Glossary of Financial Measures

Ingevity has presented certain financial measures, defined below, which have not been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and has provided a reconciliation to the most directly comparable financial measure calculated in accordance with GAAP on the following pages. These financial measures are not meant to be considered in isolation nor as a substitute for the most directly comparable financial measure calculated in accordance with GAAP. Investors should consider the limitations associated with these non-GAAP measures, including the potential lack of comparability of these measures from one company to another.

We believe these non-GAAP financial measures provide management as well as investors, potential investors, securities analysts, and others with useful information to evaluate the performance of the business, because such measures, when viewed together with our financial results computed in accordance with GAAP, provide a more complete understanding of the factors and trends affecting our historical financial performance, liquidity measures, and projected future results.

Ingevity uses the following non-GAAP Financial Measures:

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
A
  • Adjusted Earnings (Loss)

    Net income (loss) plus restructuring and other (income) charges, net, including inventory lower of cost or market charges associated with restructuring actions, acquisition and other-related (income) costs, pension and postretirement settlement and curtailment (income) charges, loss on CTO resales, gain on sale of strategic investments, debt refinancing fees, litigation verdict charges, and the income tax expense (benefit) on those items, less the provision (benefit) from certain discrete tax items.

  • Adjusted EBITDA

    Net income (loss) plus interest expense, net, provision (benefit) for income taxes, depreciation, amortization, restructuring and other (income) charges, net, including inventory lower of cost or market charges associated with restructuring actions, acquisition and other-related (income) costs, litigation verdict charges, gain on sale of strategic investment, loss on CTO resales, and pension and postretirement settlement and curtailment (income) charges, net.

  • Adjusted EBITDA Margin

    Adjusted EBITDA divided by net sales.

  • Adjusted Gross Margin

    Adjusted Gross Profit divided by Net sales.

  • Adjusted Gross Profit

    Gross profit plus depreciation and amortization, inventory lower of cost or market charges associated with restructuring actions, inventory fair value step-up amortization resulting from purchase accounting on acquisitions, and pension and postretirement settlement and curtailment (income) charges.

  • Adjusted Other (Income) Expense, Net

    Other (income) expense, net plus litigation verdict charges, depreciation, and amortization, less gains on strategic investment sales.

  • Adjusted Other (Income) Expense, Net as a Percent of Sales

    Adjusted other (income) expense, net divided by Net sales.

  • Adjusted SG&A

    Selling, general, and administrative costs plus research and technical expenses less depreciation and amortization.

  • Adjusted SG&A as a Percent of Sales

    Adjusted SG&A divided by Net sales.

  • Adjusted Tax Rate

    Calculated by dividing the Provision (benefit) for income taxes on Adjusted earnings (loss) divided by Adjusted earnings (loss) before income taxes.

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D
  • Diluted Adjusted Earnings (Loss) per Share

    Diluted earnings (loss) per common share plus restructuring and other (income) charges, net, including inventory lower of cost or market charges associated with restructuring actions, per share, acquisition and other-related (income) costs per share, pension and postretirement settlement and curtailment (income) charges per share, loss on CTO resales per share, gain on sale of strategic investment per share, debt refinancing fees per share, litigation verdict charge per share, and the income tax expense (benefit) per share on those items, less the provision (benefit) from certain discrete tax items per share.


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E
  • EBIT

    Net income (loss) plus interest expense, net and provision (benefit) for income taxes

  • EBITDA

    Net income (loss) plus interest expense, net, provision (benefit) for income taxes, depreciation and amortization.

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F
  • Free Cash Flow

    Calculated as the sum of net cash provided by (used in) the following items: operating activities less capital expenditures.

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N
  • Net Debt

    Net debt is defined as the sum of notes payable, short-term debt, current maturities of long-term debt, long-term debt including finance lease obligations, and debt issuance costs, less the sum of cash and cash equivalents, restricted cash associated with our new market tax credit financing arrangement, and restricted investment associated with certain finance lease obligations, excluding the allowance for credit losses on held-to-maturity debt securities held within the restricted investment.

  • Net Debt Ratio

    Net debt ratio is defined as Net debt divided by the last twelve months Adjusted EBITDA, inclusive of acquisition-related pro forma adjustments.

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P
  • Provision (Benefit) for Income Taxes on Adjusted Earnings (Loss)

    Provision for income taxes plus the tax expense (benefit) on restructuring and other (income) charges, net, including inventory lower of cost or market charges associated with restructuring actions, acquisition and other-related (income) costs, debt refinancing fees, litigation verdict charges, (losses) and gains from the sale of strategic investments, pension and postretirement settlement and curtailment (income) charges, less the provision (benefit) from certain discrete tax items.

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R
  • ROA (Return on Assets)

    Last twelve months Adjusted EBIT divided by total assets less cash and cash equivalents.

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S
  • Segment EBITDA

    Segment revenue 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, net, associated with corporate debt facilities, income taxes, depreciation, amortization, restructuring and other (income) charges, net, acquisition and other related costs, litigation verdict charges, pension and postretirement settlement and curtailment (income) charge, net.

  • Segment EBITDA Margin

    Segment EBITDA divided by Net Segment Sales

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