Financial Performance - Net sales decreased by 16.5% from $340.1 million in Q1 2024 to $284 million in Q1 2025[7] - Adjusted EBITDA increased by 22.7% from $74.4 million in Q1 2024 to $91.3 million in Q1 2025[7] - Adjusted EBITDA margin increased by 1020 bps from 21.9% in Q1 2024 to 32.1% in Q1 2025[7] - Diluted adjusted EPS increased by 110.6% from $0.47 in Q1 2024 to $0.99 in Q1 2025[7] - Free cash flow improved from negative $28.7 million in Q1 2024 to positive $15.4 million in Q1 2025[71] Segment Performance - Performance Materials net sales increased by 1.2% from $145.1 million to $146.8 million, with a 1.4% increase in Segment EBITDA from $78 million to $79.1 million[18] - Advanced Polymer Technologies net sales decreased by 12.1% from $48 million to $42.2 million, but Segment EBITDA increased by 31.6% from $9.5 million to $12.5 million[23] - Performance Chemicals net sales decreased by 35.4% from $147 million to $95 million, but Segment EBITDA improved by $10.3 million from negative $10.6 million to negative $0.3 million[28] Guidance and Outlook - The company widened its revenue guidance to $1.25 - $1.4 billion and affirmed free cash flow guidance of $220 - $260 million[33] - The company expects net debt ratio to be below 2.8x by year end[17, 33] - A 10% reduction in North America auto production is expected to lower Performance Materials EBITDA by approximately $15-$20 million[33, 34]

[Ingevity Q1 2025 Financial Results Overview](index=1&type=section&id=Ingevity%20reports%20first%20quarter%202025%20financial%20results) [Q1 2025 Financial Highlights](index=1&type=section&id=HIGHLIGHTS) Ingevity's first quarter 2025 results showed a **17% decline** in net sales to **$284.0 million**, primarily due to the strategic repositioning of the Performance Chemicals segment, while adjusted EBITDA grew **23%** to **$91.3 million** with margins improving to **32.1%**, driven by cost reductions and a better product mix Q1 2025 Key Financial Metrics | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $284.0M | $340.1M | -17% | | Net Income | $20.5M | ($56.0M) | N/A | | Diluted EPS | $0.56 | ($1.54) | N/A | | Adjusted EBITDA | $91.3M | $74.4M | +23% | | Adjusted EBITDA Margin | 32.1% | 21.9% | +10.2 p.p. | | Diluted Adjusted EPS | $0.99 | $0.47 | +111% | | Operating Cash Flow | $25.4M | ($12.1M) | N/A | | Free Cash Flow | $15.4M | ($28.7M) | N/A | - The decline in net sales was **primarily attributed** to the strategic repositioning of the Performance Chemicals segment, which involved exiting certain lower-margin end markets[3](index=3&type=chunk) - The **significant improvement** in **Adjusted EBITDA** and margins was a **result of successful repositioning actions** in Performance Chemicals, including reduced raw material costs and an improved product mix[4](index=4&type=chunk)[5](index=5&type=chunk) [Segment Performance](index=1&type=section&id=Segment%20Performance) The company's segments showed mixed results, with Performance Materials sales growing slightly, Advanced Polymer Technologies sales declining but achieving higher EBITDA, and Performance Chemicals experiencing a significant sales drop but a substantial improvement in its EBITDA loss [Performance Materials Segment](index=1&type=section&id=Performance%20Materials) Sales in the Performance Materials segment increased by **1%** to **$146.8 million**, driven by higher volumes in China and the Asia Pacific region, with segment EBITDA also rising by **1%** to **$79.1 million**, maintaining a strong EBITDA margin of **53.9%** Performance Materials Q1 2025 Results | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $146.8M | $145.1M | +1% | | Segment EBITDA | $79.1M | $78.0M | +1% | | Segment EBITDA Margin | 53.9% | 53.8% | +0.1 p.p. | - Growth was **primarily due to higher volumes** in China and the Asia Pacific region. In North America, an **improved mix of higher-value products** for fuel-efficient vehicles offset lower volumes[8](index=8&type=chunk) [Advanced Polymer Technologies Segment](index=2&type=section&id=Advanced%20Polymer%20Technologies) The Advanced Polymer Technologies segment reported a **12% sales decrease** to **$42.2 million**, as lower volumes in