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What changed in Ingevity Corp's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Ingevity Corp's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+375 added−362 removedSource: 10-K (2025-02-19) vs 10-K (2024-02-22)

Top changes in Ingevity Corp's 2024 10-K

375 paragraphs added · 362 removed · 256 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

64 edited+17 added−22 removed33 unchanged
Biggest changeSeasonality There are a variety of seasonal dynamics, including global climate and weather conditions, that impact our businesses, though none have currently materially affected our financial results, except in the case of the road technologies product line, where roughly 70 to 75 percent of revenue is generated between April and September.
Biggest changePerformance Materials Performance Chemicals Advanced Polymer Technologies Product Lines Road Technologies Industrial Specialties End-Use Markets Automotive Purification: Food, Chemicals, and Water Pavement Construction Pavement Preservation Pavement Reconstruction and Recycling Pavement Markings Agricultural Chemicals Lubricants Rubber Industrial Intermediates Adhesives Oilfield Automotive & Transportation Industrial Equipment Footwear & Apparel Bioplastics Consumer Packaging Medical & Health 2024 Revenue $609.6 million $608.2 million $188.6 million Seasonality There are a variety of seasonal dynamics, including global climate and weather conditions, that impact our businesses, though none have currently materially affected our financial results, except in the case of the road technologies product line, where roughly 70 to 75 percent of revenue is generated between April and September.
Competition Our competitors, which differ depending on the product, application, and region, include Kraton Corp., Eastman Chemical Co., Borregaard ASA, Repsol S.A., Lamberti S.p.A., Cargill, Vantage, PMC, as well as several others. Specific to our industrial specialty products, our customers select the product that provides the best balance of performance, consistency, and price.
Competition Our competitors, which differ depending on the product, application, and region, include Kraton Corp., Forchem, Eastman Chemical Co., Borregaard ASA, Repsol S.A., Lamberti S.p.A., Cargill, Vantage, and PMC, as well as several others. Specific to our industrial specialty products, our customers select the product that provides the best balance of performance, consistency, and price.
Additionally, in North America where the majority of our bulk shipments are executed, we abide by the American Chemistry Council’s Responsible Care practices for transporting our chemicals safely. We strategically utilize logistics providers that have committed to these higher standards of safety, security, stewardship, and sustainability.
Additionally, in North America where the majority of our bulk shipments are 6 executed, we abide by the American Chemistry Council’s Responsible Care practices for transporting our chemicals safely. We strategically utilize logistics providers that have committed to these higher standards of safety, security, stewardship, and sustainability.
By focusing on making a positive impact through everyday actions, “The IngeviWay in Action” bolsters the way we live our core values of safety and sustainability, maximize value for our people and our customers, continue our commitment to excellence, integrity and ethical behavior and drive to create innovative solutions.
By focusing on making a positive impact through everyday actions, “The IngeviWay in Action” bolsters the way we live our core values of safety and sustainability, maximize value for our people and our customers, commitment to excellence, integrity and ethical behavior, and drive to create innovative solutions.
Although our intellectual property taken as a whole is material to the business, there is no individual patent or trademark the loss of which could have a material adverse effect on the business. 7 On July 19, 2018, we filed suit against BASF Corporation (“BASF”) in the U.S.
Although our intellectual property taken as a whole is material to the business, there is no individual patent or trademark the loss of which could have a material adverse effect on the business. On July 19, 2018, we filed suit against BASF Corporation (“BASF”) in the U.S.
Although we believe that we currently have a stable natural gas supply and infrastructure for our operations, we are subject to volatility in the market price of natural gas. We enter into certain derivative financial instruments to mitigate expected fluctuations in market prices and the resulting volatility of earnings and cash flow.
Although we believe that we currently have a stable natural 4 gas supply and infrastructure for our operations, we are subject to volatility in the market price of natural gas. We enter into certain derivative financial instruments to mitigate expected fluctuations in market prices and the resulting volatility of earnings and cash flow.
These are sourced where possible through multiple suppliers to protect against supply disruptions and to maintain competitive pricing. Markets Served Road Technologies Our road technologies product line produces a broad line of innovative additives and technologies utilized globally in road construction and pavement preservation, including pavement reconstruction and recycling.
These are sourced where possible through multiple suppliers to protect against supply disruptions and to maintain competitive pricing. 10 Markets Served Road Technologies Our road technologies product line produces a broad line of innovative additives and technologies utilized globally in road construction and pavement preservation, including pavement reconstruction and recycling.
We are filing for and being granted patents for product and process developments for our Performance Materials business that we believe are both novel and consistent with trends in the technological development of engines. Our Evotherm® Warm Mix Asphalt technology is supported by numerous global patents.
We are filing for and being granted patents for product and process developments for our Performance Materials business that we believe are both novel and consistent with trends in the technological development of engines. Our Evotherm® Warm Mix Asphalt technology is supported by numerous global patents and trademarks.
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 and our motion seeking judgment as a matter of law, or a new trial in the alternative.
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.
Based on the customer and/or governmental agency requirements, the markings can be designed for varying levels of initial and retained performance properties. Customers We supply our road technologies products to approximately 850 customers in 60 countries through our own direct sales force, primarily in the Americas and Europe, as well as a network of third-party distributors.
Based on the customer and/or governmental agency requirements, the markings can be designed for varying levels of initial and retained performance properties. Customers We supply our road technologies products to approximately 750 customers in 60 countries through our own direct sales force, primarily in the Americas and Europe, as well as a network of third-party distributors.
Also, there are regulatory pressures that may incentivize suppliers of CTO to sell CTO into alternative fuel markets (i.e., biofuels) rather than to historical end users such as Ingevity. CTO-based biofuel has been deemed to meet the EU’s Renewable Energy Directive, second phase (“RED II”) biofuel sustainability criteria.
Also, there are regulatory pressures that may incentivize suppliers of CTO to sell CTO into alternative fuel markets (e.g., biofuels) rather than to historical end users such as Ingevity. CTO-based biofuel has been deemed to meet the EU’s Renewable Energy Directive, second phase (“RED II”) biofuel sustainability criteria.
We work hard to protect employees, contractors, and the communities where we operate from injuries, illnesses and incidents through the design and delivery of safe operations, continuous improvement of personal and process safety performance, management systems, and programs, a strong culture of compliance, and a commitment to zero harm to people and the environment.
We work hard to protect employees, contractors, and the communities where we operate from injuries, illnesses and incidents through the design and delivery of safe operations, continuous improvement of personal and process safety performance, management systems, and programs, a strong culture of compliance, and a commitment to strive for zero harm to people and the environment.
And our alternative-fuel vehicle technology enables the use of renewable natural gas as fuel for pickup trucks and buses. The superior durability of caprolactone-based polyurethane technologies extends product life and the biodegradable performance of our thermoplastic polycaprolactones offers compostable end of-life solutions.
Our alternative-fuel vehicle technology enables the use of renewable natural gas as fuel for pickup trucks and buses. The superior durability of caprolactone-based polyurethane technologies extends product life and the biodegradable performance of our thermoplastic polycaprolactones offer compostable end of-life solutions.
In 2023, we continued our efforts to increase reporting of and response to near miss incidents to prevent more serious injuries before they occur. This included efforts to increase the number of near misses reported and an increase in reporting by a broader number of employees.
In 2024, we continued our efforts to increase reporting of and response to near miss incidents to prevent more serious injuries before they occur. This included efforts to increase the number of near misses reported and an increase in reporting by a broader number of employees.
Crop protection formulations are highly engineered, specifically formulated, and cover a range of different formulation types, from liquids to solids. We deliver a wide range of dispersants that are high performing and consistent. In addition, our crop protection products are approved for use as inert ingredients in agrochemicals by regulatory agencies throughout the world. Paper Chemicals.
Crop protection formulations are highly engineered, specifically formulated, and cover a range of different formulation types, from liquids to solids. We deliver a wide range of dispersants that are high performing and consistent. In addition, our crop protection products are approved for use as inert ingredients in agrochemicals by regulatory agencies throughout the world. Rubber.
Environmental and other regulations and related legal proceedings have the potential to involve significant costs and liability for Ingevity. I ntellectual Property Intellectual property, including patents, closely guarded trade secrets, and highly proprietary manufacturing know-how, as well as other proprietary rights, is a critical part of maintaining our technology leadership and competitive edge.
Environmental and other regulations and related legal proceedings have the potential to involve significant costs and liability for Ingevity. I ntellectual Property Protection of intellectual property, including patents, closely guarded trade secrets, and highly proprietary manufacturing know-how, as well as other proprietary rights, is critical to maintaining our technology leadership and competitive edge.
Our food, water, beverage, and chemical purification products are sold to approximately 50 customers globally. We sell our products primarily through our own direct sales force in North America, Europe, South America, Asia, and a smaller, focused network of third-party distributors that have established a strong direct sales and marketing presence in North America and China.
Our food, water, beverage, and chemical purification products are sold to approximately 70 customers globally. We sell our products primarily through our own direct sales force in North America, 8 Europe, South America, Asia, and a smaller, focused network of third-party distributors that have established a strong direct sales and marketing presence in North America and China.
For the caprolactone-based products in our Advanced Polymer Technologies segment – although derived from traditional feedstocks – these products provide solutions that enable performance attributes in end-use markets that directly help customers and consumers meet sustainability goals. Put simply: Ingevity’s products help customers reduce their ecological impact.
For the caprolactone-based products in our Advanced Polymer Technologies segment – although derived from non-oleo feedstocks – these products provide solutions that enable performance attributes in end-use markets that directly help customers and consumers meet sustainability goals. Put simply: Ingevity’s products help customers reduce their ecological impact.
Industrial Specialties Our industrial specia lties product line produces and sells chemicals utilized in several industrial applications, including adhesive tackifiers, agrochemical dispersants, lubricant additives, printing ink resins, industrial intermediates, and oilfield. Agricultural Chemicals. We produce dispersants for crop protection products as well as other naturally derived products for agrochemicals.
Industrial Specialties Our industrial specia lties product line produces and sells chemicals utilized in several industrial applications, including adhesive tackifiers, agrochemical dispersants, lubricant additives, rubber resins, industrial intermediates, and oilfield. Agricultural Chemicals. We produce dispersants for crop protection products as well as other naturally derived products for agrochemicals.
Sawdust is readily available and is sourced through multiple suppliers to protect against supply disruptions and to maintain competitive pricing. We also utilize phosphoric acid to chemically activate the hardwood sawdust. This phosphoric acid is sourced through multiple suppliers to protect against supply disruptions and to maintain competitive pricing.
We also utilize phosphoric acid to chemically activate the hardwood sawdust. This phosphoric acid is sourced through multiple suppliers to protect against supply disruptions and to maintain competitive pricing.
In addition, BASF has indicated it will seek attorneys’ fees and costs in amounts that they will have to support at a future date. Unless the judgment is set aside, BASF will be entitled to post-judgment interest pursuant to the rate provided under federal law.
In addition, BASF has indicated it will seek attorneys’ fees and costs in amounts that they will allege and have to demonstrate at a future date. Unless the judgment is set aside, BASF will be entitled to post-judgment interest pursuant to the rate provided under federal law.
To create a majority of our chemistries, we take crude tall oil ("CTO") from pine trees, hardwood sawdust (both co-products of the lumber, paper, and furniture-making industries), and plant based oils and convert them into products that benefit customers, the environment, and society.
To create a majority of our chemistries, we take CTO from pine trees, hardwood sawdust (both co-products of the lumber, paper, and furniture-making industries), and plant based oils and convert them into products that benefit customers, the environment, and society.
In 2023, our ten largest customers accounted for approximately 82 percent of sales. We are the trusted source of these products for many of the world’s largest automotive parts manufacturers, including PHINIA Inc. (previously BorgWarner Inc.), A. Kayser Automotive System GmbH, Korea Fuel-Tech Corporation, MAHLE GmbH, and many other large and small component manufacturers throughout the global automotive supply chain.
In 2024, our ten largest customers accounted for approximately 85 percent of sales. We are the trusted source of these products for many of the world’s largest automotive parts manufacturers, including PHINIA Inc. (previously BorgWarner Inc.), A. Kayser Automotive System GmbH, Korea Fuel-Tech Corporation, MAHLE GmbH, and many other large and small component manufacturers throughout the global automotive supply chain.
Leveraging Sustainability Throughout our Performance Materials, Performance Chemicals, and Advanced Polymer Technologies portfolios, we are a leader in adding value to products made from renewable materials and in derivatizing technologies that impart desirable environmental benefits in their use.
Leveraging Sustainability Throughout our Performance Materials, Performance Chemicals, and Advanced Polymer Technologies reportable segments, we are a leader in adding value to products made from renewable materials and in derivatizing technologies that impart desirable environmental benefits in their use.
In 2023, our ten largest customers accounted for 30 percent of the product line's sales. Our largest customers include Ergon, Inc., The Heritage Group, and Idaho Asphalt Supply Inc. 11 Competition Our primary competitors in road technologies are Nouryon Chemicals B.V., Arkema S.A., Kao Specialties Americas LLC, Sherwin-Williams Company, and PPG Industries Traffic Solutions.
In 2024, our ten largest customers accounted for approximately 37 percent of the product line's sales. Our largest customers include Ergon, Inc., TRP Group, Frontline, The Heritage Group, and Idaho Asphalt Supply Inc. Competition Our primary competitors in road technologies are Nouryon Chemicals B.V., Arkema S.A., Kao Specialties Americas LLC, Sherwin-Williams Company, and PPG Industries Traffic Solutions.
Our cold in-place recycling additives allow our customers to reopen existing roadways faster, while also lowering overall costs and jobsite emissions. Pavement Markings. We provide alkyd and hydrocarbon premium-based thermoplastic road striping technologies which provide long service life, excellent adhesion, superior color, and retro-reflectivity.
Our cold in-place recycling additives allow our customers to reopen existing roadways faster, while also lowering overall costs and jobsite emissions. Pavement Markings. We provide thermoplastic and waterborne paint road markings technologies which provide long service life, excellent adhesion, superior color, and higher retro-reflectivity.
In early 2022, we reinforced our IngeviWay foundation by launching “The IngeviWay in Action,” an initiative that raises the bar on expectations to build, inspire and lead, and better aligns how we work as a team to create the Ingevity of the future.
Reinforcing our IngeviWay foundation we launched “The IngeviWay in Action,” an initiative that raises the bar on expectations to build, inspire and lead, and better aligns how we work as a team to create the Ingevity of the future.
Given the imperative for automotive manufacturers to produce vehicles for the U.S., Canada, and China markets capable of meeting life-of-vehicle emission standards, or potentially face expensive recalls and unfavorable publicity, our automotive activated carbon products provide our customers the low-risk choice for this high-performance application.
Given the imperative for automotive manufacturers to produce vehicles for the U.S., Canada, and China markets capable of meeting life-of-vehicle emission standards, or potentially face expensive recalls and unfavorable publicity, our automotive activated carbon products provide our customers the low-risk choice for this high-performance application. Additionally, we are well-positioned to meet increasing emissions standards around the world.
With the 2022 acquisition of Ozark Materials, LLC and Ozark Logistics, LLC (collectively, “Ozark Materials”), we have added road striping technologies to the portfolio. Road Construction. Evotherm®, our premier road construction additive, is a warm mix asphalt technology that promotes adhesion by acting as both a liquid antistrip and a warm mix asphalt.
With the 2022 acquisition of Ozark Materials, LLC (“Ozark Materials”), we added road markings technologies to the portfolio. Road Construction. Evotherm®, our premier road construction additive, is a warm mix asphalt technology that acts as both a liquid antistrip and a warm mix asphalt.
Our products are used in a variety of demanding applications, including adhesives, agrochemicals, asphalt paving, bioplastics, coatings, elastomers, lubricants, pavement markings, publication inks, oil exploration and production and automotive components. We operate in three reporting segments: Performance Materials, Performance Chemicals and Advanced Polymer Technologies.
Our products are used in a variety of demanding applications, including adhesives, agrochemicals, asphalt paving, bioplastics, coatings, elastomers, lubricants, paint for road markings, oil drilling, and automotive components. We operate in three reportable segments: Performance Materials, Performance Chemicals and Advanced Polymer Technologies.
Ingevity believes in the strength of its intellectual property and the merits of its position and intends to pursue all legal relief available to challenge these outcomes in the Delaware Proceeding. Final resolution of these matters could take up to 24 months.
Ingevity believes in the strength of its intellectual property and the merits of its position and intends to pursue all legal relief available to challenge these outcomes in the Delaware Proceeding.
As a result of RED II and related government incentives, there has been a significant increase in demand for CTO and its derivatives during 2023.
As a result of RED II and related government incentives, there has been a significant increase in demand for CTO and its derivatives over the past several years.
We engage in negotiations with labor unions for new CBAs from time to time based on expiration dates of agreements and statutory requirements. We consider our relationships with all salaried, union-hourly, and non-hourly employees to be positive and collaborative.
Approximately 51 percent of our production employees are represented by labor unions under various collective bargaining agreements ("CBA"). We engage in negotiations with labor unions for new CBAs from time to time based on expiration dates of agreements and statutory requirements. We consider our relationships with all salaried, union-hourly, and non-hourly employees to be positive and collaborative.
