MALVERN,
Pa., Oct. 31, 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 third
quarter ended September 30, 2024.
Third Quarter 2024 Results &
Highlights
- Sales of $179.2 million, compared
to $173.3 million in the third
quarter of 2023
- Net Income of $14.3 million,
compared to $16.6 million in the
year-ago quarter, with a net income margin of 8.0% and diluted net
income per share of $0.12. Adjusted
Net Income was $16.5 million with
Adjusted Diluted Income per share of $0.14
- Adjusted EBITDA of $59.8 million,
down 12% compared to the third quarter of 2023, with an Adjusted
EBITDA margin of 28.5%
- Cash flows from operating activities was $106.4 million for the nine months ended
September 30, 2024, compared to
$73.4 million for the nine months
ended September 30, 2023. Adjusted
Free Cash Flow was $59.3 million for
the nine months ended September 30,
2024, compared to $19.8
million for the nine months ended September 30, 2023
"Ecovyst's third-quarter results met our expectations,
showcasing the resilience of our Ecoservices segment. This was
driven by favorable pricing in regeneration services and increased
sales volumes for virgin sulfuric acid. In our Advanced Materials
& Catalysts segment, growth in polyethylene catalysts was
offset by the shift of certain hydrocracking and custom catalyst
orders into the fourth quarter of 2024," said Kurt J. Bitting, Ecovyst's Chief Executive
Officer.
"Ecovyst is steadfast in pursuing our strategic goals of
operational excellence, increasing industrial segment volumes, and
diversifying products through emerging technologies. I am pleased
with the strides we've made in enhancing reliability within
Ecoservices, which has already led to gains in operational
efficiency. Additionally, we have made notable progress in Advanced
Materials & Catalysts through investments in the Kansas City expansion and collaborations with
customers in biocatalysis and advanced recycling technologies,"
Bitting added.
Review of Segment Results and Business Trends
Ecoservices
Third quarter 2024 sales were $153.9
million, compared to $147.6
million in the third quarter of 2023. The increase in sales
reflects higher sales volume in virgin sulfuric acid and favorable
contractual pricing in regeneration services. Third quarter 2024
Adjusted EBITDA was $55.1 million,
compared to $54.7 million in the
third quarter of 2023. The modest increase reflects favorable net
pricing and higher sales volume, partially offset by higher
manufacturing costs associated with inflation, increased planned
maintenance costs and costs associated with the manufacturing plant
reliability improvement program.
Advanced Materials & Catalysts
During the third quarter of 2024, Advanced Silicas sales were
$25.3 million, compared to
$25.7 million in the third quarter of
2023. The modest decrease in sales reflects the timing of niche
custom catalyst sales, partially offset by higher sales of advanced
silicas used for the production of polyethylene. Our proportionate
50% share of third quarter sales for the Zeolyst Joint Venture was
$30.9 million, compared to
$37.0 million in the third 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 and emission control applications, partially offset by higher
sales of hydrocracking catalysts and custom catalysts. Third
quarter 2024 Adjusted EBITDA for Advanced Materials &
Catalysts, which includes our proportionate 50% share of the
Zeolyst Joint Venture, was $10.9
million, compared to $16.4
million in the third quarter of 2023, with the change
reflecting lower sales volume within the Zeolyst Joint Venture
associated with catalysts used in the production of sustainable
fuels and emission control applications, partially offset by
favorable mix and increased sales of advanced silicas used for the
production of polyethylene in Advanced Silicas.
Cash Flows and Balance Sheet
Cash flows from operating activities was $106.4 million for the nine months ended
September 30, 2024, compared to
$73.4 million for the nine months
ended September 30, 2023. The
increase was primarily driven by the timing of dividends received
from the Zeolyst Joint Venture and favorable working capital
changes. At September 30, 2024, the
Company had cash and cash equivalents of $123.5 million, total gross debt of $873.0 million and availability under the ABL
facility of $64.5 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
$188.0 million. The net debt to net
income ratio was 13.9x as of September 30,
2024 and the net debt leverage ratio was 3.2x as of
September 30, 2024.