Asia offset gains in EMEA and North America, yet segment EBITDA increased by **$3.0 million** to **$12.5 million**, and margins expanded to **29.6%**, primarily due to higher plant utilization rates Advanced Polymer Technologies Q1 2025 Results | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $42.2M | $48.0M | -12% | | Segment EBITDA | $12.5M | $9.5M | +31.6% | | Segment EBITDA Margin | 29.6% | 19.8% | +9.8 p.p. | - The increase in **EBITDA** was driven by **higher utilization rates** as the company built inventory ahead of a planned extended outage in Q2 for new boiler installation[9](index=9&type=chunk) [Performance Chemicals Segment](index=2&type=section&id=Performance%20Chemicals) Performance Chemicals sales fell **35%** to **$95.0 million**, with the Industrial Specialties product line down **50%** due to strategic repositioning and the exit from lower-margin markets, but segment EBITDA improved by **$10.3 million** to a near break-even negative **$0.3 million**, demonstrating the positive impact of cost savings, improved product mix, and lower raw material costs Performance Chemicals Q1 2025 Results | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $95.0M | $147.0M | -35% | | - Industrial Specialties | $50.7M | $101.3M | -50% | | - Road Technologies | $44.3M | $45.7M | -3% | | Segment EBITDA | ($0.3M) | ($10.6M) | +$10.3M | - The **significant improvement** in **EBITDA** reflects the **successful execution of repositioning actions**, including cost savings, exiting low-margin markets, and lower raw material costs[10](index=10&type=chunk) [Liquidity and Capital Management](index=2&type=section&id=Liquidity%2FOther) The company **Generated operating cash flow** of **$25.4 million** and **$15.4 million** in **free cash flow**, aided by improved working capital from lower raw material costs, with no shares repurchased and **$353.4 million remains available** under the current **Board authorization**, and **Net leverage improved sequentially** to **3.3 times** - **Generated operating cash flow** of **$25.4 million** and **free cash flow** of **$15.4 million**[11](index=11&type=chunk) - **No share repurchases were made** in Q1; **$353.4 million remains available** under the current **Board authorization**[11](index=11&type=chunk) - **Net leverage improved sequentially** to **3.3 times**[11](index=11&type=chunk) [Full Year 2025 Guidance](index=2&type=section&id=Full%20Year%202025%20Guidance) Ingevity has **widened to reflect risks** from international trade relations and lowered expectations for global auto production, while continuing to focus on improving profitability and reducing leverage Revised Full Year 2025 Guidance | Metric | Guidance Range | | :--- | :--- | | Sales | $1.25 billion to $1.40 billion | | Adjusted EBITDA | $380 million to $415 million | - The guidance range was **widened to reflect risks** associated with lowered expectations of global auto production due to the current state of international trade relations[12](index=12&type=chunk) [Financial Statements & Schedules](index=4&type=section&id=FINANCIAL%20SCHEDULES) [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For Q1 2025, Ingevity reported **Net sales** of **$284.0 million**, a decrease from **$340.1 million** in Q1 2024, with **Gross profit** increasing to **$113.4 million** from **$99.7 million**, and achieving a **Net income** of **$20.5 million**, a significant turnaround from a net loss of **$56.0 million** in the prior-year period, resulting in a **Diluted EPS** of **$0.56** compared to a loss of **$1.54** Q1 2025 Statement of Operations (in millions, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net sales | $284.0 | $340.1 | | Gross profit | $113.4 | $99.7 | | Restructuring and other charges, net | $12.3 | $62.8 | | Income (loss) before income taxes | $26.8 | ($71.9) | | Net income (loss) | $20.5 | ($56.0) | | Diluted earnings (loss) per share | $0.56 | ($1.54) | [Segment Operating Results](index=6&type=section&id=Segment%20Operating%20Results) In Q1 2025, Performance Materials sales grew slightly to **$146.8 million** with stable **EBITDA** of **$79.1 million**, Performance Chemicals sales dropped to **$95.0 million** from **$147.0 million**, but its **EBITDA** loss narrowed significantly to **$0.3 million** from **$10.6 million**, and Advanced Polymer Technologies sales decreased to **$42.2 million**, while its **EBITDA** grew to **$12.5 million** Q1 Net Sales by Segment (in millions) | Segment | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Performance Materials | $146.8 | $145.1 | | Performance Chemicals | $95.0 | $147.0 | | Advanced Polymer Technologies | $42.2 | $48.0 | | **Total net sales** | **$284.0** | **$340.1** | Q1 Segment EBITDA (in millions) | Segment | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Performance Materials | $79.1 | $78.0 | | Performance Chemicals | ($0.3) | ($10.6) | | Advanced Polymer Technologies | $12.5 | $9.5 | | **Total segment EBITDA** | **$91.3** | **$76.9** | [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2025, Ingevity's **Total Assets** stood at **$2,056.1 million**, a slight increase from **$2,022.6 million** at year-end 2024, with **Total Liabilities** relatively stable at **$1,821.5 million**, and key changes including an increase in accounts receivable and **Inventories, net**, while **Long-term debt** saw a slight reduction Balance Sheet Summary (in millions) | Account | March 31, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $71.5 | $68.0 | | Inventories, net | $245.4 | $226.8 | | **Total Assets** | **$2,056.1** | **$2,022.6** | | Long-term debt | $1,332.6 | $1,339.7 | | **Total Liabilities** | **$1,821.5** | **$1,827.4** | | **Total Equity** | **$234.6** | **$195.2** | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the first three months of 2025, the company **Generated operating cash flow** of **$25.4 million**, a **significant improvement** from a **$12.1 million** use of cash in the same period of 2024, with cash used in investing activities at **$11.5 million** and cash used in financing activities at **$11.0 million**, leading to a net increase in cash for the quarter Q1 Cash Flow Summary (in millions) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $25.4 | ($12.1) | | Net cash provided by (used in) investing activities | ($11.5) | ($16.3) | | Net cash provided by (used in) financing activities | ($11.0) | $23.4 | | **Change in cash, cash equivalents, and restricted cash** | **$4.3** | **($6.8)** | [Non-GAAP Reconciliations](index=10&type=section&id=Non-GAAP%20Financial%20Measures) This section provides reconciliations for key non-GAAP metrics used by management, including **Adjusted Earnings**, **Adjusted EBITDA**, **Free Cash Flow**, and **Net Debt Ratio**, which are adjusted for items like restructuring charges, acquisition costs, and other special items to provide a clearer view of the company's core operational performance and liquidity [Reconciliation of Net Income to Adjusted Earnings](index=12&type=section&id=Reconciliation%20of%20Adjusted%20Earnings%20(Loss)%20and%20Diluted%20Adjusted%20Earnings%20(Loss)%20per%20Share) **Adjusted earnings** for Q1 2025 were **$36.4 million**, or **$0.99** per **diluted share**, compared to **$17.2 million**, or **$0.47** per share, in Q1 2024, with adjustments from GAAP **Net income** of **$20.5 million** primarily including **$12.3 million** in **Restructuring and other charges, net** and **$7.9 million** in proxy contest charges Q1 Reconciliation to Adjusted Earnings (in millions) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net income (loss) (GAAP) | $20.5 | ($56.0) | | Restructuring and other charges, net | $12.3 | $62.8 | | Loss on CTO resales | — | $26.5 | | Proxy contest charges | $7.9 | — | | Tax effect and other items | ($4.3) | ($21.2) | | **Adjusted earnings (loss) (Non-GAAP)** | **$36.4** | **$17.2** | [Reconciliation of Net Income to Adjusted EBITDA](index=14&type=section&id=Reconciliation%20of%20Adjusted%20EBITDA) **Adjusted EBITDA** for Q1 2025 was **$91.3 million**, an increase from **$74.4 million** in Q1 2024, with the reconciliation from GAAP **Net income** including adding back interest, taxes, D&A, and **Other adjustments**, and the **Adjusted EBITDA Margin** improved significantly to **32.1%** from **21.9%** in the prior year Q1 Reconciliation to Adjusted EBITDA (in