MALVERN,
Pa., Aug. 1, 2024 /PRNewswire/ -- Ecovyst Inc.
(NYSE: ECVT) ("Ecovyst" or the "Company"), a leading integrated and
innovative global provider of advanced materials, specialty
catalysts and services, today reported results for the second
quarter ended June 30, 2024 and
updated fiscal 2024 guidance.
Second Quarter 2024 Results &
Highlights
- Sales of $182.8 million, compared
to $184.1 million in the second
quarter of 2023, reflecting lower average selling prices
in Ecoservices as a result of the pass-through of lower
variable costs, including sulfur costs of approximately
$3 million, partially offset by
higher sales volume in regeneration services, virgin sulfuric acid
and advanced silicas.
- Net Income of $8.3 million,
compared to $26.1 million in the
year-ago quarter, with a net income margin of 4.5% and diluted net
income per share of $0.07. The
lower net income was a result of lower operating income and lower
equity in net income from the Zeolyst Joint Venture, coupled with
higher interest and debt refinancing costs. Adjusted Net Income was
$14.1 million with Adjusted Diluted
Income per share of $0.12.
- Adjusted EBITDA of $56.9 million,
down 28% compared to the second quarter of 2023, with an Adjusted
EBITDA margin of 26.8%, reflecting lower net pricing
in Ecoservices associated with the timing and contractual
pass-through effect of lower variable costs, an increase in
planned turnaround and maintenance costs and lower sales in our
Zeolyst Joint Venture, partially offset by higher sales volume for
Ecoservices and Advanced Silicas.
- Amended and extended the Company's Term Loan, reducing the
interest rate spread and extending the maturity date to
June 2031.
- Through open market transactions, repurchased 552,081 shares of
common stock at an average price of $9.05 per share for a total cost of $5.0 million.
- Announced equity investment in Pajarito Powder, LLC to
expand advanced materials capability through collaboration on the
development of technology for production of electrolyzers and fuel
cells.
- Updating 2024 guidance to reflect anticipated softening of
demand in sustainable fuel production and emission control end uses
and more cautious outlook for industrial demand for virgin sulfuric
acid for the balance of 2024.
"We are pleased with our second quarter 2024 performance, which
came in above our estimates. In the second quarter of 2024 our
Ecoservices segment benefited from volume growth, with high
refinery utilization contributing to strong demand for our
regeneration services and positive demand fundamentals resulting in
higher sales volume for virgin sulfuric acid compared to the second
quarter of 2023. We also saw higher sales volume for our catalyst
activation and treatment services business," said Kurt J. Bitting, Ecovyst's Chief Executive
Officer. "Within our Advanced Materials & Catalysts segment,
sales of advanced silicas increased compared to the second quarter
of 2023. However, sales within the Zeolyst Joint Venture decreased
primarily due to lower sales of catalyst materials used in
sustainable fuel production and emission control applications.
Adjusted EBITDA for the second quarter of 2024 was $57 million, reflecting lower sales volume in the
Zeolyst Joint Venture and lower net pricing in Ecoservices,
partially offset by strong demand in Ecoservices and Advanced
Silicas."
Review of Segment Results and Business Trends
Ecoservices
Our regeneration services support the production of alkylate, a
high value gasoline component critical for meeting regulatory
gasoline standards and for producing premium grade gasoline. More
stringent gasoline standards and increasing demand for
higher-octane premium fuels used in high compression, more
fuel-efficient engines have contributed to high utilization rates
for our customers' alkylation units. High refinery utilization and
favorable refining margins during the first half of 2024 continued
to support demand for our regeneration services and we expect that
refinery utilization will remain high in the second half of 2024.
Sulfuric acid is a widely used chemical that plays a key role in
the production of a wide array of materials, particularly those
supporting green infrastructure. In the second quarter of 2024,
sales of virgin sulfuric acid increased compared to the second
quarter of 2023. We expect our virgin sulfuric acid sales to
continue to benefit from mining activity for metals and minerals
that provide conductivity in low carbon technologies, as well as
from demand in a wide range of industrial applications. Our
catalyst activation services provide for ex-situ sulfiding and
pre-activation for hydro-processing catalysts, with expected demand
growth in both traditional and sustainable fuel production. We
believe sustainability trends will continue to translate into
favorable demand for our treatment services business as customers
seek the sustainability-focused waste solutions offered by
Ecoservices.
Second quarter 2024 sales were $153.9
million, compared to $158.1
million in the second quarter of 2023. The change in sales
reflects lower average selling prices, primarily due to the
pass-through of lower variable costs, including costs for energy
and sulfur of approximately $3
million, partially offset by higher sales volume for
regeneration services and virgin sulfuric acid. Second quarter 2024
Adjusted EBITDA was $49.7 million,
compared to $60.1 million in the
second quarter of 2023. The decrease was primarily driven by
unfavorable net pricing, reflecting the timing and contractual
pass-through of certain costs, including energy and other indexed
costs, and an increase in turnaround and maintenance costs,
partially offset by higher sales volume in both regeneration
services and virgin sulfuric acid.
Advanced Materials & Catalysts
Our Advanced Silicas business supplies critical catalyst
components for the production of high-density polyethylene, a
high-strength and high-stiffness plastic used in bottles,
containers, and molded applications and linear low-density
polyethylene used predominately for films. While we continue to
expect long-term demand for polyethylene films and packaging to
remain positive, during the second half of 2023 we saw evidence of
softer global demand and lower operating rates for polyethylene
producers, which have continued into the first half of 2024. During
the second quarter, sales volume for Advanced Silicas increased on
higher sales of niche custom catalysts and functionalized silicas.
