Ingevity Corp

Previous wording

•the anticipated timing, charges and costs of the Performance Chemicals manufacturing consolidation and closure of our Crossett, Arkansas and DeRidder, Louisiana plants may differ materially from our estimates due to events that may occur as a result of, or in connection with, such consolidation or plant closures;

Current wording

•the anticipated timing, charges and costs of the Performance Chemicals manufacturing consolidation and closures of our Crossett, Arkansas and DeRidder, Louisiana plants may differ materially from our estimates due to events that may occur as a result of, or in connection with, such consolidation or plant closures;

Previous wording

•we may be adversely affected by general global economic, geopolitical, and financial conditions beyond our control, including inflation, the Russia-Ukraine war, and the Israel-Gaza war;

Current wording

•we may be adversely affected by general global economic, geopolitical, and financial conditions beyond our control, including inflation, the Russia-Ukraine war, and the conflict in the Middle East;

Previous wording

Ingevity Corporation provides products and technologies that purify, protect, and enhance the world around us. Through a diverse team of talented and experienced people, we develop, manufacture, and bring to market solutions that are largely renewably sourced and help customers solve complex problems while making the world more sustainable. Our products are used in a variety of demanding applications, including adhesives, agrochemicals, asphalt paving, bioplastics, coatings, elastomers, lubricants, pavement markings, oil exploration and production and automotive components. We operate in three reportable segments: Performance Materials, Performance Chemicals and Advanced Polymer Technologies.

Current wording

Ingevity Corporation provides products and technologies that purify, protect, and enhance the world around us. Through a diverse team of talented and experienced people, we develop, manufacture, and bring to market solutions that are largely renewably sourced and help customers solve complex problems while making the world more sustainable. Our products are used in a variety of demanding applications, including adhesives, agrochemicals, asphalt paving, bioplastics, coatings, elastomers, lubricants, pavement markings, oil production, and automotive components. We operate in three reportable segments: Performance Materials, Performance Chemicals and Advanced Polymer Technologies.

Previous wording

("EBITDA") margin, and discount rate, which are judgmental, and variations in any assumptions could result in materially different calculations of fair value.

Current wording

We are currently testing our remaining goodwill balance as part of our required annual October 1st goodwill impairment testing. The preliminary results have 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 between 10 and 15 percent. Since the fair value of our APT reporting unit is higher than the carrying value, we have concluded that no impairment to goodwill is necessary. Our analysis includes significant assumptions such as revenue growth rate, Earnings before Interest, Taxes, Depreciation and Amortization ("EBITDA") margin, and discount rate, which are judgmental, and variations in any assumptions could result in materially different calculations of fair value.

Previous wording

On November 1, 2023, we announced a number of strategic actions designed to reposition our Performance Chemicals reportable segment to improve profitability and reduce the cyclicality of the company as a whole. These actions increase our focus on growing our most profitable Performance Chemicals' product lines, such as road technologies, and accelerate our transition to non-CTO based fatty acids. This initiative will focus on reducing exposure to lower margin end-use markets of our industrial specialties product line, such as adhesives, publication inks, and oilfield, representing approximately 45 percent of our industrial specialties product line historical annualized net sales. This initiative included 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 Advanced Polymer Technologies (“APT”) reportable segment. All production at the DeRidder Plant ceased in the first quarter of 2024. The Performance Chemicals’ repositioning initiative included additional corporate and business cost reduction actions executed in November 2023.

Current wording

On November 1, 2023, we announced a number of strategic actions designed to reposition our Performance Chemicals reportable segment to improve profitability and reduce the cyclicality of the company as a whole. These actions increased our focus on growing our most profitable Performance Chemicals' product lines, such as road technologies, and accelerate our transition to non-CTO based fatty acids. This initiative focused on reducing exposure to lower margin end-use markets of our industrial specialties product line, such as adhesives, publication inks, and oilfield, representing approximately 45 percent of our industrial specialties product line historical annualized net sales. This initiative included 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 APT reportable segment. All production at the DeRidder Plant ceased in the first quarter of 2024. The Performance Chemicals’ repositioning initiative included additional corporate and business cost reduction actions executed in November 2023.

Previous wording

On July 31, 2024, we announced plans to transition the refining of oleo-based products manufactured for our Performance Chemicals reportable segment from our Crossett, Arkansas manufacturing plant (the “Crossett Facility”) to our North Charleston, South Carolina manufacturing plant. In connection with this action, on July 29, 2024, the Board of Directors approved the closure of the Crossett Facility, as well as additional corporate and business cost reduction actions. Ingevity plans to close the Crossett Facility in August 2024 and will continue to evaluate options for the site.