millions) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net income (loss) (GAAP) | $20.5 | ($56.0) | | Provision (benefit) for income taxes | $6.3 | ($15.9) | | Interest expense, net | $19.4 | $22.3 | | Depreciation and amortization | $24.9 | $29.6 | | Restructuring and other charges, net | $12.3 | $62.8 | | Other adjustments | $7.9 | $31.6 | | **Adjusted EBITDA (Non-GAAP)** | **$91.3** | **$74.4** | [Calculation of Free Cash Flow](index=15&type=section&id=Calculation%20of%20Free%20Cash%20Flow) The company **Generated operating cash flow** of **$15.4 million** in **free cash flow** in Q1 2025, a substantial improvement from a cash use of **$28.7 million** in Q1 2024, calculated by subtracting **Capital expenditures** of **$10.0 million** from net cash provided by operating activities of **$25.4 million** Q1 Free Cash Flow Calculation (in millions) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $25.4 | ($12.1) | | Less: Capital expenditures | $10.0 | $16.6 | | **Free Cash Flow (Non-GAAP)** | **$15.4** | **($28.7)** | [Calculation of Net Debt Ratio](index=16&type=section&id=Calculation%20of%20Net%20Debt%20Ratio) As of March 31, 2025, Ingevity's **Net Debt** was calculated at **$1,242.8 million**, and with a **LTM Adjusted EBITDA** of **$379.6 million**, the **Net debt ratio** stood at **3.3x** Net Debt Ratio Calculation as of March 31, 2025 (in millions) | Component | Amount | | :--- | :--- | | Total Debt | $1,397.0 | | Less: Cash and equivalents | $71.7 | | Less: Restricted investment | $82.5 | | **Net Debt** | **$1,242.8** | | LTM Adjusted EBITDA | $379.6 | | **Net debt ratio (Non GAAP)** | **3.3x** |

Group 1: Product Launch and Innovation - BASF SE has launched three new natural-based products for personal care: Verdessence Maize, Lamesoft OP Plus, and Dehyton PK45 GA/RA [1][2] - Verdessence Maize is a plant-based styling polymer made from renewable feedstocks, offering performance comparable to synthetic polymers [3] - Lamesoft OP Plus is a biodegradable opacifier dispersion that enhances the appearance of formulations, while Dehyton PK45 GA/RA is a betaine derived from Rainforest Alliance Certified coconut oil, suitable for shampoos and cleansers [3] Group 2: Market Position and Performance - BASF's focus on biodegradable solutions aims to capture the conscious consumer market in the personal care sector [3] - The company's stock has declined by 18.4% over the past year, slightly worse than the industry average decline of 17.1% [4] - BASF currently holds a Zacks Rank of 3 (Hold), with better-ranked stocks in the Basic Materials sector including Ingevity Corporation, Axalta Coating Systems, and Carpenter Technology Corporation [5]

Core Viewpoint - Ingevity Corporation (NGVT) has shown a strong performance with a 9.6% increase in shares over the past six months, outperforming the Zacks Chemicals Specialty industry's decline of 8% during the same period [1][2]. Group 1: Strategic Actions and Financial Performance - The company is focused on expanding capacity and driving long-term growth through organic investments and strategic repositioning [3][4]. - Ingevity is repositioning its Performance Chemicals segment to reduce exposure to lower-margin markets, which includes consolidating operations and closing the Crossett facility, leading to significant cost savings of approximately $84 million in 2024 and an expected $10-$25 million in 2025 [4][5]. - The company aims to enhance shareholder value through improved EBITDA, margins, and strong cash flows, benefiting from operational improvements and lower input costs [5]. Group 2: Acquisitions and Market Position - The acquisition of the Capa caprolactone business has provided Ingevity with a new technology platform for revenue and earnings growth, with a focus on high-growth applications [6]. - In July 2024, Ingevity expanded its Capa caprolactone distribution network in Europe, further strengthening its market position [6]. - The acquisition of Ozark Materials has also bolstered the company's presence in the paving construction industry [6]. Group 3: Market Ranking - Ingevity currently holds a Zacks Rank 1 (Strong Buy), indicating strong market confidence in its performance [7].

