Ingevity Corp

Note 1: Background

Description of Business

Ingevity Corporation ("Ingevity," "the company," "we," "us," or "our") provides products and technologies that purify, protect, and enhance the world around us. Through a diverse team of talented and experienced people, we develop, manufacture, and bring to market solutions that are largely renewably sourced and help customers solve complex problems while making the world more sustainable. Our products are used in a variety of demanding applications, including automotive gasoline vapor emissions control systems, food, water and chemical filtration, asphalt paving, agrochemical dispersants, bioplastics, coatings, elastomers, and paint for road markings. We operate in three reportable segments: Performance Materials, Performance Chemicals, and Advanced Polymer Technologies.

On September 3, 2025, Ingevity entered into an Asset Purchase Agreement (the "Purchase Agreement") with Mainstream Pine Products, LLC, a Delaware limited liability company ("Purchaser"), pursuant to which Purchaser agreed to purchase substantially all of the assets and assume and acquire certain of the rights and liabilities of Ingevity or its applicable affiliates that relate to or are used in connection with (a) Ingevity's industrial specialties product line (other than Ingevity's lignin dispersant and alternative fatty acid based products, pavement technologies product line and other businesses and products more fully described in the Purchase Agreement) and (b) Ingevity's North Charleston, South Carolina crude tall oil refinery (the "CTO Refinery") and Ingevity's and its affiliates' operations thereof (collectively, the "Divestiture"). We determined that, upon execution of the Purchase Agreement, the industrial specialties product line and CTO Refinery included within the Divestiture met the criteria to be classified as held for sale and that the sale represents a strategic shift that will have a major effect on Ingevity's operations and results. As such, the results of operations of the Divestiture have been reclassified and presented as discontinued operations for all periods presented. The Divestiture was completed on January 1, 2026.

Unless otherwise indicated, the information in the notes to the Condensed Consolidated Financial Statements refers only to our continuing operations and does not include discussion of balances or activity of the Divestiture. See Note 16 for more information.

Basis of Consolidation and Presentation

These unaudited Condensed Consolidated Financial Statements reflect the consolidated operations of the company and have been prepared in accordance with United States Securities and Exchange Commission ("SEC") interim reporting requirements. Accordingly, the accompanying Condensed Consolidated Financial Statements do not include all disclosures required by accounting principles generally accepted in the United States of America ("GAAP") for full financial statements and should be read in conjunction with the Annual Consolidated Financial Statements for the years ended December 31, 2025, 2024 and 2023, collectively referred to as the "Annual Consolidated Financial Statements," included in our Annual Report on Form 10-K for the year ended December 31, 2025 (the "2025 Annual Report").

In the opinion of management, the Condensed Consolidated Financial Statements reflect all adjustments, including normal recurring adjustments necessary to fairly present the financial position, results of operations, and cash flows for the interim periods presented and contain adequate disclosures to make the information presented not misleading. The consolidated results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.

The preparation of the Condensed Consolidated Financial Statements requires management to make estimates and assumptions with respect to the reported amounts of assets, liabilities, revenue, and expenses and the disclosure of contingent assets and liabilities. Actual results could differ from these estimates.

Certain prior year amounts have been reclassified to conform with the current year's presentation as described below.

Note 2: New Accounting Guidance

The Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC" or "Codification") is the sole source of authoritative GAAP other than SEC issued rules and regulations that apply only to SEC registrants. The FASB issues an Accounting Standards Update ("ASU") to communicate changes to the Codification. We consider the applicability and impact of all ASUs. Recently issued ASUs that are not listed within this Form 10-Q have been assessed and determined to be either not applicable or are not expected to have a material impact on the Condensed Consolidated Financial Statements.

Recently Issued Accounting Pronouncements

In November 2024, the FASB issued ASU 2024-03, "Disaggregation of Income Statement Expenses," which is intended to enhance disclosures regarding significant expenses. The purpose of the amendment is to provide readers of the financial statements with information to better understand an entity's overall performance, assess potential future cash flows, and compare an entity's performance over time and with that of other entities. The guidance is effective beginning with our 2027 fiscal year Form 10-K. We are currently evaluating the potential impact of adopting this new guidance on our Consolidated Financial Statements and related disclosures.