In 2023, our ten largest customers accounted for approximately 47 percent of the segment's sales. Our largest customers include polyurethane, adhesive, coatings, and bioplastics manufacturers. Competition Our primary caprolactone competitors are Daicel, Corp., Juren, and BASF SE, but we also face competition from other competing materials.
In 2024, our ten largest customers accounted for approximately 46 percent of the segment's sales. Our largest customers are active in polyurethane, elastomers, adhesives, coatings, and bioplastics manufacturers. Competition Our primary caprolactone competitors are Daicel Corporation, Hunan Juren Chemical Hitechnology, and BASF SE, but we also face competition from other competing materials.
The table below illustrates our product lines and the primary end uses for our products by segment, as well as our revenue by segment for the fiscal year 2023. For more information on our U.S. and foreign operations, see Notes 4 and 19, to the Consolidated Financial Statements included within Part II.
The table below illustrates our product lines and the primary end-use markets for our products by segment, as well as our net sales by segment for the fiscal year 2024. For more information on our U.S. and foreign operations, see Notes 4 and 19, to the Consolidated Financial Statements included within Part II. Item 8 of this Form 10-K.
In adhesives, our products compete against other tackifiers, including other tall oil resin ("TOR") based tackifiers as well as 12 tackifiers produced from gum rosin and hydrocarbon starting materials. In addition, the choice of polymer used in an adhesive formulation drives the selection of a tackifier. In lubricants, we compete against other producers of distilled tall oil and additives.
In adhesives, our products compete against other tackifiers, including other tall oil resin ("TOR") based tackifiers as well as tackifiers produced from gum rosin and hydrocarbon based materials. In lubricants, we compete against other producers of distilled tall oil and additives.
Performance Chemicals' net sales for 2023, 2022, and 2021 were $902.1 million, $875.1 million, and $688.9 million, respectively. The chart below reflects our 2023 Performance Chemicals' net sales by geography. Sales are assigned to geographic areas based on the location of the party to which the product was shipped.
Performance Materials' net sales for 2024, 2023, and 2022 were $609.6 million, $586.0 million, and $548.5 million, respectively. The chart below reflects our 2024 Performance Materials' net sales by geography. Sales are assigned to geographic areas based on the location of the party to which the product was shipped.
Customers We sell our industrial specialties products to approximately 500 customers around the globe in over 45 countries through our own direct sales representatives and third-party sales representatives and distributors. In 2023, our ten largest customers accounted for 35 percent of the product line's sales. Our largest customers include Haliburton, Solenis, Flint Group, H.B. Fuller Co. and ChampionX.
Customers We sell our industrial specialties products to approximately 400 customers around the globe in over 40 countries through our own direct sales representatives and third-party sales representatives and distributors. In 2024, our ten largest customers accounted for approximately 39 percent of the product line's sales. Our largest customers include Solenis, Arboris, ChampionX, and Syngenta.
Segments Performance Materials We engineer, manufacture, and sell hardwood-based, chemically activated carbon products which are produced through a highly technical and specialized process primarily for use in gasoline vapor emission control systems in internal combustion engines and hybrid electric vehicles including cars, trucks, motorcycles, and boats.
Final resolution of these matters could take up to 15 months from the date of this Annual Report on Form 10-K. 7 Segments Performance Materials We engineer, manufacture, and sell hardwood-based, chemically activated carbon products which are produced through a highly technical and specialized process primarily for use in gasoline vapor emission control systems in internal combustion engines and hybrid electric vehicles including cars, trucks, motorcycles, and boats.
We supply lubricant additives and corrosion inhibitors for the metalworking and fuel additives markets. Our lubricant products are multi-functional additives that contribute to lubricity, wetting, corrosion inhibition, emulsification, and general performance efficiency.
Adhesive applications for our products include construction, product assembly, packaging, pressure-sensitive labels and tapes, hygiene products, and road markings. We supply lubricant additives and corrosion inhibitors for the metalworking and fuel additives markets. Our lubricant products are multi-functional additives that contribute to lubricity, wetting, corrosion inhibition, emulsification, and general performance efficiency.
Our hydrogen peroxide is currently supplied by Solvay Interox Limited, a co-located supplier at our Warrington, United Kingdom facility under a long-term supply agreement. Customers We sell our Advanced Polymer Technologies products to approximately 300 customers around the globe through our own direct sales representatives and third-party sales representatives and distributors.
We maintain multiple suppliers of cyclohexanone to protect against supply disruptions and to maintain competitive pricing. Our hydrogen peroxide is currently supplied by Solvay Interox Limited under a long-term supply agreement. Customers We sell our Advanced Polymer Technologies products to approximately 250 customers around the globe through our own direct sales representatives and third-party sales representatives and distributors.
Talent Our employees are critical to our success, and we strive to provide a safe, rewarding, and respectful workplace where our people have opportunities to pursue career paths based on skills, performance, and potential. Our success depends, in part, on our ability to attract, retain and motivate critical resources across production, technical, engineering, sales, and various functional disciplines.
Talent Our employees are critical to our success, and we strive to provide a safe, rewarding, and respectful workplace where our people have opportunities to pursue career paths based on skills, performance, and potential.
We disagree with the verdict, including the court’s application of the law and entry of judgment and intend to appeal. In addition, we may challenge the U.S. District Court’s November 2020 dismissal of our patent infringement claims against BASF.
We disagree with the verdict, including the court’s application of the law and entry of judgment. Therefore, on March 13, 2024, we appealed the verdict as well as the U.S. District Court’s November 2020 dismissal of our patent infringement claims against BASF.
Once Evotherm® is mixed into the binder utilized for road layer construction, production temperatures can be significantly cooler than conventional hot mix asphalt. Lower production temperatures allow our customers to reduce emissions and fuel use during road construction as well as extend their paving seasons into colder months. Pavement Preservation.
Once Evotherm® is mixed into the binder utilized for road layer construction, production temperatures can be significantly lowered compared to conventional hot mix asphalt. Lower production temperatures reduces our customers' emissions and fuel use during road construction as well as making roads last up to 20 percent longer. Pavement Preservation.
We are a North American supplier of rosin-based sizing agents for the production of packaging related paper. Rubber. We are a global supplier of tall oil-based products, we offer a broad range of resins, rosin soaps, mixed acids and fatty acids from renewable resources. We currently supply specialty products to latex manufacturers, compounders and tire producers.
We are a global supplier of tall oil-based products and we offer a broad range of resins, rosin soaps, mixed acids and fatty acids from renewable resources. We currently supply specialty products to latex manufacturers, compounders and tire producers where our resins help improved fuel efficiency, wear and traction. 11 Industrial Intermediates.
Achievements that bolster the team, our business, and our clients—internal and external—and our fundamental values are all included in the performance evaluation process. Our method involves keeping a codified record of employee performance at mid-year and end-of-year. It also includes a requirement for all Ingevity employees to ask for feedback from those who are aware of their performance and contributions.
Our method involves keeping a codified record of employee performance at mid-year and end-of-year. It also includes a requirement for all Ingevity employees to ask for feedback from those who are aware of their performance and contributions. We encourage managers and their employees to have regular discussions to boost productivity, provide positive business outcomes, and raise employee engagement.
It describes who we are, what we want to be, and what’s important to us as we work together to fulfill our purpose to purify, protect and enhance the world around us.
Human Capital Management Core Values Developed collaboratively by Ingevity employees, the IngeviWay is the cultural framework that shapes Ingevity’s future and enables our success. It describes who we are, what we want to be, and what’s important to us as we work together to fulfill our purpose to purify, protect and enhance the world around us.
Sales are assigned to geographic areas based on the location of the party to which the product was shipped. 8 Raw Materials and Production Our Performance Materials segment serves customers globally from three manufacturing locations in the U.S. and two in China. The primary raw material (by volume) used in the manufacture of our activated carbon is hardwood sawdust.
Raw Materials and Production Our Performance Materials segment serves customers globally from three manufacturing locations in the U.S. and two in China. The primary raw material (by volume) used in the manufacture of our activated carbon is hardwood sawdust. Sawdust is readily available and is sourced through multiple suppliers to protect against supply disruptions and to maintain competitive pricing.
In order to boost productivity, provide positive business outcomes, and raise employee engagement, we encourage managers and their employees to have regular discussions. With our all-encompassing strategy, Ingevity is able to gain a comprehensive understanding of each worker's strengths and identify opportunities for growth and development. Health & Safety Ingevity has a world-class safety program and a strong safety culture.
With our all-encompassing strategy, Ingevity is able to gain a comprehensive understanding of each worker's strengths and identify opportunities for growth and development. Health & Safety Ingevity has a world-class safety program and a strong safety culture. Personal, process, and public safety are core values at Ingevity.
Our Advanced Polymer Technologies' products are caprolactone-based, which is derived from cyclohexanone, a benzene derivative, and hydrogen peroxide, both of which are readily available in the market. We maintain multiple suppliers of cyclohexanone to protect against supply disruptions and to maintain competitive pricing.
Raw Materials and Production Our Advanced Polymer Technologies segment serves customers globally from one manufacturing location in the U.K. Our Advanced Polymer Technologies' products are caprolactone-based, which is derived from cyclohexanone, a benzene derivative, and hydrogen peroxide, both of which are readily available in the market.
In addition, during the fourth quarter of 2023, Ingevity announced the planned closure of the DeRidder, Louisiana CTO refinery and derivatives operations. Once this transformation is complete, Ingevity’s participation in the rosin based adhesive and publication printing ink markets along with emulsifiers for drilling into the oilfield markets will be substantially reduced.
With the majority of this transformation complete, Ingevity’s participation in the rosin-based adhesive and publication printing ink markets along with emulsifiers for drilling into the oilfield markets has been significantly reduced.
Our business is built on our ability to maximize the value and utility of materials over their lifecycle, and we will continue to enhance this value proposition through future acquisitions and new product development. 5 Human Capital Management Core Values Developed collaboratively by Ingevity employees in 2017, the IngeviWay is the cultural framework that shapes Ingevity’s future and enables our success.
Our business is built on our ability to maximize the value and utility of materials over their lifecycle, and we will continue to enhance this value proposition through future acquisitions and new product development. Strategic Portfolio Review On October 29, 2024, we announced our intention to comprehensively review Ingevity’s asset and product portfolios.
Specific to tire producers, our resins help improved fuel efficiency, wear and traction. Industrial Intermediates. Our functional chemistries are sold across a diverse range of industrial markets including, among others, textile dyes, rubber, cleaners, mining, and nutraceuticals. Adhesives, Oilfield, and Lubricants.
Our functional chemistries are sold across a diverse range of industrial markets including, textile dyes, rubber, cleaners, mining, oilfield and nutraceuticals. Adhesives, and Lubricants. We are a North American supplier of tackifier resins which provide superior adhesion to difficult-to-bond materials to the adhesives industry.
We also produce products derived from lignin, which is extracted from black liquor, another co-product of softwood kraft pulp processing. We typically source our CTO needs primarily through supply contracts. Most of our contracted volumes are sourced through two primary parties: WestRock and Georgia-Pacific. During 2023, we sourced approximately 82 percent of our CTO from WestRock and Georgia-Pacific combined.
Most of our industrial specialties products and some of our road technologies products are derived from CTO, a co-product produced by softwood kraft pulp processors. We also produce products derived from kraft lignin, which is extracted from black liquor, another co-product of softwood kraft pulp processing. Historically, we have sourced the majority of our CTO needs through long-term supply contracts.
Our application expertise is often called upon by our customers to provide unique solutions that maximize resource efficiency. We have a broad and diverse customer base in this segment. In 2023, our top ten customers accounted for approximately 22 percent of our segment revenue, with the next 100 customers making up approximately 47 percent of our segment revenue.
We have a broad and diverse customer base in this segment. In 2024, our top ten customers accounted for approximately 26 percent of our segment revenue, with the next 100 customers making up approximately 47 percent of our segment revenue. Performance Chemicals' net sales for 2024, 2023, and 2022 were $608.2 million, $902.1 million, and $875.1 million, respectively.
The increased demand, combined with the rationalization of softwood kraft pulp processing during 2023, has created pressure on CTO pricing and driven the cost of CTO to unprecedented levels, higher by as much as 300 percent in some cases. 10 In addition to these developments in the EU, various pieces of legislation regarding the use of alternative fuels have been introduced in the U.S. at both the federal and state level.
The increased demand, combined with the rationalization of softwood kraft pulp processing, has created pressure on CTO pricing and driven the cost of CTO to unprecedented levels, higher by as much as 300 percent in some cases. During 2024, we sourced approximately 81 percent of our CTO from two primary parties: Smurfit WestRock and Georgia-Pacific.
Additionally, we are well-positioned to meet increasing emissions standards around the world. 9 Performance Chemicals Our Performance Chemicals segment is comprised of two product lines: road technologies (previously named pavement technologies) and industrial specialties. Our products are utilized in pavement construction, pavement preservation, pavement reconstruction and recycling, road markings, agrochemical dispersants, paper chemicals, and other diverse industrial uses.
Performance Chemicals Our Performance Chemicals segment is comprised of two product lines: road technologies and industrial specialties. Our products are utilized in road construction, preservation, reconstruction and recycling, road markings, agrochemical dispersants, lubricants, certain adhesives, rubber, and other diverse industrial uses. Our application expertise is often called upon by our customers to provide unique solutions that maximize resource efficiency.
In our industrial intermediates business, our tall oil fatty acid ("TOFA") competes against widely available fats and oils derived from tallow, soy, rapeseed, palm, and cotton sources. In oilfield, we compete against other tall oil specialty additives used for oil-based drilling fluids or corrosion inhibition formulations in the drilling, production and downstream applications of oilfield.
In our industrial intermediates business, our tall oil fatty acid ("TOFA") competes against widely available fats and oils derived from tallow, soy, rapeseed, palm, and cotton sources. 12 Advanced Polymer Technologies Our Advanced Polymer Technologies segment produces caprolactone and caprolactone-based specialty polymers for use in coatings, resins, elastomers, adhesives, bioplastics, and medical devices.
Today, our board of directors is 30 percent women and 20 percent racially and ethnically diverse, and our executive team is 43 percent women-led and 14 percent racially and ethnically diverse. 6 Performance Management We assess employee performance comprehensively, taking into account behaviors and direct input from the employee, feedback, and the individual's progress toward goals, as well as their level of business impact.
Performance Management We assess employee performance comprehensively, taking into account behaviors and direct input from the employee, feedback, the individual's progress toward goals, and their level of business impact. Achievements that bolster the team, our business, and our clients—internal and external—and our fundamental values are all included in the performance evaluation process.
Advanced Polymer Technologies Our Advanced Polymer Technologies segment produces caprolactone and caprolactone-based specialty polymers for use in coatings, resins, elastomers, adhesives, bioplastics, and medical devices. Advanced Polymer Technologies' net sales for 2023, 2022, and 2021 were $204.0 million, $244.7 million, and $185.8 million, respectively. The chart below reflects our 2023 Advanced Polymer Technologies' net sales by geography.
Advanced Polymer Technologies' net sales for 2024, 2023, and 2022 were $188.6 million, $204.0 million, and $244.7 million, respectively. The chart below reflects our 2024 Advanced Polymer Technologies' net sales by geography. Sales are assigned to geographic areas based on the location of the party to which the product was shipped.
Raw Materials and Production Our Performance Chemicals segment serves customers globally from six manufacturing locations in the U.S. Most of our industrial specialties and some of our road technologies products are derived from CTO, a co-product produced by softwood kraft pulp processors, such as WestRock and Georgia-Pacific LLC (“Georgia-Pacific”).
This process will not include the Performance Chemicals road technologies product line, nor certain lignin-based products that are currently reported in Ingevity’s industrial specialties product line. 9 Raw Materials and Production Our Performance Chemicals segment serves customers globally from five manufacturing locations in the U.S.
Labor Relations and Collective Bargaining We currently employ approximately 1,700 employees (excluding employees at our DeRidder, LA manufacturing facility which will be closed in 2024), of whom approximately 75 percent are employed in the U.S. Approximately 56 percent of our production employees are represented by labor unions under various collective bargaining agreements ("CBA").
Our success depends, in part, on our ability to attract, retain and motivate critical resources across production, technical, engineering, sales, and various functional disciplines. 5 Labor Relations and Collective Bargaining We currently employ approximately 1,600 employees, of whom approximately 73 percent are employed in the U.S.
Sales are assigned to geographic areas based on the location of the party to which the product was shipped. Raw Materials and Production Our Advanced Polymer Technologies segment serves customers globally from one manufacturing location in the U.K.
The chart below reflects our 2024 Performance Chemicals' net sales by geography. Sales are assigned to geographic areas based on the location of the party to which the product was shipped. In 2023, Ingevity began a transformation of the Performance Chemicals’ industrial specialties product line.
CTO accounted for approximately 26 percent of our consolidated cost of sales and 51 percent of our consolidated raw materials purchases in 2023. The supply of CTO is generally inelastic and governed by the volume of softwood kraft pulp processing around the world.
On July 1, 2024, we terminated our last material long-term CTO supply contract. As consideration for the termination, we made cash payments totaling $100.0 million during 2024. The supply of CTO is generally inelastic and governed by the volume of softwood kraft pulp processing around the world.
