals ruled against Ingevity on our appeal and we decided to no longer pursue any further appeals.

On March 13, 2026, we entered into an agreement with BASF, providing for the payment of:

(1) the judgment, plus post-judgment interest, in the amount of $97.0 million and (2) $16.2 million to resolve BASF's claim for attorneys' fees and costs, and made such payments on April 1, 2026.

The Delaware Proceeding, including all appeals and counterclaims, is now complete.

The full amount of the settlement of $113.2 million is accrued in "Accrued expenses" on the condensed consolidated balance sheet as of March 31, 2026 and the $16.2 million charge taken during the quarter was included within "Other (income) expense, net" on the condensed consolidated statements of operations for the quarter ended March 31, 2026.

On April 1, 2026, we paid $113.2 million to resolve matters related to the litigation with BASF Corporation, consisting of:

(1) the judgment, plus post-judgment interest, in the amount of $97.0 million and (2) $16.2 million to resolve BASF's claim for attorneys' fees and costs.

The litigation, including all appeals and counterclaims, is now complete.

Refer to Note 13 to the condensed consolidated financial statements for additional information.

Road Markings Product Line Disposition

On April 15, 2026, we completed the sale of our road markings product line to PPG Industries Inc.

for $65 million, subject to customary adjustments for working capital, indebtedness and transaction expenses (the "Disposition").

The Disposition does not meet the accounting criteria to be classified as assets held for sale as of March 31, 2026, nor does the transaction represent a strategic shift in the Company's future operations and financial results requiring presentation as a discontinued operation.

Revolving Credit Facility

On March 26, 2026, we entered into a Second Amendment and Restatement Agreement (the "Amendment"), which amends and restates our existing credit agreement, dated as of June 23, 2022.

Among other things, the Amendment decreased the aggregate amount of the commitments thereunder from $1 billion to $750 million, and extended the maturity date of our revolving credit facility by five years to March 31, 2031, however, if more than $250 million principal amount of the Company’s senior unsecured notes due 2028 remain outstanding on the date that is 91 days prior to their stated maturity, the maturity of the revolving credit facility will automatically accelerate to such earlier date.

Borrowings under the revolving credit facility bear interest at a rate per annum equal to, at our option, either (a) the applicable term benchmark rate, subject to a 0.00% floor, or (b) a base rate, in each case, plus an applicable margin of 1.00% to 1.75% for term benchmark loans and 0.00% to 0.75% for base rate loans.

The Amendment contains certain customary affirmative and negative covenants, representations and warranties and events of default (subject in certain cases to customary grace and cure periods).

Fees of $4.0 million were incurred to secure the Amendment.

These fees have been deferred and will be amortized over the term of the facility.

Performance Chemicals Repositioning and Industrial Specialties Divestiture

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.

We received all-cash proceeds of $93.1 million, inclusive of traditional working capital adjustments, and recorded a gain of $55.6 million within "(Gain) loss on sale of business" within discontinued operations.

See Note 16 for more information.

On April 15, 2026, we completed the sale of our former Performance Chemicals' road markings product line to PPG Industries Inc.

(the "Disposition").

We received all-cash proceeds of $63.2 million, inclusive of preliminary traditional working capital adjustments, and recorded a gain of $8.6 million within "Other (income) expense, net" on the Condensed Consolidated Statement of Operations for the three and six months ended June 30, 2026.

The transaction did not represent a strategic shift in the company's future operations and financial results and therefore is not presented as a discontinued operation.

Results of Operations

Three Months Ended March 31,

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

In millions 2026 2025 2026 2025

5 unchanged sentences

Restructuring and other (income) charges, net 1.7 7.2 2.2 9.1

Goodwill impairment charge (1)

— 183.8 — 183.8

Long-lived asset impairment charge (2)

32.1 — 32.1 —

Other (income) expense, net (4.8) 4.2 17.6 8.3

5 unchanged sentences

Net income (loss) $ 35.3 $ (146.5) $ 95.1 $ (126.0)

_______________

(1) Refer to Note 7 for more information.

(2) Refer to Note 6 and 7 for more information.

Q2 2026 Performance Summary

Net sales increased four percent from the prior year driven by price increases in the Performance Materials reportable segment and pavement technologies product line and favorable foreign exchange.

Net sales decreased five percent from the prior year driven by our former Performance Chemicals' road markings product line disposition on April 15, 2026, which more than offset increases within the Performance Materials and Advanced Polymer Technologies reportable segments.

The table below shows the 2026 Net sales and variances from 2025:

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

Three months ended March 31, 2026 vs.

Three months ended June 30, 2026 vs.