Note 3: Net Sales

Disaggregation of Net Sales

The following table presents our Net sales disaggregated by reportable segment and product line.

The following table presents our Net sales disaggregated by geography, based on the delivery address of our customer.

(1) Countries with Net sales in excess of 10 percent of consolidated Net sales for the three months ended March 31, 2026 and March 31, 2025, are the U.S., which totaled $112.8 million and $112.0 million, respectively, and China, which totaled $33.1 million and $34.7 million, respectively.

Contract Balances

The contract assets primarily relate to our rights to consideration for products produced but not billed at the reporting date. The contract assets are recognized as accounts receivable when we have an enforceable right to payment for performance completed to date and the customer has been billed. Contract liabilities represent obligations to transfer goods to a customer for which we have received consideration from our customer. For all periods presented, we hadno contract liabilities.

The following table provides information about contract assets from contracts with certain customers.

(1) Included within "Prepaid and other current assets" on the condensed consolidated balance sheets.

Note 4: Fair Value Measurements

Recurring Fair Value Measurements

The following information is presented for assets and liabilities that are recorded on the condensed consolidated balance sheets at fair value measured on a recurring basis. There were no transfers of assets and liabilities that were recorded at fair value between the three-level fair value hierarchy during the periods reported.

(1) Quoted prices in active markets for identical assets.

(2) Quoted prices for similar assets and liabilities in active markets.

(3) Significant unobservable inputs.

(4) Consists of a deferred compensation arrangement through which we hold various investment securities recognized on our condensed consolidated balance sheets. Both the asset and liability related to investment securities are recorded at fair value and are included within "Other assets" and "Other liabilities" on the condensed consolidated balance sheets, respectively. In addition to the investment securities, we also had company-owned life insurance related to the deferred compensation arrangement recorded at cash surrender value in "Other assets" of $17.9 million and $18.2 million at March 31, 2026 and December 31, 2025, respectively.

Nonrecurring Fair Value Measurements

There were no nonrecurring fair value measurements on the condensed consolidated balance sheets during the period ended March 31, 2026.

During the year ended December 31, 2025, we measured our Advanced Polymer Technologies reporting units' goodwill and our Performance Chemicals road markings long-lived assets at fair value in connection with impairment testing. These measurements are Level 3 and were determined using both the income approach and market approach for Goodwill and both quoted market prices in active markets and a discounted value of estimated future cash flows for our long-lived assets. For additional information refer to the Notes to the Consolidated Financial Statements included in the Company’s Form 10-K for the year ended December 31, 2025, filed on February 26, 2026.

Strategic Investments

Equity Method Investments

The aggregate carrying value of all strategic equity method investments totaled $2.9 million and $3.1 million at March 31, 2026 and December 31, 2025, respectively. During the fourth quarter of 2025, we sold a strategic equity method investment for $6.8 million, resulting in a $7.1 million loss, recorded within "Other (income) expense, net" on the consolidated statement of operations. We recognized an additional $0.1 million gain associated with an equity method investment sale during the year ended December 31, 2025. There wereno adjustments to the carrying value of equity method investments for impairment for the period ended March 31, 2026.

As of March 31, 2026, we had approximately $3.5 million of unfunded commitments associated with a venture capital fund investment accounted for under the equity method of accounting.

Measurement Alternative Investments

The aggregate carrying value of all measurement alternative investments where fair value is not readily determinable totaled $80.0 million and $80.0 million at March 31, 2026 and December 31, 2025, respectively. For the year ended December 31, 2025, the Company identified triggering events indicating that investments being accounted for under the measurement alternative may be impaired, and recognized impairment charges of $11.9 million, recorded in "Other (income) expense, net" on the consolidated statement of operations.

There were no adjustments to the carrying value of the measurement alternative method investments for impairment or observable price changes for the period ended March 31, 2026.