Removed
During the first quarter of 2023, we realigned our segment reporting structure to increase transparency for our investors and better align with how our chief operating decision maker intends to measure segment operating performance and allocate resources across our operating segments.
Added
On January 16, 2025, we announced the exploration of strategic alternatives for our Performance Chemicals industrial specialties product line, including a potential divestiture of portions of the North Charleston site.
Removed
We separated our engineered polymers product line from the Performance Chemicals reportable segment into its own reportable segment, Advanced Polymer Technologies. This reportable segment change also resulted in our Performance Chemicals reporting unit for goodwill being split into two separate reporting units for the purposes of goodwill impairment testing.
Added
This process includes all industrial specialties pine chemicals based chemistries that serve the paper chemical, rubber, adhesive, oilfield, lubricants and industrial intermediate end-use markets, and the North Charleston, South Carolina, CTO refinery. This process will not include the Performance Chemicals road technologies product line, nor certain lignin-based products that are currently reported in the Performance Chemicals industrial specialties product line.
Removed
In November of 2023, we announced an initiative to reposition our Performance Chemicals segment to enhance profitability and earnings stability as we execute our corporate strategy to focus on higher margin and higher growth specialty products, diversify feedstocks and optimize our manufacturing network.
Added
We will continue to evaluate the rest of our portfolio and remain committed to taking appropriate actions to ensure our cost structure is aligned with our objective of being a specialty chemicals leader. We cannot assure this strategic review will result in a transaction and will update investors when appropriate.
Removed
This initiative will result in the reduction, and in some cases exit, of historical primary end uses of our Industrial Specialties product line such as adhesives, publication inks, and oilfield as well as the closure of our Performance Chemicals' manufacturing facility in DeRidder, Louisiana. Refer to the section: Performance Chemicals , within Item 1: BUSINESS for more information.
Added
In 2024, the International Association of Machinists and Aerospace Workers, on behalf of its affiliated Local Union 1362 at our Crossett, Arkansas manufacturing plant ratified a one year extension agreement which expires March 1, 2025. The parties will begin contract renewal negotiations during the first quarter of 2025.
Removed
Item 8 of this Form 10-K. 4 Performance Materials Performance Chemicals Advanced Polymer Technologies Product Lines Road Technologies (1) Industrial Specialties End-Use Markets Automotive Food, Chemicals, and Water Purification Pavement Construction Pavement Preservation Pavement Reconstruction and Recycling Pavement Markings Agricultural Chemicals Paper Chemicals Rubber Industrial Intermediates Limited (2) : Adhesives, Oilfield and Lubricants Automotive & Transportation Industrial Equipment Footwear & Apparel Consumer Packaging Medical & Health 2023 Revenue $586.0 million $902.1 million $204.0 million _______________ (1) Previously named Pavement Technologies (2) In November of 2023 we announced an initiative to reposition our Performance Chemicals segment to enhance profitability and earnings stability as we execute our corporate strategy to focus on higher margin and higher growth specialty products, diversify feedstocks and optimize our manufacturing network.
Added
The Advanced Polymer Technologies manufacturing plant in Warrington, United Kingdom negotiates pay and conditions annually with the GMB Trade Union. In addition, the CBA at our Covington, Virginia Performance Materials plant with the International Brotherhood of Electrical Workers on behalf of its affiliated Local Union 464 expired January 15, 2025.
Removed
This initiative will result in the reduction, and in some cases exit, of historical end-use markets of our Industrial Specialties product line such as adhesives, publication inks, and oilfield. Refer to the section: Performance Chemicals , within Item 1: BUSINESS for more information.
Added
The parties began negotiations in the fourth quarter of 2024 and will continue to operate under the same terms and conditions while negotiations are pending. Also, the CBA at our Covington, Virginia Plant with the Covington Paperworkers Union Local 675, affiliated with the Association of Western Pulp and Paper Workers expires December 1, 2025.
Removed
In 2023, the United Steel, Paper, Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, on behalf of its affiliated Local Union 0775 at our Wickliffe, Kentucky Performance Materials manufacturing facility ratified a four-year CBA, which expires on February 1, 2027.
Added
It is anticipated that the parties will begin contract renewal negotiations in the fourth quarter of 2025. Diversity, Equity, Inclusion and Belonging We are committed to fostering Diversity, Equity, Inclusion and Belonging.
Removed
Also in 2023, the IBEW LOCAL Union No. 1753 at our Charleston, South Carolina Performance Chemicals manufacturing facility ratified a four-year CBA, which expires on June 20, 2026. The Advanced Polymer Technologies manufacturing facility in Warrington, United Kingdom is in the process of their annual negotiations with the GMB Union.
Added
Our success is fueled by a vibrant, team-oriented culture where people understand that our individual differences make a greater collective impact in every interaction, from peer-to-peer collaboration across regions to customer engagements.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf we fail to achieve our sustainability goals or reduce our impact on the environment or if we are unable to respond or are perceived to be inadequately responding to sustainability concerns, we may receive adverse publicity, and certain investors may divert from, or avoid investing in, our securities, which could have a negative impact on our business and reputation .
Biggest changeIf we fail to achieve our sustainability goals or reduce our impact on the environment or if we are unable to respond or are perceived to be inadequately responding to sustainability concerns, we may receive adverse publicity, and certain investors may divert from, or avoid investing in, our securities, which could have a negative impact on our business and reputation . 21 Adverse weather conditions and other environmental impacts (such as climate change and extreme weather) may impact our operations and the demand for some of our products, which could negatively affect our financial condition and results of operations.
Disruptions to any of our manufacturing operations or other facilities, due to natural disasters and extreme weather, such as a hurricane, tropical storm, earthquake, tornado, severe weather, flood, fire or other unanticipated problems such as labor difficulties, pandemics, equipment failure, cyberattacks or other cybersecurity incidents, capacity expansion difficulties or unscheduled maintenance, could cause operational disruptions of varied duration.
Disruptions to any of our manufacturing operations or other facilities due to natural disasters and extreme weather, such as a hurricane, tropical storm, earthquake, tornado, severe weather, flood or fire, or other unanticipated problems such as labor difficulties, pandemics, equipment failure, cyberattacks or other cybersecurity incidents, capacity expansion difficulties or unscheduled maintenance, could cause operational disruptions of varied duration.
The impact of these changes may lead to increased competition from competing and substitute products and downward pricing pressures on our customers, and therefore, our Advanced Polymer Technologies and industrial specialties product offerings. We face competition from new technologies and new or emerging competitors.
The impact of these changes may lead to increased competition from competing and substitute products and downward pricing pressures on our customers, and therefore, on our Advanced Polymer Technologies and industrial specialties product offerings. We face competition from new technologies and new or emerging competitors.
Volatility in the world financial markets could increase borrowing costs or affect our ability to gain access to the capital markets, which could have a material adverse effect on our competitive position, business, financial condition, results of operations, and cash flows . 22 ITEM 1B. UNRESOLVED STAFF COMMENTS None.
Volatility in the world financial markets could increase borrowing costs or affect our ability to gain access to the capital markets, which could have a material adverse effect on our competitive position, business, financial condition, results of operations, and cash flows . ITEM 1B. UNRESOLVED STAFF COMMENTS None. 22
Independent of any such regulation, increased public awareness and adverse publicity about potential impacts on climate change or environmental harm from us or our industry could harm our reputation or otherwise impact Ingevity adversely. In recent years, investors have also begun to show increased interest about sustainability and climate change as it relates to their investment decisions.
Independent of any such regulation, increased public awareness and adverse publicity about potential impacts on climate change or environmental harm from us or our industry could harm our reputation or otherwise impact Ingevity adversely. In recent years, some investors have also begun to show increased interest about sustainability and climate change as it relates to their investment decisions.
The process of designing and developing new technology and related products is complex, costly, and uncertain and may require us to retain and recruit talent in areas of expertise outside of our current core competencies. There can be no assurance that such advances in technology will be feasible or will occur in a timely and efficient manner .
The process of designing and developing new technology and related products is complex, costly, and uncertain and may require us to retain and recruit talent in areas of expertise outside of our current core competencies. There can be no assurance that such advances in technology will be feasible or successful, or will occur in a timely and efficient manner .
These unpredictable events could negatively impact our results of operations and cash flows. Further, any of these factors may impact our customers’ non-U.S. operations, which could reduce demand for our products. As our 19 international operations and activities expand, we inevitably have greater exposure to the risks associated with operating in many foreign countries .
These unpredictable events could negatively impact our results of operations and cash flows. Further, any of these factors may impact our customers’ non-U.S. operations, which could reduce demand for our products. As our international operations and activities expand, we inevitably have greater exposure to the risks associated with operating in many foreign countries .
If we fail to keep pace with the evolving or disruptive technological innovations in our end-use markets on a competitive basis, our financial condition and results of operations could be adversely affected . In the Performance Materials segment, there is competition from other activated carbon manufacturers.
If we fail to keep pace with the evolving or disruptive 16 technological innovations in our end-use markets on a competitive basis, our financial condition and results of operations could be adversely affected . In the Performance Materials segment, there is competition from other activated carbon manufacturers.
GDPR, which applies to the collection, use, retention, security, processing, and transfer of personally identifiable information of residents of EU countries, mandates new compliance obligations and imposes significant fines and sanctions for violations. CCPA requires companies to provide new data disclosure, access, deletion, and opt-out rights to consumers in California.
GDPR, which applies to the collection, use, retention, security, processing, and transfer of personally identifiable information of residents of EU countries, mandates new compliance obligations and imposes significant fines and sanctions for violations. CCPA requires 18 companies to provide new data disclosure, access, deletion, and opt-out rights to consumers in California.
Availability and pricing are determined by the supply/demand dynamics for synthetic rubber as well as the price of crude oil as the feedstock for isoprene and various other factors that are not within our control. Animal and plant based fatty acids compete with TOFA products in lubricant and industrial specialties.
Availability and pricing are determined by the supply/demand dynamics for synthetic rubber as well as the price of crude oil as the feedstock for isoprene and various other factors that are not within our control. Animal and plant based fatty acids compete with TOFA products in industrial specialties.
While we maintain policies to enter into confidentiality agreements with our employees and third parties to protect our proprietary expertise and other trade secrets, these agreements may not be enforceable or, even if legally 20 enforceable, we may not have adequate remedies for breaches of such agreements. We also may not be able to readily detect breaches of such agreements.
While we maintain policies to enter into confidentiality agreements with our employees and third parties to protect our proprietary expertise and other trade secrets, these agreements may not be enforceable or, even if legally enforceable, we may not have adequate remedies for breaches of such agreements. We also may not be able to readily detect breaches of such agreements.
In addition, we collect and store certain data, including proprietary business information, and may have access to confidential or personal information that is subject to privacy and security laws and regulations . 18 The secure processing, storage, and transmission of sensitive, confidential, and personal data is critical to our operations and business strategy.
In addition, we collect and store certain data, including proprietary business information, and may have access to confidential or personal information that is subject to privacy and security laws and regulations . The secure processing, storage, and transmission of sensitive, confidential, and personal data is critical to our operations and business strategy.
The market price for our TOFA and oleochemical products are impacted by the prices of other fats and 17 oils, and the prices for other fats and oils are driven by actual and expected harvest rates, petroleum oil prices, and the biofuel market. Other monomers, thermoplastics, and polyols compete with our caprolactone-based products.
The market price for our TOFA and oleochemical products are impacted by the prices of other fats and oils, and the prices for other fats and oils are driven by actual and expected harvest rates, petroleum oil prices, and the biofuel market. Other monomers, thermoplastics, and polyols compete with our caprolactone-based products.
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 and our motion seeking judgment as a matter of law, or a new trial in the alternative.
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.
Furthermore, in the event that WestRock’s Covington, VA paper mill’s wastewater treatment operations do not comply with permits or applicable law and WestRock is unable to determine the cause of such non-compliance, then we will be responsible for between 10 percent and 50 percent of the costs and expenses of such noncompliance (increasing in 10 percent increments per violation during each twelve-month period) despite representing less than 3 percent of the total wastewater volume.
Furthermore, in the event that Smurfit WestRock’s Covington, VA paper mill’s wastewater treatment operations do not comply with permits or applicable law and Smurfit WestRock is unable to determine the cause of such non-compliance, 14 then we will be responsible for between 10 percent and 50 percent of the costs and expenses of such noncompliance (increasing in 10 percent increments per violation during each twelve-month period) despite representing less than 3 percent of the total wastewater volume.
Our manufacturing facilities use energy, including electricity and natural gas and some of our plants emit amounts of greenhouse gas that may in the future be affected by legislative and regulatory efforts to limit greenhouse gas emissions.
Our manufacturing facilities use energy, including electricity and natural gas and some of our plants emit amounts of greenhouse gasses that may in the future be affected by legislative and regulatory efforts to limit greenhouse gas emissions.
However, regulators may react to a variety of considerations, including economic and political, that may result in any such more stringent regulations being delayed or shelved entirely, in one or more countries or regions.
However, regulators may react to a variety of considerations, including economic and political, that may result in any such more stringent regulations being delayed or 20 shelved entirely, in one or more countries or regions.
The Company purchases a variety of other raw materials from third parties for its manufacturing operations, including, but not limited to, hardwood sawdust, phosphoric acid, ethylene amines, black liquor, maleic/fumaric acid, hydrogen peroxide, cyclohexanone, and ethoxylates. Each raw material is subject to its own supply and demand dynamics which may, at times, limit availability and/or cause price volatility.
The Company purchases a variety of raw materials from third parties for its manufacturing operations, including, but not limited to, CTO, hardwood sawdust, phosphoric acid, ethylene amines, black liquor, maleic/fumaric acid, hydrogen peroxide, cyclohexanone, and ethoxylates. Each raw material is subject to its own supply and demand dynamics which may, at times, limit availability and/or cause price volatility.
While we do not do business directly with governmental agencies, our customers provide paving services to, for example, the governments of various jurisdictions within North America, South America, Europe, China, Brazil and India, and revenue either directly or indirectly attributable to such government spending continues to remain a significant portion of our revenues.
While we do not do business directly with governmental agencies, our customers provide paving services to the governments of various jurisdictions within North America, South America, Europe, China, Brazil and India, and revenue either directly or indirectly attributable to such government spending continues to remain a significant portion of our revenues.
No customer accounted for more than 10 percent of total sales for 2023. Wi th some exceptions, our business with those large customers is based primarily upon individual purchase orders. As such, our customers could cease buying our products from us at any time, for any reason, with little or no recourse.
No customer accounted for more than 10 percent of total sales for 2024. Wi th some exceptions, our business with those large customers is based primarily upon individual purchase orders. As such, our customers could cease buying our products from us at any time, for any reason, with little or no recourse.
These costs and expenses may be significant and may adversely impact our financial condition and results of operations. 14 Additionally, several of our manufacturing facilities are leased.
These costs and expenses may be significant and may adversely impact our financial condition and results of operations. Additionally, several of our manufacturing facilities are leased.
Changes in environmental laws and regulations, or their application, could subject Ingevity to significant additional 21 capital expenditures and operating expenses in future years. Additionally, changes in the regulation of greenhouse gases, as well as future climate change laws and regulations, depending on their nature and scope, could subject our operations to significant additional costs or limits on operations.
Changes in environmental laws and regulations, or their application, could subject Ingevity to significant additional capital expenditures and operating expenses. Additionally, changes in the regulation of greenhouse gases, as well as future climate change laws and regulations, depending on their nature and scope, could subject our operations to significant additional costs or limits on operations.
Because the outcome of the Company’s post-trial motions and possible appeal is difficult to predict, as of December 31, 2023, the Company has accrued a total of $85.0 million , the full amount of the jury’s verdict (including treble damages).
Because the outcome of the Company’s post-trial motions and possible appeal is difficult to predict, as of December 31, 2024, the Company has accrued a total of $85.0 million , the full amount of the jury’s verdict (including treble damages).
The amount accrued for this matter is included within Other liabilities on the consolidated balance sheet as of December 31, 2023, and the charge is included within Other (income) expense, net on the consolidated statement of operations for the twelve months ended December 31, 2021.
The amount accrued for this matter is included within Other liabilities on the consolidated balance sheet as of December 31, 2024, and the charge is included within Other (income) expense, net on the consolidated statement of operations for the twelve months ended December 31, 2021.
For example, Chinese government agencies have in the past required companies to reduce or suspend manufacturing operations from time to time, with little or no notice, for reasons such as energy restrictions and air quality concerns. The timing and length of these suspensions, which are expected to continue occurring, are difficult to predict.
For example, Chinese government agencies ha ve in the past required companies to reduce or suspend manufacturing operations from time to time, with little or no notice, for reasons such as energy restrictions and air quality concerns. The timing and length of these suspensions, which are expected to continue occurring, are difficult to predict.
District Court dismissed the Company’s patent infringement claims against BASF alleging BASF infringed the 844 Patent and invalidated some, but not all, of the claims in our 844 patent, which expired in March 2022 . The Company disagrees with the verdict, including the court’s application of the law and entry of judgment, and intends to appeal.
District Court dismissed the Company’s patent infringement claims against BASF alleging BASF infringed the 844 Patent and invalidated some, but not all, of the claims in our 844 patent, which expired in March 2022 . The Company disagrees with the verdict, including the court’s application of the law and entry of judgment.