Our future expectations for sales of advanced silicas used for the
production of polyethylene are based, in part, on the ongoing
expansion of our Advanced Silicas production capability at our
Kansas City, Kansas facility, that
is intended to support growth in demand for polyethylene
production, backed by long-term customer commitments. We expect the
expansion at our Kansas City,
Kansas site to be complete in late 2025. Through the Zeolyst
Joint Venture, we supply specialty catalysts to customers for use
in the production of both traditional and sustainable fuels,
petrochemicals, and emission control systems for both on-road and
non-road diesel engines. We also supply niche-custom catalysts in
the refining and petrochemical industries.
During the second quarter of 2024, Advanced Silicas sales were
$28.9 million, compared to
$26.0 million in the second quarter
of 2023, with the increase primarily related to higher sales of
niche custom catalysts. Our proportionate 50% share of second
quarter sales for the Zeolyst Joint Venture was $29.0 million, compared to $44.7 million in the second quarter of 2023. The
change in Zeolyst Joint Venture sales was due primarily to lower
sales of catalysts used in the production of sustainable fuels,
emission control applications and timing of niche custom catalyst
sales. Second quarter 2024 Adjusted EBITDA for Advanced Materials
& Catalysts, which includes our proportionate 50% share of the
Zeolyst Joint Venture, was $14.7
million, compared to $25.4
million in the second quarter of 2023, with the change
reflecting lower sales within the Zeolyst Joint Venture, partially
offset by higher sales in Advanced Silicas.
Cash Flows and Balance Sheet
Cash flows from operating activities was $46.4 million for the six months ended
June 30, 2024, compared to
$41.1 million for the six months
ended June 30, 2023. The increase was
primarily driven by the timing of dividends received from the
Zeolyst Joint Venture offset by debt extinguishment costs. At
June 30, 2024, the Company had cash
and cash equivalents of $83.3
million, total gross debt of $873.0
million and availability under the ABL facility of
$72.3 million, after giving effect to
$3.3 million of outstanding letters
of credit and no revolving credit facility borrowings outstanding,
for total available liquidity of $155.6
million. The net debt to net income ratio was 14.1x as of
June 30, 2024 and the net debt
leverage ratio was 3.3x as of June 30,
2024.
Updated 2024 Financial Outlook
"For the second half of 2024 we expect demand for regeneration
services, treatment services and catalyst activation to remain
positive. We currently expect sales of virgin sulfuric acid to
increase in 2024, compared to 2023, however, we are cautious about
macro-economic headwinds in the second half of 2024 that could lead
to lower industrial demand and a weaker spot market demand for
virgin acid. The Hurricane Beryl weather event is expected to
result in a modest impact to our third quarter Ecoservices results
due to repair costs and prolonged storm-related production outages
at a few of our customers. For Advanced Silicas, we continue to
expect sales of polyethylene catalysts and supports to be up in
2024 as compared to 2023. However, uncertainty around industrial
fundamentals and operating rates could impact the size of these
gains," said Bitting.
"While we remain excited about the long-term growth prospects
for catalyst sales into sustainable fuel applications, we are
revising our near-term outlook given evolving industry trends in
2024. The value of Renewable Identification Numbers or RINs, which
incentivize the production of renewable diesel, have been adversely
impacted by the development of an imbalance between production and
current demand. This imbalance, in conjunction with the increased
cost of feedstocks, has adversely impacted near-term economics for
producers of renewable diesel. We expect that this near-term
headwind will result in the deferral of construction of new
renewable diesel units. We also expect that low utilization rates
in the existing renewable diesel units will result in deferred
refill sales as producers are able to extend catalyst life. In
addition, U.S. rising interest rates have adversely impacted sales
of heavy-duty diesel vehicles. June sales were down 25%
year-over-year, and marked the eleventh consecutive month of sales
declines for Class 8 vehicles in the U.S. In Europe, the four-year delay in implementation
of Euro7 for heavy-duty diesel
vehicles has also impacted sales, with sales of heavy-duty vehicles
expected to be down 15% to 20% year-over-year. As a result, we have
also reduced our expectations for sales of emission control
catalysts for the balance of the year.
In consideration of our lower expectations for sales of
catalysts used in the production of sustainable fuels and emission
control applications, and with a more conservative view of overall
demand fundamentals in the second half of 2024, we are revising our
guidance for full-year 2024 Adjusted EBITDA to a range of
$230 million to $245 million. Despite the uncertain conditions
and near-term macro-economic headwinds in a few of our product
lines, we remain confident in the long-term growth trajectory of
our business. Ecovyst still expects to generate higher
year-over-year Adjusted Free Cash Flow while continuing to make the
investments that support future growth," Bitting said.
Based upon the Company's view of business conditions and demand
trends as of today, the Company's revised guidance for full year
2024 is as follows:
- Sales of $700 million to
$740 million (change from
$715 million to $755 million)
- Sales of $115 million to
$135 million (change from
$145 million to $165 million) for proportionate 50% share of
Zeolyst Joint Venture, which is excluded from GAAP Sales
- Full year 2024 Adjusted EBITDA1 of $230 million to $245
million (change from $255
million to $275 million)
- Free Cash Flow1 of $75
million to $85 million (change
from $85 million to $105 million)
- Capital expenditures of $70
million to $80 million
- Interest expense of $48 million
to $52 million (change from
$45 million to $55 million)
- Depreciation & Amortization
- Ecovyst - $88 million to
$92 million (change from $85 million to $95
million)
- Zeolyst J.V. - $12 million to
$14 million
- Effective tax rate in the mid 20% range
- Full year 2024 Adjusted Net Income1 of $53 million to $74
million, with Adjusted Diluted Income per share of
$0.45 to $0.63.
The Company's guidance for third quarter 2024 is as follows:
- Q3 2024 Adjusted EBITDA1 of $58 million to $65
million
- Q3 2024 Adjusted Net Income1 of $14 million to $21
million, with Adjusted Diluted Income per share of
$0.12 to $0.18.
