Ingevity Corp

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Note 13: Leases

We have both operating and finance leases, with the majority being operating lease agreements related to rail cars, tanks, equipment, and real estate. Supplemental consolidated balance sheet information related to our leases is as follows:

(1) Operating lease assets, net are recorded net of accumulated amortization of $40.7 million and $40.8 million as of December 31, 2023, and 2022, respectively.

(2) Finance lease assets, net are recorded net of accumulated amortization in Property, plant, and equipment, net and Other assets, net of $78.4 million and $1.5 million, as of December 31, 2023, and $73.8 million and $1.4 million, as of December 31, 2022.

(3) Operating lease liabilities include $0.5 million and $0.2 million of accrued interest, as of December 31, 2023 and 2022, respectively.

Finance Leases

Our finance lease obligations of $101.1 million, and $101.9 million at December 31, 2023 and 2022, respectively, primarily consist oftwo leases. The first obligation of $80.0 million, at December 31, 2023, is owed to the city of Wickliffe, Kentucky, associated with Performance Materials' Wickliffe, Kentucky, manufacturing site, which is due at maturity in 2027. This obligation will be settled upon maturity utilizing liquid assets that have been placed into a trust established strictly for this purpose. The trust is presented as Restricted investment on the consolidated balance sheet in the amount of $79.1 million as of December 31, 2023, see Note 5 for more information. The remaining obligation of $20.9 million, at December 31, 2023, is primarily owed to the lessor of our corporate headquarters in North Charleston, South Carolina. The lease commenced in July 2020, with a term of 15 years, and is structured as a traditional rental with payments due on a monthly basis.

We also have a finance lease obligation due in 2031 for certain assets located at our Performance Materials' Waynesboro, Georgia, manufacturing facility. The lease is with the Development Authority of Burke County (“Authority”). The Authority established the sale-leaseback of these assets by issuing an industrial development revenue bond. The bond was purchased by Ingevity and the obligations under the finance lease remain with Ingevity. Accordingly, we offset the finance lease obligation and bond on our consolidated balance sheets.

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Components of lease cost are as follows:

(1) Includes short-term leases and variable lease costs, which are immaterial.

(2) Only on the rare occasion do we sublease our leased assets; as a result, this amount excludes sublease income which is immaterial.

Maturity of Lease Liabilities

(1) As of December 31, 2023, we have zero operating lease commitments that have not yet commenced related to manufacturing and office equipment leases.

Lease Term and Discount Rate

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Other Information