We have certain large customers in particular businesses, the loss of which could have a material adverse effect on the applicable segment’s sales and, depending on the significance of the loss, our results of operations, financial condition or cash flows. Sales to the Company’s ten largest customers (across all three segments) accounted for 31 percent of total sales for 2023.
We have certain large customers in particular businesses, the loss of which could have a material adverse effect on the applicable segment’s sales and, depending on the significance of the loss, our results of operations, financial condition or cash flows. Sales to the Company’s ten largest customers (across all three segments) accounted for 38 percent of total sales for 2024.
We are currently involved in several legal actions relative to the intellectual property associated with the 844 Patent. On September 15, 2021, a jury in the lawsuit filed by the Company against BASF Corporation for patent infringement in the U.S.
We are currently involved in several legal actions related to the intellectual property associated with 19 the 844 Patent. On September 15, 2021, a jury in the lawsuit filed by the Company against BASF Corporation for patent infringement in the U.S.
We have exposure to risks of operating outside the U.S., including: fluctuations in foreign currency exchange rates, including the euro, pound sterling, Japanese yen and Chinese renminbi; restrictions on, or difficulties and costs associated with, the repatriation of cash from foreign countries to the U.S.; difficulties and costs associated with complying with a wide variety of complex laws, treaties and regulations, which may carry significant penalties for non-compliance; unexpected changes in political or regulatory environments; earnings and cash flows that may be subject to tax withholding requirements or the imposition of tariffs, exchange controls or other restrictions; geopolitical and economic instability, including the wars in Ukraine and the Gaza region; general country strikes or work stoppages; unforeseen public health crises, such as pandemic and epidemic diseases; import and export restrictions, tariffs, and other trade barriers or retaliatory actions; difficulties in maintaining overseas subsidiaries and international operations; difficulties in obtaining approval for significant transactions; government limitations on foreign ownership; government takeover or nationalization of business; and government mandated price controls .
We have exposure to risks of operating outside the U.S., including: fluctuations in foreign currency exchange rates, including the euro, pound sterling, Japanese yen, Brazilian Real, and Chinese renminbi; restrictions on, or difficulties and costs associated with, the repatriation of cash from foreign countries to the U.S.; difficulties and costs associated with complying with a wide variety of complex laws, treaties and regulations, which may carry significant penalties for non-compliance; unexpected changes in political or regulatory environments; earnings and cash flows that may be subject to tax withholding requirements or the imposition of tariffs, exchange controls or other restrictions; geopolitical and economic instability, including the wars in Ukraine and the Middle East; general country strikes or work stoppages; unforeseen public health crises, such as pandemic and epidemic diseases; import and export restrictions; difficulties in maintaining overseas subsidiaries and international operations; difficulties in obtaining approval for significant transactions; government limitations on foreign ownership; government takeover or nationalization of business; and government mandated price controls.
We have set targets for greenhouse gas reductions and related sustainability goals. There can be no assurance that we will meet these targets and goals.
We have set targets for greenhouse gas emissions and related sustainability goals. There can be no assurance that we will meet these targets and goals.
Demand for our Advanced Polymer Technologies products which are sold into footwear adhesives and structural support, may be affected by consumer discretionary spending and changes in consumer preferences. Additionally, sales of our industrial specialties products may be negatively impacted due to reduced global industrial demand.
Demand for our Advanced Polymer Technologies products which are sold into automotive applications, footwear adhesives and structural support, may be affected by consumer discretionary spending and changes in consumer preferences. Additionally, sales of our industrial specialties and Advanced Polymer Technologies products have, and may continue to be, negatively impacted due to reduced global industrial demand.
As petroleum oil prices can change rapidly, Ingevity products may be disadvantaged due to the fact that CTO is a thinly traded commodity with pricing commonly established for periods ranging from one quarter to one-year periods of time.
As petroleum oil prices can change rapidly, Performance Chemical segment products may be disadvantaged due to the fact that CTO is a thinly traded commodity with pricing commonly established for periods ranging from one quarter to one-year periods of time.
Our industries and the end-use markets into which we sell our products experience periodic technological change and product improvement.
Our industries and the end-use markets into which we sell our products experience periodic technological change and product innovation.
We have instituted a system of security policies, procedures, capabilities, internal controls and audits based on our pursuit of ISO 27001 certification, designed to protect this information. Additionally, we engage third-party threat detection, penetration testing, and monitoring services which includes a global cybersecurity incident response team.
We have instituted a system of security policies, procedures, capabilities, internal controls and audits aligned with our ISO 27001 certification, designed to protect this information. Additionally, we engage third-party threat detection, penetration testing, and monitoring services which includes a global cybersecurity incident response team.
For the third-party services that remain, any such services would be at risk if any of the counterparties were to idle or permanently shut down the associated mill or plant, or if operations at the associated mill or plant were disrupted due to natural or other disaster, or by reason of strikes or other labor disruptions, or if there were a significant contractual dispute between the parties.
The services provided by third parties would be at risk if any of the counterparties were to idle or permanently shut down the associated mill or plant, or if operations at the associated mill or plant were disrupted due to natural or other disaster, or by reason of strikes or other labor disruptions, or if there were a significant contractual dispute between the parties.
As the adoption of more stringent regulations governing gasoline vapor emissions is expected to drive significant growth in our automotive carbon applications, the failure to enact such regulations will have an impact on the growth prospects for these products .
As the adoption of more stringent regulations governing gasoline vapor emissions is expected to drive significant growth in our automotive carbon applications, the failure to enact such regulations would have a negative impact on the growth prospects for these products .
We purchase a variety of other raw materials, which are also subject to pricing pressures and limited availability; inability to procure these raw materials or to pass on price increases could negatively impact our operations or financial results.
Supply Chain Risks We purchase a variety of raw materials, which are subject to pricing pressures and limited availability; inability to procure these raw materials or to pass on price increases could negatively impact our operations or financial results.
Additional regulation of or requirements for such chemicals could require us to change our operations, and these changes could affect the quality or types of products we manufacture and/or materially increase our costs . Increased focus by governmental entities on environmental issues and sustainability may result in new or increased regulations.
Additional regulation of or requirements for such chemicals could require us to change our operations, and these changes could affect the quality or types of products we manufacture and/or materially increase our costs . Increased focus by governmental entities on environmental issues and sustainability have resulted in a complex landscape of new or increased regulations.
We are dependent upon third parties for the provision of certain critical operating services, primarily utilities and related services (depending on the site, e.g., steam, compressed air, energy, water, wastewater treatment, hydrogen peroxide), at our Covington, Virginia Performance Materials facility, at our Warrington, United Kingdom Advanced Polymer Technologies facility, and at the following Performance Chemicals facilities: Crossett, Arkansas and North Charleston, South Carolina.
We are dependent upon third parties for the provision of certain critical operating services, primarily utilities and related services (depending on the site, e.g., steam, compressed air, energy, water, wastewater treatment, hydrogen peroxide), at our Covington, Virginia Performance Materials facility and at our Warrington, United Kingdom Advanced Polymer Technologies facility.
In addition, pricing for competing oleochemicals such as palm or soybean is likely to put further pressure on pricing of the Company’s products during periods of depressed petroleum prices.
In addition, pricing for competing oleochemicals such as palm or soybean is likely to put further pressure on pricing of the Company’s products during periods of depressed petroleum prices. 17 We are dependent on certain large customers.
Further, the CBA at our Crossett, Arkansas Performance Chemicals' manufacturing facility with the International Association of Machinists and Aerospace Workers Union ("IAM") expires on March 1, 2024. The parties began contract renewal negotiations during the first quarter of 2024.
The CBA at our Crossett, Arkansas Performance Chemicals manufacturing facility with the International Association of Machinists and Aerospace Workers Union ("IAM") expires on March 1, 2025. The parties will begin contract renewal negotiations during the first quarter of 2025.
Our business involves hazards associated with chemical manufacturing, storage, transportation and disposal; the legal and regulatory environment related to such chemicals and other environmental impacts (such as climate change and extreme weather) could require expenditures or changes to our product formulations and operations.
Our business involves hazards associated with chemical manufacturing, storage, transportation and disposal; the legal and regulatory environment related to such chemicals could require expenditures or changes to our product formulations and operations.
For example, our Performance Chemicals segment produces many products derived from lignin, which, like CTO, is a co-product of the kraft pulping process.
For example, our Performance Chemicals segment produces many products derived from CTO and lignin, which are co-products of the kraft pulping process.
Lignin is in limited supply and if we are unable to secure a sufficient amount of lignin on a cost-effective basis we could suffer disruption to our road technologies business, which could negatively impact our financial results and our results of operations.
Lignin is also in limited supply and if we are unable to secure a sufficient amount of lignin on a cost-effective basis we could suffer disruption to our road technologies product line, which could negatively impact our financial results and our results of operations. 15 Disruptions within our supply chain could negatively impact, our production, financial condition and results of operations.
Government business is, in general, subject to special risks and challenges, including: delays in funding and uncertainty regarding the allocation of funds to federal, state and local agencies; delays in spending or reductions in other state and local funding dedicated for transportation projects; other government budgetary constraints, cutbacks, delays or reallocation of government funding; long purchase cycles or approval processes; our customers’ competitive bidding and qualification requirements; changes in government policies and political agendas; and international conflicts or other military operations that could cause the temporary or permanent diversion of government funding from transportation or other infrastructure projects. 16 Certain of the Company’s products are sold into cyclical end-markets, such as the automotive market and the apparel market, which are impacted by changes in consumer and industrial demand.
Government business is, in general, subject to special risks and challenges, including: delays in funding and uncertainty regarding the allocation of funds to federal, state and local agencies; delays in spending or reductions in other state and local funding dedicated for transportation projects; other government budgetary constraints, cutbacks, delays or reallocation of government funding; long purchase cycles or approval processes; our customers’ competitive bidding and qualification requirements; changes in government policies and political agendas; and international conflicts or other military operations that could cause the temporary or permanent diversion of government funding from transportation or other infrastructure projects.
The anticipated timing, charges, and costs of the closure of the DeRidder Plant could materially differ from our estimates if the plant closure results in adverse legal or regulatory actions, if personnel required to effect the shutdown become unavailable, or we are affected by other factors not currently contemplated.
The anticipated timing, charges, costs and results of the closure of the Plant Closures and other current or future repositioning activities are subject to a number of assumptions and risks and the actual results could materially differ from our estimates if such actions result in adverse legal or regulatory actions, if personnel required to effect the shutdown become unavailable, or we are affected by other factors not currently contemplated.
Certain of our products face competition from substitute products where the costs of different raw material inputs can impact the price competitiveness of our products and negatively impact our sales and/or profits as we respond to substitute product competition. Gum rosin-based products and hydrocarbon resins compete with our TOR-based resins in the adhesives market.
Certain of our products face competition from substitute products where the costs of different raw material inputs can impact the price competitiveness of our products and negatively impact our sales and/or profits as we respond to substitute product competition.
Market Risks Adverse conditions in the automotive market may negatively impact demand for our automotive carbon products. Sales of our automotive activated carbon products are tied to global internal-combustion-engine (“ICE”) and hybrid electric vehicle automobile (“HEV”) production levels.
Sales of our automotive activated carbon products are tied to global internal-combustion-engine (“ICE”) and hybrid electric vehicle automobile (“HEV”) production levels.
Disruptions within our supply chain have negatively impacted, and could continue to negatively impact, our production, financial condition and results of operations. We have been, and could continue to be, adversely affected by disruptions within our supply chain and transportation network. Our products are transported by truck, rail, barge or ship primarily by third-party providers.
We could be adversely affected by disruptions within our supply chain and transportation network. Our products are transported by truck, rail, barge or ship primarily by third-party providers.
The costs of transporting our products could be negatively affected by factors outside of our control, including rail service interruptions or rate increases, extreme weather events, tariffs, rising fuel costs, and capacity constraints. Recently, the Panama Canal drought and Suez Canal attacks have, and could continue to, adversely impact the reliability and cost of our export shipments to customers.
The costs of transporting our products could be negatively affected by factors outside of our control, including rail service interruptions or rate increases, extreme weather events, local hostilities, tariffs, rising fuel costs, and capacity constraints.
If such actions are determined adversely to us, or there is an associated economic impact on our business, we may have inadequate insurance or cash flow to offset any associated costs . Increasing weather-related impacts on our operations and plant sites may impact the cost or availability of insurance.
While we have insurance coverage intended to assist with any financial impacts the financial resources of the Company could be impacted. If such actions are determined adversely to us, or there is an associated economic impact on our business, we may have inadequate insurance or cash flow to offset any associated costs .
Significant delays or increased costs relating to transportation could materially affect our financial condition and results of operations. Disruptions at our suppliers could lead to volatility or increases in raw material or energy costs and/or reduced availability of materials or energy, potentially affecting our financial condition and results of operations .
Disruptions at our suppliers could lead to volatility or increases in raw material or energy costs and/or reduced availability of materials or energy, potentially affecting our financial condition and results of operations . Market Risks Adverse conditions in the automotive market may negatively impact demand for our automotive carbon products.
Also, many of our production employees are governed by collective bargaining agreements (“CBAs”). The CBA at our Warrington, United Kingdom Advanced Polymer Technologies manufacturing facility with GMB Union expired on January 15, 2024. The parties began contract renewal negotiations during the first quarter of 2024 and continue to operate under the expired CBA while negotiations are pending.
Also, many of our production employees are governed by collective bargaining agreements (“CBAs”). The CBA at our Warrington, United Kingdom Advanced Polymer Technologies manufacturing facility with GMB Union is negotiated annually and the parties operate under the prior CBA until new terms are agreed.
In 2023, sales to customers outside of the U.S. made up approximately 37 percent of our total sales, and we sell our products to customers in approximately 75 c ountries.
International Operations Risks We are exposed to the risks inherent in international sales and operations. In 2024, sales to customers outside of the U.S. made up approximately 42 percent of our total sales, and we sell our products to customers in approximately 70 countries.
The Company also intends to challenge the U.S. District Court’s previous dismissal of the Company’s patent infringement claims against BASF in the Delaware Proceedings. The final resolution of these matters could take up to twenty-four months and there can be no assurance that the Company will prevail in its attempts to challenge the verdict.
As of December 31, 2024 , the final resolution of these matters could take up to 15 months and there can be no assurance that the Company will prevail in its attempts to challenge the verdict.
Any losses due to these events may not be covered by our existing insurance policies or may be subject to certain deductibles. In certain cases, we have products, such as our extruded honeycomb and caprolactone products, that are only made at one facility.
Any losses due to these events may not be covered by our existing insurance policies or may be subject to certain deductibles.
Removed
Operational Risks There may be negative impacts to our business arising out of the closure of our plant in DeRidder, Louisiana. On November 1, 2023, we announced our plan to close our plant in DeRidder, Louisiana (the “DeRidder Plant”).
Added
Operational Risks The repositioning of our Performance Chemicals business has reduced our net sales and may otherwise adversely affect our financial condition and results of operations during this transition period.
Removed
As a result of the Deridder Plant closing and reduced CTO refining capacity, we may be obligated, under an existing CTO supply contract, to purchase CTO volumes through 2025 at amounts in excess of needed CTO volumes. We intend to manage our CTO inventories by reselling excess volumes in the open market.
Added
On November 1, 2023 and July 31, 2024, we announced a number of strategic actions designed to further reposition our Performance Chemicals reportable segment to improve the profitability and reduce the cyclicality of the Company as a whole.
Removed
Depending on the then current market price for CTO at the time of such sales, we may have to sell the CTO at a loss when our contracted price exceeds market, which may adversely affect our financial condition and results of operations.
Added
These initiatives, including the closure of our plants in DeRidder, Louisiana and Crossett, Arkansas (the “Plant Closures”), focus on reducing exposure to lower margin end-use markets of our industrial specialties product line.
Removed
The third party providers of critical and non-critical services at our location in North Charleston, South Carolina have announced the cessation of these services. The services in North Charleston are currently being wound down, with only certain water supply and treatment services to be transitioned in 2024.
Added
These actions have, and may continue to, adversely affect the Company’s financial condition and results of operations. Our review of strategic alternatives for the industrial specialties product line and North Charleston, South Carolina crude tall oil (“CTO”) refinery may not result in a transaction and any transaction entered into may not yield the expected results or benefits.
Removed
We have incurred and expect to incur significant costs to provide these services ourselves or obtain these services from other third parties. While we are executing our plans to minimize disruption to our business, there is no guarantee that we will be able to replace these services on a timely and cost-effective basis.
Added
On January 16, 2025, we announced plans to explore strategic alternatives for our industrial specialties product line and North Charleston, South Carolina CTO refinery, including a potential divestiture of portions of the North Charleston site.
Removed
The costs associated with replacing these services may be significant and any delay in our ability to replace these services could result in interruptions to our operations, both of which could adversely affect our financial condition and results of operations.
Added
While it is our intent to identify and pursue a transaction that will strengthen the Performance Chemicals segment and improve the Company’s financial performance, and benefit our stockholders by enabling us to focus on higher growth and higher margin opportunities, there can be no guarantee that this strategic review will result in such a transaction or achieve such expected results or benefits.