Restricted Investment

Our restricted investment is a trust managed in order to secure repayment of the finance lease obligation associated with the Performance Materials' Wickliffe, Kentucky manufacturing plant at maturity. The trust, presented as Restricted investment on our condensed consolidated balance sheets, originally purchased long-term bonds that mature through 2026. The principal received at maturity of the bonds, along with interest income that is reinvested in the trust, is expected to be equal to or more than the $80.0 million finance lease obligation that is due in 2027. Because the provisions of the trust provide us the ability, and it is our intent, to hold the investments to maturity, the investments held by the trust are accounted for as held to maturity ("HTM"); therefore, they are held at their amortized cost. The investments held by the trust earn interest at the stated coupon rate of the invested bonds. Interest earned on the investments held by the trust is recognized and presented as interest income on our condensed consolidated statements of operations. As interest from the bonds is received and as bonds mature, any proceeds not reinvested are held in highly liquid securities and treated as restricted cash.

At March 31, 2026 and December 31, 2025, the carrying value of our restricted investment was $85.1 million and $84.4 million, net of an allowance for credit losses of $0.2 million and $0.2 million, and included restricted cash of $59.4 million and $34.0 million, respectively. The fair value at March 31, 2026 and December 31, 2025 was $84.7 million and $84.0 million, respectively, based on Level 1 inputs. As a result of the obligation being due in January 2027, we have reclassified the full amount of the restricted investment to "Current assets" on the condensed consolidated balance sheet at March 31, 2026.

The following table shows the total amortized cost of our HTM debt securities by credit rating, excluding the allowance for credit losses and cash. The primary factor in our expected credit loss calculation is the composite bond rating. As the rating decreases, the risk present in holding the bond is inherently increased, leading to an increase in expected credit losses.

Debt and Finance Lease Obligations

(1) For both periods presented, the carrying value of our variable interest rate debt, including the impact of a $200.0 million floating-to-fixed interest rate swap, and excluding debt issuance fees is considered a reasonable estimate of the fair value.

(2) For both periods presented, the carrying value of our fixed interest rate debt included the impact of a $200.0 million floating-to-fixed interest rate swap. As of March 31, 2026 and December 31, 2025, the fair value of our fixed rate debt was $728.6 million and $735.7 million, respectively, based on Level 2 inputs.

(3) At March 31, 2026 and December 31, 2025, the fair value of our $80.0 million finance lease obligation associated with our Performance Materials' Wickliffe, Kentucky manufacturing site was $81.2 million and $81.4 million, respectively, based on Level 2 inputs. The fair value of all other finance lease obligations approximates their carrying values.

Note 5: Inventories, net

Note 6: Property, Plant, and Equipment, net

Note 7: Goodwill and Other Intangible Assets, net

Goodwill

(1) Includes accumulated impairment losses of $306.6 million and $183.8 million related to the Performance Chemicals and Advanced Polymer Technologies reportable segments, respectively.

There were no events or circumstances indicating that goodwill might be impaired as of March 31, 2026.

Other Intangible Assets

(1) Represents trademarks, trade names, and know-how.

(2) Includes accumulated impairment loss of $84.1 million related to the Long lived asset impairment charge.

Intangible assets subject to amortization were attributed to our business segments as follows:

The amortization expense related to our intangible assets in the table above is shown in the table below.

Based on the current carrying values of intangible assets, estimated pre-tax amortization expense for the next five years is as follows: $14.7 million for the remainder of 2026, 2027 - $19.6 million, 2028 - $19.6 million, 2029 - $19.6 million, and 2030 - $19.6 million. The estimated pre-tax amortization expense may fluctuate due to changes in foreign currency exchange rates.

Note 8: Financial Instruments and Risk Management

Cash Flow Hedges

Foreign Currency Exchange Risk Management

As of March 31, 2026, there were $2.5 million open foreign currency derivative contracts. The fair value of the designated foreign currency hedge contracts was a net asset (liability) ofzero andzero at March 31, 2026 and December 31, 2025, respectively.

Commodity Price Risk Management

As of March 31, 2026, we had 0.9 million mmBTUS (millions of British Thermal Units) in open natural gas derivative contracts, designated as cash flow hedges. As of March 31, 2026, open natural gas derivative contracts hedge a portion of forecasted transactions until December 2026. The fair value of the open natural gas derivative contracts was a net asset (liability) of $(0.5) million and $(0.5) million as of March 31, 2026 and December 31, 2025, respectively.