Current wording

Additionally, in July 2024, we announced plans to transition the refining of oleo-based products manufactured for our Performance Chemicals reportable segment from our Crossett, Arkansas manufacturing plant (the “Crossett Facility”) to our North Charleston, South Carolina manufacturing plant. This action included the closure of the Crossett Facility, as well as additional corporate and business cost reduction actions. We ceased production at the Crossett Facility in the third quarter of 2024.

Previous wording

The actions referenced above, when combined with other targeted workforce reduction initiatives during 2023, resulted in the reduction of Ingevity's global workforce by almost 20 percent. Specific to Performance Chemicals, the reduction represented approximately 30 percent of the reportable segment's workforce.

Current wording

The actions referenced above, when combined with other targeted workforce reduction initiatives during 2023 and 2024, resulted in the reduction of Ingevity's global workforce by 23 percent. Specific to Performance Chemicals, the reduction represented approximately 40 percent of the reportable segment's workforce.

Previous wording

We expect to incur aggregate charges of approximately $250 million associated with the Performance Chemicals' repositioning. This is a reduction of approximately $30 million from prior expectations due to lower than estimated plant cleaning costs. Total expected charges now consist of approximately $185 million in asset-related charges, approximately $15 million in severance and other employee-related costs, and approximately $50 million in other restructuring costs, including decommissioning, dismantling and removal charges, and contract termination costs. Through June 30, 2024, we have incurred $207.6 million associated with these actions, including $182.0 million of non-cash asset-related charges and $25.6 million of charges to be settled in cash. As of June 30, 2024, $21.3 million of the charges to be settled in cash have been paid. We expect approximately $185 million of the total charges to be non-cash and $65 million to be settled in cash. The remainder of the non-cash and 50-60 percent of cash charges are expected to be recognized in 2024.

Current wording

We expect to incur aggregate charges of approximately $350 million associated with the Performance Chemicals' repositioning. This is an increase of approximately $100 million from prior expectations due to the closure of the Crossett Facility. Total expected charges now consist of approximately $250 million in asset-related charges, approximately $25 million in severance and other employee-related costs, and approximately $75 million in other restructuring costs, including decommissioning, dismantling and removal charges, and CTO supply contract termination costs. Through September 30, 2024, we have incurred $297.0 million associated with these actions, including $250.8 million of non-cash asset-related charges and $46.2 million of charges to be settled in cash. As of September 30, 2024, $41.0 million of the charges to be settled in cash have been paid and all non-cash charges have been incurred. In total, we expect approximately $100 million of cash charges, including approximately $10-$15 million during the fourth quarter of 2024 and approximately $20-$25 million during 2025.

Previous wording

The Company believes the collective actions of workforce, operational, and regional business exits will hinder our ability to dispose of the associated inventory on hand. As a result, we recorded zero and $2.5 million of non-cash, lower of cost or market, inventory charges during the three and six months ended June 30, 2024, respectively, to adjust the carrying value of the impacted inventory to what we expect to realize upon disposal, less disposal costs. These inventory charges are recorded to Cost of sales on the condensed consolidated statement of operations.

Current wording

The company believes the collective actions of workforce, operational, and regional business exits will hinder our ability to dispose of the associated inventory on hand. As a result, we recorded $3.8 million and $6.3 million of non-cash, lower of cost or market, inventory charges during the three and nine months ended September 30, 2024, respectively, to adjust the carrying value of the impacted inventory to what we expect to realize upon disposal, less disposal costs. These inventory charges are recorded to Cost of sales on the condensed consolidated statements of operations.

Previous wording

The DeRidder Plant closure, and the corresponding reduced CTO refining capacity, significantly reduced our CTO volume requirements. However, we were obligated, under an existing CTO supply contract, to purchase CTO volumes through 2025 at amounts in excess of our required CTO volumes needed to support our business operations. To manage this excess inventory, we sold CTO volumes (herein referred to as "CTO resales") in the open market. For the three and six months ended June 30, 2024, we have incurred $23.5 million and $50.0 million of CTO resale losses, which are recorded as Other (income) expense, net on the condensed consolidated statements of operations.