Removed
Supply Chain Risks Our Performance Chemicals segment is highly dependent on CTO as a raw material, which is in limited supply, and has been and may continue to be subject to significant price increases resulting in costs that we may not be able to pass through to customers.
Added
The third party provider of critical and non-critical services at our location in Warrington, United Kingdom has announced plans to discontinue operations at its Warrington, United Kingdom plant, but continues to provide services to us.
Removed
CTO is a key raw material in our industrial specialties and some of our road technologies product lines within our Performance Chemicals segment. Availability of CTO is directly linked to (as it is a co-product of) the production output of kraft paper mills using softwood, primarily pine trees, as their feedstock, (i.e., pulp).
Added
The CBA at our Covington, Virginia Performance Materials plant with the International Brotherhood of Electrical Workers on behalf of its affiliated Local Union 464 expired on January 15, 2025. The parties began negotiations in the fourth quarter of 2024 and will continue to operate under the same terms and conditions while negotiations are pending.
Removed
Softwood pulp is the predominant fiber source for packaging grades of paper as well as fluff pulp for personal care products. As a result, there is a finite global supply of CTO, with global demand for softwood pulp driving the global supply of CTO.
Added
Further, the CBA at our Covington, Virginia Plant with the Covington Paperworkers Union Local 675, affiliated with the Association of Western Pulp and Paper Workers will expire on December 1, 2025. It is anticipated that the parties will begin contract renewal negotiations during the fourth quarter of 2025.
Removed
Further, some pulp or paper mills may choose to consume their production of CTO to meet their energy needs or reduce their carbon footprint rather than sell the CTO to third parties, further constraining the availability of CTO and increasing inflationary pricing pressure as a result.
Added
In certain cases, we have products, such as our extruded honeycomb, caprolactone, pavement preservation products, road construction products, pavement reconstruction and recycling products, and industrial specialties products, that are only made at a single site, such as our Covington, Virginia Performance Materials plant .
Removed
Weather conditions have in the past and may in the future affect the availability and quality of pine trees used in the kraft pulping process and, therefore, the availability of CTO that meets Ingevity’s quality standards. Geopolitical risk factors could constrain C TO availability.
Added
While we have taken aggressive action to limit the Company’s exposure to the volatility of the CTO market, its limited availability and competing demands for its use could again impact our financial results and results of operations if we are unable to source a sufficient supply at a reasonable cost.
Removed
For example, sanctions imposed on Russia in 2022 have constrained the global CTO supply by approximately 10 perc ent. CTO-based biofuel has been deemed to meet the EU’s Renewable Energy Directive, second phase (“RED II”) biofuel sustainability criteria.
Added
For example, port strikes within the U.S. have adversely impacted, and could continue to adversely impact, the reliability and cost of our export shipments to customers. Significant delays or increased costs relating to transportation could materially affect our financial condition and results of operations.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeITEM 1C. CYBERSECURITY At Ingevity, we recognize the paramount importance of cybersecurity in safeguarding sensitive information. We are aligned with industry standards, such as the ISO 27001 cybersecurity framework. Our comprehensive cybersecurity program is led by a team of diverse, highly skilled professionals, and we invest in modern technologies, including artificial intelligence and machine learning, to fortify our defenses.
Biggest changeOur comprehensive cybersecurity program is led by a team of diverse, highly skilled professionals, and we invest in modern technologies, including artificial intelligence and machine learning, to fortify our defenses.
Despite our security architecture and controls, and those of our third-party providers, we may be vulnerable to cyber-attacks, computer viruses, security breaches, ransomware attacks, inadvertent or intentional employee actions, system failures, and other risks that could materially impact our financial results and our results of operations. 23
Despite our security architecture and controls, and those of our third-party providers, we may be vulnerable to cyber-attacks, computer viruses, security breaches, ransomware attacks, inadvertent or intentional employee actions, system failures, and other risks that could materially impact our financial results and our results of operations.
Additionally, our cybersecurity team regularly meets with our executive management leadership team to provide updates on our cybersecurity risks and incidents ensuring management is keenly aware of any potential threat. Protection of Sensitive Information.
Additionally, our CIO regularly meets with our executive management leadership team to provide updates on our cybersecurity risks and incidents ensuring management is keenly aware of any potential threat. Protection of Sensitive Information.
We maintain collection, storage, and access controls of personal, proprietary, and confidential information, focusing on protecting trade secrets, intellectual property, clinical trial data, third-party information, and employee data. Industry-Standard Frameworks and Policies. We incorporate industry-standard frameworks, policies, and practices such as ISO 27001 which are designed to protect the confidentiality and privacy of information. Protection Mechanisms.
We enforce collection, storage, and access controls of personal, proprietary, and confidential information, focusing on protecting trade secrets, intellectual property, clinical trial data, third-party information, and employee data. Industry-Standard Frameworks and Policies. We incorporate industry-standard frameworks, policies, and practices such as ISO 27001 which are designed to protect the confidentiality and privacy of information. Protection Mechanisms.
We have a robust cybersecurity incident response plan that incorporates regular simulations, drills, and vulnerability scans, penetration testing and third-party assessments of our cybersecurity controls and resilience. Third-Party Monitoring. We employ a managed security services provider that provides 24/7 monitoring of our enterprise network.
We maintain a robust cybersecurity incident response plan that incorporates regular simulations, drills, vulnerability scans, penetration testing and third-party assessments to evaluate and enhance our cybersecurity controls and resilience. Third-Party Monitoring. We partner with a managed security services provider for 24/7 monitoring of our enterprise network.
We currently follow the ISO 27001 cybersecurity framework and are progressing toward program certification. We continuously monitor our enterprise network and have deployed detective and preventative controls. In-depth third-party security assessments are conducted annually. Incident Response and Testing.
We currently adhere to the ISO 27001 information security framework and are advancing our program having achieved ISO 27001 certification in 2024. We continuously monitor our enterprise network and have deployed detective and preventative controls. In-depth third-party security assessments are conducted annually. Incident Response and Testing.
We continue to collaborate with local, state and federal agencies and peers in the chemical manufacturing industry to identify the latest threats and implement effective defenses to protect our employees and customers. Key Components of Our Cybersecurity Program: Leadership and Governance. Led by our Chief Information Security Officer ("CISO"), we have a team of skilled internal and external cybersecurity professionals.
We actively collaborate with local, state and federal agencies, as well as peers in the chemical manufacturing industry to identify the latest threats and implement effective defenses that safeguard our employees and customers. Key Components of Our Cybersecurity Program: Leadership and Governance.
During the past year, there have been no material risks from cybersecurity threats or prior cybersecurity incidents that have materially affected or are reasonably likely to materially affect the Company’s business strategy, results of operations, or financial condition.
We believe these measures contribute to the protection of both our organization's and our clients' sensitive information. During the past three years, there have been no material impacts from cybersecurity threats or cybersecurity incidents that have materially affected or are reasonably likely to materially affect the Company’s business strategy, results of operations, 23 or financial condition.
We have implemented processes for continual monitoring of our information systems, including the deployment of advanced security measures and system audits to identify potential vulnerabilities. If a cybersecurity incident were to occur, we are equipped with an incident response plan that includes immediate actions to mitigate the impact and long-term strategies for remediation and prevention of future incidents.
If a cybersecurity incident were to occur, we have developed and documented an incident response plan that includes immediate actions to mitigate the impact and long-term strategies for remediation and prevention of future incidents.
We require third-party service providers with access to personal, confidential or proprietary information to implement and maintain comprehensive cybersecurity practices consistent with applicable legal standards and industry best practices. Insurance Coverage. We maintain insurance coverage that includes cybersecurity protection.
We require third-party service providers with access to personal, confidential or proprietary information to implement and maintain comprehensive cybersecurity measures aligned with applicable legal standards and industry best practices. Our proactive approach to cybersecurity involves the integration of leading technologies and collaboration with third-party experts to ensure alignment with industry standards.
Our Board of Directors (“the Board”) has oversight of our cybersecurity and risk management programs. The Board receives at least semiannual updates from the Chief Information Officer and CISO on cybersecurity matters and our risk management program, and periodic updates from external cybersecurity experts on the overall risk landscape.
The Sustainability & Safety Committee receives at least quarterly updates from the CIO on cybersecurity matters and our related risk management program, and periodic updates from external cybersecurity experts on the overall risk landscape.
Removed
Our proactive approach to cybersecurity involves the integration of leading technologies and collaboration with third-party experts to ensure alignment with industry standards. We believe these measures contribute to the protection of both our organization's and our clients' sensitive information.
Added
ITEM 1C. CYBERSECURITY At Ingevity, we recognize the paramount importance of cybersecurity in safeguarding sensitive information. We align with industry standards, including the ISO 27001 information security framework, for which we became certified in 2024.
Added
We have a team of skilled internal and external cybersecurity professionals, led by our Vice President of Information Technology, Chief Information Officer and Chief Information Security Officer ("CIO"), who has over three decades of experience in information security and information technology infrastructure.
Added
Our team has experience in information security and information technology infrastructure and holds several advanced and expert licenses and certifications, including International Society of Automation 62443, Cybersecurity Expert and International Information System Security Certification Consortium (ISC2), Certified Information Security Manager (CISM), and Certified Information Systems Security Professional (CISSP).
Added
Beginning in 2025, the Sustainability & Safety Committee of our Board of Directors (“the Board”) has oversight of our cybersecurity and risk management programs. Prior to that, the full Board exercised oversight of cybersecurity risk management. The Board moved oversight of cybersecurity risk management into the Sustainability & Safety Committee to allow for more in-depth reviews.
Added
Our full Board of Directors also receives an update at least once a year on these matters in addition to regular reporting from the Sustainability & Safety Committee on matters reviewed. We have implemented processes for continual monitoring of our information systems, including the deployment of advanced security measures and system audits to identify potential vulnerabilities.

Item 2. Properties

Properties — owned and leased real estate

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Biggest change(2) We expect to complete the closure of our manufacturing facility in DeRidder, Louisiana in 2024. (3) Certain manufacturing assets are subject to a finance lease with the Development Authority of Burke County (the county in which Waynesboro, Georgia is located). (4) Certain manufacturing assets are subject to a finance lease.
Biggest change(2) All production at our DeRidder and Crossett Plants ceased during 2024. We continue to lease the Crossett, Arkansas site and own the DeRidder, Louisiana site. (3) Certain manufacturing assets are subject to a finance lease with the Development Authority of Burke County (the county in which Waynesboro, Georgia is located).
Location Own / Lease Functional Use North Charleston, South Carolina Own / Lease (1) Corporate Headquarters; Application Labs; Performance Chemicals: Manufacturing Covington, Virginia Lease Performance Materials: Manufacturing Crossett, Arkansas Lease Performance Chemicals: Manufacturing DeRidder, Louisiana Own (2) Performance Chemicals: Manufacturing Waynesboro, Georgia Own (3) Performance Materials: Manufacturing Shanghai, People's Republic of China Lease Regional Headquarters; Application Lab Wickliffe, Kentucky Own (4) Performance Materials: Manufacturing Changshu, People’s Republic of China Lease Performance Materials: Manufacturing Warrington, United Kingdom Lease Advanced Polymer Technologies: Manufacturing, Application Lab Zhuhai, People’s Republic of China Lease Performance Materials: Manufacturing, Application Lab Greenville, Alabama Lease Performance Chemicals: Manufacturing Dayton, Nevada Own Performance Chemicals: Manufacturing Childress, Texas Own (5) Performance Chemicals: Manufacturing Marion, Indiana Own Performance Chemicals: Manufacturing ________________________ (1) Portions of the manufacturing operations are on leased land and our corporate headquarters building is leased.
Location Own / Lease Functional Use North Charleston, South Carolina Own / Lease (1) Corporate Headquarters; Application Labs; Performance Chemicals: Manufacturing Covington, Virginia Lease Performance Materials: Manufacturing Crossett, Arkansas Lease (2) Performance Chemicals: Manufacturing DeRidder, Louisiana Own (2) Performance Chemicals: Manufacturing Waynesboro, Georgia Own (3) Performance Materials: Manufacturing Shanghai, People's Republic of China Lease Regional Headquarters; Application Lab Wickliffe, Kentucky Own (4) Performance Materials: Manufacturing Changshu, People’s Republic of China Lease Performance Materials: Manufacturing Warrington, United Kingdom Lease Advanced Polymer Technologies: Manufacturing, Application Lab Zhuhai, People’s Republic of China Lease Performance Materials: Manufacturing, Application Lab Greenville, Alabama Lease Performance Chemicals: Manufacturing Dayton, Nevada Own Performance Chemicals: Manufacturing Childress, Texas Own (5) Performance Chemicals: Manufacturing Marion, Indiana Own Performance Chemicals: Manufacturing ________________________ (1) Portions of the manufacturing operations are on leased land and our corporate headquarters building is leased.
We believe these facilities are adequate and suitable for our current operations, and that the production capacity of our facilities is sufficient to meet current demand. In the case of the properties identified as “Leased”, we nevertheless own the manufacturing assets themselves.
We believe these facilities are adequate and suitable for our current operations, and that the production capacity of our facilities is sufficient to meet current demand. In the case of the properties identified as “Leased,” we nevertheless own the manufacturing facilities and equipment.
(5) Portions of the manufacturing operations are on leased land.
(4) Certain manufacturing assets are subject to a finance lease. (5) Portions of the manufacturing operations are on leased land.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeFortson 56 President and Chief Executive Officer (2020-present); Executive Vice President, Chief Financial Officer & Treasurer (2015-2020); Vice President, Chief Financial Officer and Treasurer of AAR Corporation (2013-2015); Managing Director in the Investment Banking Department of Bank of America Merrill Lynch (2007-2013) Mary Dean Hall 66 Executive Vice President and Chief Financial Officer (2021-present); Senior Vice President, Chief Financial Officer and Treasurer at Quaker Houghton (2015-2021); Vice President and Treasurer at Eastman Chemical Company (2009-2015); Prior to that role, she held various senior-level financial positions of increasing responsibility with Eastman from 1995 through 2009, including Treasurer, Vice President and Controller, and Vice President, Finance.
Biggest changeMary Dean Hall 67 Executive Vice President and Chief Financial Officer (2021-present); Senior Vice President, Chief Financial Officer and Treasurer at Quaker Houghton (2015-2021); Vice President and Treasurer at Eastman Chemical Company (2009-2015); Prior to that role, she held various senior-level financial positions of increasing responsibility with Eastman from 1995 through 2009, including Treasurer, Vice President and Controller, and Vice President, Finance.
Steve Hulme 55 Senior Vice President & President of Advanced Polymer Technologies (2022-present); Vice President, Engineered Polymers (2020-2022); General Manager at Maysta International Ltd (2018-2020); Prior to that role, he held various senior-level positions of increasing responsibility with Evonik and Air Products and Chemicals from 2010 through 2018.
Steve Hulme 56 Senior Vice President & President of Advanced Polymer Technologies (2022-present); Vice President, Engineered Polymers (2020-2022); General Manager at Maysta International Ltd (2018-2020); Prior to that role, he held various senior-level positions of increasing responsibility with Evonik and Air Products and Chemicals from 2010 through 2018.
(2009-2015) Rich White 61 Senior Vice President & President of Performance Chemicals (2022-present); Vice President, Industrial Specialties (2019-2022); VP Global Sales at DuPont Nutrition & Biosciences (2017-2019); Prior to that role, he held various senior-level positions of increasing responsibility with FMC from 1998 through 2017.
Edward Woodcock 59 Executive Vice President & President of Performance Materials (2015-present); Vice President of MeadWestvaco's Carbon Technologies business (2010-2015) Rich White 62 Senior Vice President & President of Performance Chemicals (2022-present); Vice President, Industrial Specialties (2019-2022); Vice President, Global Sales at DuPont Nutrition & Biosciences (2017-2019); Prior to that role, he held various senior-level positions of increasing responsibility with FMC from 1998 through 2017.
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 24 INFORMATION ABOUT OUR EXECUTIVE OFFICERS The executive officers of Ingevity Corporation, the offices they currently hold, their business experience over the past five years and their ages are as follows: Name Age (1) Present Position and Business Experience John C.
MINE SAFETY DISCLOSURES Not applicable. 24 INFORMATION ABOUT OUR EXECUTIVE OFFICERS The executive officers of Ingevity Corporation, the offices they currently hold, their business experience over the past five years and their ages are as follows: Name Age (1) Present Position and Business Experience Luis Fernandez-Moreno 62 Interim President and Chief Executive Officer (2024-present); Senior Vice President of Ashland Inc.
Christine Stunyo 45 Senior Vice President, Chief Human Resources Officer (2022 - present); Senior Vice President Human Resources at Host Hotels & Resorts (2020-2022); Senior Vice President, Global Human Resources at US Pharmacopeia (2019-2020), Vice President, Global Human Resources at US Pharmacopeia (2015-2018); Prior to that role, she held various senior-level positions of increasing responsibility with Capital One and PepsiCo from 2005 through 2015. _______________ (1) As of December 31, 2023.
Terry Dyer 58 Senior Vice President & Chief Human Resources Officer (2024-present); Senior Vice President Human Resources and Communications, Billerud (2020-2024); Chief Human Resource Officer, Worthington Industries (2012-2016); Prior to that role, he held various senior-level positions of increasing responsibility with Armstrong World Industries and Burlington Industries from 1998 through 2012. _______________ (1) As of December 31, 2024.