Interest Rate Risk Management

During the third quarter of 2024, we entered into a floating-to-fixed interest rate swap to convert a notional amount of $200.0 million of the variable, Secured Overnight Financing Rate ("SOFR") based interest component of our 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, which was 3.66 percent as of March 31, 2026, 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 $(0.1) million and $(0.4) million at March 31, 2026 and December 31, 2025, respectively.

Effect of Cash Flow Hedge Accounting on AOCI

Within the next twelve months, we expect to reclassify $0.2 million of net gains from AOCI to income, before taxes.

Fair Value Measurements

The following information is presented for derivative assets and liabilities that are recorded in the condensed consolidated balance sheets at fair value measured on a recurring basis. There were no transfers of assets and liabilities that are recorded at fair value between Level 1 and Level 2 during the periods reported. There were no nonrecurring fair value measurements related to derivative assets and liabilities on the condensed consolidated balance sheets as of March 31, 2026, or December 31, 2025.

(1) Quoted prices in active markets for identical assets.

(2) Quoted prices for similar assets and liabilities in active markets.

(3) Significant unobservable inputs.

(4) Included within "Prepaid and other current assets" on the condensed consolidated balance sheets.

(5) Included within "Accrued expenses" on the condensed consolidated balance sheets.

(6) Included within "Other liabilities" on the condensed consolidated balance sheets.

Note 9: Debt, including Finance Lease Obligations

Current and long-term debt including finance lease obligations consisted of the following:

(1) Letters of credit outstanding under the revolving credit facility were $9.0 million and $9.0 million and available funds under the facility were $223.0 million and $474.0 million at March 31, 2026 and December 31, 2025, respectively.

(2) The weighted interest rate associated with our revolving credit facility, exclusive of any floating-to-fixed interest rate instrument, was 4.98 percent and 6.40 percent for the period ended March 31, 2026 and December 31, 2025, respectively.

(3) As of March 31, 2026 and December 31, 2025, $80.0 million of the finance lease obligations upon maturity will be settled utilizing liquid assets that have been placed into a trust established strictly for this purpose. The trust is presented as Restricted investment on the condensed consolidated balance sheets in the amount of $85.1 million and $84.4 million as of March 31, 2026 and December 31, 2025, respectively. Refer to Note 4, under the section: Restricted Investment, for more information.

(4) The weighted interest rate associated with our accounts receivable securitization program was 5.20 percent and 5.51 percent for the period ended March 31, 2026 and December 31, 2025, respectively.

(5) Debt maturing within one year, inclusive of the finance lease obligation associated with our Performance Materials' Wickliffe, Kentucky manufacturing site, is included in "Notes payable and current maturities of long-term debt" on the condensed consolidated balance sheets. Refer to Note 4, under the section: Restricted Investment, for more information.

Revolving Credit Facility

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

Among other things, the Amendment decreased the aggregate amount of the commitments thereunder from $1 billion to $750 million, and extended the maturity date of our revolving credit facility by five years to March 31, 2031, however, if more than $250 million principal amount of the Company’s senior unsecured notes due 2028 remain outstanding on the date that is 91 days prior to their stated maturity, the maturity of the revolving credit facility will automatically accelerate to such earlier date. Borrowings under the revolving credit facility bear interest at a rate per annum equal to, at our option, either (a) the applicable term benchmark rate, subject to a 0.00% floor, or (b) a base rate, in each case, plus an applicable margin of 1.00% to 1.75% for term benchmark loans and 0.00% to 0.75% for base rate loans. The Amendment contains certain customary affirmative and negative covenants, representations and warranties and events of default (subject in certain cases to customary grace and cure periods).

Fees of $4.0 million were incurred to secure the Amendment. These fees have been deferred and will be amortized over the term of the facility.

