Company: NGVT
Filing Date: 2025-02-19
Form Type: 10-K
Source: 0001653477-25-000015
Chunk: 8

Company: Ingevity Corp
Filing Date: 2025-02-19
Form: 10-K
Item: Item 2
Chunk 8
---
 workforce, operational, and regional business exits will hinder our ability to dispose of the associated inventory on hand. As a result, in the years ended December 31, 2024 and 2023, we recorded $6.3 million and $19.7 million, respectively, of non-cash, lower of cost or market, inventory charges to adjust the carrying value of the impacted inventory to what we will realize upon disposal, less disposal costs. These inventory charges are recorded to Cost of sales on the consolidated statement 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 19 for more information.  

CTO Resale Activity

The DeRidder Plant closure, and the corresponding reduced CTO refining capacity, significantly reduced our CTO volume requirements. However, we were obligated under an existing CTO supply contract to purchase CTO volumes through 2025 at amounts in excess of 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. During the years ended December 31, 2024 and 2023, we incurred $52.7 million and $22.0 million of CTO resale losses, which are recorded as Other (income) expense, net on the consolidated statements of operations. Refer to Note 2, under the section: Non-operating income and expense, for more information.

As of July 1, 2024, we terminated the CTO supply contract that resulted in these excess CTO volumes. As consideration for the early termination of the CTO supply contract, we made cash payments totaling $100.0 million. The total charge was recorded within Other (income) expense, net on the 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 December 31, 2024.

Expected Savings and Impact

The Performance Chemicals' repositioning, which began in November 2023, was focused on reducing exposure to lower margin end-use markets of our industrial specialties