Current wording

The DeRidder Plant closure, and the corresponding reduction in CTO refining capacity, significantly reduced our CTO volume requirements. However, we were obligated under an existing CTO supply contract to purchase CTO volumes through 2025 at amounts in excess of the CTO volumes needed to support our business operations. To manage this excess inventory, we sold CTO volumes (herein referred to as "CTO resales") in the open market. For the three and nine months ended September 30, 2024, we have incurred $0.8 million and $50.8 million, respectively, of CTO resale losses, which are recorded as Other (income) expense, net on the condensed consolidated statements of operations.

Previous wording

As of July 1, 2024, as further described in Note 16, we have terminated the CTO supply contract that resulted in these excess CTO volumes. As a result of the termination of this supply contract, the purchases under the CTO supply contract ended, effective June 30, 2024. Therefore, we are no longer required to purchase this excess CTO volume through 2025, and as such, we expect to end our CTO resale activity by the end of 2024 and to incur no more than $5.0 million in additional costs as we liquidate the excess CTO resale volumes on hand as of June 30, 2024.

Current wording

As of July 1, 2024, we terminated the CTO supply contract that resulted in these excess CTO volumes. As consideration for the termination of the CTO supply contract, we made a cash payment in the amount of $50.0 million on July 1, 2024 and an additional cash payment in the amount of $50.0 million. The total charge of $100.0 million was recorded within Other (income) expense, net on the condensed consolidated statements of operations for the nine months ended September 30, 2024. As a result of the termination of this supply contract, the purchases under the CTO supply contract ended effective June 30, 2024. Therefore, we are no longer required to purchase this excess CTO volume through 2025, and as such, we expect to end our CTO resale activity by the end of 2024 and to incur no more than $5.0 million in additional costs as we liquidate the excess CTO resale volumes on hand as of September 30, 2024.

Previous wording

The Performance Chemicals' repositioning is focused on reducing exposure to lower margin end-use markets of our industrial specialties product line, such as adhesives, publication inks, and oilfield, representing approximately 45 percent of our industrial specialties product line historical annualized net sales, and as such, we expect annualized net sales to decrease accordingly. The annualized cash savings we expect to realize from these actions are approximately $95 million to $110 million beginning in 2024. These cash savings will be derived from headcount reductions, plant operating efficiencies, and reduced supply chain costs. In addition to the cash savings, annualized depreciation and intangible amortization expense related to asset charges taken through this initiative will decline by approximately $15 million and $17 million, respectively, of which we expect to realize approximately $10 million and $12 million in 2024, respectively.

Current wording

The Performance Chemicals' repositioning is focused on reducing exposure to lower margin end-use markets of our industrial specialties product line, such as adhesives, publication inks, and oilfield, representing approximately 45 percent of our industrial specialties product line historical annualized net sales, and as such, we expect annualized net sales to decrease accordingly. The annualized cash savings we expect to realize from these actions are approximately $95 million to $110 million of which $65 million to $75 million we expect to realize in 2024. These cash savings will be derived from headcount reductions, plant operating efficiencies, and reduced supply chain costs. In addition to the cash savings, annualized depreciation and intangible amortization expense related to asset charges taken through this initiative will decline by approximately $15 million and $17 million, respectively, of which we expect to realize approximately $10 million and $12 million in 2024, respectively.

Previous wording

Collectively, these savings are expected to be realized in the following financial statement captions: 70-80 percent in Cost of sales, 15-25 percent in Selling, general, and administrative expenses, and ~5 percent in Research and technical expenses, all presented on our condensed consolidated statement of operations. During the three and six months ended June 30, 2024, we realized cash savings of approximately $22 million and $42 million, including $17 million and $32 million in Cost of sales, $4 million and $8 million in Selling, general, and administrative expenses, and $1 million and $2 million in Research and technical expenses, respectively.

Current wording

Collectively, these savings are expected to be realized in the following financial statement captions: 70-80 percent in Cost of sales, 15-25 percent in Selling, general, and administrative expenses, and ~5 percent in Research and technical expenses, all presented on our condensed consolidated statements of operations. During the three and nine months ended September 30, 2024, we realized cash savings of approximately $18 million and $60 million, including $14 million and $46 million in Cost of sales, $3 million and $11 million in Selling, general, and administrative expenses, and $1 million and $3 million in Research and technical expenses, respectively.

