Ingevity Corp
For the period ended Mar 31, 2025. Filed May 6, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 6, 2025
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What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-10-30.
0001653477-24-000100
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-06.
0001653477-25-000091
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 155 previous paragraphs and 132 current paragraphs.
77 unchanged; 36 reworded; 19 added; 41 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 15 previous and 14 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (19)
Current report
•our announced 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;
Current report
•leadership transitions within our organization;
Current report
Proxy Contest
Current report
On March 30, 2025, the company entered into a cooperation agreement (the “Cooperation Agreement”) with Vision One Fund, L.P. and its affiliates (“Vision One”), a stockholder of the company. Pursuant to the Cooperation Agreement, our Board of Directors (“Board”) agreed to appoint a new member to the company’s Board within one day of the 2025 annual meeting of stockholders (“Annual Meeting”), and Vision One agreed to withdraw its nominees for election at the Annual Meeting and to abide by certain customary standstill restrictions, mutual non-disparagement provisions, voting commitments and other obligations until the opening of the nomination window for the company’s 2026 annual meeting of stockholders. In connection with the Cooperation Agreement, Vision One was entitled to the reimbursement of certain of its reasonable and documented out-of-pocket fees and expenses. During the first quarter of 2025, we incurred costs of approximately $7.9 million in connection with our response to the proxy contest. These costs, which were included within "Other (income) expense, net" on the condensed consolidated statements of operations, include legal and other professional service fees as well as incremental proxy solicitation costs related to the Annual Meeting. We do not expect additional material costs related to the proxy contest to be incurred for the remainder of the year.
Current report
Since November of 2023, we have realized total cash savings of approximately $92 million, including $74 million in Cost of sales, $13 million in Selling, general, and administrative expenses, and $5 million in Research and technical expenses, respectively. We expect to realize all remaining savings in 2025.
Current report
In addition to the cash savings, we expect to realize approximately $15 million to $17 million in lower full year depreciation and intangible amortization expenses, respectively. To date, we realized savings of approximately $12 million. We expect to realize the remaining savings in 2025.
Current report
The Net sales decrease of $56.1 million in 2025 was driven by volume decline of $55.4 million (16 percent), and unfavorable foreign currency exchange of $0.7 million (zero percent).
Current report
Gross profit increase of $13.7 million was driven primarily by decreased manufacturing costs of $18.1 million, LIFO liquidation benefit of $4.5 million, and favorable foreign currency exchange of $0.4 million. This increase was partially offset by unfavorable sales volume of $7.7 million, and unfavorable pricing and sales composition (mix) of $1.6 million. Gross profit for the three months ended March 31, 2025 includes realized savings of $6.0 million from the Performance Chemicals repositioning actions initiated in 2023.
Current report
(3) See Note 13 for more information.
Current report
Performance Materials Net sales increased one percent compared to the prior year quarter driven by slightly higher volume and price and sales mix. There are two components to mix that are key to understanding this reportable segment. The segment benefits from production of larger vehicles, such as trucks and sport utility vehicles, as well as more hybrids and internal combustion engine vehicles versus all electric vehicles, as these vehicles contain more of our activated carbon content. Regional mix is also important as North America, which is nearly 50 percent of Performance Material sales, is our most profitable region due to the typically larger size of vehicles requiring more content, and this region also has the highest emissions control standards in the world requiring more advanced forms of our activated carbon product. Asia Pacific is also an important region, representing about 40 percent of total Performance Materials net sales. Within Asia Pacific, about half of our net sales are in China and the remaining are made up primarily of South Korea and Japan. All of these countries have strict emissions control standards or strong export markets where our activated carbon plays an important role in meeting regulations. Europe is our least impactful region due to the regulatory environment favoring electric vehicles, and also because European emissions standards lag behind North America and Asia Pacific. Segment EBITDA for Performance Materials increased $1.1 million or one percent and Segment EBITDA margin was flat compared to the prior year quarter.
Current report
Segment net sales. The increase of $1.7 million in 2025 was driven by favorable pricing and sales mix of $0.9 million (one percent), and volume growth of $0.8 million (zero percent).