$ 331.5 (28.2) 10.0 0.8 $ 314.1

Three Months Ended March 31, 2026 vs 2025

The Net sales increase of $10.1 million in 2026 was driven by favorable pricing and sales mix of $6.5 million (three percent), favorable foreign currency exchange of $3.2 million (one percent), and a volume increase of $0.4 million (zero percent).

Three Months Ended March 31, 2026 vs.

Gross profit increase of $4.5 million in 2026 was driven by favorable pricing and sales mix of $6.5 million, favorable sales volume of $2.2 million, and LIFO impacts of $0.7 million.

This increase was partially offset by increased manufacturing costs of $4.7 million, and unfavorable foreign currency exchange of $0.2 million.

Six months ended June 30, 2026 vs.

$ 579.4 (27.8) 16.5 4.0 $ 572.1

Three Months Ended June 30, 2026 vs 2025

The Net sales decrease of $17.4 million in 2026 was driven by a volume decrease of $28.2 million (nine percent), partially offset by favorable pricing and sales mix of $10.0 million (three percent) and favorable foreign currency exchange of $0.8 million (zero percent).

Six Months Ended June 30, 2026 vs.

The Net sales decrease of $7.3 million in 2026 was driven by a volume decrease of $27.8 million (five percent), partially offset by favorable pricing and sales mix of $16.5 million (three percent) and favorable foreign currency exchange of $4.0 million (one percent).

Three Months Ended June 30, 2026 vs 2025

Gross profit increase of $11.2 million in 2026 was driven by favorable pricing and sales mix of $10.0 million, and decreased manufacturing costs of $9.1 million.

This increase was partially offset by unfavorable sales volume of $6.6 million, and unfavorable foreign currency exchange of $1.3 million.

Six Months Ended June 30, 2026 vs.

Gross profit increase of $15.7 million in 2026 was driven by favorable pricing and sales mix of $16.5 million, and decreased manufacturing costs of $5.1 million.

This increase was partially offset by unfavorable sales volume of $4.4 million, and unfavorable foreign currency exchange of $1.5 million.

Selling, general and administrative expenses

Three Months Ended March 31, 2026 vs.

SG&A was $40.7 million (16 percent of Net sales) and $41.9 million (17 percent of Net sales) for the three months ended March 31, 2026 and 2025, respectively.

Overall, SG&A decreased by $1.2 million (three percent), driven by decreased intangible amortization expense of $2.3 million, and decreased spending on commercial activities of $0.4 million, partially offset by increased variable incentive compensation of $1.5 million.

Three Months Ended June 30, 2026 vs 2025

SG&A was $39.0 million (12 percent of Net sales) and $43.6 million (13 percent of Net sales) for the three months ended June 30, 2026 and 2025, respectively.

Overall, SG&A decreased by $4.6 million (11 percent), driven by decreased intangible amortization expense of $3.3 million, decreased spending on commercial activities of $1.2 million, and decreased variable incentive compensation of $0.1 million.

Six Months Ended June 30, 2026 vs.

SG&A was $79.7 million (14 percent of Net sales) and $85.5 million (15 percent of Net sales) for the six months ended June 30, 2026 and 2025, respectively.

Overall, SG&A decreased by $5.8 million (seven percent), driven by decreased intangible amortization expense of $5.6 million, and decreased spending on commercial activities of $1.6 million.

The decrease was partially offset by increased variable incentive compensation of $1.4 million.

Research and technical expenses

Three Months Ended March 31, 2026 vs.

Research and technical expenses as a percentage of Net sales was 2.6 percent and 2.8 percent for the three months ended March 31, 2026 and 2025, respectively.

Research and technical expenses as a percentage of Net sales decreased due to higher sales.

Three Months Ended June 30, 2026 vs 2025

Research and technical expenses as a percentage of Net sales remained relatively consistent period over period, totaling 1.9 percent and 2.1 percent for the three months ended June 30, 2026 and 2025, respectively.

Overall, Research and technical expenses decreased by $0.9 million, compared to the prior year, primarily driven by a decrease within our Performance Materials reportable segment.

Six Months Ended June 30, 2026 vs.

Research and technical expenses as a percentage of Net sales remained relatively consistent period over period, totaling 2.2 percent and 2.4 percent for the six months ended June 30, 2026 and 2025, respectively.

Overall, Research and technical expenses decreased by $1.2 million, compared to the prior year, primarily driven by a decrease within our Performance Materials reportable segment.

Restructuring and other (income) charges, net

Three Months Ended March 31, 2026 vs.

Three Months Ended March 31,

Three and Six Months Ended June 30, 2026 vs.