1In reliance upon the unreasonable efforts exemption
provided under Item 10(e)(1)(i)(B) of Regulation S-K, the Company
is not able to provide a reconciliation of its non-GAAP financial
guidance to the corresponding GAAP measures without unreasonable
effort because of the inherent difficulty in forecasting and
quantifying certain amounts necessary for such a reconciliation
such as certain non-cash, nonrecurring or other items that are
included in net income and EBITDA as well as the related tax
impacts of these items and asset dispositions / acquisitions and
changes in foreign currency exchange rates that are included in
cash flow, due to the uncertainty and variability of the nature and
amount of these future charges and costs. Because this information
is uncertain, the Company is unable to address the probable
significance of the unavailable information, which could be
material to future results.
Stock Repurchase Authorization
In April 2022, the Company's Board
of Directors approved a stock repurchase program authorizing the
repurchase of up to $450.0 million of
the Company's outstanding common stock over the next four years. To
date, repurchases under the program have been funded using cash on
hand and cash generated from operations, with repurchases conducted
through negotiated transactions with the Company's equity sponsors,
as well as through open market repurchases. Future repurchases may
also be conducted through negotiated transactions, open market
repurchases or other means, including through Rule 10b-18 trading plans or through the use of other
techniques such as accelerated share repurchases.
During the second quarter of 2024, the Company repurchased
552,081 shares of its common stock on the open market at an average
price of $9.05 per share, for a total
cost of $5.0 million.
During the second quarter of 2023, in connection with a
secondary offering of the Company's common stock in May 2023, the Company repurchased 4,000,000
shares of its common stock sold in the offering from the
underwriter at a price of $10.88 per
share concurrently with the closing of the offering, for a total of
$43.5 million.
For possible future repurchases, the actual timing, number, and
nature of shares repurchased will depend on a variety of factors,
including stock price, trading volume, and general business and
market conditions. The repurchase program does not obligate the
Company to acquire any number of shares in any specific period, or
at all, and the repurchase program may be amended, suspended or
discontinued at any time at the Company's discretion. As of
June 30, 2024, $229.6 million was available for share
repurchases under the program.
Conference Call and Webcast Details
On Thursday, August 1, 2024, Ecovyst management will review
the second quarter results during a conference call and audio-only
webcast scheduled for 11:00 a.m. Eastern
Time.
Conference Call: Investors may listen to the conference call
live via telephone by dialing 1 (800) 343-5419 (domestic) or
1 (203) 518-9731 (international) and use the
participant code ECVTQ224.
Webcast: An audio-only live webcast of the conference call and
presentation materials can be accessed at
https://investor.ecovyst.com. A replay of the conference
call/webcast will be made available at
https://investor.ecovyst.com/events-presentations.
Investor Contact:
Gene Shiels
(484) 617-1225
gene.shiels@ecovyst.com
About Ecovyst Inc.
Ecovyst Inc. and subsidiaries is a leading integrated and
innovative global provider of advanced materials, specialty
catalysts and services. We support customers globally through our
strategically located network of manufacturing facilities. We
believe that our products and services contribute to improving the
sustainability of the environment.
We have two uniquely positioned specialty businesses:
Ecoservices provides sulfuric acid recycling to the
North American refining industry for the production of alkylate and
provides high quality and high strength virgin sulfuric acid for
industrial and mining applications. Ecoservices also provides
chemical waste handling and treatment services, as well as ex-situ
catalyst activation services for the refining and petrochemical
industry. Advanced Materials & Catalysts, through its
Advanced Silicas business, provides finished silica catalysts,
catalyst supports and functionalized silicas necessary to produce
high performing plastics and to enable sustainable chemistry, and
through its Zeolyst Joint Venture, innovates and supplies specialty
zeolites used in catalysts that support the production of
sustainable fuels, remove nitrogen oxides from diesel engine
emissions and that are broadly applied in refining and
petrochemical process. For more information, see our website at
https://www.ecovyst.com.
Presentation of Non-GAAP Financial Measures
In addition to the results provided in accordance with U.S.
generally accepted accounting principles ("GAAP") throughout this
press release, the Company has provided non-GAAP financial measures
— Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income,
Free Cash Flow, Adjusted Free Cash Flow, Adjusted Diluted Income
per share, Net Debt to Net Income ratio and Net Debt Leverage Ratio
(collectively, "Non-GAAP Financial Measures") — which present
results on a basis adjusted for certain items. The Company uses
these Non-GAAP Financial Measures for business planning purposes
and in measuring its performance relative to that of its
competitors. The Company believes that these Non-GAAP Financial
Measures are useful financial metrics to assess its operating
performance from period-to-period by excluding certain items that
the Company believes are not representative of its core business.
These Non-GAAP Financial Measures are not intended to replace, and
should not be considered superior to, the presentation of the
Company's financial results in accordance with GAAP. The use of the
Non-GAAP Financial Measures terms may differ from similar measures
reported by other companies and may not be comparable to other
similarly titled measures. These Non-GAAP Financial Measures are
reconciled from the respective measures under GAAP in the attached
appendix.
Zeolyst Joint Venture
The Company's zeolite catalysts product group operates through
its Zeolyst Joint Venture, which is accounted for as an equity
method investment in accordance with GAAP. The presentation of the
Zeolyst Joint Venture's sales represents 50% of the sales of the
Zeolyst Joint Venture. The Company does not record sales by the
Zeolyst Joint Venture as revenue and such sales are not
consolidated within the Company's results of operations. However,
the Company's Adjusted EBITDA reflects the share of earnings of the
Zeolyst Joint Venture that have been recorded as equity in net
income from affiliated companies in the Company's consolidated
statements of income for such periods and includes Zeolyst Joint
Venture adjustments on a proportionate basis based on the Company's
50% ownership interest. Accordingly, the Company's Adjusted EBITDA
margins are calculated including 50% of the sales of the Zeolyst
Joint Venture for the relevant periods in the denominator.