Debt Covenants

Our indenture contains certain customary covenants (including covenants limiting Ingevity's and its restricted subsidiaries' ability to grant or permit liens on certain property securing debt, declare or pay dividends, make distributions on or repurchase or redeem capital stock, make investments in unrestricted subsidiaries, engage in sale and lease-back transactions, and engage in a consolidation or merger, or sell, transfer or otherwise dispose of all or substantially all of the assets of Ingevity and our restricted subsidiaries, taken as a whole) and events of default (subject in certain cases to customary exceptions, as well as grace and cure periods). The occurrence of an event of default under the 2028 Senior Notes could result in the acceleration of the notes of such series and could cause a cross-default resulting in the acceleration of other indebtedness of Ingevity and its subsidiaries. We were in compliance with all covenants under the indenture as of March 31, 2026.

The credit agreement governing our revolving credit facility contains customary default provisions, including defaults for non-payment, breach of representations and warranties, insolvency, non-compliance with covenants and cross-defaults to other material indebtedness. The occurrence of an uncured event of default under the credit agreement could result in all loans and other obligations becoming immediately due and payable and our revolving credit facility being terminated. The credit agreement also contains certain customary covenants, including financial covenants. The revolving credit facility financial covenants require Ingevity to maintain on a consolidated basis a maximum total net leverage ratio of 4.0 to 1.0 (which may be increased to 4.5 to 1.0 under certain circumstances) and a minimum interest coverage ratio of 3.0 to 1.0. As calculated per the credit agreement, our net leverage for the four consecutive quarters ended March 31, 2026 was 2.5, and our actual interest coverage for the four consecutive quarters ended March 31, 2026 was 6.2. We were in compliance with all covenants under the credit agreement at March 31, 2026.

Note 10: Equity

(1) Included within "Cost of sales" on the condensed consolidated statements of operations.

Share Repurchases

On July 25, 2022, our Board of Directors authorized the repurchase of up to $500.0 million of our common stock (the "2022 Authorization"), and rescinded the prior outstanding repurchase authorization with respect to the shares that remained unused under the prior authorization. Shares under the 2022 Authorization may be purchased through open market or privately negotiated transactions at the discretion of management based on its evaluation of market prevailing conditions and other factors, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended.

During the three months ended March 31, 2026, we repurchased $52.3 million, inclusive of $0.4 million in excise tax, in common stock, representing 774,189 shares of our common stock at a weighted average cost per share of $67.10. At March 31, 2026, $245.6 million remained unused under the 2022 Authorization.

During the three months ended March 31, 2025, we repurchasedno common stock.

Note 11: Restructuring and Other (Income) Charges, net

Detail on the restructuring charges and other (income) charges, net, is provided below.

Restructuring Charges

(1) Primarily represents costs associated with plant and equipment decommissioning charges and other miscellaneous exit costs.

(2) The Performance Chemicals repositioning began in 2023 and resulted in the completion of the sale of the industrial specialties product line on January 1, 2026. Refer to Note 16 for more information.

Restructuring and Other (Income) Charges, net Reserves

The following table, inclusive of continuing and discontinued operations shows a roll forward of restructuring reserves that will result in cash spending, the majority of which relate to the Performance Chemicals repositioning.

(1) Included in "Accrued expenses" on the condensed consolidated balance sheets.

(2) Includes severance and other employee-related costs, exited leases, and other miscellaneous exit costs. Any asset write-downs including accelerated depreciation and impairment charges are not included in the above table.

(3) Primarily foreign currency translation adjustments.

Note 12: Income Taxes

The effective tax rates, including discrete items, were as follows:

We determine our interim tax provision using an Estimated Annual Effective Tax Rate methodology ("EAETR"). The EAETR is applied to the year-to-date ordinary income, exclusive of discrete items. The tax effects of discrete items are then included to arrive at the total reported interim tax provision.

The determination of the EAETR is based upon a number of estimates, including the estimated annual pre-tax ordinary income in each tax jurisdiction in which we operate. As our projections of ordinary income change throughout the year, the EAETR will change period-to-period. The tax effects of discrete items are recognized in the tax provision in the period they occur. Depending on various factors, such as the item's significance in relation to total income and the rate of tax applicable in the jurisdiction to which it relates, discrete items in any quarter may materially impact the reported effective tax rate. As a global enterprise, our tax expense may be impacted by changes in tax rates or laws, the finalization of tax audits and reviews, as well as other factors. As such, there may be significant volatility in interim tax provisions.