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

In millions 2026 2025 2026 2025

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$ 1.7 $ 7.2 $ 2.2 $ 9.1

(1) See Note 11 for more information.

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(1) Refer to Note 11 for more information.

Other (income) expense, net

Three Months Ended March 31, 2026 vs.

Three Months Ended March 31,

Three and Six Months Ended June 30, 2026 vs.

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

In millions 2026 2025 2026 2025

2 unchanged sentences

Impairment of license agreement (2)

(Gain) loss on sale of strategic investment (2)

Proxy contest charges (2)

Portfolio realignment costs (2)

Gain on sale of business (3)

(8.6) — (8.6) —

Other (income) expense, net 0.5 1.5 0.7 (0.9)

1 unchanged sentence

_______________

(1) See Note 13 for more information.

(2) See Note 14 for more information.

(1) Refer to Note 13 for more information.

(2) Refer to Note 14 for more information.

(3) Refer to Note 16 for more information.

Interest expense, net

Three Months Ended March 31, 2026 vs.

Three Months Ended March 31,

Three and Six Months Ended June 30, 2026 vs.

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

In millions 2026 2025 2026 2025

Accounts receivable securitization (1)

$ 0.6 $ 1.1 $ 1.1 $ 1.8

Finance lease obligations (1)

1.8 1.8 3.6 3.6

Interest rate swap (2)

0.1 (0.3) 0.2 (0.5)

Litigation related interest expense (3)

0.1 1.2 2.0 2.5

Revolving Credit Facility and other lines of credit (1)

7.2 10.3 14.4 21.7

Senior notes (1)

5.6 5.6 11.2 11.2

Other interest (income) expense, net (1.2) (1.1) (2.4) (2.3)

1 unchanged sentence

_______________

(1) See Note 9 for more information.

(2) See Note 8 for more information.

(3) See Note 13 for more information.

(1) Refer to Note 9 for more information.

(2) Refer to Note 8 for more information.

(3) Refer to Note 13 for more information.

Provision (benefit) for income taxes on continuing operations

Three Months Ended March 31, 2026 vs.

For the three months ended March 31, 2026 and 2025, our effective tax rate was 22.5 percent and 22.6 percent, respectively.

Excluding discrete items, the effective rate was 26.0 percent compared to 21.9 percent in the three months ended March 31, 2026 and 2025, respectively.

See Note 12 for more information.

Three and Six Months Ended June 30, 2026 vs.

For the three months ended June 30, 2026 and 2025, our effective tax rate was 21.5% and (3.5)%, respectively.

Excluding discrete items, the effective rate was 26.0% compared to 21.3% in the three months ended June 30, 2026 and 2025, respectively.

Refer to Note 12 for more information.

For the six months ended June 30, 2026 and 2025, our effective tax rate was 21.9% and (13.4)%, respectively.

Excluding discrete items, the effective rate was 26.0% compared to 21.6% in the six months ended June 30, 2026 and 2025, respectively.

Refer to Note 12 for more information.

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

Three Months Ended March 31, 2026 vs.

Income (loss) from discontinued operations, net of income taxes was $36.4 million and $(8.6) million for the three months ended March 31, 2026 and 2025, respectively.

Increase was driven by the gain on sale.

See Note 16 for more information.

Three and Six Months Ended June 30, 2026 vs.

Income (loss) from discontinued operations, net of income taxes was $(4.5) million and $31.9 million for the three and six months ended June 30, 2026, respectively.

Income (loss) from discontinued operations, net of income taxes was $(5.1) million and $(13.7) million for the three and six months ended June 30, 2025, respectively.

For the six months ended June 30, 2026, the increase was driven by the gain on sale.

Refer to Note 16 for more information.

Segment Operating Results

In addition to the information discussed above, the following sections discuss the results of operations for Ingevity's reportable segments.

Our segments are (i) Performance Materials, (ii) Performance Chemicals and (iii) Advanced Polymer Technologies.

Our segments are (i) Performance Materials, (ii) Pavement Technologies and (iii) Advanced Polymer Technologies.

Segment Earnings before Interest, Taxes, Depreciation and Amortization ("EBITDA") is the primary measure used by the company's chief operating decision maker to evaluate the performance of and allocate resources among our reportable segments.

1 unchanged sentence

We have excluded the following items from segment EBITDA:

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

interest expense associated with corporate debt facilities, interest income, income taxes, depreciation, amortization, restructuring and other income (charges), net, gain on sale of business, goodwill impairment charges, long-lived asset impairment charges, acquisition and other-related income (costs), gain (loss) on strategic investments, impairment of license agreement, proxy contest charges, portfolio realignment costs, pension and postretirement settlement and curtailment income (charges), net, litigation charge, 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 the Annual Consolidated Financial Statements included in our 2025 Annual Report.