Note on Forward-Looking Statements
Some of the information contained in this press release
constitutes "forward-looking statements." Forward-looking
statements can be identified by words such as "anticipates,"
"intends," "plans," "seeks," "believes," "estimates," "expects,"
"projects" and similar references to future periods.
Forward-looking statements are based on our current expectations
and assumptions regarding our business, the economy and other
future conditions. Because forward-looking statements relate to the
future, they are subject to inherent uncertainties, risks and
changes in circumstances that are difficult to predict. Examples of
forward-looking statements include, but are not limited to,
statements regarding our future results of operations, financial
condition, capital expenditure projects, liquidity, prospects,
growth, strategies, capital allocation program (including the stock
repurchase program), product and service offerings, expected demand
trends, our third quarter 2024 financial outlook and our 2024
financial outlook. Our actual results may differ materially from
those contemplated by the forward-looking statements. We caution
you, therefore, against relying on any of these forward-looking
statements. They are neither statements of historical fact nor
guarantees or assurances of future performance. Important factors
that could cause actual results to differ materially from those in
the forward-looking statements include, but are not limited to,
regional, national or global political, economic, business,
competitive, market and regulatory conditions, including tariffs
and trade disputes, currency exchange rates, the effects of
inflation and other factors, including those described in the
sections titled "Risk Factors" and "Management's Discussion &
Analysis of Financial Condition and Results of Operations" in our
filings with the SEC, which are available on the SEC's website at
www.sec.gov. These forward-looking statements speak only as of the
date of this release. Factors or events that could cause our actual
results to differ may emerge from time to time, and it is not
possible for us to predict all of them. We undertake no obligation
to update any forward-looking statement, whether as a result of new
information, future developments or otherwise, except as may be
required by applicable law.
|
ECOVYST INC. AND
SUBSIDIARIES
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
|
|
(in millions, except
share and per share amounts)
|
|
|
|
Three months
ended
June
30,
|
|
|
|
Six months
ended
June
30,
|
|
|
|
|
2024
|
|
2023
|
|
%
Change
|
|
2024
|
|
2023
|
|
%
Change
|
|
|
|
|
Sales
|
|
$
182.8
|
|
$
184.1
|
|
(0.7) %
|
|
$
343.4
|
|
$
345.0
|
|
(0.5) %
|
|
Cost of goods
sold
|
|
129.1
|
|
123.1
|
|
4.9 %
|
|
250.5
|
|
247.5
|
|
1.2 %
|
|
Gross
profit
|
|
53.7
|
|
61.0
|
|
(12.0) %
|
|
92.9
|
|
97.5
|
|
(4.7) %
|
|
Selling, general and
administrative expenses
|
|
22.7
|
|
21.4
|
|
6.1 %
|
|
44.3
|
|
42.5
|
|
4.2 %
|
|
Other operating
expense, net
|
|
3.1
|
|
6.3
|
|
(50.8) %
|
|
6.8
|
|
13.0
|
|
(47.7) %
|
|
Operating
income
|
|
27.9
|
|
33.3
|
|
(16.2) %
|
|
41.8
|
|
42.0
|
|
(0.5) %
|
|
Equity in net (income)
from affiliated companies
|
|
(1.4)
|
|
(11.4)
|
|
(87.7) %
|
|
(3.5)
|
|
(11.6)
|
|
(69.8) %
|
|
Interest expense,
net
|
|
12.9
|
|
9.2
|
|
40.2 %
|
|
26.3
|
|
19.0
|
|
38.4 %
|
|
Debt extinguishment
costs
|
|
4.6
|
|
—
|
|
NM
|
|
4.6
|
|
—
|
|
NM
|
|
Other expense,
net
|
|
0.4
|
|
0.6
|
|
(33.3) %
|
|
0.6
|
|
0.2
|
|
200.0 %
|
|
Income before income
taxes
|
|
11.4
|
|
34.9
|
|
(67.3) %
|
|
13.8
|
|
34.4
|
|
(59.9) %
|
|
Provision for income
taxes
|
|
3.1
|
|
8.8
|
|
(64.8) %
|
|
4.3
|
|
9.7
|
|
(55.7) %
|
|
Effective tax
rate
|
|
27.1 %
|
|
25.2 %
|
|
|
|
30.9 %
|
|
28.3 %
|
|
|
|
Net income
|
|
$
8.3
|
|
$
26.1
|
|
(68.2) %
|
|
$
9.5
|
|
$
24.7
|
|
(61.5) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share
|
|
$
0.07
|
|
$
0.22
|
|
|
|
$
0.08
|
|
$
0.20
|
|
|
|
Diluted earnings per
share
|
|
$
0.07
|
|
$
0.22
|
|
|
|
$
0.08
|
|
$
0.20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
116,912,332
|
|
118,651,402
|
|
|
|
116,935,708
|
|
120,335,414
|
|
|
|
Diluted
|
|
117,635,289
|
|
119,920,742
|
|
|
|
117,545,240
|
|
121,831,942
|
|
|
|
ECOVYST INC. AND
SUBSIDIARIES
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
