Ecovyst Reports Second Quarter 2023 Results
- Net income increased by 36% year-over-year
- Adjusted EBITDA increased by 9% year-over-year
- Strong pricing, favorable mix, and higher sales of renewable fuels, emission control, and hydrocracking catalysts
- Sales declined from $225.2 million in Q2 2022 to $184.1 million in Q2 2023
- Lower virgin sulfuric acid and silica catalyst sales volume
Second Quarter 2023 Results & Highlights
-
Sales of
, compared to$184.1 million in the second quarter of 2022, the reduction driven primarily by lower pass-through of sulfur costs of approximately$225.2 million .$32 million -
Net income of
, up$26.1 million 36% year-over-year, with a net income margin of14.2% and with diluted net income per share of , up$0.22 57% year-over-year; Adjusted net income of , up$34.6 million 15% year-over-year, with Adjusted diluted earnings per share of , up$0.29 32% year-over-year. -
Adjusted EBITDA of
, up$79.3 million 9% year-over-year, with an Adjusted EBITDA margin of34.7% . - Profitability driven by strong pricing, favorable mix, and higher sales of renewable fuels, emission control, and hydrocracking catalysts, offsetting lower virgin sulfuric acid and silica catalyst sales volume.
-
In conjunction with a secondary offering, repurchased 4,000,000 shares at an average price of
, for total cost of$10.88 .$43.5 million - Formalized a strategic cooperation with Valoregen for development of advanced plastic recycling technologies utilizing the Opal InfinityTM catalyst portfolio of the Zeolyst Joint Venture.
- Updating 2023 guidance to reflect anticipated softening of demand in select end uses and the impact of an unforeseen outage and production restriction at one of our sites.
Financial results and outlook include non-GAAP financial measures. These non-GAAP measures are more fully described and are reconciled from the respective measures determined under GAAP in “Presentation of Non-GAAP Financial Measures” and the attached appendix.
“During the second quarter of 2023, high refinery utilization continued to support demand for our regeneration services and we benefited from higher net pricing for regeneration volume. In addition, and as anticipated, we saw stronger sales for emission control, hydrocracking and renewable fuel catalysts in our Catalyst Technologies segment, which also continued to benefit from previously implemented price increases,” said Kurt J. Bitting, Ecovyst’s Chief Executive Officer. “Although unplanned operational downtime at our Ecoservices’ Dominguez facility at the end of the quarter limited sales volume and increased maintenance costs, we delivered second quarter 2023 Adjusted EBITDA of
Second Quarter 2023 Results
Sales for the quarter ended June 30, 2023 were
Net income was
Review of Segment Results and Business Trends
Demand across most product categories, end-uses and customers remained positive. Through the second quarter of 2023, high refinery utilization continued to support activity in our regeneration services business, and we anticipate high refinery utilization to continue for the balance of 2023. In addition, strong demand resulted in higher sales of catalyst used in the production of renewable fuels, emission control and hydrocracking catalysts during the second quarter, compared to the second quarter of 2022, and we expect continued higher sales of hydrocracking catalysts in the second half of 2023, compared to the first half of the year. However, sales volumes in Ecoservices were impacted in the second quarter of 2023, primarily by the unplanned production downtime at the Dominguez site, and we expect the outages and resulting production restriction to adversely impact sales and maintenance costs in the third quarter of 2023.
In addition, late in the second quarter of 2023, we saw evidence of weaker demand fundamentals in nylon and polyethylene end uses, which we believe are more driven by cyclical, global demand trends. For the second half of 2023, we believe these weaker demand fundamentals will adversely impact sales of virgin sulfuric acid into nylon production. In addition, we now expect lower sales of polyethylene catalysts for the balance of 2023, driven by declining global polyethylene demand and lower polyethylene production plant operating rates.
Ecoservices
Our regeneration services support the production of alkylate, a high value gasoline component critical for meeting stringent gasoline standards and for producing premium grade gasoline. Tightening of gasoline standards and increased demand for higher-octane premium grade gasoline to power high compression, more fuel efficient engines resulted in higher utilization for our customers’ alkylation units. High
Sales were
Catalyst Technologies
Our silica catalysts 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 expect long-term demand for polyethylene films and packaging to remain positive, late in the second quarter we saw evidence of softer global demand and lower operating rates for polyethylene producers, which we believe will impact sales of polyethylene catalysts in the second half of 2023. Through the Zeolyst Joint Venture, we also supply specialty catalysts to customers for use in the production of both traditional and renewable fuels, petrochemicals, and emission control systems for both on-road and non-road diesel engines. Demand for traditional fuels remained positive and demand for renewable fuels increased. We also supply niche custom catalysts in the refining and petrochemical industries. We continue to expect growth in demand for catalysts used in these applications.