Removed
S. Edward Woodcock 58 Executive Vice President & President of Performance Materials (2015-present); Vice President of MeadWestvaco's Carbon Technologies business (2010-2015) Stacy L. Cozad 53 Executive Vice President, General Counsel & Secretary (2021-present); Senior Vice President, General Counsel, Chief Compliance Officer and Corporate Secretary at Spirit AeroSystems Holdings, Inc.
Added
(2012-2017); President, Ashland Inc. Chemicals Group (2015-2017); President, Ashland Inc. Specialty Ingredients (2013-2015); and President, Ashland Water Technologies (2012-2013). Prior to that role, he held various senior-level positions of increasing responsibility with Rohm & Haas Company for 27 years.
Removed
(2017-2021); Senior Vice President, General Counsel and Corporate Secretary at Spirit AeroSystems Holdings, Inc. (2016-2017); Associate General Counsel – Litigation at Southwest Airlines Co.
Added
Ryan Fisher 49 Senior Vice President, General Counsel & Secretary (2024-present); Vice President, Deputy General Counsel, Chief Compliance Officer and Assistance Secretary (2021-2024); Deputy General Counsel, Chief Legal Officer - Performance Chemicals and Assistant Secretary (2016-2020); Senior Counsel, WestRock Company (2015-2015); Associate General Counsel, WestRock Company (2014-2015); Assistant General Counsel, WestRock Company (2006-2013).

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIn light of our market capitalization, the S&P SmallCap 600 Index is a more comparable broad market index with which to compare Ingevity's common stock. 26 December 31, 2018 2019 2020 2021 2022 2023 Ingevity Corporation $ 100.00 $ 104.41 $ 90.49 $ 85.67 $ 84.17 $ 56.42 S&P Small Cap 600 Index $ 100.00 $ 122.74 $ 136.53 $ 173.04 $ 145.10 $ 168.23 S&P MidCap 400 Index $ 100.00 $ 126.17 $ 143.39 $ 178.85 $ 155.42 $ 180.90 S&P Chemicals 600 Index $ 100.00 $ 116.09 $ 137.69 $ 172.60 $ 147.72 $ 156.99 Dow Jones U.S.
Biggest changeIn light of our market capitalization, the S&P SmallCap 600 Index is a more comparable broad market index with which to compare Ingevity's common stock. 26 December 31, 2019 2020 2021 2022 2023 2024 Ingevity Corporation $ 100.00 $ 86.67 $ 82.06 $ 80.61 $ 54.04 $ 46.64 S&P Small Cap 600 Index $ 100.00 $ 111.24 $ 140.98 $ 118.22 $ 137.07 $ 148.91 S&P MidCap 400 Index $ 100.00 $ 113.65 $ 141.76 $ 123.19 $ 143.38 $ 163.30 S&P Chemicals 600 Index $ 100.00 $ 118.60 $ 148.68 $ 127.25 $ 135.24 $ 128.11 Dow Jones U.S.
Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (1) October 1-31, 2023 — $ — — $ 353,384,633 November 1-30, 2023 — $ — — $ 353,384,633 December 1-31, 2023 — $ — — $ 353,384,633 Total — — _______________ (1) On July 25, 2022, our Board of Directors authorized the repurchase of up to $500.0 million of our common stock and rescinded the prior outstanding repurchase authorization with respect to the shares that remained unused under the prior authorization.
Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (1) October 1-31, 2024 — $ — — $ 353,384,633 November 1-30, 2024 — $ — — $ 353,384,633 December 1-31, 2024 — $ — — $ 353,384,633 Total — — _______________ (1) On July 25, 2022, our Board of Directors authorized the repurchase of up to $500.0 million of our common stock (the "2022 Authorization"), and rescinded the prior outstanding repurchase authorization with respect to the shares that remained unused under the prior authorization.
Stock Performance Graph The following table and graph present the cumulative total stockholder return for Ingevity's common stock compared with the Standard & Poor's (S&P) SmallCap 600 Index, S&P MidCap 400 Index, the S&P Chemicals 600 Index, and the Dow Jones (DJ) U.S. Specialty Chemicals Index for the five-year period ended December 31, 2023.
Stock Performance Graph The following table and graph present the cumulative total stockholder return for Ingevity's common stock compared with the Standard & Poor's (S&P) SmallCap 600 Index, S&P MidCap 400 Index, the S&P Chemicals 600 Index, and the Dow Jones (DJ) U.S. Specialty Chemicals Index for the five-year period ended December 31, 2024.
The graph assumes the investment of $100 in each of Ingevity's common stock, the S&P SmallCap 600 Index, S&P MidCap 400 Index, the S&P Chemicals 600 Index, and the DJ U.S. Specialty Chemicals Index, respectively, as of market close on December 31, 2018, and that all dividends, if any, were reinvested.
The graph assumes the investment of $100 in each of Ingevity's common stock, the S&P SmallCap 600 Index, S&P MidCap 400 Index, the S&P Chemicals 600 Index, and the DJ U.S. Specialty Chemicals Index, respectively, as of market close on December 31, 2019, and that all dividends, if any, were reinvested.
Previously, Ingevity was included in the S&P MidCap 400 Index and was moved to the S&P SmallCap 600 Index on June 16, 2023, so we updated our comparative broad market index accordingly for the fiscal year ended December 31, 2023.
Previously, Ingevity was included in the S&P MidCap 400 Index and was moved to the S&P SmallCap 600 Index on June 16, 2023. We updated our comparative broad market index accordingly for the fiscal year ended December 31, 2024.
("NYSE") under the symbol "NGVT." There were approximately 4,400 record holders of our common stock as of February 14, 2024 . Unregistered Sales of Equity Securities Not Applicable. Issuer Purchases of Equity Securities The following table summarizes information with respect to the repurchase of our common stock during the three months ended December 31, 2023.
("NYSE") under the symbol "NGVT." There were approximately 4,200 record holders of our common stock as of February 14, 2025 . Unregistered Sales of Equity Securities Not Applicable. Issuer Purchases of Equity Securities The following table summarizes information with respect to the repurchase of our common stock during the three months ended December 31, 2024.
Shares under the current repurchase 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.
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.
Specialty Chemicals Index $ 100.00 $ 112.25 $ 129.32 $ 160.08 $ 138.26 $ 140.21 The graph and related information set forth above are not deemed to be "filed" with the SEC for purposes of Section 18 of the Exchange Act or incorporated by reference into any future filing made by us with the SEC, except to the extent that we specifically incorporate it by reference into any such filing.
Specialty Chemicals Index $ 100.00 $ 115.21 $ 142.61 $ 123.18 $ 124.91 $ 118.83 The graph and related information set forth above are not deemed to be "filed" with the SEC for purposes of Section 18 of the Exchange Act or incorporated by reference into any future filing made by us with the SEC, except to the extent that we specifically incorporate it by reference into any such filing.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

87 edited+70 added−57 removed38 unchanged
Biggest changeReconciliation of Net Income to Adjusted EBITDA Years Ended December 31, In millions 2023 2022 2021 Net income (loss) (GAAP) $ (5.4) $ 211.6 $ 118.1 Interest expense 93.3 61.8 51.7 Interest income (6.3) (7.5) (4.0) Provision (benefit) for income taxes (4.7) 58.0 44.7 Depreciation and amortization - Performance Materials 38.3 36.1 36.8 Depreciation and amortization - Performance Chemicals 53.2 43.1 40.0 Depreciation and amortization - Advanced Polymer Technologies 31.3 29.6 33.1 Restructuring and other (income) charges, net (1) 189.9 13.8 16.2 Acquisition and other-related costs (2) 4.5 5.9 0.6 Loss on CTO resales (3) 22.0 — — Gain on sale of strategic investment (4) (19.3) — — Litigation verdict charge (5) — — 85.0 Pension and postretirement settlement and curtailment charges (income), net (6) — 0.2 — Adjusted EBITDA (Non-GAAP) $ 396.8 $ 452.6 $ 422.2 _______________ (1) We regularly perform strategic reviews and assess the return on our operations, which sometimes results in a plan to restructure the business.
Biggest changeReconciliation of Net Income (Loss) to Adjusted EBITDA Years Ended December 31, In millions 2024 2023 2022 Net income (loss) (GAAP) $ (430.3) $ (5.4) $ 211.6 Interest expense 97.8 93.3 61.8 Interest income (7.7) (6.3) (7.5) Provision (benefit) for income taxes (105.3) (4.7) 58.0 Depreciation and amortization (1) 108.3 122.8 108.8 Restructuring and other (income) charges, net (2) 186.2 170.2 13.8 Goodwill impairment charge (3) 349.1 — — Acquisition and other-related costs (4) 0.3 4.5 5.9 Loss on CTO resales (5) 52.7 22.0 — CTO supply contract termination charges (6) 100.0 — — (Gain) loss on strategic investments (7) 11.4 (19.3) — Pension and postretirement settlement and curtailment charges (income), net (8) 0.2 — 0.2 Adjusted EBITDA (Non-GAAP) $ 362.7 $ 377.1 $ 452.6 _______________ (1) Refer to Note 19 for more information.
Other Potential Liquidity Needs Share Repurchases On July 25, 2022, our Board of Directors authorized the repurchase of up to $500.0 million of our common stock and rescinded the prior outstanding repurchase authorization with respect to the shares that remained unused under the prior authorization.
Other Potential Liquidity Needs Share Repurchases On July 25, 2022, our Board of Directors authorized the repurchase of up to $500.0 million of our common stock (the "2022 Authorization"), and rescinded the prior outstanding repurchase authorization with respect to the shares that remained unused under the prior authorization.
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 an impairment exists. 41 If an asset is determined to be impaired, the loss is measured based on quoted market prices in active markets, if available.
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 an impairment exists. If an asset is determined to be impaired, the loss is measured based on quoted market prices in active markets, if available.
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.
Since these CTO resale activities 39 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.
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.
If the carrying value of a reporting unit that includes goodwill exceeds its fair 44 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.
These assumptions are based on company-specific information and projections, which are not observable in the market and are therefore considered Level 2 and Level 3 measurements. The excess of the purchase price over the fair value of the identified assets and liabilities is recorded as goodwill.
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 45 as goodwill.
Selection of the appropriate reporting unit is based on the level at which discrete financial information is 42 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.
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.
Gross profit Year Ended December 31, 2023 vs. 2022 Gross profit decrease of $98.2 million was driven by increased manufacturing costs of $158.6 million due primarily 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 exchange impacts of $0.9 million, partially offset by favorable pricing and sales composition (mix) of $127.9 million.
Year Ended December 31, 2023 vs. 2022 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.
The sales decrease was driven by a volume decline of $58.3 million (24 percent), partially offset by favorable pricing and sales composition (mix) of $17.0 million (seven percent), and favorable foreign currency exchange of $0.6 million (zero percent). Segment EBITDA.
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). Segment EBITDA.
The sales increase was driven by favorable pricing and sales composition (mix) of $93.1 million (11 percent), comprised of industrial specialties ($62.7 million) and road technologies product lines ($30.4 million), respectively.
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.
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. 38 Liquidity and Capital Resources The primary source of liquidity for our business is the cash flow provided by operating activities.
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. 41 Liquidity and Capital Resources The primary source of liquidity for our business is the cash flow provided by operating activities.
(6) Our pension and postretirement settlement and curtailment charges (income) are related to the acceleration of prior service costs, as a result of a reduction in the number of participants within the Union Hourly defined benefit pension plan. These are excluded from our segment results because we consider these costs to be outside our operational performance.
(8) Our pension and postretirement settlement and curtailment charges (income) are related to the acceleration of prior service costs, as a result of a reduction in the number of participants within the Union Hourly defined benefit pension plan. These are excluded from our segment results because we consider these costs to be outside our operational performance.
Shares under the current repurchase 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.
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.
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 both segments.
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.
Segment EBITDA is defined as segment net sales less segment operating expenses (segment operating expenses consist of costs of sales, selling, general and administrative expenses, other (income) expense, net, excluding depreciation and amortization).
Segment EBITDA is defined as segment net sales less segment operating expenses (segment operating expenses consist of costs of sales, selling, general and administrative expenses, research and technical expenses, other (income) expense, net, excluding depreciation and amortization).
(4) We exclude gains and losses from sales of 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.
(7) 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.
Selling, general, and administrative expenses Year Ended December 31, 2023 vs. 2022 Selling, general, and administrative ("SG&A") expenses were $183.7 million (11 percent of Net sales) and $198.8 million (12 percent of Net sales) for the years ended December 31, 2023 and 2022, respectively.
Year Ended December 31, 2023 vs. 2022 SG&A expenses were $183.7 million (11 percent of Net sales) and $198.8 million (12 percent of Net sales) for the years ended December 31, 2023 and 2022, respectively.
Research and technical expenses Years Ended December 31, 2023, 2022, and 2021 Research and technical expenses as a percentage of Net sales remained relatively consistent period over period, totaling 1.9 percent of sales in the year ended December 31, 2023, compared to 1.8 percent in the year ended December 31, 2022, and 1.9 percent in the year ended December 31, 2021.
Research and technical expenses Years Ended December 31, 2024, 2023, and 2022 Research and technical expenses as a percentage of Net sales remained relatively consistent period over period, totaling 2.0 percent of sales in the year ended December 31, 2024, compared to 1.9 percent in the year ended December 31, 2023, and 1.8 percent in the year ended December 31, 2022.
The increase was partially offset by a volume decrease of $65.3 million (seven percent), driven by a decline in industrial specialties ($167.7 million), partially offset by growth in road technologies ($102.4 million). Unfavorable foreign currency exchange also impacted Net sales by $0.8 million (zero percent). Segment EBITDA.
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). Segment EBITDA.
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 $95.9 million at December 31, 2023.
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 $68.0 million at December 31, 2024.
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 December 31, 2023, our undrawn capacity under our revolving credit facility was $259.5 million.
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 December 31, 2024, our undrawn capacity under our revolving credit facility was $302.4 million.
The cash and cash equivalents balance at December 31, 2023, includ ed $90.7 million held by our foreign subsidiaries. Cash and earnings of our foreign subsidiaries are generally used to finance our foreign operations and their capital expenditures. We believe that our foreign holdings of cash will not have a material adverse impact on our U.S. liquidity.
The cash and cash equivalents balance at December 31, 2024, includ ed $63.9 million held by our foreign subsidiaries. Cash and earnings of our foreign subsidiaries are generally used to finance our foreign operations and their capital expenditures. We believe that our foreign holdings of cash will not have a material adverse impact on our U.S. liquidity.
We have no material commitments associated with these projected capital expenditures as of December 31, 2023. 39 Cash flow comparison of Years Ended December 31, 2023, 2022, and 2021 Years Ended December 31, In millions 2023 2022 2021 Net cash provided by (used in) operating activities $ 205.1 $ 313.4 $ 293.3 Net cash provided by (used in) investing activities (77.3) (551.9) (138.6) Net cash provided by (used in) financing activities (99.9) 48.1 (133.1) Cash flows provided by (used in) operating activities Cash provided by (used in) operating activities, which consists of net income (loss) adjusted for non-cash items including the cash impact from changes in operating assets and liabilities (i.e., working capital), totaled $205.1 million for the year ended December 31, 2023.
We have no material commitments associated with these projected capital expenditures as of December 31, 2024. 42 Cash flow comparison of Years Ended December 31, 2024, 2023, and 2022 Years Ended December 31, In millions 2024 2023 2022 Net cash provided by (used in) operating activities $ 128.6 $ 205.1 $ 313.4 Net cash provided by (used in) investing activities (79.5) (77.3) (551.9) Net cash provided by (used in) financing activities (70.2) (99.9) 48.1 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.
On November 1, 2023, we announced a number of strategic actions designed to further reposition our Performance Chemicals operating segment to improve the profitability and reduce the cyclicality of the Company as a whole.
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.
Our fiscal year 2023 annual goodwill impairment test was performed as of October 1, 2023. 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.
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.
We have excluded the following items from segment EBITDA: interest expense, net, associated with corporate debt facilities, income taxes, depreciation, amortization, restructuring and other (income) charges, net, including inventory lower of cost or market charges associated with restructuring actions, acquisition and other-related (income) costs, litigation verdict charges, (losses) gains from the sale of strategic investments, (losses) gains on CTO resales, and pension and postretirement settlement and curtailment (income) charge, net.
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.
We continue to include undistributed earnings or loss, distributions, amortization or accretion of basis differences, and other-than-temporary impairments for equity method investments that we believe are directly attributable to the operational performance of such investments, in our reportable segment results. Refer to Note 5 to the Consolidated Financial Statements included within Part II.
We continue to include undistributed earnings or loss, distributions, amortization or accretion of basis differences, and other-than-temporary impairments for equity method investments that we believe are directly attributable to the operational performance of such investments, in our reportable segment results. Refer to Note 5 for more information.
The increase in 2023 was driven by favorable pricing and sales composition (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.
Year Ended December 31, 2023 vs. 2022 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.