Previous wording

The Net sales decrease was driven primarily by the Performance Chemicals' industrial specialties product line due to repositioning actions which included the focus on reducing exposure to lower margin end-use markets and therefore reduced sales during the quarter by approximately $78 million. Also contributing to the lower sales was unfavorable weather in North America impacting our road technologies product line and continued weakness in certain industrial end markets that negatively impacted sales in our industrial specialties product line, slightly offset by an increase in our Performance Materials reportable segment.

Current wording

The Net sales decrease was driven primarily by the Performance Chemicals' industrial specialties product line due to repositioning actions which included the focus on reducing exposure to lower margin end-use markets and therefore reduced sales during the quarter by approximately $51 million. Also contributing to the lower sales was unfavorable weather in key North American regions impacting our road technologies product line and continued weakness in certain industrial end markets that negatively impacted sales in our industrial specialties product line, slightly offset by an increase in our Advanced Polymer Technologies and Performance Materials reportable segments.

Previous wording

The Net sales decrease of $91.2 million in 2024 was driven by volume declines of $86.2 million (18 percent), primarily in our Performance Chemicals industrial specialties and road technologies product lines. Unfavorable pricing and sales composition (mix) of $1.6 million (zero percent) and unfavorable foreign currency exchange of $3.4 million (one percent) also contributed to the decline in Net sales.

Current wording

The Net sales decrease of $69.1 million in 2024 was driven by volume declines of $68.7 million (15 percent), primarily in our Performance Chemicals reportable segment, and unfavorable foreign currency exchange of $0.8 million (zero percent). This was partially offset by favorable pricing and sales composition (mix) of $0.4 million (zero percent).

Previous wording

The Net sales decrease of $143.7 million in 2024 was driven by volume declines of $131.2 million (15 percent), primarily in our Performance Chemicals industrial specialties product line and our APT reportable segment. Unfavorable pricing and sales composition (mix) of $5.7 million (one percent) and unfavorable foreign currency exchange of $6.8 million (one percent) also contributed to the decline in Net sales.

Current wording

The Net sales decrease of $212.8 million in 2024 was driven by volume declines of $199.9 million (15 percent), primarily in our Performance Chemicals reportable segment. Unfavorable pricing and sales composition (mix) of $5.2 million (zero percent) and unfavorable foreign currency exchange of $7.7 million (one percent) also contributed to the decline in Net sales.

Previous wording

Gross profit decrease of $29.8 million was driven primarily by unfavorable sales volume of $24.6 million in our Performance Chemicals industrial specialties product line. The decrease was further driven by unfavorable pricing and sales composition (mix) of $3.1 million, primarily within our APT reportable segment, unfavorable foreign currency exchange of $1.9 million, and increased manufacturing cost of $0.2 million. Gross profit includes the realized savings of $17.0 million from the Performance Chemicals repositioning actions initiated in 2023. 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.

Current wording

Gross profit increase of $0.9 million was driven primarily by decreased manufacturing costs of $2.8 million, driven by lower input costs in Performance Materials and higher throughput in APT, partially offset by higher CTO costs in Performance Chemicals. The increase was partially offset by unfavorable sales volume of $0.5 million in our Performance Chemicals industrial specialties product line, unfavorable pricing and sales composition (mix) of $0.5 million, primarily in our APT reportable segment, and unfavorable foreign currency exchange of $0.9 million. Gross profit includes the realized savings of $14.0 million from the Performance Chemicals repositioning actions initiated in 2023. 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.

Previous wording

Gross profit decrease of $60.5 million was driven primarily by unfavorable sales volume of $40.7 million in our Performance Chemicals industrial specialties product line and our APT reportable segment, and increased manufacturing costs of $8.5 million. The decrease was further driven by unfavorable pricing and sales composition (mix) of $7.4 million primarily within our APT reportable segment, and unfavorable foreign currency exchange of $3.9 million. Gross profit includes the realized savings of $32.0 million from the Performance Chemicals repositioning actions initiated in 2023. 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.

Current wording

Gross profit decrease of $59.6 million was driven primarily by unfavorable sales volume of $27.7 million in our Performance Chemicals industrial specialties product line, and increased manufacturing costs of $22.5 million, mainly driven by higher CTO costs in Performance Chemicals which were partially offset by lower input costs in Performance Materials and higher throughput in APT. The decrease was further driven by unfavorable pricing and sales composition (mix) of $7.9 million primarily within our APT reportable segment, and unfavorable foreign currency exchange of $1.5 million. Gross profit includes the realized savings of $46.0 million from the Performance Chemicals repositioning actions initiated in 2023. 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.