During the second quarter of 2023, silica catalysts sales were
Cash Flows and Balance Sheet
Cash flows from operating activities was
Updated 2023 Financial Outlook
“While our expectations for regeneration services demand and sales of hydrocracking and other zeolite-based catalysts remains positive for the second half of 2023, late in the second quarter we began to see evidence of softer demand in end uses more linked to global macroeconomic fundamentals, including lower demand expectations and de-stocking from certain customers. These end uses include nylon production, which is a significant outlet for our virgin sulfuric acid, and polyethylene production, where global demand operating rates have continued to decrease beyond our forecast. In addition, the unplanned equipment outage and production restriction at the Ecoservices’ Dominguez location late in the second quarter continued into the third quarter, prior to its resolution,” said Bitting.
“Given that we expect weaker demand in the nylon and polyethylene end uses, and with the combined impact of both lost sales volume and higher maintenance and repair costs primarily associated with the unplanned equipment outage and production restriction at the Ecoservices’ Dominguez site, we are making a moderate revision to our full-year Adjusted EBITDA expectations to a range of
Based upon business trends and conditions as of today, the Company’s full year 2023 guidance is as follows:
-
Sales of
to$685 million 1 (changed from$715 million to$730 million to reflect lower expected virgin sulfuric acid volume and lower expected volume of polyethylene catalysts)$760 million -
Sales of
to$155 million for proportionate$165 million 50% share of Zeolyst Joint Venture, which is excluded from GAAP sales (increased from to$145 million )$155 million -
Adjusted EBITDA2 of
to$260 million (change from$275 million to$285 million )$300 million -
Adjusted Free Cash Flow2 of
to$100 million (change from$115 million to$115 million )$130 million -
Capital expenditures of
to$50 million (change from$60 million to$60 million )$70 million -
Interest expense of
to$45 million (no change)$50 million -
Depreciation & amortization (no change)
-
Ecovyst -
to$80 million $90 million -
Zeolyst J.V. -
to$14 million $16 million
-
Ecovyst -
1Sales outlook for 2023 assumes lower average sulfur prices, compared to 2022, and lower projected pass-through of sulfur costs of approximately
2In 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
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
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, 2023,
Conference Call and Webcast Details
On Thursday, August 3, 2023, 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) 267-6316 (domestic) or 1 (203) 518-9848 (international) and use the participant code ECVTQ223.
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.
About Ecovyst Inc.
Ecovyst Inc. and subsidiaries is a leading integrated and innovative global provider of specialty catalysts and services. We support customers globally through our strategically located network of manufacturing facilities. We believe that our products, which are predominantly inorganic, 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 on-purpose virgin sulfuric acid for water treatment, mining, and industrial applications; and Catalyst Technologies provides finished silica catalysts and catalyst supports necessary to produce high strength and high stiffness plastics and, through its Zeolyst Joint Venture, supplies zeolites used for catalysts that help produce renewable fuels, remove nitrogen oxides from diesel engine emissions as well as sulfur from fuels during the refining 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
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