(in millions, except
share and per share amounts)
|
|
|
June 30,
2024
|
|
December 31,
2023
|
|
ASSETS
|
|
|
|
|
Cash and cash
equivalents
|
$
83.3
|
|
$
88.4
|
|
Accounts receivable,
net
|
85.2
|
|
81.3
|
|
Inventories,
net
|
52.0
|
|
45.1
|
|
Derivative
assets
|
12.3
|
|
13.4
|
|
Prepaid and other
current assets
|
31.1
|
|
17.8
|
|
Total current
assets
|
263.9
|
|
246.0
|
|
Investments in
affiliated companies
|
409.2
|
|
440.2
|
|
Property, plant and
equipment, net
|
573.6
|
|
576.9
|
|
Goodwill
|
404.3
|
|
404.5
|
|
Other intangible
assets, net
|
109.4
|
|
116.6
|
|
Right-of-use lease
assets
|
24.3
|
|
24.3
|
|
Other long-term
assets
|
35.2
|
|
29.4
|
|
Total
assets
|
$
1,819.9
|
|
$
1,837.8
|
|
LIABILITIES
|
|
|
|
|
Current maturities of
long-term debt
|
$
6.5
|
|
$
9.0
|
|
Accounts
payable
|
34.2
|
|
40.2
|
|
Operating lease
liabilities—current
|
7.7
|
|
8.2
|
|
Accrued
liabilities
|
48.5
|
|
61.7
|
|
Total current
liabilities
|
96.9
|
|
119.1
|
|
Long-term debt,
excluding current portion
|
855.9
|
|
858.9
|
|
Deferred income
taxes
|
115.2
|
|
115.8
|
|
Operating lease
liabilities—noncurrent
|
16.4
|
|
16.0
|
|
Other long-term
liabilities
|
18.2
|
|
22.5
|
|
Total
liabilities
|
1,102.6
|
|
1,132.3
|
|
Commitments and
contingencies
|
|
|
|
|
EQUITY
|
|
|
|
|
Common stock ($0.01
par); authorized shares 450,000,000; issued shares 140,872,846 and
140,744,045
on June 30, 2024 and December 31, 2023, respectively; outstanding
shares 116,466,232 and 116,116,895
on June 30, 2024 and December 31, 2023, respectively
|
1.4
|
|
1.4
|
|
Preferred stock ($0.01
par); authorized shares 50,000,000; no shares issued or outstanding
on June 30,
2024 and December 31, 2023
|
—
|
|
—
|
|
Additional paid-in
capital
|
1,100.7
|
|
1,102.6
|
|
Accumulated
deficit
|
(161.3)
|
|
(170.9)
|
|
Treasury stock, at
cost; shares 24,406,614 and 24,627,150 on June 30, 2024 and
December 31, 2023,
respectively
|
(223.5)
|
|
(226.7)
|
|
Accumulated other
comprehensive loss
|
—
|
|
(0.9)
|
|
Total
equity
|
717.3
|
|
705.5
|
|
Total liabilities and
equity
|
$
1,819.9
|
|
$
1,837.8
|
|
ECOVYST INC. AND
SUBSIDIARIES
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
Six months
ended
June
30,
|
|
2024
|
|
2023
|
|
Cash flows from
operating activities:
|
(in
millions)
|
|
Net income
|
$
9.5
|
|
$
24.7
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
Depreciation
|
36.5
|
|
34.1
|
|
Amortization
|
7.0
|
|
7.0
|
|
Amortization of
deferred financing costs and original issue discount
|
1.1
|
|
1.0
|
|
Debt extinguishment
costs
|
0.1
|
|
—
|
|
Foreign currency
exchange loss (gain)
|
0.2
|
|
(0.6)
|
|
Deferred income tax
(benefit) provision
|
(1.7)
|
|
1.3
|
|
Net loss on asset
disposals
|
0.6
|
|
2.3
|
|
Stock
compensation
|
7.5
|
|
9.1
|
|
Equity in net income
from affiliated companies
|
(3.5)
|
|
(11.6)
|
|
Dividends received
from affiliated companies
|
33.0
|
|
10.0
|
|
Other, net
|
2.3
|
|
6.2
|
|
Working capital
changes that used cash:
|
|
|
|
|
Receivables
|
(4.1)
|
|
(3.0)
|
|
Inventories
|
(6.7)
|
|
(3.0)
|
|
Prepaids and other
current assets
|
(4.5)
|
|
(5.7)
|
|
Accounts
payable
|
(3.3)
|
|
(1.5)
|
|
Accrued
liabilities
|
(27.6)
|
|
(29.2)
|
|
Net cash provided by
operating activities
|
46.4
|
|
41.1
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
Purchases of property,
plant and equipment
|
(36.6)
|
|
(39.2)
|
|
Other, net
|
(0.2)
|
|
—
|
|
Net cash used in
investing activities
|
(36.8)
|
|
(39.2)
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
Draw down of revolving
credit facilities
|
—
|
|
14.5
|
|
Repayments of
revolving credit facilities
|
—
|
|
(14.5)
|
|
Issuance of long-term
debt, net of discount
|
870.8
|
|
—
|
|
Repayments of
long-term debt
|
(877.5)
|
|
(4.5)
|
|
Repurchases of common
shares
|
(5.0)
|
|
(73.4)
|
|
Tax withholdings on
equity award vesting
|
(1.2)
|
|
(0.9)
|
|
Repayment of financing
obligation
|
(1.5)
|
|
(1.4)
|
|
Other, net
|
—
|
|
0.3
|
|
Net cash used in
financing activities
|
(14.4)
|
|
(79.9)
|
|
|
|
|
|
Effect of exchange rate
changes on cash and cash equivalents
|
(0.3)
|
|
(3.7)
|
|
Net change in cash and
cash equivalents
|
(5.1)
|
|
(81.7)
|
|
Cash and cash
equivalents at beginning of period
|
88.4
|
|
110.9
|
|
Cash and cash
equivalents at end of period
|
$
83.3
|
|
$
29.2
|
|
Appendix Table A-1:
Reconciliation of Net Income to Adjusted EBITDA