Previous wording

Research and technical expenses as a percentage of Net sales remained relatively consistent period over period, increasing to 1.9 percent from 1.7 percent for the three months ended June 30, 2024 and 2023, respectively. Research and technical expense as a percentage of Net sales increased due to lower sales. Overall, Research and technical expense decreased by $0.7 million, which included approximately $1.0 million realized from cost savings initiatives implemented last year.

Current wording

Research and technical expenses as a percentage of Net sales remained relatively consistent period over period, increasing to 1.8 percent from 1.7 percent for the three months ended September 30, 2024 and 2023, respectively. Research and technical expenses as a percentage of Net sales increased due to lower sales. Overall, Research and technical expense decreased by $1.1 million, which included approximately $1.0 million realized from the Performance Chemicals repositioning actions initiated in 2023.

Previous wording

Research and technical expenses as a percentage of Net sales remained consistent period over period, at 1.9 percent and 1.9 percent for the six months ended June 30, 2024 and 2023, respectively. Included in the overall $2.7 million decrease is approximately $2.0 million realized from cost savings initiatives implemented last year.

Current wording

Research and technical expenses as a percentage of Net sales remained consistent period over period, at 1.9 percent and 1.9 percent for the nine months ended September 30, 2024 and 2023, respectively. Included in the overall $3.8 million decrease is approximately $3.0 million realized from the Performance Chemicals repositioning actions initiated in 2023.

Previous wording

Goodwill impairment charge of $349.1 million for the three and six months ended June 30, 2024 within our Performance Chemicals reportable segment. See Note 7 for more information.

Current wording

Goodwill impairment charge of zero and $349.1 million for the three and nine months ended September 30, 2024 within our Performance Chemicals reporting unit. See Note 7 for more information.

Previous wording

Acquisition-related (income) costs were $(0.2) million and $0.1 million for the three and six months ended June 30, 2024, and $1.8 million and $3.7 million three and six months ended June 30, 2023, respectively. All charges relate to the integration of Ozark Materials into our Performance Chemicals segment.

Current wording

Acquisition-related (income) costs were $(0.1) million and zero for the three and nine months ended September 30, 2024, and $0.1 million and $3.8 million for the three and nine months ended September 30, 2023, respectively. All charges relate to the integration of Ozark Materials into our Performance Chemicals reportable segment.

Previous wording

For the three months ended June 30, 2024 and 2023, our effective tax rate was 15.2 percent and 25.6 percent, respectively. Excluding discrete items, the effective rate was 33.5 percent compared to 23.8 percent in the three months ended June 30, 2024 and 2023, respectively. See Note 12 for more information.

Current wording

For the three months ended September 30, 2024 and 2023, our effective tax rate was 22.3 percent and 21.5 percent, respectively. Excluding discrete items, the effective rate was 2.6 percent compared to 28.7 percent in the three months ended September 30, 2024 and 2023, respectively. See Note 12 for more information.

Previous wording

For the six months ended June 30, 2024 and 2023, our effective tax rate was 16.4 percent and 22.9 percent, respectively. Excluding discrete items, the effective rate was 34.5 percent compared to 23.3 percent in the six months ended June 30, 2024 and 2023, respectively. See Note 12 for more information.

Current wording

For the nine months ended September 30, 2024 and 2023, our effective tax rate was 17.9 percent and 22.6 percent, respectively. Excluding discrete items, the effective rate was (33.0) percent compared to 24.6 percent in the nine months ended September 30, 2024 and 2023, respectively. See Note 12 for more information.

Previous wording

In addition to the information discussed above, the following sections discuss the results of operations for Ingevity's reportable segments. Our segments are (i) Performance Materials, (ii) Performance Chemicals and (iii) Advanced Polymer Technologies. Segment Earnings before Interest, Taxes, Depreciation and Amortization ("EBITDA") is the primary measure used by the company's chief operating decision maker to evaluate the performance of and allocate resources among our operating segments. Segment EBITDA is defined as segment net sales less segment operating expenses (segment operating expenses consist of costs of sales, selling, general and administrative expenses, research and technical expenses, other (income) expense, net, excluding depreciation and amortization). We have excluded the following items from segment EBITDA: interest expense associated with corporate debt facilities, interest income, income taxes, depreciation, amortization, restructuring and other income (charges), net, 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, and pension and postretirement settlement and curtailment income (charges), net.