2024 Financial Outlook
Ecovyst expects demand trends for our Ecoservices segment to
remain positive for the balance of 2024. The company expects high
refinery utilization to provide continued support for our
regeneration services business. Ecovyst remains cautious about the
possibility of further contraction in industrial demand, but we
anticipate sales of virgin sulfuric acid to be up in 2024, compared
to 2023. For Advanced Silicas, Ecovyst expects sales of
polyethylene catalysts and supports to be up in 2024, compared to
2023. However, the magnitude of the increase remains a function of
overall industrial activity and related customer demand. Ecovyst
remains cautious of the potential for timing shifts to impact sales
of event-driven, niche custom catalysts in our Advanced Silicas
business. The Company expects the current supply and demand
imbalance in the renewable fuels industry will continue to
challenge the near-term demand outlook for Ecovyst's sales of
catalyst materials used in sustainable fuel production. Subdued
economic conditions and high interest rates are also anticipated to
continue to weigh on the near-term sales of emission control
catalyst materials which are used on heavy duty diesel
vehicles.
"I am pleased with the focus and performance of my Ecovyst
colleagues in the face of the near-term challenges in some of our
product groups. Based upon our current expectations for the
remainder of the year, which include continued positive momentum in
our Ecoservices business, and an expectation for higher
polyethylene catalyst sales and anticipated timing associated with
hydrocracking and niche custom catalyst sales, we are maintaining
our guidance for full-year 2024 Adjusted EBITDA of $230 million $245
million. While we remain cautious about the
uncertainty in the global macroeconomic environment and its
potential impact on industrial activity over the balance of the
year, we believe the continued resilience and cash generation of
our core businesses will allow Ecovyst to remain intently focused
on achieving our long-term growth objectives and on value creation
for our shareholders," Bitting said.
The Company's current guidance for full year 2024 is as
follows:
- Sales of $700 million to
$740 million
- Sales of $115 million to
$135 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
- Free Cash Flow1 of $75
million to $85 million
- Capital expenditures of $70
million to $80 million
- Interest expense of $48 million
to $52 million
- Depreciation & Amortization
- Ecovyst - $88 million to
$92 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.
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 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 million of
the Company's outstanding common stock over the next four years. As
of September 30, 2024, $229.6 million was available for share
repurchases under the program.
During the third quarter of 2024, the Company did not repurchase
any shares of its common stock pursuant to the stock repurchase
program. During the third quarter of 2023, the Company repurchased
541,494 shares of its common stock on the open market at an average
price of $9.85 per share, for a total
cost of $5.3 million, excluding
brokerage commissions and accrued excise tax.
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 and may be conducted through negotiated
transactions, open market repurchases or other means, including
through Rule 10b-18 trading plans or
accelerated share repurchases. 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.
Conference Call and Webcast Details
On Thursday, October 31, 2024, Ecovyst management will
review the third 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) 267-6316 (domestic) or
1 (203) 518-9783 (international) and use the
participant code ECVTQ324.