|
|
|
|
Three months
ended
June
30,
|
|
Six months
ended
June
30,
|
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
|
(in
millions)
|
|
Reconciliation of
net income to Adjusted EBITDA
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
8.3
|
|
$
26.1
|
|
$
9.5
|
|
$
24.7
|
|
Provision for income
taxes
|
|
3.1
|
|
8.8
|
|
4.3
|
|
9.7
|
|
Interest expense,
net
|
|
12.9
|
|
9.2
|
|
26.3
|
|
19.0
|
|
Depreciation and
amortization
|
|
21.6
|
|
21.0
|
|
43.6
|
|
41.2
|
|
EBITDA
|
|
45.9
|
|
65.1
|
|
83.7
|
|
94.6
|
|
Joint venture
depreciation, amortization and interest(a)
|
|
3.2
|
|
3.2
|
|
6.5
|
|
6.8
|
|
Amortization of
investment in affiliate step-up(b)
|
|
0.9
|
|
1.6
|
|
2.5
|
|
3.2
|
|
Debt extinguishment
costs
|
|
4.6
|
|
—
|
|
4.6
|
|
—
|
|
Net loss on asset
disposals(c)
|
|
—
|
|
1.1
|
|
0.6
|
|
2.3
|
|
Foreign currency
exchange (gain) loss(d)
|
|
(0.1)
|
|
(0.4)
|
|
0.1
|
|
(1.1)
|
|
LIFO (benefit)
expense(e)
|
|
(1.5)
|
|
1.1
|
|
(2.7)
|
|
2.5
|
|
Transaction and other
related costs(f)
|
|
0.1
|
|
1.2
|
|
0.2
|
|
2.6
|
|
Equity-based
compensation
|
|
3.8
|
|
5.0
|
|
7.5
|
|
9.1
|
|
Restructuring,
integration and business optimization
expenses(g)
|
|
0.2
|
|
1.1
|
|
0.4
|
|
2.1
|
|
Other(h)
|
|
(0.2)
|
|
0.3
|
|
(1.0)
|
|
0.1
|
|
Adjusted
EBITDA
|
|
$
56.9
|
|
$
79.3
|
|
$
102.4
|
|
$
122.2
|
|
Descriptions to
Ecovyst Non-GAAP Reconciliations
|
|
|
|
(a)
|
We use Adjusted EBITDA
as a performance measure to evaluate our financial results. Because
our Advanced Materials & Catalysts segment includes our 50%
interest in the Zeolyst Joint Venture, we include an
adjustment for our 50% proportionate share of depreciation,
amortization and interest expense of the Zeolyst Joint
Venture.
|
|
(b)
|
Represents the
amortization of the fair value adjustments associated with the
equity affiliate investment in the Zeolyst Joint Venture as a
result of the combination of the businesses of PQ Holdings Inc. and
Eco Services Operations LLC in May 2016. We determined the fair
value of the equity affiliate investment and the fair value step-up
was then attributed to the underlying assets of the Zeolyst Joint
Venture. Amortization is primarily related to the fair value
adjustments associated with intangible assets, including customer
relationships and technical know-how.
|
|
(c)
|
When asset disposals
occur, we remove the impact of net gain/loss of the disposed asset
because such impact primarily reflects the non-cash write-off of
long-lived assets no longer in use.
|
|
(d)
|
Reflects the exclusion
of the foreign currency transaction gains and losses in the
statements of income related to the non-permanent intercompany debt
denominated in local currency translated to U.S.
dollars.
|
|
(e)
|
Represents non-cash
adjustments to the Company's LIFO reserves for certain inventories
in the U.S. that are valued using the LIFO method, effectively
reflecting the results as if these inventories were valued using
the FIFO method, which we believe provides a means of comparison to
other companies that may not use the same basis of accounting for
inventories.
|
|
(f)
|
Relates to certain
transaction costs, including debt financing, due diligence and
other costs related to transactions that are completed, pending or
abandoned, that we believe are not representative of our ongoing
business operations.
|
|
(g)
|
Includes the impact of
restructuring, integration and business optimization expenses,
which are incremental costs that are not representative of our
ongoing business operations.
|
|
(h)
|
Other consists of
adjustments for items that are not core to our ongoing business
operations. These adjustments include environmental remediation and
other legal costs, expenses for capital and franchise taxes, and
defined benefit pension and postretirement plan (benefits) costs,
for which our obligations are under plans that are frozen. Also
included in this amount are adjustments to eliminate the benefit
realized in cost of goods sold of the allocation of a portion of
the contract manufacturing payments under the five-year agreement
with the buyer of the Performance Chemicals business to the
financing obligation under the failed sale-leaseback. Included in
this line-item are rounding discrepancies that may arise from
rounding from dollars (in thousands) to dollars (in
millions).