The below table provides a reconciliation between our reported effective tax rates and the EAETR of our continuing operations.

(1) See Note 11 for further information.

(2) See Note 13 for further information.

(3) See Note 14 for further information.

(4) Increase in EAETR for the three months ended March 31, 2026, as compared to March 31, 2025, is primarily driven by impacts in the U.S. Changes to the foreign-derived intangible income deduction, now referred to as the foreign-derived deduction-eligible income ("FDDEI"), as a result of the 2025 One Big Beautiful Bill Act ("OBBB"), provided a decrease in the EAETR in 2026. This decrease was more than offset by unfavorable increases in the Internal Revenue Code (IRC) Section 162M limitation against officers compensation, additional disallowances of meals and entertainment expenses, as well as a base erosion anti-abuse tax (BEAT) minimum tax inclusion in 2026, increasing the EAETR in 2026.

At March 31, 2026 and December 31, 2025, we had deferred tax assets of $12.4 million and $11.8 million, respectively, resulting from certain historical net operating losses from our Brazil and U.S. state tax credits for which a valuation allowance has been established. The ultimate realization of these deferred tax assets depends on the generation of future taxable income during the periods in which these net operating losses and tax credits are available to be used. In evaluating the realizability of these deferred tax assets, we consider projected future taxable income and tax planning strategies in making our assessment. As of March 31, 2026, we cannot objectively assert that these deferred tax assets are more likely than not to be realized and therefore we have maintained a valuation allowance. We intend to continue maintaining a valuation allowance on these deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances. A release of all or a portion of the valuation allowance could be possible if we determine that sufficient positive evidence becomes available to allow us to reach a conclusion that the valuation allowance will no longer be needed. A release of the valuation allowance would result in the recognition of certain deferred tax assets and a reduction to income tax expense for the period the release is recorded. However, the exact timing and amount of the valuation allowance release are subject to change based on the level of profitability that we are able to actually achieve.

As a result of the OBBB signed into law in 2025, significant modifications to U.S. international tax framework became effective in 2026. Based on the analysis performed by the Company, the OBBB will have an impact on the FDDEI deduction. The changes in deduction rate, base calculation, and expense allocation rules for FDDEI are driving a benefit to our effective tax rate, which is partially offset by the increase in the BEAT minimum tax rate, as well as increased disallowances associated with meals and entertainment expenses.

During 2025, we determined that the earnings of our China subsidiaries are no longer permanently reinvested due to global trade volatility. As a result of this change, we recorded deferred tax expense of $0.7 million relating to China withholding taxes for the three months ended March 31, 2026. With the exception of China and Belgium, the Company does not currently expect to repatriate cash earnings from our foreign operations to fund U.S. operations.

Pillar Two, released by the Organisation for Economic Cooperation and Development (OECD), went into effect on January 1, 2024. Pillar Two's intent is to create a 15% global minimum tax for all jurisdictions in which multinational enterprises operate. To date, fourteen of our reporting jurisdictions have enacted final legislation adopting Pillar Two. While we do not anticipate that this legislation will have a material impact on our tax provision or effective tax rate, we continue to monitor evolving tax legislation in the jurisdictions in which we operate. No tax impacts of Pillar Two were recorded for the quarter ended March 31, 2026.

Note 13: Commitments and Contingencies

Legal Proceedings

On July 19, 2018, we filed suit against BASF Corporation ("BASF") in the United States District Court for the District of Delaware (the "Delaware Proceeding") alleging BASF infringed Ingevity's patent covering canister systems used in the control of automotive gasoline vapor emissions (U.S. Patent No. RE38,844) (the "844 Patent"). On February 14, 2019, BASF asserted counterclaims against us in the Delaware Proceeding, allegingtwo claims for violations of U.S. antitrust law (one for exclusive dealing and the other for tying) as well as a claim for tortious interference with an alleged prospective business relationship between BASF and a BASF customer (the "BASF Counterclaims"). The BASF Counterclaims relate to our enforcement of the 844 Patent and our entry into several supply agreements with customers of its fuel vapor canister honeycombs. The U.S. District Court dismissed our patent infringement claims on November 18, 2020, and the case proceeded to trial on the BASF Counterclaims in September 2021.