Current report
Performance Chemicals net sales decreased $52.0 million (35 percent) compared to the prior year quarter, primarily as a result of our repositioning actions. Approximately$37 million of the decline in net sales reflects the exit of lower-margin end markets in our industrial specialties product line as we continue to focus on maximizing profitability. The remaining net sales decline was primarily due to a slower start to the road paving season, and weakness in industrial demand within our industrial specialties product line. Segment EBITDA improved $10.3 million compared to the prior year quarter, reflecting the positive impact of repositioning actions, including benefits from cost savings actions and lower raw material costs.
Current report
Segment EBITDA. The increase of $10.3 million in 2025 was driven by lower manufacturing costs of $6.5 million, primarily due to lower cost CTO, LIFO liquidation benefit of $6.5 million, lower SG&A of $1.9 million, which benefited from the Performance Chemicals repositioning, decreased foreign currency exchange and other charges of $1.9 million, and favorable pricing and sales mix of $0.2 million. The increase was partially offset by a volume decline of $6.7 million.
Current report
Advanced Polymer Technologies net sales decreased 12 percent compared to the prior year quarter primarily due to a volume decline from continued market weakness across Asia and unfavorable overall product mix and selective price concessions. Segment EBITDA increased by 32 percent, primarily driven by higher utilization rates as we built inventory in preparation for a planned extended outage in the second quarter to install new boilers.
Current report
Segment net sales. The decrease of $5.8 million in 2025 was driven by a volume decline of $4.0 million (eight percent), unfavorable pricing and sales mix of $1.1 million (two percent), and unfavorable foreign currency exchange of $0.7 million (one percent).
Current report
Segment EBITDA. The increase of $3.0 million in 2025 was driven by decreased manufacturing costs of $6.1 million. The increase was partially offset by a volume decline of $1.5 million, unfavorable pricing and sales mix of $1.1 million, increased foreign currency exchange and other charges of $0.3 million, and increased SG&A of $0.2 million.
Current report
(6) Charges represent legal and other professional service fees as well as incremental proxy solicitation costs related to a proxy contest.
Current report
We continue to monitor the evolving macroeconomic landscape, including the implications of recent tariffs and broader trade uncertainty. We are adjusting the lower end of our previously disclosed outlook to Net sales between $1.25 billion and $1.4 billion for 2025. This change reflects updated industry forecasts that estimate an approximate 10 percent reduction in North America light vehicle production. As such, we would expect Net sales in our Performance Materials reportable segment to be flat or down compared to the prior year. For our Performance Chemicals reportable segment, we expect Net sales in our road technologies product line to improve compared to 2024 we have moved away from lower margin products and adverse weather conditions experienced in key states within the U.S. negatively impacted 2024. Our industrial specialties product line remains focused on higher margin end markets and is expected to deliver Net sales between $160 and $200 million. Additionally, our Advanced Polymer Technologies reportable segment anticipates Net sales flat to prior year due to weak end market demand and continued competitive dynamics, particularly in Asia.
Current report
Our Adjusted EBITDA outlook, which has been adjusted to incorporate the ~10 percent reduction in North America light vehicle production, is expected to be between $380 million and $415 million for 2025. If the forecasts suggesting a ~10 percent reduction in North America light vehicle production are true than we expect our Performance Materials reportable segment EBITDA to decline compared to the prior year. We expect to maintain segment EBITDA margins around 50 percent based on improved pricing and continued operational efficiencies. Our Performance Chemicals reportable segment EBITDA is expected to improve due to revenue growth in our road technologies product line, lower CTO costs, and further savings from our repositioning actions. We expect segment EBITDA margins in the mid-to-high single digits. We anticipate that our Advanced Polymer Technologies segment EBITDA will modestly improve versus prior year as our enacted pricing and mix strategies will produce segment EBITDA margins of around 20 percent.