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 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
September
30,
|
|
|
|
Nine months
ended
September
30,
|
|
|
|
|
2024
|
|
2023
|
|
%
Change
|
|
2024
|
|
2023
|
|
%
Change
|
|
|
|
|
Sales
|
|
$
179.2
|
|
$
173.3
|
|
3.4 %
|
|
$
522.5
|
|
$
518.3
|
|
0.8 %
|
|
Cost of goods
sold
|
|
124.5
|
|
120.1
|
|
3.7 %
|
|
374.9
|
|
367.7
|
|
2.0 %
|
|
Gross
profit
|
|
54.7
|
|
53.2
|
|
2.8 %
|
|
147.6
|
|
150.6
|
|
(2.0) %
|
|
Selling, general and
administrative expenses
|
|
20.0
|
|
16.9
|
|
18.3 %
|
|
64.3
|
|
59.5
|
|
8.1 %
|
|
Other operating
expense, net
|
|
3.1
|
|
4.3
|
|
(27.9) %
|
|
9.9
|
|
17.2
|
|
(42.4) %
|
|
Operating
income
|
|
31.6
|
|
32.0
|
|
(1.3) %
|
|
73.4
|
|
73.9
|
|
(0.7) %
|
|
Equity in net (income)
from affiliated companies
|
|
0.9
|
|
(4.7)
|
|
(119.1) %
|
|
(2.5)
|
|
(16.3)
|
|
(84.7) %
|
|
Interest expense,
net
|
|
11.3
|
|
11.8
|
|
(4.2) %
|
|
37.6
|
|
30.8
|
|
22.1 %
|
|
Debt extinguishment
costs
|
|
—
|
|
—
|
|
— %
|
|
4.6
|
|
—
|
|
NM
|
|
Other expense,
net
|
|
0.6
|
|
0.4
|
|
50.0 %
|
|
1.1
|
|
0.6
|
|
83.3 %
|
|
Income before income
taxes
|
|
18.8
|
|
24.5
|
|
(23.3) %
|
|
32.6
|
|
58.8
|
|
(44.6) %
|
|
Provision for income
taxes
|
|
4.5
|
|
7.9
|
|
(43.0) %
|
|
8.8
|
|
17.6
|
|
(50.0) %
|
|
Effective tax
rate
|
|
24.0 %
|
|
32.3 %
|
|
|
|
26.9 %
|
|
29.9 %
|
|
|
|
Net income
|
|
$
14.3
|
|
$
16.6
|
|
(13.9) %
|
|
$
23.8
|
|
$
41.2
|
|
(42.2) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share
|
|
$
0.12
|
|
$
0.14
|
|
|
|
$
0.20
|
|
$
0.35
|
|
|
|
Diluted earnings per
share
|
|
$
0.12
|
|
$
0.14
|
|
|
|
$
0.20
|
|
$
0.34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
116,490,634
|
|
116,446,085
|
|
|
|
116,786,759
|
|
119,042,161
|
|
|
|
Diluted
|
|
117,187,054
|
|
117,374,347
|
|
|
|
117,425,254
|
|
120,417,132
|
|
|
|
ECOVYST INC. AND
SUBSIDIARIES
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
(in millions, except
share and per share amounts)
|
|
|
September
30,
2024
|
|
December 31,
2023
|
|
ASSETS
|
|
|
|
|
Cash and cash
equivalents
|
$
123.5
|
|
$
88.4
|
|
Accounts receivable,
net
|
74.0
|
|
81.3
|
|
Inventories,
net
|
53.7
|
|
45.1
|
|
Derivative
assets
|
6.2
|
|
13.4
|
|
Prepaid and other
current assets
|
26.1
|
|
17.8
|
|
Total current
assets
|
283.5
|
|
246.0
|
|
Investments in
affiliated companies
|
410.4
|
|
440.2
|
|
Property, plant and
equipment, net
|
571.7
|
|
576.9
|
|
Goodwill
|
405.8
|
|
404.5
|
|
Other intangible
assets, net
|
106.6
|
|
116.6
|
|
Right-of-use lease
assets
|
25.7
|
|
24.3
|
|
Other long-term