Core Insights - Ingevity's shares have declined approximately 8.3% since the last earnings report, underperforming the S&P 500 [1] - There is uncertainty regarding whether this negative trend will continue or if the company is poised for a breakout before the next earnings release [1] Earnings Report Summary - The last earnings report for Ingevity was about a month ago, and it is essential to analyze this report to understand the key catalysts affecting the company's performance [1] - No earnings estimate revisions have been made by analysts in the past two months, indicating a period of quiet regarding future earnings expectations [2]

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Core Viewpoint - Ingevity Corporation's stock is currently viewed as a promising investment opportunity, having increased approximately 41% over the past six months, driven by strategic repositioning, acquisitions, and growth initiatives [1]. Financial Performance - Earnings estimates for Ingevity for 2025 have risen by 29% over the past 60 days, indicating analysts' optimism [3]. - Ingevity has surpassed the Zacks Consensus Estimate in three of the last four quarters, achieving an average earnings surprise of about 202.9% [4]. - The company's return on equity (ROE) stands at 41.4%, significantly higher than the industry average of 15.5% [5]. Strategic Initiatives - Ingevity is focusing on expanding capacity and driving long-term growth through organic investments and strategic acquisitions [6]. - The repositioning of the Performance Chemicals segment aims to reduce exposure to lower-margin markets, with actions including consolidating operations and closing the Crossett facility, resulting in approximately $84 million in savings in 2024 and projected incremental savings of $10-$25 million in 2025 [7]. - The acquisition of the Capa caprolactone business has introduced a new technology platform for revenue and earnings growth, with a recent expansion of its distribution network in Europe [9]. Shareholder Value Enhancement - The company is committed to enhancing shareholder value through improved EBITDA, better margins, and strong cash flows, benefiting from operational improvements and lower input costs [8].

Industry Overview - The Zacks Chemicals Specialty industry is facing challenges due to soft demand, particularly in Europe and China, alongside elevated input, supply chain, and logistics costs [1][5][7] - The industry consists of manufacturers producing specialty chemical products for various end-use markets, including textiles, automotive, and agriculture [3][4] Demand and Economic Conditions - Demand softness is noted in building and construction as well as industrial markets, primarily due to economic slowdowns in Europe and China [5][6] - Elevated borrowing costs and inflation are negatively impacting the residential construction industry, contributing to weakened manufacturing activities [6][7] Cost Pressures - Specialty chemical manufacturers are experiencing inflation in raw material costs and disruptions in supply chains and freight transportation [7] - Although raw material costs have moderated, they remain higher than pre-pandemic levels, continuing to pressure margins [7] Strategic Measures - Companies in the specialty chemicals sector are implementing strategic measures such as cost-cutting, productivity improvements, and expansion into high-growth markets to navigate the challenging environment [2][8] - Actions to strengthen balance sheets and boost cash flows are also being prioritized [8] Industry Performance - The Zacks Chemicals Specialty industry has underperformed compared to the S&P 500 and the broader Zacks Basic Materials sector, with a loss of 20.1% over the past year [11] - The industry currently trades at an EV/EBITDA ratio of 22.1X, higher than the S&P 500's 17.59X and the sector's 11.84X [12] Company Highlights - **Axalta Coating Systems**: This company is benefiting from strength in its refinish business, with expected earnings growth of 7.2% for 2025 and a recent upward revision of 5.9% in earnings estimates [13][15] - **Ingevity Corp**: Expected to see earnings growth of 26.8% for 2025, with operational improvements and strategic acquisitions aiding performance [16][17] - **Flexible Solutions International Inc.**: This company has an expected earnings growth rate of 50% for 2025, with recent upward revisions of 12.5% in earnings estimates [19][20]