Removed paragraphs (41)
Previous report
•the anticipated timing, charges and costs associated with the repositioning of our Performance Chemicals reportable segment and crude tall oil (“CTO”) resales may differ materially from our estimates due to events that may occur as a result of, or in connection with, such actions;
Previous report
•our Performance Chemicals segment is highly dependent on CTO, which is limited in supply and subject to price increases that have negatively impacted the business and will continue to do so if our ability to pass through such price increases remains limited;
Previous report
•adverse weather conditions may impact demand for certain of our road technologies products;
Previous report
•complications with the implementation and operation of our new enterprise resource planning system, including higher than anticipated associated costs;
Previous report
Interest Rate Risk Management
Previous report
During the three months ended September 30, 2024, we entered into a floating-to-fixed interest rate swap with a notional amount of $200.0 million to manage the variability of cash flows in the interest rate payments associated with our existing Secured Overnight Financing Rate ("SOFR") based interest payments, effectively converting $200.0 million of our floating rate debt to a fixed rate. In accordance with the terms of this instrument, we receive floating rate interest payments based upon one-month U.S. dollar SOFR and in return are obligated to pay interest at a fixed rate of 3.84 percent until August 2026. The fair value of the interest rate swap was an asset (liability) of $(1.7) million and zero at September 30, 2024 and December 31, 2023, respectively.
Previous report
Measurement Alternative Investments
Previous report
During the first and third quarters of 2024, the company identified triggering events indicating that investments being accounted for under the measurement alternative may be impaired. For the three and nine months ended September 30, 2024, the company recognized an impairment of $6.7 million and $11.5 million, respectively, recorded in Other (income) expense, net on the condensed consolidated statements of operations.
Previous report
Annual Goodwill Test
Previous report
We conduct a required annual review of goodwill for potential impairment at October 1st, or sooner if events or changes in circumstances indicate that the fair value of a reporting unit is below its carrying value. Our reporting units are our operating segments, i.e., Performance Materials, Performance Chemicals, and Advanced Polymer Technologies ("APT"). 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.
Previous report
During the second quarter of 2024, we recorded a full impairment of our Performance Chemicals reporting unit goodwill. The remaining balance of our goodwill, is primarily related to our APT reporting unit. There have been no events or changes in circumstances during the third quarter that have required interim testing of our goodwill for impairment.
Previous report
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 report
The below table shows how changes in certain significant assumptions utilized in our preliminary annual goodwill testing, specific to our APT reporting unit, impacts the calculated headroom.
Previous report
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 report
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 report
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 report
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 report
Selling, general and administrative expenses ("SG&A") were $38.7 million (10 percent of Net sales) and $40.0 million (nine percent of Net sales) for the three months ended September 30, 2024 and 2023, respectively. Overall, SG&A decreased by approximately $1.3 million or three percent. Our Performance Chemicals' repositioning actions resulted in non-cash reduction of intangible amortization expense of $3.5 million and $3.0 million in cash savings. These combined savings were partially offset by increased spending on commercial activities of $0.4 million and $4.8 million of higher variable incentive compensation, driven by adjustments recognized in the three months ended September 30, 2023, that did not repeat in 2024.
Previous report
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 report
Goodwill impairment charge
Previous report
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 report
Net sales in our Performance Materials reportable segment increased three percent compared to the prior year quarter as the segment benefited from increased pricing on select products. Segment EBITDA increased $6.1 million or eight percent primarily driven by improved operational efficiencies that contributed to lower input costs.
Previous report
Segment net sales. The increase of $3.9 million in 2024 was driven primarily by increased pricing on selected products of $3.9 million (three percent) and favorable foreign currency exchange of $0.3 million (zero percent). The increase was partially offset by a volume decrease of $0.3 million (zero percent).
Previous report
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 report
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 report
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 report
Net sales in our Performance Chemicals reportable segment decreased 31 percent compared to the prior year quarter, primarily the result of our Performance Chemicals' repositioning actions that are focused on exiting lower-margin end markets for our Industrial Specialties product line.
Previous report
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 report
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 report
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 report
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 report
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 report
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 report
Segment EBITDA decreased by 12.5 percent as pricing pressure, unfavorable product mix and adverse impacts from foreign currency exchange more than offset the higher sales volumes that drove improved plant utilization rates in the current quarter.
Previous report
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 report
Segment net sales. The decrease of $16.9 million in 2024 was driven by unfavorable pricing and sales composition (mix) of $16.7 million (10 percent), and unfavorable foreign currency exchange of $2.7 million (two percent), partially offset by a volume increase of $2.5 million (two percent).
Previous report
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 report
(5) As consideration for the termination of the CTO supply contract, we made a cash payment in the amount of $50.0 million on July 1, 2024 and an additional cash payment in the amount of $50.0 million on October 8, 2024. Since this contract termination is directly attributable to the Performance Chemicals’ repositioning, that is, it does not represent normal, recurring expenses necessary to operate our business, we have excluded the CTO supply contract termination charges for the purposes of calculating our non-GAAP financial performance measures. Refer to Note 11 for more information.
