Company: NGVT
Filing Date: 2025-11-06
Form Type: 10-Q
Source: 0001653477-25-000127
Chunk: 181

Company: Ingevity Corp
Filing Date: 2025-11-06
Form: 10-Q
Item: Part I, Item 3
Chunk 181
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 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 borrowings was 5.75 percent for the period ended September 30, 2025. A hypothetical 100 basis point increase in the variable interest rate component of our borrowings for the nine months ended September 30, 2025, would have increased our annual interest expense by approximately $4.1 million or seven percent. Comparatively, a 100 basis point increase in the variable interest rate component of our borrowings for the nine months ended September 30, 2024, would have increased our annual interest expense by approximately $6.5 million or eight percent.

Commodity price risk

A portion of our manufacturing costs includes purchased raw materials, which are commodities whose prices fluctuate as market supply and demand fundamentals change. Accordingly, product margins and the level of our profitability tend to fluctuate with the changes in these commodity prices. 

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Natural gas price risk

Natural gas, both direct and indirect, is our largest form of energy costs constituting approximately four percent of our cost of goods sold for the nine months ended September 30, 2025. Increases in natural gas costs, unless passed on to our customers, would adversely affect our results of operations. If natural gas prices increase significantly, our business or results of operations may be adversely affected. We enter into certain derivative financial instruments to mitigate expected fluctuations in market prices and the volatility to earnings and cash flow resulting from changes to the pricing of natural gas purchases. Refer to Note 8 for more information on our natural gas price risk hedging program. For the three and nine months ended September 30, 2025, a hypothetical, unhedged 10 percent increase in natural gas pricing would have resulted in an increase to cost of sales of approximately $0.7 million (34 basis points) and $2.1 million (39 basis points). Comparatively, for the three and nine months