1 unchanged sentence

Q2 2026 Performance Summary

Performance Materials Net sales increased six percent compared to the prior year quarter driven by annual pricing actions and a favorable mix as a shift in consumer preferences from battery electric vehicles to hybrids continued.

Segment EBITDA was up 10 percent to $92.0 million driven by improved price and mix, higher volume, and higher plant utilization in the quarter to build inventory ahead of planned outages in the second quarter, which more than offset higher SG&A and other expenses.

Segment EBITDA margin improved 230 basis point to 59.2% compared to 56.9% in the prior year.

In millions Three Months Ended March 31,

Total Performance Materials - Net sales $ 155.4 $ 146.8

Performance Materials Net sales increased four percent to $160.6 million driven by higher volumes and favorable mix driven by a continued shift in consumer preferences from battery electric vehicles to hybrids, further supported by annual pricing actions.

Segment EBITDA was up six percent to $86.1 million driven by higher volumes, improved price and mix, and higher plant utilization, which more than offset higher SG&A and other expenses.

Segment EBITDA margin improved 100 basis points to 53.6% compared to 52.6% in the prior year.

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

2026 2025 2026 2025

Performance Materials - Net sales $ 160.6 $ 153.9 $ 316.0 $ 300.7

Segment EBITDA $ 86.1 $ 81.0 $ 178.1 $ 164.5

Net Sales Comparison of Three Months Ended March 31, 2026 and March 31, 2025:

Net Sales Comparison of Three and Six Months Ended June 30, 2026 and June 30, 2025:

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

Three months ended March 31, 2026 vs.

Three months ended June 30, 2026 vs.

$ 153.9 2.6 3.7 0.4 $ 160.6

Three Months Ended March 31, 2026 vs.

Six months ended June 30, 2026 vs.

$ 300.7 5.4 8.9 1.0 $ 316.0

Three Months Ended June 30, 2026 vs 2025

Segment net sales.

The increase of $8.6 million in 2026 was driven by favorable pricing and sales mix of $5.2 million (four percent), volume growth of $2.8 million (two percent), and favorable foreign currency exchange of $0.6 million (zero percent).

The increase of $6.7 million in 2026 was driven by favorable pricing and sales mix of $3.7 million (two percent), volume growth of $2.6 million (two percent), and favorable foreign currency exchange of $0.4 million (zero percent).

Segment EBITDA.

The increase of $8.5 million in 2026 was driven by decreased manufacturing costs of $5.3 million, favorable pricing and sales mix of $5.2 million, and volume growth of $2.9 million.

The increase was partially offset by unfavorable foreign currency exchange and other charges of $3.3 million, and increased SG&A and research and technical expenses of $1.6 million.

Performance Chemicals

The increase of $5.1 million in 2026 was driven by favorable pricing and sales mix of $3.7 million, volume growth of $1.6 million, decreased manufacturing costs of $0.3 million, and favorable foreign currency exchange and other charges of $1.5 million.

The increase was partially offset by increased SG&A and research and technical expenses of $2.0 million.

Six Months Ended June 30, 2026 vs.

Segment net sales.

The increase of $15.3 million in 2026 was driven by favorable pricing and sales mix of $8.9 million (three percent), volume growth of $5.4 million (two percent), and favorable foreign currency exchange of $1.0 million (zero percent).

Segment EBITDA.

The increase of $13.6 million in 2026 was driven by favorable pricing and sales mix of $8.9 million, decreased manufacturing costs of $5.6 million, and volume growth of $4.5 million.

The increase was partially offset by increased SG&A and research and technical expenses of $3.6 million, and unfavorable foreign currency exchange and other charges of $1.8 million.

Pavement Technologies

Q2 2026 Performance Summary

Performance Chemicals Net sales, which include the road markings product line divested on April 15, 2026, were $58.3 million, similar to the prior year.

Pavement Technologies sales were flat, as improvements in price and mix were offset by lower volumes.

Sales in Road Markings declined 10 percent, driven by continued competitive pressure impacting volumes, while pricing remained stable.

Segment EBITDA of $0.6 million declined $5.2 million from the prior year driven primarily by lower plant utilization in Road Markings compared to the first quarter of 2025.

Pavement Technologies Net sales declined 22 percent to $104.2 million, primarily due to the April 15, 2026 divestiture of our former Performance Chemicals' road markings product line.

Excluding the divestiture, sales increased three percent, driven by higher price and volumes with regional strength in North America partially offset by weakness in China and South America.