Current wording

In addition to the information discussed above, the following sections discuss the results of operations for Ingevity's reportable segments. Our segments are (i) Performance Materials, (ii) Performance Chemicals and (iii) Advanced Polymer Technologies. Segment Earnings before Interest, Taxes, Depreciation and Amortization ("EBITDA") is the primary measure used by the company's chief operating decision maker to evaluate the performance of and allocate resources among our operating segments. Segment EBITDA is defined as segment net sales less segment operating expenses (segment operating expenses consist of costs of sales, selling, general and administrative expenses, research and technical expenses, other (income) expense, net, excluding depreciation and amortization). We have excluded the following items from segment EBITDA: interest expense associated with corporate debt facilities, interest income, income taxes, depreciation, amortization, restructuring and other income (charges), net, 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.

Previous wording

Segment EBITDA. The increase of $26.2 million in 2024 was driven by the increase in sales as noted above, decreased manufacturing costs of $13.9 million, favorable pricing and sales composition (mix) of $8.7 million, a volume increase of $6.1 million, and favorable foreign currency exchange of $0.3 million. The increase was partially offset by increased SG&A and research and technical expenses of $2.8 million.

Current wording

Segment EBITDA. The increase of $6.1 million in 2024 was driven by the increase in sales as noted above, decreased manufacturing costs of $7.7 million, favorable pricing and sales composition (mix) of $3.0 million, and decreased foreign currency exchange and other charges of $0.1 million. The increase was partially offset by increased SG&A and research and technical expenses of $4.5 million, and a volume decrease of $0.2 million.

Previous wording

Segment net sales. The increase of $16.3 million in 2024 was driven by a volume increase of $10.5 million (four percent) and favorable pricing and sales composition (mix) of $10.2 million (four percent). The increase was partially offset by unfavorable foreign currency exchange of $4.4 million (two percent).

Current wording

Segment net sales. The increase of $20.2 million in 2024 was driven by favorable pricing and sales composition (mix) of $14.1 million (three percent), and a volume increase of $10.2 million (two percent). The increase was partially offset by unfavorable foreign currency exchange of $4.1 million (one percent).

Previous wording

Segment EBITDA. The increase of $18.0 million in 2024 was driven by the increase in sales as noted above, decreased manufacturing costs of $6.9 million, favorable pricing and sales composition (mix) of $4.8 million, a volume increase of $4.7 million, and favorable foreign currency exchange of $1.7 million. The increase was partially offset by increased SG&A and research and technical expenses of $0.1 million.

Current wording

Segment EBITDA. The increase of $32.3 million in 2024 was driven by the increase in sales as noted above, decreased manufacturing costs of $21.8 million, favorable pricing and sales composition (mix) of $11.7 million, a volume increase of $5.7 million, and decreased foreign currency exchange and other charges of $0.4 million. The increase was partially offset by increased SG&A and research and technical expenses of $7.3 million.

Previous wording

Net sales in our Performance Chemicals reportable segment decreased 35 percent compared to the prior year quarter. The road technologies product line net sales decrease of $11.8 million was primarily driven by weather related delays. The industrial specialties product line net sales decrease of $86.7 million was primarily driven by lower volumes as a result of the focus on reducing exposure to lower margin end-use markets as part of the Performance Chemicals' repositioning, which resulted in reduced sales of approximately $78 million, as well as continued weakness in certain industrial end markets.

Current wording

The road technologies product line net sales decrease of $10.7 million was primarily driven by unfavorable weather conditions in key North American regions. The industrial specialties product line net sales decrease of $68.3 million was primarily driven by lower volumes as a result of our repositioning actions resulting in reduced sales of approximately $51 million, as well as continued weakness in certain industrial end markets.

Previous wording

Contributing to the decline in Segment EBITDA was higher CTO spend, which nearly doubled from last year, and unfavorable plant throughput due to continued weakness in industrial demand, which negatively impacted utilization rates at both our North Charleston, South Carolina and Crossett, Arkansas manufacturing sites. Slightly offsetting these elevated costs were cost savings realized during the quarter due to the Performance Chemicals' repositioning.

Current wording

Contributing to the decline in Segment EBITDA was higher CTO costs and unfavorable plant throughput due to continued weakness in industrial demand associated with our industrial specialties product line. Additionally, unfavorable weather conditions in key North American regions impacted our road technologies product line. Slightly offsetting these elevated costs were cost savings realized during the quarter due to the Performance Chemicals' repositioning.