Previous report
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.
Previous report
Adjusted EBITDA is expected to be between $350 million and $360 million for 2024. We expect growth in our Performance Materials segment EBITDA, primarily due to improved operational efficiency resulting in lower input costs. Performance Chemicals will continue to be impacted by elevated CTO costs and the slow industrial market recovery. We anticipate that our Advanced Polymer Technologies segment EBITDA will be down versus prior year as pricing strategy is expected to drive volume growth resulting in improved utilization rates, which we expect will be more than offset by unfavorable mix and adverse foreign currency impacts.
Showing the first 40 of 41 passages. Open the source sections for the rest.
Reworded paragraphs (36)
Previous 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;
Current wording
•the anticipated timing, charges, costs and results of any current or future repositioning of our Performance Chemicals segment, including the oleo-based product refining transition and the closure of our plants in DeRidder, Louisiana and Crossett, Arkansas may differ materially from our estimates due to events that may occur as a result of, or in connection with, such repositioning efforts;
Previous wording
•we are exposed to risks related to our international sales and operations;
Current wording
•we are exposed to risks related to our international sales and operations, including changes in tariffs;
Previous wording
•if more stringent air quality standards are not adopted worldwide, our growth could be impacted;
Current wording
•if more stringent air quality standards worldwide are not adopted, our growth could be impacted;
Previous wording
•we may be adversely affected by disruptions in our supply chain;
Current wording
•we may continue to be adversely affected by disruptions in our supply chain;
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•the occurrence of natural disasters and extreme weather or other unanticipated problems such as labor difficulties (including work stoppages), equipment failure, or unscheduled maintenance and repair, which could result in operational disruptions of varied duration;
Current wording
•the occurrence of natural disasters and extreme weather or other unanticipated problems such as labor difficulties (including work stoppages), equipment failure, or unscheduled maintenance and repair, planned and unplanned production slowdowns and shutdowns, turnarounds and outages, which could result in operational disruptions of varied duration;
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 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, paint for road markings, oil drilling, and automotive components. We operate in three reportable segments: Performance Materials, Performance Chemicals and Advanced Polymer Technologies.
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 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.
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 diversifying our raw material stream to non-CTO based fatty acids. The repositioning focused on reducing exposure to lower margin end-use markets of our industrial specialties product line, such as adhesives, publication inks, and oilfield, representing approximately 45 percent of our industrial specialties product line historical annualized net sales. The repositioning included the closure of the Performance Chemicals CTO refinery and 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.
Previous 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.
Current wording
Additionally, in July 2024, we announced plans to transition the refining of oleo-based products manufactured for the 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
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.
Current wording
We expect to incur aggregate charges of approximately $360 million, excluding the CTO resale activity as described below, associated with the Performance Chemicals repositioning, consisting of approximately $250 million in asset-related charges, approximately $25 million in severance and other employee-related costs, and approximately $85 million in other restructuring costs, including decommissioning, dismantling and removal charges, and contract termination costs. Through March 31, 2025, we have incurred $322.9 million associated with these actions, including $244.7 million of non-cash asset-related charges, excluding $7.4 million related to an asset retirement obligation ("ARO"), and $78.2 million of charges to be settled in cash, which include the aforementioned ARO. As of March 31, 2025, $65.0 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 $110 million of cash charges, including approximately $25-$30 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 $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.
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 zero and $2.5 million of non-cash, lower of cost or market, inventory charges during the three months ended March 31, 2025, and 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. Since these inventory charges are directly attributable to the Performance Chemicals repositioning, that is, they do not represent normal, recurring expenses necessary to operate our business, we have excluded such impact from the financial results of our Performance Chemicals reportable segment. Refer to Note 14 for more information.
Previous 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.
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 months ended March 31, 2025 and 2024, we have incurred zero and $26.5 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, 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.