|
|
Appendix Table A-2:
Reconciliation of Net Income and EPS to Adjusted Net Income and
Adjusted EPS(1)
|
|
|
Three months
ended
June
30,
|
|
2024
|
|
2023
|
|
Pre-tax
amount
|
Tax
expense
(benefit)
|
After-tax
amount
|
Per share,
basic
|
Per share,
diluted
|
|
Pre-tax
amount
|
Tax
expense
(benefit)
|
After-tax
amount
|
Per share,
basic
|
Per share,
diluted
|
|
(in millions, except
share and per share amounts)
|
|
Net income
|
$
11.4
|
$ 3.1
|
$
8.3
|
$
0.07
|
$
0.07
|
|
$
34.9
|
$ 8.8
|
$ 26.1
|
$
0.22
|
$
0.22
|
|
Amortization of
investment in affiliate step-up(b)
|
0.9
|
0.2
|
0.7
|
0.01
|
0.01
|
|
1.6
|
0.4
|
1.2
|
0.01
|
0.01
|
|
Debt extinguishment
costs
|
4.6
|
1.2
|
3.4
|
0.03
|
0.03
|
|
—
|
—
|
—
|
—
|
—
|
|
Net loss on asset
disposals(c)
|
—
|
—
|
—
|
—
|
—
|
|
1.1
|
0.3
|
0.8
|
0.01
|
0.01
|
|
Foreign currency
exchange gain(d)
|
(0.1)
|
—
|
(0.1)
|
—
|
—
|
|
(0.4)
|
(0.2)
|
(0.2)
|
—
|
—
|
|
LIFO (benefit)
expense(e)
|
(1.5)
|
(0.3)
|
(1.2)
|
(0.01)
|
(0.01)
|
|
1.1
|
0.3
|
0.8
|
0.01
|
0.01
|
|
Transaction and other
related costs(f)
|
0.1
|
—
|
0.1
|
—
|
—
|
|
1.2
|
0.3
|
0.9
|
0.01
|
0.01
|
|
Equity-based
compensation
|
3.8
|
0.9
|
2.9
|
0.02
|
0.02
|
|
5.0
|
1.0
|
4.0
|
0.03
|
0.03
|
|
Restructuring,
integration and business optimization
expenses(g)
|
0.2
|
0.1
|
0.1
|
—
|
—
|
|
1.1
|
0.3
|
0.8
|
0.01
|
0.01
|
|
Other(h)
|
(0.2)
|
(0.1)
|
(0.1)
|
—
|
—
|
|
0.3
|
0.1
|
0.2
|
(0.01)
|
(0.01)
|
|
Adjusted Net
Income(1)
|
$
19.2
|
$ 5.1
|
$ 14.1
|
$
0.12
|
$
0.12
|
|
$
45.9
|
$ 11.3
|
$ 34.6
|
$
0.29
|
$
0.29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding
|
|
|
|
116,912,332
|
117,635,289
|
|
|
|
|
118,651,402
|
119,920,742
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months
ended
June
30,
|
|
2024
|
|
2023
|
|
Pre-tax
amount
|
Tax
expense
(benefit)
|
After-tax
amount
|
Per share,
basic
|
Per share,
diluted
|
|
Pre-tax
amount
|
Tax
expense
(benefit)
|
After-tax
amount
|
Per share,
basic
|
Per share,
diluted
|
|
(in millions, except
share and per share amounts)
|
|
Net income
|
$
13.8
|
$ 4.3
|
$
9.5
|
$
0.08
|
$
0.08
|
|
$
34.4
|
$ 9.7
|
$ 24.7
|
$
0.20
|
$
0.20
|
|
Amortization of
investment in affiliate step-up(b)
|
2.5
|
0.6
|
1.9
|
0.02
|
0.02
|
|
3.2
|
0.8
|
2.4
|
0.02
|
0.02
|
|
Debt extinguishment
costs
|
4.6
|
1.2
|
3.4
|
0.03
|
0.03
|
|
—
|
—
|
—
|
—
|
—
|
|
Net loss on asset
disposals(c)
|
0.6
|
0.1
|
0.5
|
—
|
—
|
|
2.3
|
0.6
|
1.7
|
0.01
|
0.01
|
|
Foreign currency
exchange loss (gain)(d)
|
0.1
|
—
|
0.1
|
—
|
—
|
|
(1.1)
|
(0.2)
|
(0.9)
|
(0.01)
|
(0.01)
|
|
LIFO (benefit)
expense(e)
|
(2.7)
|
(0.7)
|
(2.0)
|
(0.02)
|
(0.02)
|
|
2.5
|
0.7
|
1.8
|
0.02
|
0.02
|
|
Transaction and other
related costs(f)
|
0.2
|
0.1
|
0.1
|
—
|
—
|
|
2.6
|
0.7
|
1.9
|
0.02
|
0.02
|
|
Equity-based
compensation
|
7.5
|
1.4
|
6.1
|
0.05
|
0.05
|
|
9.1
|
0.8
|
8.3
|
0.07
|
0.07
|
|
Restructuring,
integration and business optimization
expenses(g)
|
0.4
|
0.1
|
0.3
|
—
|
—
|
|
2.1
|
0.6
|
1.5
|
0.01
|
0.01
|
|
Other(h)
|
(1.0)
|
(0.3)
|
(0.7)
|
—
|
—
|
|
0.1
|
—
|
0.1
|
0.01
|
—
|
|
Adjusted Net
Income(1)
|
$
26.0
|
$ 6.8
|
$ 19.2
|
$
0.16
|
$
0.16
|
|
$
55.2
|
$ 13.7
|
$ 41.5
|
$
0.35
|
$
0.34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding
|
|
|
|
116,935,708
|
117,545,240
|
|
|
|
|
120,335,414
|
121,831,942
|
|
|
See Appendix Table A-1
for Descriptions to Ecovyst Non-GAAP Reconciliations in the table
above.
|
|
|
|
(1)
|
We define Adjusted Net
Income as net income adjusted for non-operating income or expense
and the impact of certain non-cash or other items that are included
in net income that we do not consider indicative of our ongoing
operating performance. Adjusted Net Income is presented as a key
performance indicator as we believe it will enhance a prospective
investor's understanding of our results of operations and financial
condition.
|
|
|
|
The adjustments to net
income are shown net of applicable tax rates of 25.1% and 26.2% for
the six months ended June 30, 2024 and 2023, respectively, except
for equity-based compensation. The tax effect on equity-based
compensation is derived by removing the tax effect of any
equity-based compensation expense disallowed as a result of its
inclusion within IRC Sec. 162(m), and adding the tax effect of
equity-based stock compensation shortfall recorded as a discrete
item.