Core Insights - Ingevity Corporation (NGVT) reported a fourth-quarter 2024 profit of $16.6 million or 46 cents per share, a significant improvement from a loss of $116.8 million or $3.23 per share in the same quarter last year [1] - Adjusted earnings for the quarter were 95 cents per share, exceeding the Zacks Consensus Estimate of 12 cents [1] Revenue Performance - Revenues decreased by 19.6% year over year to $298.8 million, primarily due to the repositioning of the Performance Chemicals segment [2] - The Performance Chemicals division generated revenues of $98.7 million, down approximately 44% year over year [3] - Road Technologies' sales were $48.5 million, down 9.2%, while Industrial Specialties sales fell 59.2% to $50.2 million [3] - Performance Materials revenues rose by 2.2% to $156.2 million, driven by volume growth in North America and China [4] - Advanced Polymer Technologies segment sales increased by 3.5% to $43.9 million, attributed to higher volumes [5] Financial Metrics - The fourth-quarter operating cash flow was $64.5 million, with free cash flow of $39.6 million, which included a $50 million termination fee related to a long-term CTO supply contract [6] - Net leverage improved to 3.5x from 4x in the previous quarter [6] Future Outlook - For 2025, NGVT aims to enhance shareholder value through improved EBITDA, margins, and strong cash flows, with sales projected between $1.3 billion and $1.4 billion [7] - The company anticipates adjusted EBITDA in the range of $400-$415 million for 2025 [7] Stock Performance - Ingevity's shares have declined by 4.3% over the past year, compared to a 20.6% decline in the industry [8]

Financial Performance - Ingevity Corporation reported revenue of $609.6 million from Performance Materials, $608.2 million from Performance Chemicals, and $188.6 million from Advanced Polymer Technologies for the fiscal year 2024[15]. - Performance Materials segment net sales for 2024 were $609.6 million, up from $586.0 million in 2023, representing a growth of 2.7%[42]. - Performance Chemicals segment net sales for 2024 were $608.2 million, a decrease of 32.5% from $902.1 million in 2023[48]. - Advanced Polymer Technologies segment net sales for 2024 were $188.6 million, down from $204.0 million in 2023, reflecting a decline of 7.0%[73]. - For the year ended December 31, 2024, net sales decreased to $1,406.4 million, down 16 percent from $1,692.1 million in 2023, primarily due to a volume decline of $274.9 million[178][182]. - Gross profit for 2024 was $454.7 million, a decrease of $17.2 million from 2023, driven by unfavorable sales volume and pricing, partially offset by decreased manufacturing costs[184]. - Selling, general, and administrative expenses decreased by approximately $17.0 million to $166.7 million in 2024, representing 12 percent of net sales[186]. - The company recorded a goodwill impairment charge of $349.1 million for the year ended December 31, 2024[191]. - Performance Chemicals segment net sales declined by 33% to $608.2 million in 2024, down from $902.1 million in 2023, largely due to repositioning actions and exit from lower-margin markets[206]. - Segment EBITDA for Performance Chemicals fell to $14.7 million in 2024, a decrease of $51.0 million compared to $65.7 million in 2023[207]. Strategic Initiatives - The company is exploring strategic alternatives for its Performance Chemicals industrial specialties product line, which may include divestiture of parts of the North Charleston site[23]. - The company is exploring strategic alternatives for its industrial specialties product line and North Charleston CTO refinery, with no guarantee of successful transactions[80]. - The Performance Chemicals repositioning is expected to yield cash savings of approximately $95 million to $110 million, with $84.0 million realized in 2024[175]. - The company expects to incur total charges of approximately $350.0 million related to the Performance Chemicals repositioning, with $250.0 million in asset-related charges and $100.0 million to be settled in cash[170]. Customer Concentration and Market Risks - In 2024, the top ten customers in the Performance Materials segment accounted for approximately 85% of sales, indicating a high customer concentration risk[45]. - The company serves approximately 750 customers in the road technologies product line, with the top ten customers accounting for about 37% of sales in 2024[63]. - In 2024, the ten largest customers accounted for approximately 46% of the segment's