assets
|
36.3
|
|
29.4
|
|
Total
assets
|
$
1,840.0
|
|
$
1,837.8
|
|
LIABILITIES
|
|
|
|
|
Current maturities of
long-term debt
|
$
8.7
|
|
$
9.0
|
|
Accounts
payable
|
33.4
|
|
40.2
|
|
Operating lease
liabilities—current
|
8.0
|
|
8.2
|
|
Accrued
liabilities
|
61.7
|
|
61.7
|
|
Total current
liabilities
|
111.8
|
|
119.1
|
|
Long-term debt,
excluding current portion
|
853.9
|
|
858.9
|
|
Deferred income
taxes
|
108.5
|
|
115.8
|
|
Operating lease
liabilities—noncurrent
|
17.6
|
|
16.0
|
|
Other long-term
liabilities
|
18.9
|
|
22.5
|
|
Total
liabilities
|
1,110.7
|
|
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 September 30, 2024 and December 31, 2023,
respectively; outstanding shares 116,509,803 and 116,116,895 on
September 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 September 30, 2024 and December 31, 2023
|
—
|
|
—
|
|
Additional paid-in
capital
|
1,103.4
|
|
1,102.6
|
|
Accumulated
deficit
|
(147.1)
|
|
(170.9)
|
|
Treasury stock, at
cost; shares 24,363,043 and 24,627,150 on September 30, 2024 and
December 31, 2023, respectively
|
(223.1)
|
|
(226.7)
|
|
Accumulated other
comprehensive loss
|
(5.3)
|
|
(0.9)
|
|
Total
equity
|
729.3
|
|
705.5
|
|
Total liabilities and
equity
|
$
1,840.0
|
|
$
1,837.8
|
|
ECOVYST INC. AND
SUBSIDIARIES
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
Nine months
ended
September
30,
|
|
2024
|
|
2023
|
|
Cash flows from
operating activities:
|
(in
millions)
|
|
Net income
|
$
23.8
|
|
$
41.2
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
Depreciation
|
56.2
|
|
51.9
|
|
Amortization
|
10.6
|
|
10.5
|
|
Amortization of
deferred financing costs and original issue discount
|
1.3
|
|
1.5
|
|
Deferred income tax
benefit
|
(4.5)
|
|
(1.0)
|
|
Net loss on asset
disposals
|
0.8
|
|
3.3
|
|
Stock
compensation
|
10.5
|
|
12.5
|
|
Equity in net income
from affiliated companies
|
(2.5)
|
|
(16.3)
|
|
Dividends received
from affiliated companies
|
33.0
|
|
10.0
|
|
Other, net
|
(7.3)
|
|
(5.2)
|
|
Working capital
changes that provided (used) cash:
|
|
|
|
|
Receivables
|
7.6
|
|
(8.9)
|
|
Inventories
|
(7.4)
|
|
(3.9)
|
|
Prepaids and other
current assets
|
(8.3)
|
|
0.9
|
|
Accounts
payable
|
(5.8)
|
|
(3.7)
|
|
Accrued
liabilities
|
(1.6)
|
|
(19.4)
|
|
Net cash provided by
operating activities
|
106.4
|
|
73.4
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
Purchases of property,
plant and equipment
|
(51.7)
|
|
(53.6)
|
|
Investment in
non-marketable equity securities
|
(4.5)
|
|
—
|
|
Net cash used in
investing activities
|
(56.2)
|
|
(53.6)
|
|
|
|
|
|