In millions Years Ended December 31, 2023 2022 2021 Total Performance Materials - Net sales $ 586.0 $ 548.5 $ 516.8 Segment EBITDA 286.6 252.2 249.4 Net Sales Comparison of Years Ended December 31, 2023, 2022, and 2021 Change vs. prior year In millions Prior year Net sales Volume Price/Mix Currency effect Current year Net sales Year Ended December 31, 2023 vs 2022 $ 548.5 17.3 32.2 (12.0) $ 586.0 Year Ended December 31, 2022 vs 2021 $ 516.8 28.6 14.9 (11.8) $ 548.5 Year Ended December 31, 2023 vs. 2022 Segment net sales.
In millions Years Ended December 31, 2024 2023 2022 Total Performance Materials - Net sales $ 609.6 $ 586.0 $ 548.5 Segment EBITDA $ 319.1 $ 286.6 $ 252.2 Net Sales Comparison of Years Ended December 31, 2024, 2023, and 2022 Change vs. prior year In millions Prior year Net sales Volume Price/Mix Currency effect Current year Net sales Year Ended December 31, 2024 vs 2023 $ 586.0 11.2 17.3 (4.9) $ 609.6 Year Ended December 31, 2023 vs 2022 $ 548.5 17.3 32.2 (12.0) $ 586.0 Year Ended December 31, 2024 vs. 2023 Segment net sales.
(2) 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 37 associated with the completion of acquisitions and strategic investments.
(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.
Our products are used in a variety of demanding applications, including adhesives, agrochemicals, asphalt paving, bioplastics, coatings, elastomers, lubricants, pavement markings, publication inks, oil exploration and production, and automotive components. We operate in three reporting segments: Performance Materials, Performance Chemicals, and Advanced Polymer Technologies.
Our products are used in a variety of demanding applications, including adhesives, agrochemicals, asphalt paving, bioplastics, coatings, elastomers, lubricants, paint for road markings, oil drilling, and automotive components. We operate in three reportable segments: Performance Materials, Performance Chemicals, and Advanced Polymer Technologies.
In millions Years Ended December 31, 2023 2022 2021 Advanced Polymer Technologies - Net sales $ 204.0 $ 244.7 $ 185.8 Segment EBITDA 44.5 40.0 32.3 Net Sales Comparison of Years Ended December 31, 2023, 2022, and 2021 Change vs. prior year In millions Prior year Net sales Volume Price/Mix Currency effect Current year Net sales Year Ended December 31, 2023 vs 2022 $ 244.7 (58.3) 17.0 0.6 $ 204.0 Year Ended December 31, 2022 vs 2021 $ 185.8 6.9 62.4 (10.4) $ 244.7 Year Ended December 31, 2023 vs. 2022 Segment net sales.
In millions Years Ended December 31, 2024 2023 2022 Advanced Polymer Technologies - Net sales $ 188.6 $ 204.0 $ 244.7 Segment EBITDA $ 35.2 $ 44.5 $ 40.0 Net Sales Comparison of Years Ended December 31, 2024, 2023, and 2022 Change vs. prior year In millions Prior year Net sales Volume Price/Mix Currency effect Current year Net sales Year Ended December 31, 2024 vs 2023 $ 204.0 7.1 (18.8) (3.7) $ 188.6 Year Ended December 31, 2023 vs 2022 $ 244.7 (58.3) 17.0 0.6 $ 204.0 Year Ended December 31, 2024 vs. 2023 Segment net sales.
Segment EBITDA increased by $2.8 million due to favorable volume of $15.6 million, pricing and sales composition (mix) of $13.8 million, and decreased SG&A expenses and research and technical costs of $0.5 million. The increase was largely offset by higher manufacturing costs of $21.5 million, and unfavorable foreign currency exchange impacts of $5.6 million.
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.
Years Ended December 31, In millions 2023 2022 2021 Net sales Road Technologies product line $ 369.8 $ 241.3 $ 195.4 Industrial Specialties product line 532.3 633.8 493.5 Total Performance Chemicals - Net sales $ 902.1 $ 875.1 $ 688.9 Segment EBITDA 65.7 160.4 140.5 Net Sales Comparison of Years Ended December 31, 2023, 2022, and 2021 Change vs. prior year In millions Prior year Net sales Volume Price/Mix Currency effect Current year Net sales Year Ended December 31, 2023 vs 2022 $ 875.1 (65.3) 93.1 (0.8) $ 902.1 Year Ended December 31, 2022 vs 2021 $ 688.9 (26.1) 216.9 (4.6) $ 875.1 Year Ended December 31, 2023 vs. 2022 Segment net sales.
Years Ended December 31, In millions 2024 2023 2022 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 Segment EBITDA $ 14.7 $ 65.7 $ 160.4 Net Sales Comparison of Years Ended December 31, 2024, 2023, and 2022 Change vs. prior year In millions Prior year Net sales Volume Price/Mix Currency effect Current year Net sales Year Ended December 31, 2024 vs 2023 $ 902.1 (293.2) 0.5 (1.2) $ 608.2 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 Year Ended December 31, 2023 vs 2022 $ 875.1 (65.3) 93.1 (0.8) $ 902.1 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 Year Ended December 31, 2024 vs. 2023 Segment net sales.
We continue to include the service cost, amortization of prior service cost, interest costs, expected return on plan assets, and amortized actual gains and losses in our segment EBITDA. Refer to Note 14 to the Consolidated Financial Statements included within Part II. Item 8 of this Form 10-K for more information.
We continue to include the service cost, amortization of prior service cost, interest costs, expected return on plan assets, and amortized actual gains and losses in our segment EBITDA. Refer to Note 14 for more information.
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.
Overview 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.
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.
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.
Management does not currently expect to repatriate cash earnings from our foreign operations in order to fund U.S. operations. Debt and Finance Lease Obligations Refer to Note 10 to the Consolidated Financial Statements included within Part II. Item 8 of this Form 10-K for a summary of our outstanding debt obligations and revolving credit facility.
Management does not currently expect to repatriate cash earnings from our foreign operations in order to fund U.S. operations. 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.
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, including inventory lower of cost or market charges associated with restructuring actions, acquisition and other-related (income) costs, litigation verdict charges, gain on sale of strategic investments, loss on CTO resales, and pension and postretirement settlement and curtailment (income) charges, net.
Adjusted EBITDA is defined as net income (loss) plus interest expense, net, provision (benefit) for income taxes, depreciation, amortization, restructuring and other (income) charges, net, 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.
Our analysis included significant assumptions such as: revenue growth rate, Earnings before Interest, Taxes, Depreciation and Amortization ("EBITDA") margin, and discount rate which are judgmental and variations in any assumptions could result in materially different calculations of fair value. We concluded that there was no impairment for the quarter ended September 30, 2023.
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.
Item 8 of this Form 10-K for more information. 32 Interest income Years Ended December 31 2023, 2022, and 2021 Years Ended December 31, In millions 2023 2022 2021 Restricted investment (1) $ 2.4 $ 2.1 $ 2.0 Fixed-to-fixed cross-currency interest rate swap (2) — 1.1 0.5 Floating-to-fixed interest rate swaps (2) — 1.7 — Other 3.9 2.6 1.5 Total interest income $ 6.3 $ 7.5 $ 4.0 _______________ (1) See Note 5 to the Consolidated Financial Statements included within Part II.
(4) See Note 18 for more information.q Interest income Years Ended December 31 2024, 2023, and 2022 Years Ended December 31, In millions 2024 2023 2022 Restricted investment (1) $ 2.6 $ 2.4 $ 2.1 Fixed-to-fixed cross-currency interest rate swap (2) — — 1.1 Floating-to-fixed interest rate swaps (2) 0.8 — 1.7 Other (3) 4.3 3.9 2.6 Total interest income $ 7.7 $ 6.3 $ 7.5 _______________ (1) See Note 5 for more information.
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 of $0.1 million.
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.
Over the next twelve months, we expect to fund the following: interest payments, capital expenditures, expenditures related to our business transformation initiative, debt principal repayments, income tax payments, purchases pursuant to our stock repurchase program (and related excise tax payments), income tax payments, additional spending associated with our Performance Materials' intellectual property litigation, and restructuring activities such as the North Charleston plant transition, and the repositioning of our Performance Chemicals operating segment as further described within Note 15 to the Consolidated Financial Statements included within Part II.
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.
The increase in 2022 was driven by a volume increase of $28.6 million (six percent) and favorable pricing of $14.9 million (three percent), partially offset by unfavorable foreign currency exchange impacts of $11.8 million (two percent). Segment EBITDA.
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). 35 Segment EBITDA.
Capital expenditure categories Years Ended December 31, In millions 2023 2022 2021 Maintenance $ 65.5 $ 57.4 $ 47.9 Safety, health and environment 11.3 19.7 14.4 Growth and cost improvement 33.0 65.4 41.5 Total capital expenditures $ 109.8 $ 142.5 $ 103.8 40 Cash flows provided by (used in) financing activities 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, net payments on the revolving credit facility of $87.9 million, and offset by proceeds from our accounts receivable securitization facility of $81.3 million.
Capital expenditure categories Years Ended December 31, In millions 2024 2023 2022 Maintenance $ 50.8 $ 65.5 $ 57.4 Safety, health and environment 4.1 11.3 19.7 Growth and cost improvement 22.7 33.0 65.4 Total capital expenditures $ 77.6 $ 109.8 $ 142.5 Cash flows provided by (used in) financing activities 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.
Item 8 of this Form 10-K. 33 Segment Operating Results In addition to the information discussed above, the following sections discuss the results of operations for each of Ingevity's segments. Our segments are (i) Performance Materials, (ii) Performance Chemicals, and (iii) Advanced Polymer Technologies.
An explanation of the change in the effective tax rate is presented in Note 17. 34 Segment Operating Results In addition to the information discussed above, the following sections discuss the results of operations for each of Ingevity's segments. Our segments are (i) Performance Materials, (ii) Performance Chemicals, and (iii) Advanced Polymer Technologies.
These actions increase our focus on growing our most profitable Performance Chemicals product lines such as road technologies and accelerate our transition to non-crude tall oil (“CTO”)-based fatty acids.
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.
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 both segments.
Gross profit includes the realized savings of $68.0 million from the Performance Chemicals repositioning action initiated in 2023. 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.
Prior Year Net sales are expected to be between $1.40 billion and $1.55 billion for 2024. We expect growth in our Performance Materials reportable segment on improved global automotive production over the prior year.
Prior Year Net sales are expected to be between $1.3 billion and $1.4 billion for 2025. 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.
Change vs. prior year In millions Prior year Net sales Volume Price/Mix Currency effect Current year Net sales Year Ended December 31, 2023 vs. 2022 $ 1,668.3 (106.3) 142.3 (12.2) $ 1,692.1 Year Ended December 31, 2022 vs. 2021 $ 1,391.5 9.4 294.2 (26.8) $ 1,668.3 Year Ended December 31, 2023 vs. 2022 The sales increase in 2023 was driven by favorable pricing and sales composition (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). 30 Year Ended December 31, 2022 vs. 2021 The sales increase in 2022 was driven by favorable pricing and sales composition (mix) of $294.2 million (21 percent), primarily attributed to an increase in Performance Chemicals of $216.9 million, and a volume increase of $9.4 million (one percent), offset slightly by unfavorable foreign exchange impacts of $26.8 million (two percent).
Year Ended December 31, 2023 vs. 2022 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). 31 Gross profit Year Ended December 31, 2024 vs. 2023 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.
Results of Operations Years Ended December 31, In millions 2023 2022 2021 Net sales $ 1,692.1 $ 1,668.3 $ 1,391.5 Cost of sales 1,220.2 1,098.2 878.7 Gross profit 471.9 570.1 512.8 Selling, general, and administrative expenses 183.7 198.8 179.3 Research and technical expenses 31.8 30.3 26.3 Restructuring and other (income) charges, net 170.2 13.8 16.2 Acquisition-related costs 3.6 5.0 0.6 Other (income) expense, net 5.7 (1.7) 79.9 Interest expense 93.3 61.8 51.7 Interest income (6.3) (7.5) (4.0) Income (loss) before income taxes (10.1) 269.6 162.8 Provision (benefit) for income taxes (4.7) 58.0 44.7 Net income (loss) $ (5.4) $ 211.6 $ 118.1 Net sales The table below shows 2023 and 2022 Net sales and variances from 2022 and 2021, respectively.
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. 30 Results of Operations Years Ended December 31, In millions 2024 2023 2022 Net sales $ 1,406.4 $ 1,692.1 $ 1,668.3 Cost of sales 951.7 1,220.2 1,098.2 Gross profit 454.7 471.9 570.1 Selling, general, and administrative expenses 166.7 183.7 198.8 Research and technical expenses 28.1 31.8 30.3 Restructuring and other (income) charges, net 186.2 170.2 13.8 Goodwill impairment charge 349.1 — — Acquisition-related costs 0.3 3.6 5.0 Other (income) expense, net 169.8 5.7 (1.7) Interest expense 97.8 93.3 61.8 Interest income (7.7) (6.3) (7.5) Income (loss) before income taxes (535.6) (10.1) 269.6 Provision (benefit) for income taxes (105.3) (4.7) 58.0 Net income (loss) $ (430.3) $ (5.4) $ 211.6 Net sales The table below shows 2024 and 2023 Net sales and variances from 2023 and 2022, respectively.
Segment EBITDA increased by $34.4 million due to pricing and sales composition (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.
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.
The preparation of our financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses. We have reviewed these accounting policies, identifying those that we believe to be critical to the preparation and understanding of our financial statements.
We have reviewed these accounting policies, identifying those that we believe to be critical to the preparation and understanding of our financial statements. Critical accounting policies are central to our presentation of results of operations and financial condition and require management to make estimates and judgments on certain matters.
These increases were partially offset by higher manufacturing costs of $50.9 million due to inflationary raw material and energy costs, and increased SG&A expenses of $9.0 million due to increased spending on growth initiatives, compensation, and travel. 36 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. generally accepted accounting principles (“GAAP”) and has provided a reconciliation to net income, the most directly comparable financial measure calculated in accordance with GAAP.
These 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. 38 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. generally accepted accounting principles (“GAAP”) and has provided a reconciliation to net income, the most directly comparable financial measure calculated in accordance with GAAP.
(3) Due to the DeRidder Plant closure, as noted in footnote 1 above, and the corresponding reduced CTO refining capacity, we may be obligated, under an existing CTO supply contract, to purchase CTO through 2025 at amounts in excess of required CTO volumes.
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.
Item 8 of this Form 10-K. In addition, we may also evaluate and consider strategic acquisitions, joint ventures, or other transactions to create stockholder value and enhance financial performance.
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.
We expect approximately $180.0 million of the total charges to be non-cash. The majority of non-cash charges and 50-60 percent of cash charges are expected to be recognized in 2024.
We expect approximately $250.0 million of the total charges to be non-cash and $100.0 million to be settled in cash.
During the year ended December 31, 2023, we incurred $5.1 million in cash charges and $127.7 million in non-cash charges related to the strategic actions initiated during the fourth quarter of 2023. 28 The charges we currently expect to incur in connection with these actions are subject to a number of assumptions and risks, and actual results may differ materially.
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 expect to incur aggregate charges of approximately $280.0 million associated with these actions, consisting of approximately $180.0 million in asset-related charges, approximately $15.0 million in severance and other employee-related costs, and approximately $85.0 million in other restructuring costs including decommissioning, dismantling and removal charges, and contract termination costs.
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.
Interest expense Years Ended December 31, 2023, 2022, and 2021 Years Ended December 31, In millions 2023 2022 2021 Finance lease obligations $ 7.3 $ 7.5 $ 7.4 Revolving credit facility and term loan (1) 59.1 21.2 7.6 Senior Notes 22.4 33.1 36.7 Accounts receivable securitization (2) 1.5 — — Litigation related interest expense (3) 3.0 — — Total interest expense $ 93.3 $ 61.8 $ 51.7 _______________ (1) The increase in interest expense was driven by higher average debt levels during 2023 due to the October 2022, $325.0 million acquisition of Ozark Materials, as well as higher average interest rates in 2023 compared to prior years.
(2) See Note 15 for more information. 33 Interest expense Years Ended December 31, 2024, 2023, and 2022 Years Ended December 31, In millions 2024 2023 2022 Finance lease obligations (1) $ 7.3 $ 7.3 $ 7.5 Revolving credit facility and term loan (2) (3) 57.2 59.1 21.2 Senior Notes (3) 22.4 22.4 33.1 Accounts receivable securitization (3) 5.7 1.5 — Litigation related interest expense (4) 5.2 3.0 — Total interest expense $ 97.8 $ 93.3 $ 61.8 _______________ (1) See Note 13 for more information.
The announced actions include the permanent closure of our Performance Chemicals' CTO refinery and the closure of our manufacturing plant located in DeRidder, Louisiana (the “DeRidder Plant”), including the polyol production assets associated with the Advance Polymer Technologies reportable segment, as well as additional corporate and business cost reduction actions.
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.
Cash flow from operations was further reduced by 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. This was partially offset by a reduction in tax payments of $25.1 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.
Critical Accounting Policies and Estimates Our principal accounting policies are described in Note 2 to the Consolidated Financial Statements included within Part II. Item 8 of this Form 10-K. Our Consolidated Financial Statements are prepared in conformity with GAAP.