On September 15, 2021, a jury in the Delaware Proceeding issued a verdict in favor of BASF on the BASF Counterclaims and awarded BASF damages of approximately $28.3 million, which trebled under U.S. antitrust law to approximately $85.0 million. On May 18, 2023, the court in the Delaware Proceeding entered judgment on the jury's verdict, which commenced the post-trial briefing stage. On February 13, 2024, the court in the Delaware Proceeding denied BASF's motion for pre-judgment interest on its tortious interference claim as well as our motion seeking judgment as a matter of law, or a new trial in the alternative. In addition, BASF indicated it would seek attorneys' fees and costs in amounts that they would allege and have to demonstrate at a future date.

On March 13, 2024, we appealed the verdict as well as the U.S. District Court's November 2020 dismissal of our patent infringement claims against BASF to the U.S. Federal Circuit Court of Appeals. On February 11, 2026, the U.S. Federal Circuit Court of Appeals ruled against Ingevity on our appeal and we decided to no longer pursue any further appeals. On March 13, 2026, we entered into an agreement with BASF, providing for the payment of: (1) the judgment, plus post-judgment interest, in the amount of $97.0 million and (2) $16.2 million to resolve BASF's claim for attorneys' fees and costs, and made such payments on April 1, 2026. The Delaware Proceeding, including all appeals and counterclaims, is now complete.

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

Note 14: Segment Information

Ingevity's reportable segments are (i) Performance Materials ("PM"), (ii) Performance Chemicals ("PC"), and (iii) Advanced Polymer Technologies ("APT"). Our reportable segments were determined based upon the nature of the products produced, the nature of the production process, the type of customer for the products, the similarity of economic characteristics, and the manner in which management reviews results. Segment EBITDA is the primary measure used by the chief operating decision maker ("CODM"), the CEO and President of Ingevity, to evaluate the performance of and allocate resources among our reportable segments. The CODM utilizes Segment EBITDA for each reportable segment in the annual budgeting and forecasting process. Segment EBITDA enables the CODM to compare each business and make informed and consistent resource allocation decisions.

The historical industrial specialties product line that is classified as discontinued operations includes only direct operating expenses which the Company will no longer incur upon the close of the Divestiture. Indirect costs, such as those related to corporate and segment shared service functions previously allocated to the industrial specialties product line, do not meet the criteria for discontinued operations and remain reported within continuing operations in Indirect costs allocated to Divestiture. See Note 1 for more information.

Corporate and other

Effective in the fourth quarter of 2025, Corporate and other costs have been excluded from segment EBITDA. These costs are recorded within "Selling, general, and administrative expenses" on our Condensed Consolidated Statements of Operations and are associated with corporate administrative functions (e.g., executive office, corporate finance, legal, human resources) and other compliance costs to operate as a NYSE listed entity. Additionally, these costs are managed at a corporate level and not directly attributable to our reportable segments. Reporting these costs separately will provide greater transparency into our segment results and cost structure. We have recast the data below to reflect the changes in our reportable segments to conform to the current year presentation.

(1) 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, goodwill impairment charges, acquisition and other-related income (costs), gain (loss) on strategic investments, impairment of license agreement, proxy contest charges, portfolio realignment costs, pension and postretirement settlement and curtailment income (charges), net, litigation charge, indirect costs allocated to Divestiture, and Corporate and other costs.

(2) Segment expenses included within the primary measure used by our CODM are included within the below table.

(3) The table below provides an allocation of these charges between ourthree reportable segments to provide investors, potential investors, securities analysts and others with the information, should they choose, to apply such (income) charges to each respective reportable segment for which the charges relate.

(4) Charge represents an impairment of a license agreement within the Performance Materials reportable segment.

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

(6) Charges represent professional service fees related to a review of the company's portfolio.