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 original issue discount and financing fees
|
870.8
|
|
—
|
|
Repayments of
long-term debt
|
(877.5)
|
|
(6.8)
|
|
Repurchases of common
shares
|
(5.0)
|
|
(78.7)
|
|
Tax withholdings on
equity award vesting
|
(1.2)
|
|
(3.4)
|
|
Repayment of financing
obligation
|
(2.4)
|
|
(2.1)
|
|
Other, net
|
0.2
|
|
0.5
|
|
Net cash used in
financing activities
|
(15.1)
|
|
(90.5)
|
|
|
|
|
|
Effect of exchange rate
changes on cash and cash equivalents
|
—
|
|
(1.9)
|
|
Net change in cash and
cash equivalents
|
35.1
|
|
(72.6)
|
|
Cash and cash
equivalents at beginning of period
|
88.4
|
|
110.9
|
|
Cash and cash
equivalents at end of period
|
$ 123.5
|
|
$
38.3
|
|
Appendix Table A-1:
Reconciliation of Net Income to Adjusted EBITDA
|
|
|
|
Three months
ended
September
30,
|
|
Nine months
ended
September
30,
|
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
|
(in
millions)
|
|
Reconciliation of
net income to Adjusted EBITDA
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
14.3
|
|
$
16.6
|
|
$
23.8
|
|
$
41.2
|
|
Provision for income
taxes
|
|
4.5
|
|
7.9
|
|
8.8
|
|
17.6
|
|
Interest expense,
net
|
|
11.3
|
|
11.8
|
|
37.6
|
|
30.8
|
|
Depreciation and
amortization
|
|
23.2
|
|
21.3
|
|
66.8
|
|
62.5
|
|
EBITDA
|
|
53.3
|
|
57.6
|
|
137.0
|
|
152.1
|
|
Joint venture
depreciation, amortization and interest(a)
|
|
3.6
|
|
3.3
|
|
10.1
|
|
10.1
|
|
Amortization of
investment in affiliate step-up(b)
|
|
0.6
|
|
1.6
|
|
3.2
|
|
4.8
|
|
Debt extinguishment
costs
|
|
—
|
|
—
|
|
4.6
|
|
—
|
|
Net loss on asset
disposals(c)
|
|
0.2
|
|
1.0
|
|
0.8
|
|
3.3
|
|
Foreign currency
exchange loss (gain)(d)
|
|
—
|
|
0.8
|
|
0.1
|
|
(0.4)
|
|
LIFO (benefit)
expense(e)
|
|
(0.6)
|
|
—
|
|
(3.2)
|
|
2.5
|
|
Transaction and other
related costs(f)
|
|
—
|
|
0.2
|
|
0.2
|
|
2.8
|
|
Equity-based
compensation
|
|
3.0
|
|
3.5
|
|
10.5
|
|
12.6
|
|
Restructuring,
integration and business optimization
expenses(g)
|
|
0.5
|
|
0.3
|
|
0.9
|
|
2.4
|
|
Other(h)
|
|
(0.8)
|
|
(0.4)
|
|
(1.9)
|
|
(0.1)
|
|
Adjusted
EBITDA
|
|
$
59.8
|
|
$
67.9
|
|
$
162.3
|
|
$
190.1
|
|
|
|
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 remeasurement effects of
monetary assets and liabilities, including non-permanent
intercompany debt, denominated in foreign currency.
|
|
|
|
(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
September
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
|
$
18.8
|
$ 4.5
|
$ 14.3
|
$
0.12
|
$
0.12
|
|
$
24.5
|
$ 7.9
|
$ 16.6
|
$
0.14
|
$
0.14
|
|
Amortization of