Segment EBITDA of $25.4 million declined $3.4 million from the prior year, primarily reflecting the absence of $6.0 million of Road Markings EBITDA included in the prior-year period, partially offset by improved pricing and volumes in the remaining Pavement Technologies business.

Segment EBITDA margin was 24.4% compared to 21.4% in the prior year.

Three Months Ended March 31,

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

In millions 2026 2025 2026 2025

Total Performance Chemicals - Net sales $ 58.3 $ 58.9

Pavement Technologies product line 49.7 49.4

Road Markings product line 8.6 9.5

Pavement Technologies - Net sales $ 104.2 $ 134.3 $ 162.5 $ 193.2

Segment EBITDA $ 25.4 $ 28.8 $ 26.0 $ 34.6

Net Sales Comparison of Three Months Ended March 31, 2026 and March 31, 2025:

Net Sales Comparison of Three and Six Months Ended June 30, 2026 and June 30, 2025:

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

Three months ended March 31, 2026 vs.

Three months ended June 30, 2026 vs.

$ 134.3 (31.8) 1.7 — $ 104.2

Pavement Technologies product line 49.4 (2.0) 1.8 0.5 49.7

Road Markings product line 9.5 (0.9) — — 8.6

Three Months Ended March 31, 2026 vs.

Six months ended June 30, 2026 vs.

$ 193.2 (34.7) 3.5 0.5 $ 162.5

Three Months Ended June 30, 2026 vs 2025

Segment net sales.

The decrease of $0.6 million in 2026 was driven by a volume decline of $2.9 million (five percent), as a result of a decrease in pavement technologies ($2.0 million) and road markings ($0.9 million), partially offset by favorable pricing and sales mix of $1.8 million (three percent), driven by pavement technologies ($1.8 million), and favorable foreign currency exchange of $0.5 million (one percent).

The decrease of $30.1 million in 2026 was driven by a volume decline of $31.8 million (24 percent), as a result of a decrease in our divested road markings product line ($33.0 million), offset by an increase in Pavement Technologies ($1.2 million).

The overall decrease was partially offset by favorable pricing and sales mix of $1.7 million (one percent) within pavement technologies.

Segment EBITDA.

The decrease of $5.2 million in 2026 was driven by increased manufacturing costs of $5.4 million, a volume decline of $0.9 million, increased SG&A expenses of $0.4 million, and unfavorable foreign currency exchange and other charges of $0.3 million.

The decrease was partially offset by favorable pricing and sales mix of $1.8 million.

The decrease of $3.4 million in 2026 was driven by a volume decline of $8.5 million and unfavorable foreign currency exchange and other charges of $0.4 million.

The decrease was partially offset by decreased manufacturing costs of $2.7 million, favorable pricing and sales mix of $1.7 million, and decreased SG&A expenses of $1.1 million.

Six Months Ended June 30, 2026 vs.

Segment net sales.

The decrease of $30.7 million in 2026 was driven by a volume decline of $34.7 million (18 percent), as a result of a decrease in our divested road markings product line ($33.9 million), and Pavement Technologies ($0.8 million).

The decrease was partially offset by favorable pricing and sales mix of $3.5 million (two percent) within pavement technologies, and favorable foreign currency exchange of $0.5 million (zero percent).

Segment EBITDA.

The decrease of $8.6 million in 2026 was driven by a volume decline of $9.4 million, increased manufacturing costs of $2.7 million, and unfavorable foreign currency exchange and other charges of $0.7 million.

The decrease was partially offset by favorable pricing and sales mix of $3.5 million, and decreased SG&A expenses of $0.7 million.

Advanced Polymer Technologies

Q2 2026 Performance Summary

Advance d Polymer Technologies Net sales of $44.3 million increased five percent as favorable foreign exchange and higher volume more than offset decline in price due to unfavorable mix.

Segment EBITDA for the quarter was $7.6 million compared to $13.6 million in the prior year due primarily to an inventory build in the first quarter of 2025, in anticipation of a material planned outage in the second quarter of 2025.

Advanced Polymer Technologies Net sales increased 14 percent to $49.3 million driven primarily by higher prices, including a price surcharge to offset increased raw material and energy cost, a favorable mix toward higher-value derivative products, and competitor supply disruptions.

Segment EBITDA for the quarter was $11.2 million compared to $2.0 million in the prior year.

The improvement was driven by improved product mix and higher plant utilization compared with the prior year period that included extended downtime associated with the installation of new boilers and further supported by competitor supply disruptions.

Segment EBITDA margin was 22.7% compared to 4.6% in the prior year.