Previous wording

Segment net sales. The decrease of $137.1 million was driven by a volume decrease of $132.4 million (28 percent), as a result of a decrease in industrial specialties ($114.3 million) and road technologies ($18.1 million), unfavorable pricing and sales composition (mix) of $4.2 million (one percent), attributable to a decrease in industrial specialties ($10.6 million), partially offset by an increase in road technologies ($6.4 million), and unfavorable foreign currency exchange of $0.5 million (zero percent).

Current wording

Segment net sales. The decrease of $79.0 million was driven by a volume decrease of $80.2 million (31 percent), as a result of a decrease in industrial specialties ($71.6 million) and road technologies ($8.6 million), and unfavorable foreign currency exchange of $0.3 million (zero percent). This decrease was partially offset by favorable pricing and sales composition (mix) of $1.5 million (one percent), attributable to an increase in industrial specialties ($3.5 million), partially offset by a decrease in road technologies ($2.0 million).

Previous wording

Segment EBITDA. The decrease of $66.5 million was driven by a volume decrease of $43.1 million, higher manufacturing costs of $30.4 million, primarily due to increased CTO cost, unfavorable pricing and sales composition (mix) of $4.1 million, and unfavorable foreign currency exchange of $0.9 million. The decrease was partially offset by lower SG&A of $12.0 million, which benefited from the Performance Chemicals' repositioning and cost saving initiatives implemented in 2023.

Current wording

Segment EBITDA. The decrease of $4.9 million was driven by a volume decrease of $4.9 million, higher manufacturing costs of $3.5 million, primarily due to higher cost CTO, and increased foreign currency exchange and other charges of $1.8 million. The decrease was partially offset by lower SG&A of $3.8 million, which benefited from the Performance Chemicals' repositioning and cost saving initiatives implemented in 2023, and favorable pricing and sales composition (mix) of $1.5 million.

Previous wording

Segment net sales. The decrease of $98.5 million was driven by a volume decrease of $96.9 million (34 percent), as a result of a decrease in industrial specialties ($81.0 million) and road technologies ($15.9 million), unfavorable pricing and sales composition (mix) of $1.3 million (zero percent), attributable to a decrease in industrial specialties ($5.5 million), partially offset by an increase in road technologies ($4.2 million), and unfavorable foreign currency exchange of $0.3 million (zero percent).

Current wording

Segment net sales. The decrease of $216.1 million was driven by a volume decrease of $212.6 million (29 percent), as a result of a decrease in industrial specialties ($185.9 million) and road technologies ($26.7 million), unfavorable pricing and sales composition (mix) of $2.6 million (zero percent), attributable to a decrease in industrial specialties ($7.0 million), partially offset by an increase in road technologies ($4.4 million), and unfavorable foreign currency exchange of $0.9 million (zero percent).

Previous wording

Segment EBITDA. The decrease of $35.6 million was driven by a volume decrease of $30.3 million, higher manufacturing costs of $10.1 million, primarily due to increased CTO cost, unfavorable pricing and sales composition (mix) of $1.3 million, and unfavorable foreign currency exchange of $0.5 million. The decrease was partially offset by lower SG&A of $6.6 million, which benefited from the Performance Chemicals' repositioning and cost saving initiatives implemented in 2023.

Current wording

Segment EBITDA. The decrease of $71.4 million was driven by higher manufacturing costs of $47.5 million, primarily due to higher cost CTO, a volume decrease of $34.3 million, increased foreign currency exchange and other charges of $2.8 million, and unfavorable pricing and sales composition (mix) of $2.6 million. The decrease was partially offset by lower SG&A of $15.8 million, which benefited from the Performance Chemicals' repositioning and cost saving initiatives implemented in 2023.

Previous wording

Net sales in our Advanced Polymer Technologies reportable segment decreased 10 percent compared to the prior year quarter as higher volumes were offset by reduced pricing.

Current wording

Net sales in our Advanced Polymer Technologies reportable segment increased 14 percent compared to the prior year quarter as volumes recovered from last year's lows.

Previous wording

Segment net sales. The decrease of $5.3 million in 2024 was driven by unfavorable pricing and sales composition (mix) of $6.6 million (12 percent) and unfavorable foreign currency exchange of $1.1 million (two percent), partially offset by a volume increase of $2.4 million (five percent).