sales, with around 250 customers globally[75]. - Sales to the Company's ten largest customers accounted for 38 percent of total sales for 2024, with no single customer exceeding 10 percent[101]. Operational Challenges - The company faces supply chain risks, including pricing pressures and limited availability of raw materials, which could negatively impact operations and financial results[89]. - The automotive market's adverse conditions may negatively impact demand for automotive carbon products, which are tied to global internal-combustion-engine and hybrid electric vehicle production levels[91]. - The road technologies product line is heavily dependent on government infrastructure spending, which can be affected by budgetary constraints and delays[92]. - The company is exposed to cyclical end-markets, such as automotive and apparel, which are subject to rapid changes in consumer demand and preferences[93]. - Increased competition from new technologies and emerging competitors could adversely affect the company's financial condition and results of operations[94]. - The adoption of electric and hydrogen fuel cell vehicles is increasing, which may reduce demand for activated carbon automotive products unless the company develops new products for these markets[97]. - Competition from other caprolactone manufacturers, including new entrants, poses a risk to the company's financial condition and results of operations[98]. Sustainability and Environmental Impact - Ingevity's products help reduce ecological impact, with automotive activated carbon products recovering 8 million gallons of gasoline daily[21]. - Ingevity is committed to sustainability, utilizing renewable materials in its products and technologies to enhance environmental benefits[20]. - The company has set targets for greenhouse gas emissions and sustainability goals, but there is no assurance that these targets will be met, which could negatively impact investor interest[121]. - Environmental standards drive the implementation of gasoline vapor emission control systems, with potential growth in automotive carbon applications contingent on stricter regulations[116]. - Changes in environmental laws and regulations could lead to significant additional capital expenditures and operating expenses for the company[120]. Workforce and Diversity - The company employs approximately 1,600 employees, with 73 percent based in the U.S., and 51 percent of production employees represented by labor unions[28]. - The board of directors is composed of 33 percent women and 22 percent racially and ethnically diverse members, reflecting the company's commitment to diversity[31]. - Ingevity's global workforce was reduced by 23%, with approximately 40% of the Performance Chemicals segment's workforce affected[169]. Financial Management and Capital Structure - The company relies on various forms of credit for working capital needs, and unfavorable economic conditions could adversely affect access to capital[126]. - The company executed a floating-to-fixed interest rate swap with a notional amount of $200.0 million, converting floating rate debt to a fixed rate of 3.84% until August 2026[158]. - Total interest expense for 2024 increased to $97.8 million, up from $93.3 million in 2023, primarily due to higher average debt levels and interest rates[194]. - The increase in interest income for 2024 was to $7.7 million, up from $6.3 million in 2023, primarily driven by other interest income[195]. Legal and Regulatory Environment - The company operates under a complex legal and regulatory environment related to chemical manufacturing, which could lead to increased operating costs and potential interruptions in operations[118]. - The jury awarded BASF damages of approximately $28.3 million, which will be trebled to approximately $85.0 million under U.S. antitrust law[112]. - As of December 31, 2024, the total amount accrued for the Delaware Proceeding, including post-judgment interest, was $91.4 million[113]. Cybersecurity and IT Risks - The Company relies on information technology systems for operations, making it vulnerable to cyber-attacks and data breaches, which could disrupt business[105]. - The company has achieved ISO 27001 certification in 2024, indicating a commitment to cybersecurity and the protection of sensitive information[128]. - The company experienced no material impacts from cybersecurity threats in the past three years, but vulnerabilities remain a concern[135].