In millions Three Months Ended March 31,

Total Advanced Polymer Technologies - Net sales $ 44.3 $ 42.2

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

2026 2025 2026 2025

Advanced Polymer Technologies - Net sales $ 49.3 $ 43.3 $ 93.6 $ 85.5

Segment EBITDA $ 11.2 $ 2.0 $ 18.8 $ 15.6

Net Sales Comparison of Three Months Ended March 31, 2026 and March 31, 2025:

Net Sales Comparison of Three and Six Months Ended June 30, 2026 and June 30, 2025:

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

Three months ended March 31, 2026 vs.

Three months ended June 30, 2026 vs.

$ 43.3 1.0 4.6 0.4 $ 49.3

Three Months Ended March 31, 2026 vs.

Six months ended June 30, 2026 vs.

$ 85.5 1.5 4.1 2.5 $ 93.6

Three Months Ended June 30, 2026 vs 2025

Segment net sales.

The increase of $2.1 million in 2026 was driven by favorable foreign currency exchange of $2.1 million (five percent), volume growth of $0.5 million (one percent), partially offset by unfavorable pricing and sales mix of $0.5 million (one percent).

The increase of $6.0 million in 2026 was driven by favorable pricing and sales mix of $4.6 million (11 percent), volume growth of $1.0 million (two percent), and favorable foreign currency exchange of $0.4 million (one percent).

Segment EBITDA.

The decrease of $6.0 million in 2026 was driven by increased manufacturing costs of $6.0 million, unfavorable pricing and sales mix of $0.5 million, and unfavorable foreign currency exchange and other charges of $0.2 million.

The decrease was partially offset by lower SG&A of $0.5 million, and volume growth of $0.2 million.

The increase of $9.2 million in 2026 was driven by favorable pricing and sales mix of $4.6 million, decreased manufacturing costs of $4.1 million, lower SG&A of $0.3 million, and volume growth of $0.3 million.

The increase was partially offset by unfavorable foreign currency exchange of $0.1 million.

Six Months Ended June 30, 2026 vs.

Segment net sales.

The increase of $8.1 million in 2026 was driven by favorable pricing and sales mix of $4.1 million (five percent), favorable foreign currency exchange of $2.5 million (three percent), and volume growth of $1.5 million (two percent).

Segment EBITDA.

The increase of $3.2 million in 2026 was driven by favorable pricing and sales mix of $4.1 million, lower SG&A of $0.8 million, and volume growth of $0.5 million.

The increase was partially offset by increased manufacturing costs of $1.9 million, and unfavorable foreign currency exchange and other charges of $0.3 million.

Use of Non-GAAP Financial Measures - Adjusted EBITDA from continuing operations

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

Adjusted EBITDA from continuing operations is defined as net income (loss) from continuing operations plus interest expense, net, provision (benefit) for income taxes, depreciation, amortization, restructuring and other (income) charges, net, goodwill impairment charges, acquisition and other-related (income) costs, litigation charge, (gain) loss on strategic investments, impairment of license agreement, proxy contest charges, portfolio realignment costs, and pension and postretirement settlement and curtailment (income) charges, net.

Adjusted EBITDA from continuing operations is defined as net income (loss) from continuing operations plus interest expense, net, provision (benefit) for income taxes, depreciation, amortization, restructuring and other (income) charges, net, goodwill impairment charges, long-lived asset impairment charges, gain on sale of business, acquisition and other-related (income) costs, litigation charge, (gain) loss on strategic investments, impairment of license agreement, proxy contest charges, portfolio realignment costs, 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 this non-GAAP measure, including the potential lack of comparability of this measure from one company to another.

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Reconciliation of Net Income (Loss) from Continuing Operations (GAAP) to Adjusted EBITDA from Continuing Operations (Non-GAAP)

Three Months Ended March 31,

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

In millions 2026 2025 2026 2025

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Depreciation and amortization (1)

22.0 25.2 44.7 49.7

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

1.7 7.2 2.2 9.1

Goodwill impairment charge (3)

— 183.8 — 183.8

Long-lived asset impairment charge (4)

32.1 — 32.1 —

Gain on sale of business (1)

(8.6) — (8.6) —

Litigation charge (5)

Impairment of license agreement (1)

(Gain) loss on strategic investment (1)

Proxy contest charges (6)

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(3) Refer to Note 7 for more information.

(4) Refer to Note 6 and Note 7 for more information.

(5) Refer to Note 13 for more information.

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

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Adjusted EBITDA from continuing operations

Three Months Ended March 31, 2026 vs.

Three and Six Months Ended June 30, 2026 vs.