Current wording
On July 1, 2024, the CTO supply contract that resulted in these excess CTO volumes was terminated. As consideration for the termination of the CTO supply contract, we made cash payments totaling $100.0 million during 2024. The charge was recorded within "Other (income) expense, net" on the condensed consolidated statements of operations for the year ended December 31, 2024. As a result of the termination, the purchases under the CTO supply contract ended effective June 30, 2024. The CTO resale activity described above ended in 2024 and no excess CTO volumes were on hand at March 31, 2025.
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 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.
Current wording
The Performance Chemicals repositioning, which began in November 2023, 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. As a result of this initiative, we expect to realize total cash savings of approximately $95 million to $100 million. These cash savings will be derived from headcount reductions, plant operating efficiencies, and reduced supply chain costs. 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.
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 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.
Current wording
In the first quarter of 2025, we realized cash savings of approximately $8 million, including $6 million in Cost of sales, $1 million in Selling, general, and administrative expenses, and $1 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 $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.
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 $37 million. Also contributing to the lower sales was continued weakness in certain industrial end markets that negatively impacted sales in our industrial specialties product line and our Advanced Polymer Technologies reportable segment, slightly offset by an increase in our Performance Materials reportable segment.
Previous wording
SG&A was $127.3 million (11 percent of Net sales) and $140.3 million (11 percent of Net sales) for the nine months ended September 30, 2024 and 2023, respectively. Overall, SG&A decreased by $13.0 million or nine percent driven by our Performance Chemicals' repositioning actions that reduced non-cash intangible amortization expense by $8.6 million and included $11.0 million in cash savings. These combined savings were partially offset by increased spending on commercial activities of $1.1 million and $5.5 million of higher variable incentive compensation, driven by adjustments recognized in 2023 that did not repeat in 2024.
Current wording
SG&A was $43.1 million (15 percent of Net sales) and $47.2 million (14 percent of Net sales) for the three months ended March 31, 2025 and 2024, respectively. Overall, SG&A decreased by $4.1 million or nine percent driven by our Performance Chemicals repositioning actions that reduced non-cash intangible amortization expense by $1.9 million and included $1.0 million in cash savings. SG&A was further reduced by decreased spending on commercial activities of $1.2 million.
Previous 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.
Current wording
Research and technical expenses as a percentage of Net sales remained relatively consistent period over period, at 2.7 percent and 2.0 percent for the three months ended March 31, 2025 and 2024, respectively. Research and technical expenses as a percentage of Net sales increased due to lower sales. Overall, Research and technical expenses increased by $0.9 million, compared to the prior year quarter, driven by a $1.9 million increase primarily within our Performance Materials reportable segment. The increase was partially offset by approximately $1.0 million in cash savings realized from the Performance Chemicals repositioning actions initiated in 2023.
Previous 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.
Current wording
Acquisition-related (income) costs were zero and $0.3 million for the three months ended March 31, 2025 and 2024, respectively. All charges relate to the integration of Ozark Materials into our Performance Chemicals reportable segment.
Previous 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.
Current wording
For the three months ended March 31, 2025 and 2024, our effective tax rate was 23.5 percent and 22.1 percent, respectively. Excluding discrete items, the effective rate was 22.6 percent compared to 24.2 percent in the three months ended March 31, 2025 and 2024, 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, CTO supply contract termination charges, 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, proxy contest charges, and pension and postretirement settlement and curtailment income (charges), net.
Previous wording
Segment EBITDA. The decrease of $1.4 million was driven by unfavorable pricing and sales composition (mix) of $5.0 million, increased foreign currency exchange and other charges of $2.2 million, and increased SG&A of $0.6 million. The decrease was partially offset by a volume increase of $4.6 million, and decreased manufacturing costs of $1.8 million.
Current wording
Segment EBITDA. The increase of $1.1 million in 2025 was driven by volume growth of $0.5 million, decreased foreign currency exchange and other charges of $3.2 million, and decreased manufacturing costs of $1.4 million. The increase was partially offset by LIFO charges of $2.0 million, unfavorable pricing and sales composition (mix) of $0.7 million, and increased SG&A and research and technical expenses of $1.3 million.
Previous 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).