Critical Accounting Policies and Estimates Our principal accounting policies are described in Note 2. Our Consolidated Financial Statements are prepared in conformity with GAAP. The preparation of our financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses.
The increase was partially offset by higher manufacturing costs of $8.8 million, and unfavorable foreign currency exchange impacts of $0.4 million. 34 Year Ended December 31, 2022 vs. 2021 Segment net sales.
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. 37 Year Ended December 31, 2023 vs. 2022 Segment net sales.
Other (income) expense, net Years Ended December 31, 2023, 2022, and 2021 Years Ended December 31, In millions 2023 2022 2021 Gain (loss) on sale of strategic investment (1) $ (19.3) $ — $ — Foreign currency transaction (gain) loss 3.7 2.3 2.5 Loss on CTO resales (2) 22.0 — — Litigation verdict charge (3) — — 85.0 Other (income) expense, net (0.7) (4.0) (7.6) Total Other (income) expense, net $ 5.7 $ (1.7) $ 79.9 _______________ (1) See Note 5 to the Consolidated Financial Statements included within Part II.
Other (income) expense, net Years Ended December 31, 2024, 2023, and 2022 Years Ended December 31, In millions 2024 2023 2022 (Gain) loss on strategic investments (1) $ 11.4 $ (19.3) $ — Foreign currency transaction (gain) loss 4.2 3.7 2.3 CEO severance charges 4.8 — — Loss on CTO resales (2) 52.7 22.0 — CTO supply contract termination charges (2) 100.0 — — Other (income) expense, net (3.3) (0.7) (4.0) Total Other (income) expense, net $ 169.8 $ 5.7 $ (1.7) _______________ (1) See Note 5 for more information.
These components, net of tax, include further restructuring and other income (charges), net; additional acquisition and other-related income (costs); litigation verdict charges; additional pension and postretirement settlement and curtailment (income) charges; and revisions due to legislative tax rate changes. Additionally, discrete tax items could drive variability in our projected effective tax rate.
Ingevity does not forecast net income as it cannot, without unreasonable effort, estimate or predict with certainty various components of net income. These components, net of tax, include further restructuring and other income (charges), net; additional acquisition and other-related income (costs); additional pension and postretirement settlement and curtailment (income) charges; and revisions due to legislative tax rate changes.
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.
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. 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.
All of these components could significantly impact such financial measures.
Additionally, discrete tax items could drive variability in our projected effective tax rate. All of these components could significantly impact such financial measures.
Cash provided by (used in) operating activities for 2023 was driven by lower cash earnings of $57.2 million and a net increase in overall working capital of $48.3 million, despite a decrease in trade working capital (accounts receivable, inventory, and accounts payable) of $15.6 million, compared to 2022.
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 for 2023, when compared to 2022, decreased by $108.3 million.
For the twelve months ended December 31, 2023 and 2022, all charges related to the integration of Ozark Materials into our Performance Chemicals segment. For the twelve months ended December 31, 2021, all charges incurred were in connection with the Caprolactone acquisition into our Advanced Polymer Technologies segment. See Note 16 to the Consolidated Financial Statements included within Part II.
Acquisition-related costs Years Ended December 31, 2024, 2023, and 2022 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.
The sales increase was driven by favorable pricing and product mix of $216.9 million (31 percent) in industrial specialties ($201.8 million) and road technologies product lines ($15.1 million), partially offset by a volume decline of $26.1 million (four percent), and unfavorable foreign currency exchange impacting Net sales by $4.6 million (one percent). Segment EBITDA.
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). Segment EBITDA.
Provision (benefit) for income taxes Years Ended December 31, 2023, 2022, and 2021 For the years ended December 31, 2023, 2022, and 2021, our effective tax rate was 46.5 percent, 21.5 percent, and 27.5 percent respectively. An explanation of the change in the effective tax rate is presented in Note 17 to the Consolidated Financial Statements included within Part II.
(2) See Note 9 for more information. (3) Primarily consists of bank interest. Provision (benefit) for income taxes Years Ended December 31, 2024, 2023, and 2022 For the years ended December 31, 2024, 2023, and 2022, our effective tax rate was 19.7 percent, 46.5 percent, and 21.5 percent respectively.
Refer to Note 15 to the Consolidated Financial Statements included within Part II. Item 8 of this Form 10-K for more information on the charges.
See "Cautionary Statements about Forward-Looking Statements" at the beginning of this Annual Report on Form 10-K for further discussion. All references to notes (herein referred to as "Note") in this section refer to the notes accompanying the Consolidated Financial Statements included in Part II. Item 8 within this Form 10-K.
Critical accounting policies are central to our presentation of results of operations and financial condition and require management to make estimates and judgments on certain matters. We base our estimates and judgments on historical experience, current conditions, and other reasonable factors.
We base our estimates and judgments on historical experience, current conditions, and other reasonable factors.
For the year ended December 31, 2023, the loss on CTO resales relates to the Performance Chemicals segment. Refer to Note 2 and Note 15 to the Consolidated Financial Statements included within Part II. Item 8 of this Form 10-K for more information.
For the years ended December 31, 2024 and 2023, the loss on CTO resales relates to the Performance Chemicals segment. Refer to Note 2 and Note 15 for more information. (6) As consideration for the termination of the CTO supply contract, we made cash payments totaling $100.0 million during 2024.
Year Ended December 31, 2022 vs. 2021 Segment net sales. The sales increase was driven by favorable pricing and product mix of $62.4 million (34 percent), and favorable volume of $6.9 million (four percent), partially offset by unfavorable foreign currency exchange of $10.4 million (six percent). Segment EBITDA.
Year Ended December 31, 2024 vs. 2023 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).
These increases were partially offset by favorable pricing and sales composition (mix) of $89.7 million and decreased SG&A expenses of $7.6 million. 35 Year Ended December 31, 2022 vs. 2021 Segment net sales.
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. Year Ended December 31, 2023 vs. 2022 Segment net sales.
Segment EBITDA increased $4.5 million, mainly due to favorable pricing and sales composition (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 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.
Capital spending included the base maintenance capital supporting ongoing operations and cost improvement and growth spending in our Advanced Polymer Technologies segment. Also, during the year ended December 31, 2023, we sold a strategic investment (refer to Note 5 to the Consolidated Financial Statements included within Part II. Item 8 of this Form 10-K 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 provided by (used in) operating activities for 2022 was driven by higher cash earnings of $41.4 million offset by a net increase in overall working capital of $12.9 million which includes an increase in trade working capital (accounts receivable, inventory, and accounts payable) of $8.3 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. Cash flows provided by (used in) investing activities Cash used in investing activities for 2024 was primarily driven by capital spending.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeSales to the automotive industry, which represents our largest industry concentration, were approximately 30 percent of our consolidated Net sales. No customers individually accounted for greater than 10 percent of Ingevity's consolidated Net sales. Commodity price risk A portion of our manufacturing costs includes purchased raw materials, which are commodities whose prices fluctuate as market supply and demand fundamentals change.
Biggest changeNo customer individually accounted for greater than 10 percent of Ingevity's consolidated Net sales. 46 Commodity price risk A portion of our manufacturing costs includes purchased raw materials, which are commodities whose prices fluctuate as market supply and demand fundamentals change. Accordingly, product margins and the level of our profitability tend to fluctuate with the changes in these commodity prices.
The primary currencies for which we have exchange rate exposure are the U.S. dollar versus the euro, the Japanese yen, the pound sterling, and the Chinese renminbi. In addition, certain of our domestic operations have sales to foreign customers. In the conduct of our foreign operations, we also make inter-company sales.
The primary currencies for which we have exchange rate exposure are the U.S. dollar versus the euro, the Japanese yen, the pound sterling, the Brazilian real, and the Chinese renminbi. In addition, certain of our domestic operations have sales to foreign customers. In the conduct of our foreign operations, we also make inter-company sales.
In some cases, to minimize the effects of such fluctuations, we use foreign exchange forward contracts to hedge firm and highly anticipated foreign currency cash flows. Our largest exposures are to the Chinese renminbi and the euro.
In some cases, to minimize the effects of such fluctuations, we use foreign exchange forward contracts to hedge firm and highly anticipated foreign currency cash flows. Our largest exposures are to the Brazilian real, the Chinese renminbi, and the euro.
Natural gas price risk Natural gas, both direct and indirect, is our largest form of energy costs constituting approximately five percent of our cost of goods sold for the year ended December 31, 2023. Increases in natural gas costs, unless passed on to our customers, would adversely affect our results of operations.
Natural gas price risk Natural gas, both direct and indirect, is our largest form of energy costs constituting approximately four percent of our cost of goods sold for the year ended December 31, 2024. Increases in natural gas costs, unless passed on to our customers, would adversely affect our results of operations.
A hypothetical 10 percent adverse change, excluding the impact of any hedging instruments, in the average Chinese renminbi and euro to U.S. dollar exchange rates during the year ended December 31, 2023, would have decreased our net sales and income before income taxes for the year ended December 31, 2023, by approximately $18 million or one percent and $6 million or two percent, respectively.
A hypothetical 10 percent adverse change, excluding the impact of any hedging instruments, in the average Brazilian real, Chinese renminbi, and euro to U.S. dollar exchange rates during the year ended December 31, 2024, would have decreased our net sales and income before income taxes for the year ended December 31, 2024, by approximately $18 million or one percent and $6 million or one percent, respectively.
Comparatively, for the year ended December 31, 2022, a hypothetical 100 basis point increase in the variable interest rate component of our borrowings would have increased our annual interest expense by approximately $8 million or 11 percent.
Comparatively, for the year ended December 31, 2023, a hypothetical 100 basis point increase in the variable interest rate component of our borrowings would have increased our annual interest expense by approximately $8 million or 10 percent. 47
Based on average pricing during the year ended December 31, 2023, a hypothetical unhedged, unfavorable 10 percent increase in the market price for CTO would have increased our cost of sales for the year ended December 31, 2023, by approximately $31.6 million or three percent, which we may not have been able to pass on to our customers.
Based on average pricing during the year ended December 31, 2024, a hypothetical unhedged, unfavorable 10 percent increase in the market price for CTO would have increased our cost of sales for the year ended December 31, 2024, by approximately $13.0 million or one percent, which we may not have been able to pass on to our customers.
Comparatively, a hypothetical 10 percent adverse change in the average Chinese renminbi and euro to U.S. dollar exchange rates during the year ended December 31, 2022 would have decreased our net sales and income before income taxes for the year ended December 31, 2022, by approximately $19 million or one percent and $7 million or two percent, respectively.
Comparatively, a hypothetical 10 percent adverse change in the average Brazilian real, Chinese renminbi, and euro to U.S. dollar exchange rates during the year ended December 31, 2023 would have decreased our net sales and income before income taxes for the year ended December 31, 2023, by approximately $20 million or one percent and $5 million or two percent, respectively.
For the year ended December 31, 2023, a hypothetical, unhedged 10 percent increase in natural gas pricing would have resulted in an increase to cost of sales of approximately $6.5 million or 53 basis points.
Comparatively, for the year ended December 31, 2023, a hypothetical, unhedged 10 percent increase in natural gas pricing would have resulted in an increase to cost of sales of approximately $4.7 million or 39 basis points.
Comparatively, based on average pricing during the year ended December 31, 2022 , a hypothetical unhedged, unfavorable 10 percent increase in the market price for CTO would have increased our cost of sales for the year ended December 31, 2022 by approximately $13.4 million or one percent .
Comparatively, based on average pricing during the year ended December 31, 2023 , a hypothetical unhedged, unfavorable 10 percent increase in the market price for CTO would have increased our cost of sales for the year ended December 31, 2023 by approximately $29.3 million or two percent .
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Foreign currency We have foreign-based operations, primarily in Europe, South America, and Asia, which accounted for approximately 22 percent of our net sales in 2023. We have designated the local currency as the functional currency of our significant operations outside of the U.S.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Foreign currency exchange rate risk Net sales originating from our foreign-based operations, primarily Europe, South America, and Asia, accounted for approximately 25 percent of our net sales in 2024. We have designated the local currency as the functional currency of our significant operations outside of the U.S.
Our largest customer as of December 31, 2023, had accounts receivable of $7.5 million and $9.3 million as of December 31, 2023 and 2022, respectively. Sales to our largest customer, which is from our Performance Materials segment, were approximately four percent of total net sales for each of the years ended December 31, 2023, 2022, and 2021, respectively.
Sales to our largest customer, which is in our Performance Materials segment, were approximately six percent of total net sales for the year ended December 31, 2024, and four percent for each of the years ended December 31, 2023, and 2022, respectively.
Our sources of energy costs are diversified among electricity, steam and natural gas, with natural gas comprising our largest energy input. 43 Crude tall oil price risk Our results of ope rations are directly affected by the cost of our raw materials, particularly CTO, which represents approximately 26 percent of consolidated cost of sales and 51 percent of our full company raw materials purchases for the year ended December 31, 2023.
Crude tall oil price risk Our results of ope rations are directly affected by the cost of our raw materials, particularly CTO, which, excluding CTO resales, represents approximately 14 percent of consolidated cost of sales and 38 percent of our full company raw materials purchases for the year ended December 31, 2024.
As a result, we are subject to interest rate risk with respect to such floating-rate debt. For the year ended December 31, 2023, a hypothetical 100 basis point increase in the variable interest rate component of our borrowings would increase our annual interest expense by approximately $8 million or 10 percent.
For the year ended December 31, 2024, a hypothetical 100 basis point increase in the variable interest rate component of our borrowings would increase our annual interest expense by approximately $6 million or eight percent.
During 2022, we had floating-to-fixed interest rate swaps with a combined notional amount of $166.2 million to manage the variability of cash flows in the interest rate payments associated with our existing LIBOR-based interest payments, effectively converting $166.2 million of our floating rate debt to a fixed rate.
Interest rate risk 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.
Comparatively, for the year ended December 31, 2022, a hypothetical, unhedged 10 percent increase in natural gas pricing would have resulted in an increase to cost of sales of approximately $7.9 million or 70 basis points. As of December 31, 2023, open commodity contracts hedge forecasted transactions until December 2024.
Refer to Note 9 for more information on our natural gas price risk hedging program. For the year ended December 31, 2024, a hypothetical, unhedged 10 percent increase in natural gas pricing would have resulted in an increase to cost of sales of approximately $3.6 million or 37 basis points.
The fair value of the outstanding designated natural gas commodity hedge contracts as of December 31, 2023 and 2022 was a net liability of $0.9 million and $1.6 million, respectively. Interest Rate Risk As of December 31, 2023, approximately $821 million of our borrowings include a variable interest rate component.
The fair value of the open natural gas derivative contracts as of December 31, 2024 and 2023 was a net asset (liability) of $0.3 million and $(0.9) million, respectively.
As of December 31, 2023, we had 0.8 million and 0.2 million mmBTUS (millions of British Thermal Units) in the aggregate notional volume of outstanding natural gas commodity swap contracts and zero-cost collar option contracts, respectively, designated as cash flow hedges.
As of December 31, 2024, we had 1.8 million mmBTUS (millions of British Thermal Units) in open natural gas derivative contracts, designated as cash flow hedges. As of December 31, 2024, open natural gas derivative contracts hedge a portion of forecasted transactions until December 2025.
The fair value of outstanding interest rate instruments at December 31, 2023 and 2022 was an asset (liability) of zero. 44
The fair value of outstanding interest rate instruments at December 31, 2024 and 2023 was an asset of $0.6 million and zero, respectively. As of December 31, 2024, approximately $555 million of our borrowings, adjusted for our $200 million floating-to-fixed interest rate swap, include a variable interest rate component.
Accordingly, product margins and the level of our profitability tend to fluctuate with the changes in these commodity prices. The cost of energy is a manufacturing cost that is exposed to commodity pricing.
The cost of energy is a manufacturing cost that is exposed to commodity pricing. Our sources of energy costs are diversified among electricity, steam and natural gas, with natural gas comprising our largest energy input.
Per the terms of these instruments, we received floating rate interest payments ba sed upon the three-month U.S. dollar LIBOR and in return were obligated to pay interest at a fixed rate of 3.79 percent until July 2023. Due to the repayment of our term loan (refer to Note 10 to the Consolidated Financial Statements included within Part II.
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.
Removed
Refer to Note 9 to the Consolidated Financial Statements included within Part II. Item 8 of this Form 10-K for more information on our natural gas price risk hedging program.
Added
Our largest customer as of December 31, 2024, had accounts receivable of $8.3 million and $7.5 million as of December 31, 2024 and 2023, respectively.
Removed
Item 8 of this Form 10-K for more information), in 2022, we terminated these interest rate swap instruments. Upon termination of the interest rate swap instruments, we reclassified a $1.7 million gain from AOCI into Interest income on the consolidated statement of operations.
Added
Sales to the automotive industry, which represents our largest industry concentration, were approximately 40 percent of our consolidated Net sales.
Added
The repositioning of the Performance Chemicals reportable segment and the termination of the long-term CTO supply contract have significantly reduced the Company's volume requirements and exposure to CTO beginning in 2025.
Added
As a result, we are subject to interest rate risk with respect to such floating-rate debt. The weighted average interest rate associated with our variable interest rate borrowings, was 6.52 percent for the period ended December 31, 2024.

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