Adjusted EBITDA from continuing operations is the sum of the EBITDA of all reportable segments, less the indirect costs allocated to Divestiture, and Corporate and other costs, and as such, the factors that impacted adjusted EBITDA from continuing operations period to period are the same factors that affected earnings discussed in the Results of Operations and Segment Operating Results sections included within this MD&A.

Current Full Year Company Outlook vs.

We are reaffirming our previously disclosed outlook, excluding the contributions from the divested road markings product line beginning April 15, 2026.

Our outlook includes a full year of operating results for the Advanced Polymer Technologies reportable segment.

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

We are raising our full-year adjusted EBITDA outlook reflecting the strong first-half execution and results across our portfolio.

Our outlook includes a full year of operating results from the Advanced Polymer Technologies reportable segment and excludes contributions from the divested industrial specialties product line, effective January 1, 2026, and the road markings product line beginning April 15, 2026.

Net sales are expected to be between $1.05 billion and $1.15 billion for 2026.

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, excluding the divested road markings product line beginning April 15, 2026, to grow mid-single digits through continued adoption of our warm mix asphalt products.

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

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

We expect Net sales in our Pavement Technologies reportable segment, excluding the divested road markings product line beginning April 15, 2026, to grow mid-single digits through continued adoption of our warm mix asphalt products.

For our Advanced Polymer Technologies reportable segment, we expect Net sales to grow low-double digits with low-single digit volume growth, reflecting price surcharges implemented in the second quarter of 2026 to offset rising raw materials prices.

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

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 high-teens.

The segment is expected to benefit from revenue growth but will be burdened by indirect costs from the divested industrial specialties and road markings product lines.

We anticipate that our Advanced Polymer Technologies reportable 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.

We expect our Performance Materials reportable segment to maintain segment EBITDA margins around mid-50 percent, as revenue growth is partially offset by investments in selective growth opportunities.

In our Pavement Technologies reportable segment, we expect segment EBITDA margins in the high-teens.

The segment is expected to benefit from revenue growth but will be burdened by indirect costs from the divested road markings product line.

We anticipate that our Advanced Polymer Technologies reportable segment EBITDA will improve versus prior year driven by volume growth, while maintaining segment EBITDA margins of approximately 20 percent.

Corporate and Other costs are expected to be consistent with 2025.

The divestitures of the industrial specialties and road markings product lines resulted in indirect costs of between $19 million and $21 million.

We expect to eliminate at least $15 million of these indirect costs over the course of 2026, with the full run rate of those savings achieved in 2027.

We expect to be burdened by approximately $12 million to $18 million of indirect costs from the divested industrial specialties and road markings product lines in 2026, the majority of which will be absorbed by our Performance Chemicals reportable segment.

The divestitures of the industrial specialties and road markings product lines resulted in approximately $20 million of indirect costs caused by dis-synergies of scale.

We expect to achieve run rate savings of approximately 75% of these costs by the end of 2026.

Through the second quarter of 2026, we have eliminated approximately $10 million of these costs.

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

We expect to recognize between $90 million and $95 million of depreciation and amortization, adjusted for the divested road marking product line, in 2026.

We expect to recognize approximately $90 million of depreciation and amortization, adjusted for the divested road markings product line, in 2026.

A reconciliation of net income from continuing operations, to adjusted EBITDA from continuing operations, as projected for 2026 is not provided.

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

As of March 31, 2026, our undrawn capacity under our revolving credit facility was $223.0 million.

As of June 30, 2026, our undrawn capacity under our revolving credit facility was $246.9 million.

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

debt principal repayments, interest payments, capital expenditures, income tax payments, purchases pursuant to our stock repurchase program (and related excise tax payments), restructuring activities, and $113.2 million associated with the BASF litigation settlement, as further described in Note 13.

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

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

Cash and cash equivalents totaled $95.4 million at March 31, 2026.

Cash and cash equivalents totaled $97.4 million at June 30, 2026.

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

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

The cash and cash equivalents balance at March 31, 2026, included $88.3 million held by our foreign subsidiaries.

The cash and cash equivalents balance at June 30, 2026 included $87.4 million held by our foreign subsidiaries.

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

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

During the three months ended March 31, 2026, we repurchased $52.3 million, inclusive of $0.4 million in excise tax, in common stock, representing 774,189 shares of our common stock at a weighted average cost per share of $67.10.

At March 31, 2026, $245.6 million remained unused under the 2022 Authorization.

During the three months ended March 31, 2025, we repurchased no common stock.

During the three months ended June 30, 2026, we repurchased $35.1 million, inclusive of $0.2 million in excise tax, in common stock, representing 491,000 shares of our common stock at a weighted average cost per share of $70.94.