|
|
Appendix Table
A-3: Sales and Adjusted EBITDA by Business
Segment
|
|
|
|
Three months
ended
June
30,
|
|
|
|
Six months
ended
June
30,
|
|
|
|
|
2024
|
|
2023
|
|
%
Change
|
|
2024
|
|
2023
|
|
%
Change
|
|
|
|
|
Sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ecoservices
|
|
$ 153.9
|
|
$ 158.1
|
|
(2.7) %
|
|
$ 295.6
|
|
$ 295.8
|
|
(0.1) %
|
|
Advanced
Silicas
|
|
28.9
|
|
26.0
|
|
11.2 %
|
|
47.8
|
|
49.2
|
|
(2.8) %
|
|
Total
sales
|
|
$ 182.8
|
|
$ 184.1
|
|
(0.7) %
|
|
$ 343.4
|
|
$ 345.0
|
|
(0.5) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Zeolyst Joint Venture
sales
|
|
$ 29.0
|
|
$ 44.7
|
|
(35.1) %
|
|
$ 52.5
|
|
$ 66.8
|
|
(21.4) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ecoservices
|
|
$ 49.7
|
|
$ 60.1
|
|
(17.3) %
|
|
$ 91.2
|
|
$ 96.9
|
|
(5.9) %
|
|
Advanced Materials
& Catalysts
|
|
14.7
|
|
25.4
|
|
(42.1) %
|
|
25.8
|
|
38.4
|
|
(32.8) %
|
|
Unallocated corporate
expenses
|
|
(7.5)
|
|
(6.2)
|
|
(21.0) %
|
|
(14.6)
|
|
(13.1)
|
|
(11.5) %
|
|
Total Adjusted
EBITDA
|
|
$ 56.9
|
|
$ 79.3
|
|
(28.2) %
|
|
$ 102.4
|
|
$ 122.2
|
|
(16.2) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
Margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ecoservices
|
|
32.3 %
|
|
38.0 %
|
|
|
|
30.9 %
|
|
32.8 %
|
|
|
|
Advanced Materials
& Catalysts(1)
|
|
25.4 %
|
|
35.9 %
|
|
|
|
25.7 %
|
|
33.1 %
|
|
|
|
Total Adjusted
EBITDA Margin(1)
|
|
26.8 %
|
|
34.7 %
|
|
|
|
25.9 %
|
|
29.7 %
|
|
|
|
|
|
(1)
|
Adjusted EBITDA Margin
calculation includes proportionate 50% share of sales from the
Zeolyst Joint Venture.
|
|
Appendix Table A-4:
Adjusted Free Cash Flow
|
|
|
|
Six months
ended
June
30,
|
|
|
2024
|
|
2023
|
|
|
(in
millions)
|
|
Net cash provided by
operating activities
|
|
$
46.4
|
|
$
41.1
|
|
Less:
|
|
|
|
|
|
Purchases of property,
plant and equipment(1)
|
|
(36.6)
|
|
(39.2)
|
|
Free Cash
Flow(2)
|
|
$
9.8
|
|
$
1.9
|
|
|
|
|
|
|
Adjustments to free
cash flow:
|
|
|
|
|
|
Cash paid for debt
financing costs included in cash from operating
activities
|
|
4.6
|
|
—
|
|
Adjusted Free Cash
Flow(2)
|
|
$
14.4
|
|
$
1.9
|
|
|
|
|
|
|
Net cash used in
investing activities(3)
|
|
$
(36.8)
|
|
$
(39.2)
|
|
Net cash used in
financing activities
|
|
$
(14.4)
|
|
$
(79.9)
|
|
|
|
(1)
|
Excludes the Company's
proportionate 50% share of capital expenditures from
the Zeolyst Joint Venture.
|
|
(2)
|
We define Adjusted Free
Cash Flow as net cash provided by operating activities less
purchases of property, plant and equipment, adjusted for cash flows
that are unusual in nature and/or infrequent in occurrence that
neither relate to our core business nor reflect the liquidity of
our underlying business. Historically these adjustments include
proceeds from the sale of assets, net interest proceeds on swaps
designated as net investment hedges, the cash paid for segment
disposals and cash paid for debt financing costs included in cash
from operating activities. Adjusted Free Cash Flow is a non-GAAP
financial measure that we believe will enhance a prospective
investor's understanding of our ability to generate additional cash
from operations, and is an important financial measure for use in
evaluating our financial performance. Our presentation of Adjusted
Free Cash Flow is not intended to replace, and should not be
considered superior to, the presentation of our net cash provided
by operating activities determined in accordance with GAAP.
Additionally, our definition of Adjusted Free Cash Flow is limited,
in that it does not represent residual cash flows available for
discretionary expenditures, due to the fact that the measure does
not deduct the payments required for debt service and other
contractual obligations or payments made for business acquisitions.
Therefore, we believe it is important to view Adjusted Free Cash
Flow as a measure that provides supplemental information to our
consolidated statements of cash flows. You should not consider
Adjusted Free Cash Flow in isolation or as an alternative to the
presentation of our financial results in accordance with GAAP. The
presentation of Adjusted Free Cash Flow may differ from similar
measures reported by other companies and may not be comparable to
other similarly titled measures.
|
|
(3)
|
Net cash used in
investing activities includes purchases of property, plant and
equipment, which is also included in our computation of Adjusted
Free Cash Flow.
|
|
Appendix Table A-5:
Net Debt Leverage Ratio
|
|
|
June 30,
2024
|
|
June 30,
2023
|
|
(in millions, except
ratios)
|
|
Total debt
|
$
873.0
|
|
$
882.0
|
|
Less:
|
|
|
|
|
Cash and cash
equivalents
|
83.3
|
|
29.2
|
|
Net debt
|
$
789.7
|
|
$
852.8
|
|
|
|
|
|
Trailing twelve
months:
|
|
|
|
|
Net income
|
$
56.1
|
|
$
67.4
|
|
Adjusted
EBITDA(1)
|
$
240.1
|
|
$
266.8
|
|
|
|
|
|
Net Debt to Net Income
ratio
|
14.1 x
|
|
12.7 x
|
|
Net Debt Leverage
ratio
|
3.3 x
|
|
3.2 x
|
|
|
|
|
|
(1)
|
Refer to Appendix
Table A-1: Reconciliation of Net Income to Adjusted EBITDA for the
reconciliation to the most comparable GAAP financial
measure.
|
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SOURCE Ecovyst Inc.