investment in affiliate step-up(b)
|
0.6
|
0.1
|
0.5
|
—
|
—
|
|
1.6
|
0.5
|
1.1
|
0.01
|
0.01
|
|
Net loss on asset
disposals(c)
|
0.2
|
0.1
|
0.1
|
—
|
—
|
|
1.0
|
0.3
|
0.7
|
0.01
|
0.01
|
|
Foreign currency
exchange loss(d)
|
—
|
—
|
—
|
—
|
—
|
|
0.8
|
0.2
|
0.6
|
0.01
|
0.01
|
|
LIFO
benefit(e)
|
(0.6)
|
(0.2)
|
(0.4)
|
—
|
—
|
|
—
|
—
|
—
|
—
|
—
|
|
Transaction and other
related costs(f)
|
—
|
—
|
—
|
—
|
—
|
|
0.2
|
0.1
|
0.1
|
—
|
—
|
|
Equity-based
compensation
|
3.0
|
0.7
|
2.3
|
0.02
|
0.02
|
|
3.5
|
0.3
|
3.2
|
0.03
|
0.03
|
|
Restructuring,
integration and business optimization
expenses(g)
|
0.5
|
0.1
|
0.4
|
—
|
—
|
|
0.3
|
0.1
|
0.2
|
—
|
—
|
|
Other(h)
|
(0.8)
|
(0.1)
|
(0.7)
|
—
|
—
|
|
(0.4)
|
(0.1)
|
(0.3)
|
(0.01)
|
(0.01)
|
|
Adjusted Net
Income(1)
|
$
21.7
|
$ 5.2
|
$ 16.5
|
$
0.14
|
$
0.14
|
|
$
31.5
|
$ 9.3
|
$ 22.2
|
$
0.19
|
$
0.19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding
|
|
|
|
116,490,634
|
117,187,054
|
|
|
|
|
116,446,085
|
117,374,347
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months
ended
September
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
|
$
32.6
|
$ 8.8
|
$ 23.8
|
$
0.20
|
$
0.20
|
|
$
58.8
|
$ 17.6
|
$ 41.2
|
$
0.35
|
$
0.34
|
|
Amortization of
investment in affiliate step-up(b)
|
3.2
|
0.8
|
2.4
|
0.02
|
0.02
|
|
4.8
|
1.3
|
3.5
|
0.03
|
0.03
|
|
Debt extinguishment
costs
|
4.6
|
1.2
|
3.4
|
0.03
|
0.03
|
|
—
|
—
|
—
|
—
|
—
|
|
Net loss on asset
disposals(c)
|
0.8
|
0.2
|
0.6
|
0.01
|
0.01
|
|
3.3
|
0.9
|
2.4
|
0.02
|
0.02
|
|
Foreign currency
exchange loss (gain)(d)
|
0.1
|
—
|
0.1
|
—
|
—
|
|
(0.4)
|
(0.1)
|
(0.3)
|
—
|
—
|
|
LIFO (benefit)
expense(e)
|
(3.2)
|
(0.8)
|
(2.4)
|
(0.02)
|
(0.02)
|
|
2.5
|
0.7
|
1.8
|
0.02
|
0.01
|
|
Transaction and other
related costs(f)
|
0.2
|
0.1
|
0.1
|
—
|
—
|
|
2.8
|
0.8
|
2.0
|
0.02
|
0.02
|
|
Equity-based
compensation
|
10.5
|
2.1
|
8.4
|
0.07
|
0.07
|
|
12.6
|
1.1
|
11.5
|
0.10
|
0.10
|
|
Restructuring,
integration and business optimization
expenses(g)
|
0.9
|
0.2
|
0.7
|
0.01
|
0.01
|
|
2.4
|
0.7
|
1.7
|
0.01
|
0.01
|
|
Other(h)
|
(1.9)
|
(0.6)
|
(1.3)
|
(0.01)
|
(0.02)
|
|
(0.1)
|
—
|
(0.1)
|
(0.01)
|
—
|
|
Adjusted Net
Income(1)
|
$
47.8
|
$ 12.0
|
$ 35.8
|
$
0.31
|
$
0.30
|
|
$
86.7
|
$ 23.0
|
$ 63.7
|
$
0.54
|
$
0.53
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding
|
|
|
|
116,786,759
|
117,425,254
|
|
|
|
|
119,042,161
|
120,417,132
|
|
|
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. Adjusted Net Income may not be comparable with net
income or Adjusted Net Income as defined by other
companies.
|
The adjustments to net income are shown net of applicable tax
rates of 25.1% and 27.4% for the nine months ended September 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
September
30,
|
|
|
|
Nine months
ended
September
30,
|
|
|
|
|
2024
|
|
2023
|
|
%
Change
|
|
2024
|
|
2023
|
|
%
Change
|
|
|
|
|
Sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ecoservices
|
|
$ 153.9
|
|
$ 147.6
|
|
4.3 %
|
|
$ 449.4
|
|
$ 443.4
|
|
1.4 %
|
|
Advanced
Silicas
|
|
25.3
|
|
25.7
|
|
(1.6) %
|
|
73.1
|
|
74.9
|
|
(2.4) %
|
|
Total
sales
|
|
$ 179.2
|
|
$ 173.3
|
|
3.4 %
|
|
$ 522.5
|
|
$ 518.3
|
|
0.8 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Zeolyst Joint Venture
sales
|
|
$ 30.9
|
|
$ 37.0
|
|
(16.5) %
|
|
$ 83.4
|
|
$ 103.7
|
|
(19.6) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ecoservices
|
|
$ 55.1
|
|
$ 54.7
|
|
0.7 %
|
|
$ 146.3
|
|
$ 151.6
|
|
(3.5) %
|
|
Advanced Materials
& Catalysts
|
|
10.9
|
|
16.4
|
|
(33.5) %
|
|
36.8
|
|
54.7
|
|
(32.7) %
|
|
Unallocated corporate
expenses
|
|
(6.2)
|
|
(3.2)
|
|
(93.8) %
|
|
(20.8)
|
|
(16.2)
|
|
(28.4) %
|
|
Total Adjusted
EBITDA
|
|
$ 59.8
|
|
$ 67.9
|
|
(11.9) %
|
|
$ 162.3
|
|
$ 190.1
|
|
(14.6) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
Margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ecoservices
|
|
35.8 %
|
|
37.1 %
|
|
|
|
32.6 %
|
|
34.2 %
|
|
|
|
Advanced Materials
& Catalysts(1)
|
|
19.4 %
|
|
26.2 %
|
|
|
|
23.5 %
|
|
30.6 %
|
|
|
|
Total Adjusted
EBITDA Margin(1)
|
|
28.5 %
|
|
32.3 %
|
|
|
|
26.8 %
|
|
30.6 %
|
|
|
|
|
|
(1)
|
Adjusted EBITDA Margin
calculation includes proportionate 50% share of sales from the
Zeolyst Joint Venture.
|
|
Appendix Table A-4:
Adjusted Free Cash Flow
|
|
|
|
Nine months
ended
September
30,
|
|
|
2024
|
|
2023
|
|
|
(in
millions)
|
|
Net cash provided by
operating activities
|
|
$
106.4
|
|
$
73.4
|
|
Less:
|
|
|
|
|
|
Purchases of property,
plant and equipment(1)
|
|
(51.7)
|
|
(53.6)
|
|
Free Cash
Flow(2)
|
|
$
54.7
|
|
$
19.8
|
|
|
|
|
|
|
Adjustments to free
cash flow:
|
|
|
|
|
|
Cash paid for debt
financing costs included in cash from operating
activities
|
|
4.6
|
|
—
|
|
Adjusted Free Cash
Flow(2)
|
|
$
59.3
|
|
$
19.8
|
|
|
|
|
|
|
Net cash used in
investing activities(3)
|
|
$
(56.2)
|
|
$
(53.6)
|
|
Net cash used in
financing activities
|
|
$
(15.1)
|
|
$
(90.5)
|
|
|
|
(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
|
|
|
September 30,
2024
|
|
September 30,
2023
|
|
(in millions, except
ratios)
|
|
Total debt
|
$
873.0
|
|
$
879.8
|
|
Less:
|
|
|
|
|
Cash and cash
equivalents
|
123.5
|
|
38.3
|
|
Net debt
|
$
749.5
|
|
$
841.5
|
|
|
|
|
|
Trailing twelve
months:
|
|
|
|
|
Net income
|
$
53.8
|
|
$
62.7
|
|
Adjusted
EBITDA(1)
|
$
232.0
|
|
$
259.3
|
|
|
|
|
|
Net Debt to Net Income
ratio
|
13.9x
|
|
13.4x
|
|
Net Debt Leverage
ratio
|
3.2x
|
|
3.2x
|
___________
|
(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.