Current wording

Segment net sales. The increase of $6.0 million in 2024 was driven by a volume increase of $11.8 million (28 percent), partially offset by unfavorable pricing and sales composition (mix) of $5.0 million (12 percent), and unfavorable foreign currency exchange of $0.8 million (two percent).

Previous wording

Segment EBITDA. The decrease of $1.8 million was driven by unfavorable pricing and sales composition (mix) of $6.6 million, partially offset by decreased manufacturing costs of $2.9 million, a volume increase of $1.0 million, decreased SG&A of $0.7 million, and favorable foreign currency exchange of $0.2 million.

Current wording

Segment EBITDA. The decrease of $7.5 million was driven by unfavorable pricing and sales composition (mix) of $17.0 million, and increased foreign currency exchange and other charges of $2.5 million. The decrease was partially offset by decreased manufacturing costs of $10.1 million, decreased SG&A of $1.0 million, and a volume increase of $0.9 million.

Previous wording

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, goodwill impairment charge, acquisition and other-related (income) costs, litigation verdict charges, (loss) gain on strategic investments, loss on CTO resales, and pension and postretirement settlement and curtailment (income) charges, net.

Current wording

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, goodwill impairment charge, acquisition and other-related (income) costs, 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.

Previous wording

(4) Due to the DeRidder Plant closure, and the corresponding reduced CTO refining capacity, we were obligated, under an existing CTO supply contract, to purchase CTO through 2025 at amounts in excess of required CTO volumes. As of July 1, 2024, we have terminated the CTO supply contract that resulted in these excess CTO volumes. As a result of the termination of this contract the purchases under the CTO supply contract ended, effective June 30, 2024. Therefore, we are no longer required to purchase this excess CTO volume through 2025, and as such, we expect to end our CTO resale activity by the end of 2024. Since these CTO resale activities are directly attributable to the Performance Chemicals’ repositioning, that is, they do not represent normal, recurring expenses necessary to operate our business, we have excluded the CTO resale (income) charges for the purposes of calculating our non-GAAP financial performance measures. For the three and six months ended June 30, 2024, the loss on CTO resales relates to the Performance Chemicals segment. Refer to Note 11 for more information.

Current wording

(4) Due to the DeRidder Plant closure, and the corresponding reduced CTO refining capacity, we were obligated, under an existing CTO supply contract, to purchase CTO through 2025 at amounts in excess of required CTO volumes. As of July 1, 2024, we have terminated the CTO supply contract that resulted in these excess CTO volumes. As a result of the termination of this contract the purchases under the CTO supply contract ended, effective June 30, 2024. Therefore, we are no longer required to purchase this excess CTO volume through 2025, and as such, we expect to end our CTO resale activity by the end of 2024. Since these CTO resale activities are directly attributable to the Performance Chemicals’ repositioning, that is, they do not represent normal, recurring expenses necessary to operate our business, we have excluded the CTO resale (income) charges for the purposes of calculating our non-GAAP financial performance measures. For the three and nine months ended September 30, 2024, the loss on CTO resales relates to the Performance Chemicals segment. Refer to Note 11 for more information.

Previous wording

Net sales are expected to be between $1.40 billion and $1.50 billion for 2024. We expect growth in our Performance Materials reportable segment on improved global hybrid automotive production and lower than anticipated Battery Electric Vehicle penetration. The Performance Chemicals reportable segment revenue will reflect the impact of our repositioning to improve profitability by focusing on higher margin end markets, as well as continued weak industrial demand. We expect our road technologies product line revenue to grow through technology adoption and continued geographic expansion. Our Advanced Polymer Technologies reportable segment anticipates revenues flat to prior year; market improvements in Europe are mostly offset by a challenging China economy and industrial demand.

Current wording

Net sales are expected to be between $1.40 billion and $1.50 billion for 2024. We expect growth in our Performance Materials reportable segment due to increased pricing on select products that benefited from improved global hybrid automotive production and lower than anticipated battery electric vehicle penetration. The Performance Chemicals reportable segment revenue will reflect the impact of our repositioning to improve profitability by focusing on higher margin end markets, as well as continued weak industrial demand. We expect our road technologies product line revenue to decline when compared to the prior year due to unfavorable weather conditions experienced in North America during 2024. Our Advanced Polymer Technologies reportable segment anticipates revenues flat to the prior year; market improvements in Europe are mostly expected to be more than offset by a challenging China economy and weak industrial demand.