Current wording
Segment net sales. The decrease of $52.0 million in 2025 was driven by a volume decline of $52.2 million (35 percent), as a result of a decrease in industrial specialties ($49.9 million) and road technologies ($2.3 million). This was partially offset by favorable pricing and sales mix of $0.2 million (zero percent), attributable to an increase in road technologies ($0.9 million), partially offset by a decrease in industrial specialties ($0.7 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, CTO supply contract termination charges, 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, proxy contest 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 nine months ended September 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. On July 1, 2024, the CTO supply contract that resulted in these excess CTO volumes was terminated. As a result of the termination of this contract, the purchases under the CTO supply contract ended, effective June 30, 2024, and we ended our CTO resale activity as of December 31, 2024. Since these CTO resale activities are directly attributable to the Performance Chemicals repositioning, that is, they do not represent normal, recurring expenses necessary to operate our business, we have excluded the CTO resale (income) charges for the purposes of calculating our non-GAAP financial performance measures. For the three months ended March 31, 2024, the loss on CTO resales relates to the Performance Chemicals segment. Refer to Note 11 for more information.
Previous wording
The primary source of liquidity for our business is the cash flow provided by operating activities. We expect our cash flow provided by operations combined with cash on hand and available capacity under our revolving credit facility to be sufficient to fund our planned operations and meet our interest and other contractual obligations for at least the next twelve months. As of September 30, 2024, our undrawn capacity under our revolving credit facility was $244.4 million. Over the next twelve months, we expect to fund the following: interest payments, capital expenditures, 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, restructuring activities such as the repositioning of our Performance Chemicals reportable segment as further described within Note 11, and consideration for the termination of the CTO supply contract further described within Note 11. In addition, we may also evaluate and consider strategic acquisitions, joint ventures, or other transactions to create stockholder value and enhance financial performance. In connection with such transactions, or to fund other anticipated uses of cash, we may modify our existing revolving credit facility, redeem all or part of our outstanding senior notes, seek additional debt financing, issue equity securities, or some combination thereof.
Current wording
The primary source of liquidity for our business is the cash flow provided by operating activities. We expect our cash flow provided by operations combined with cash on hand and available capacity under our revolving credit facility to be sufficient to fund our planned operations and meet our interest and other contractual obligations for at least the next twelve months. As of March 31, 2025, our undrawn capacity under our revolving credit facility was $309.4 million. Over the next twelve months, we expect to fund the following: debt principal repayments, interest payments, capital expenditures, income tax payments, additional spending associated with our Performance Materials' intellectual property litigation, and restructuring activities such as the repositioning of our Performance Chemicals reportable segment as further described within Note 11. 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. 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.
Previous wording
Cash and cash equivalents totaled $135.5 million at September 30, 2024. We continuously monitor deposit concentrations and the credit quality of the financial institutions that hold our cash and cash equivalents, as well as the credit quality of our insurance providers, customers, and key suppliers.
Current wording
Cash and cash equivalents totaled $71.5 million at March 31, 2025. We continuously monitor deposit concentrations and the credit quality of the financial institutions that hold our cash and cash equivalents, as well as the credit quality of our insurance providers, customers, and key suppliers.
Previous wording
Due to the global nature of our operations, a portion of our cash is held outside the U.S. The cash and cash equivalents balance at September 30, 2024, included $128.5 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. If these earnings were distributed, such amounts could be subject to U.S. federal income tax at the statutory rate less the available foreign tax credits, if any, and could potentially be subject to withholding taxes in the various jurisdictions. The potential tax implications of the repatriation of unremitted earnings are driven by facts at the time of distribution, therefore, it is not practicable to estimate the income tax liabilities that might be incurred if such cash and earnings were repatriated to the U.S. Management does not currently expect to repatriate cash earnings from our foreign operations in order to fund U.S. operations.
Current wording
Due to the global nature of our operations, a portion of our cash is held outside the U.S. The cash and cash equivalents balance at March 31, 2025, included $67.5 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. If these earnings were distributed, such amounts could be subject to U.S. federal income tax at the statutory rate less the available foreign tax credits, if any, and could potentially be subject to withholding taxes in the various jurisdictions. The potential tax implications of the repatriation of unremitted earnings are driven by facts at the time of distribution, therefore, it is not practicable to estimate the income tax liabilities that might be incurred if such cash and earnings were repatriated to the U.S. Management does not currently expect to repatriate cash earnings from our foreign operations in order to fund U.S. operations.
Previous wording
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. 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.
Current wording
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. Shares under the 2022 Authorization may be purchased through open market or privately negotiated transactions at the discretion of management based on its evaluation of market prevailing conditions and other factors, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Exchange Act.