During the six months ended June 30, 2026, we repurchased $87.4 million, inclusive of $0.6 million in excise tax, in common stock, representing 1,265,189 shares of our common stock at a weighted average cost per share of $68.59.

At June 30, 2026, $210.7 million remained unused under the 2022 Authorization.

During the three and six months ended June 30, 2025, we repurchased no common stock.

Capital Expenditures

Projected 2026 capital expenditures are $40-60 million.

We have no material commitments associated with these projected capital expenditures as of March 31, 2026 .

Cash flow comparison of the Three Months Ended March 31, 2026 and 2025

Three Months Ended March 31,

We have no material commitments associated with these projected capital expenditures as of June 30, 2026 .

Cash flow comparison of the Six Months Ended June 30, 2026 and 2025

Six Months Ended June 30,

In millions 2026 2025

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Cash flows provided by (used in) operating activities

Cash used in 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 $2.0 million for the three months ended March 31, 2026, which was inclusive of a $55.6 million gain related to the sale of the industrial specialties product line.

Cash used in operating activities for the three months ended March 31, 2026, was driven by a net increase in trade working capital of $33.9 million (including accounts receivable, inventory, and accounts payable), a decrease in CTO resale cash inflows of $6.2 million, and increased employee compensation payments of $5.1 million.

Partially offsetting these cash outflows was increased cash earnings of $9.4 million, lower cash interest paid of $3.5 million, decreased spending on restructuring initiatives of $3.0 million, and lower cash taxes paid of $1.9 million.

Cash used in 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 $15.8 million for the six months ended June 30, 2026, which was inclusive of a $113.2 million cash payment for a litigation settlement, and $62.8 million of gains related to divestitures, including a $54.2 million gain related to the sale of the industrial specialties product line.

Cash used in operating activities for the six months ended June 30, 2026 was driven by a $113.2 million cash payment for a litigation settlement, a net increase in trade working capital of $31.9 million (including accounts receivable, inventory, and accounts payable), increased employee compensation payments of $7.4 million, and a decrease in CTO resale cash inflows of $6.2 million.

Partially offsetting these cash outflows was increased cash earnings of $13.8 million, lower cash interest paid of $8.7 million, lower cash taxes paid of $8.3 million, and decreased spending on restructuring initiatives of $7.7 million.

Cash flows provided by (used in) investing activities

Cash provided by investing activities, inclusive of continuing and discontinued operations, in the three months ended March 31, 2026 was $106.3 million and was primarily driven by cash proceeds of $93.1 million related to the sale of the industrial specialties product line, cash proceeds from our restricted investment of $24.7 million, offset primarily by capital expenditures of $10.3 million.

In the three months ended March 31, 2026 and 2025, capital spending included the base maintenance capital supporting ongoing operations, and growth and cost improvement spending.

Capital expenditure categories Three Months Ended March 31,

Cash provided by investing activities, inclusive of continuing and discontinued operations, in the six months ended June 30, 2026 was $181.7 million and was primarily driven by cash proceeds of $156.3 million related to the sale of the industrial specialties product line and road markings product line, and cash proceeds from our restricted investment of $47.8 million, offset primarily by capital expenditures of $20.6 million.

In the six months ended June 30, 2026 and 2025, capital spending included the base maintenance capital supporting ongoing operations, and growth and cost improvement spending.

Capital expenditure categories Six Months Ended June 30,

In millions 2026 2025

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Cash flows provided by (used in) financing activities

Cash used in financing activities, inclusive of continuing and discontinued operations, in the three months ended March 31, 2026, was $61.8 million and was primarily due to repurchases of common stock of $52.3 million, tax payments related to withholdings on vested equity awards of $4.3 million, and debt issuance costs of $4.0 million.

Cash used in financing activities in the three months ended March 31, 2025 was $11.0 million and was primarily due to proceeds from our revolving credit facility and other borrowings of $92.3 million, partially offset by payments on our revolving credit facility and other borrowings of $100.3 million.

Cash used in financing activities, inclusive of continuing and discontinued operations, in the six months ended June 30, 2026, was $99.4 million and was primarily due to repurchases of common stock of $86.8 million, tax payments related to withholdings on vested equity awards of $5.7 million, and debt issuance costs of $4.0 million.

Cash used in financing activities in the six months ended June 30, 2025 was $74.0 million and was primarily due to payments on our revolving credit facility and other borrowings of $229.3 million, partially offset by proceeds from our revolving credit facility and other borrowings of $158.5 million.

New Accounting Guidance

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis