Company: NGVT
Filing Date: 2025-11-06
Form Type: 10-Q
Source: 0001653477-25-000127
Chunk: 77

Company: Ingevity Corp
Filing Date: 2025-11-06
Form: 10-Q
Item: Part I, Item 1
Chunk 77
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 to foreign customers. In the conduct of our foreign operations, we also make inter-company sales. All of this exposes us to the effect of changes in foreign currency exchange rates. Our earnings are therefore subject to change due to fluctuations in foreign currency exchange rates when the earnings in foreign currencies are translated into U.S. dollars. In some cases, to minimize the effects of such fluctuations, we use foreign exchange forward contracts to hedge firm and highly anticipated foreign currency cash flows. Our largest exposures are to the Brazilian real, the Chinese renminbi and the euro. A hypothetical 10 percent adverse change, excluding the impact of any hedging instruments, in the average Brazilian real, Chinese renminbi and euro to U.S. dollar exchange rates during the nine months ended September 30, 2025, would have decreased our net sales and income from continuing operations before income taxes by approximately $10.8 million or one percent, and $3.5 million or ten percent, respectively. Comparatively, a hypothetical 10 percent adverse change, excluding the impact of any hedging instruments, in the average Brazilian real, Chinese renminbi and euro to U.S. dollar exchange rates during the nine months ended September 30, 2024, would have decreased our net sales and income from continuing operations before income taxes by approximately $11.0 million or one percent, and $3.6 million or two percent, respectively.

Interest rate risk

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 4.13 percent as of September 30, 2025, 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 $(0.3) million and $0.6 million at September 30, 2025 and December 31, 2024, respectively.

As of September 30, 2025, approximately $415 million of our borrowings, adjusted for our $200.0 million floating-to-fixed interest rate swap, included a variable interest rate component. The weighted average interest rate associated with our variable interest rate