Previous wording
During the three and nine months ended September 30, 2024, we repurchased no common stock. At September 30, 2024, $353.4 million remained unused under the 2022 Authorization.
Current wording
During the three months ended March 31, 2025 and 2024, we repurchased no common stock. At March 31, 2025, $353.4 million remained unused under the 2022 Authorization.
Previous wording
Projected 2024 capital expenditures are $90-$100 million. We have no material commitments associated with these projected capital expenditures as of September 30, 2024.
Current wording
Projected 2025 capital expenditures are $50-70 million. We have no material commitments associated with these projected capital expenditures as of March 31, 2025.
Previous wording
Cash flow comparison of the Nine Months Ended September 30, 2024 and 2023
Current wording
Cash flow comparison of the Three Months Ended March 31, 2025 and 2024
Previous wording
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 $64.1 million for the nine months ended September 30, 2024.
Current wording
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 $25.4 million for the three months ended March 31, 2025.
Previous wording
Cash provided by operating activities for the nine months ended September 30, 2024, when compared to the nine months ended September 30, 2023, decreased by $94.8 million. This decrease was driven by reduced cash earnings of $123.8 million, CTO supply contract termination payment of $50.0 million, CTO resale cash outflows of $45.0 million, and higher cash interest paid of $3.1 million due primarily to rising interest rates when compared to 2023. Partially offsetting these cash outflows was a net reduction in trade working capital of $79.8 million (including accounts receivable, inventory, and accounts payable), reduced employee compensation payments of $40.6 million, reduced spending on restructuring initiatives of $2.8 million, and a reduction in tax payments of $3.9 million as a result of the lower cash earnings.
Current wording
Cash provided by operating activities for the three months ended March 31, 2025, when compared to the three months ended March 31, 2024, increased by $37.5 million. This increase was driven by a decrease in CTO resale cash outflows of $26.0 million, increased cash earnings of $7.9 million, a net reduction in trade working capital of $10.2 million (including accounts receivable, inventory, and accounts payable), and lower cash interest paid of $2.4 million. Partially offsetting these cash inflows was increased employee compensation payments of $5.9 million, increased spending on restructuring initiatives of $1.6 million, and an increase in tax payments of $1.5 million as a result of the higher cash earnings.
Previous wording
Cash used in investing activities in the nine months ended September 30, 2024 was $51.5 million and was primarily driven by capital expenditures of $52.7 million. In the nine months ended September 30, 2024 and 2023, capital spending included the base maintenance capital supporting ongoing operations, and growth and cost improvement spending. The decrease in Net cash provided by (used in) investing activities when compared to the prior year period is primarily due to the first quarter 2023 sale of a strategic investment that resulted in a cash inflow of $31.5 million, offset by reduced capital expenditures of $27.9 million.
Current wording
Cash used in investing activities in the three months ended March 31, 2025 was $11.5 million and was primarily driven by capital expenditures of $10.0 million. In the three months ended March 31, 2025 and 2024, capital spending included the base maintenance capital supporting ongoing operations, and growth and cost improvement spending. The decrease in Net cash used in investing activities when compared to the prior year period is primarily due to reduced capital expenditures of $6.6 million.
Previous wording
Cash used in financing activities in the nine months ended September 30, 2023 was $93.4 million and was primarily driven by payments on our revolving credit facility and other borrowings of $240.1 million, and the repurchase of common stock of $92.1 million, partially offset by borrowings on our revolving credit facility of $239.5 million.
Current wording
Cash used in financing activities in the three months ended March 31, 2025, was $11.0 million and was primarily driven by payments on our revolving credit facility of $100.3 million, partially offset by borrowings on our revolving credit facility and other borrowings of $92.3 million.
Previous wording
Cash provided by financing activities in the nine months ended September 30, 2024, was $27.4 million and was primarily driven by borrowings on our revolving credit facility and other borrowings of $150.5 million, partially offset by payments on our revolving credit facility of $119.3 million.
Current wording
Cash provided by financing activities in the three months ended March 31, 2024 was $23.4 million and was primarily driven by borrowings on our revolving credit facility of $81.4 million, partially offset by payments on our revolving credit facility of $55.0 million.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
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.