(7) Charges represent litigation charge related to the BASF verdict. Refer to Note 13 for more information.

(8) Corporate and other costs is defined as costs associated with corporate administrative functions (e.g., executive office, corporate finance, legal, human resources) and other compliance costs to operate as a NYSE listed entity. Also includes corporate administrative function share of information technology, safety, health, accounting and human resource departments.

(9) Includes indirect costs previously allocated to the Divestiture that are not eligible for discontinued operations accounting treatment.

(1) Includes indirect costs previously allocated to the Divestiture that are not eligible for discontinued operations accounting treatment.

(1) Assets not specifically managed as part of one specific segment are referred to as "Corporate and other."

Note 15: Earnings (Loss) per Share

The following average number of potential common shares were antidilutive, and therefore, were not included in the diluted earnings per share calculation:

Note 16: Discontinued Operations

The Divestiture, as defined in Note 1, was completed on January 1, 2026. We received all-cash proceeds of $93.1 million, inclusive of traditional working capital adjustments, and recorded a gain of $55.6 million within "(Gain) loss on sale of business" within discontinued operations.

During the third quarter of 2025, the Company determined that the industrial specialties product line and CTO Refinery included within the Divestiture meet the criteria to be classified as held for sale and that the sale represents a strategic shift that will have a major effect on Ingevity's operations and results. As such, the results of operations of the industrial specialties product line and CTO Refinery, are presented as discontinued operations.

Furthermore, in connection with the Divestiture, Ingevity entered into a series of agreements, including, but not limited to, (a) a transition services agreement, pursuant to which Ingevity provides certain transition services to Purchaser for up to a 12-month period following the closing to facilitate the transfer of purchased assets to Purchaser, (b) an intellectual property agreement, in perpetuity, pursuant to which Ingevity assigned and transferred certain intellectual property assets used in the Businesses (as defined in the Purchase Agreement) to Purchaser in connection with the Divestiture and received a license back to continue to exclusively utilize specified intellectual property in certain of Ingevity's remaining businesses, (c) a restrictive covenant agreement, subjecting Ingevity to a non-solicitation and limited non-compete obligation for a period offour years following the closing, (d) a ground lease agreement, with an initial term of 20 years and up toeight successive renewal terms of 10 years each, pursuant to which Ingevity leases certain real property used in the operations of the Divestiture and grants certain easements and licenses granting Purchaser the right to use portions of Ingevity's manufacturing facilities located at 5598 Virginia Avenue, North Charleston, South Carolina 29406 (the "Plant") necessary for the operation of the Divestiture, (e) a reciprocal plant operating agreement, with an initial term of 20 years and up toeight successive renewal terms of 10 years each, pursuant to which Ingevity and Purchaser provide each other with certain services and other arrangements supporting the operations of the CTO Refinery and the Plant and (f) an environmental indemnity agreement, which includes mutual indemnification rights and obligations for each party with respect to certain pre- and post-closing environmental losses that may arise, as well as an indemnity for environmental losses that may be incurred by either party under certain agreements between the parties in connection with the Divestiture.

The results of our discontinued operations are summarized below:

(1) The gain of $55.6 million is inclusive of $5.9 million of customary purchase price adjustments, including a $4.7 million LIFO reserve adjustment, reflecting the impact of removing the divested industrial specialties product line inventory from the Company's LIFO pool.

The following table presents the major classes of assets and liabilities which represent those related to our industrial specialties product line, classified as held for sale and presented as discontinued operations:

(1) Reported net of LIFO Reserve ofzero and $8.2 million for the periods ending March 31, 2026 and December 31, 2025, respectively.

The cash flows related to the discontinued operations have not been segregated and are included in the Condensed Consolidated Statements of Cash Flows. The following table presents significant cash flow and non-cash information for the Discontinued Operations:

Note 17: Subsequent Events

Performance Chemicals' Road Markings Product Line Disposition

On April 15, 2026, we completed the sale of our Performance Chemicals' road markings product line to PPG Industries Inc. for $65 million, subject to customary adjustments for working capital, indebtedness and transaction expenses (the "Disposition").

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