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, liquidity, prospects, growth, strategies, capital allocation program (including the stock repurchase program), product and service offerings, expected demand trends and our 2023 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 the 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, |
|
|
||||||||||||||
|
|
|
2023 |
|
|
|
2022 |
|
|
% Change |
|
|
2023 |
|
|
|
2022 |
|
|
% Change |
||
|
|
|
||||||||||||||||||||
Sales |
|
$ |
184.1 |
|
|
$ |
225.2 |
|
|
(18.3 |
)% |
|
$ |
345.0 |
|
|
$ |
404.9 |
|
|
(14.8 |
)% |
Cost of goods sold |
|
|
123.1 |
|
|
|
165.3 |
|
|
(25.5 |
)% |
|
|
247.5 |
|
|
|
297.3 |
|
|
(16.8 |
)% |
Gross profit |
|
|
61.0 |
|
|
|
59.9 |
|
|
1.8 |
% |
|
|
97.5 |
|
|
|
107.6 |
|
|
(9.4 |
)% |
Selling, general and administrative expenses |
|
|
21.4 |
|
|
|
22.8 |
|
|
(6.1 |
)% |
|
|
42.5 |
|
|
|
46.3 |
|
|
(8.2 |
)% |
Other operating expense, net |
|
|
6.3 |
|
|
|
9.7 |
|
|
(35.1 |
)% |
|
|
13.0 |
|
|
|
17.4 |
|
|
(25.3 |
)% |
Operating income |
|
|
33.3 |
|
|
|
27.4 |
|
|
21.5 |
% |
|
|
42.0 |
|
|
|
43.9 |
|
|
(4.3 |
)% |
Equity in net (income) from affiliated companies |
|
|
(11.4 |
) |
|
|
(8.5 |
) |
|
34.1 |
% |
|
|
(11.6 |
) |
|
|
(14.3 |
) |
|
(18.9 |
)% |
Interest expense, net |
|
|
9.2 |
|
|
|
8.9 |
|
|
3.4 |
% |
|
|
19.0 |
|
|
|
17.3 |
|
|
9.8 |
% |
Other expense, net |
|
|
0.6 |
|
|
|
0.5 |
|
|
20.0 |
% |
|
|
0.2 |
|
|
|
0.8 |
|
|
(75.0 |
)% |
Income before income taxes |
|
|
34.9 |
|
|
|
26.5 |
|
|
31.7 |
% |
|
|
34.4 |
|
|
|
40.1 |
|
|
(14.2 |
)% |
Provision for income taxes |
|
|
8.8 |
|
|
|
7.3 |
|
|
20.5 |
% |
|
|
9.7 |
|
|
|
13.0 |
|
|
(25.4 |
)% |
Effective tax rate |
|
|
25.2 |
% |
|
|
27.5 |
% |
|
|
|
|
28.3 |
% |
|
|
32.4 |
% |
|
|
||
Net income |
|
$ |
26.1 |
|
|
$ |
19.2 |
|
|
35.9 |
% |
|
$ |
24.7 |
|
|
$ |
27.1 |
|
|
(8.9 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic earnings per share |
|
$ |
0.22 |
|
|
$ |
0.14 |
|
|
|
|
$ |
0.20 |
|
|
$ |
0.20 |
|
|
|
||
Diluted earnings per share |
|
$ |
0.22 |
|
|
$ |
0.14 |
|
|
|
|
$ |
0.20 |
|
|
$ |
0.19 |
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic |
|
|
118,651,402 |
|
|
|
138,035,764 |
|
|
|
|
|
120,335,414 |
|
|
|
137,876,185 |
|
|
|
||
Diluted |
|
|
119,920,742 |
|
|
|
139,149,560 |
|
|
|
|
|
121,831,942 |
|
|
|
139,175,659 |
|
|
|
ECOVYST INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in millions, except share and per share amounts) |
|||||||
|
June 30,
|
|
December 31,
|
||||
ASSETS |
|
|
|
||||
Cash and cash equivalents |
$ |
29.2 |
|
|
$ |
110.9 |
|
Accounts receivable, net |
|
78.2 |
|
|
|
74.8 |
|
Inventories, net |
|
47.6 |
|
|
|
44.4 |
|
Derivative assets |
|
17.3 |
|
|
|
18.5 |
|
Prepaid and other current assets |
|
24.9 |
|
|
|
19.1 |
|
Total current assets |
|
197.2 |
|
|
|
267.7 |
|
Investments in affiliated companies |
|
438.4 |
|
|
|
436.0 |
|
Property, plant and equipment, net |
|
587.2 |
|
|
|
584.9 |
|
Goodwill |
|
404.2 |
|
|
|
403.2 |
|
Other intangible assets, net |
|
123.5 |
|
|
|
129.9 |
|
Right-of-use lease assets |
|
29.6 |
|
|
|
28.3 |
|
Other long-term assets |
|
33.9 |
|
|
|
34.6 |
|
Total assets |
$ |
1,814.0 |
|
|
$ |
1,884.6 |
|
LIABILITIES |
|
|
|
||||
Current maturities of long-term debt |
$ |
9.0 |
|
|
$ |
9.0 |
|
Accounts payable |
|
34.6 |
|
|
|
40.0 |
|
Operating lease liabilities—current |
|
9.1 |
|
|
|
8.2 |
|
Accrued liabilities |
|
50.3 |
|
|
|
72.2 |
|
Total current liabilities |
|
103.0 |
|
|
|
129.4 |
|
Long-term debt, excluding current portion |
|
862.4 |
|
|
|
865.9 |
|
Deferred income taxes |
|
137.1 |
|
|
|
136.2 |
|
Operating lease liabilities—noncurrent |
|
20.5 |
|
|
|
20.0 |
|
Other long-term liabilities |
|
23.3 |
|
|
|
25.8 |
|
Total liabilities |
|
1,146.3 |
|
|
|
1,177.3 |
|
Commitments and contingencies |
|
|
|
||||
EQUITY |
|
|
|
||||
Common stock ( |
|
1.4 |
|
|
|
1.4 |
|
Preferred stock ( |
|
— |
|
|
|
— |
|
Additional paid-in capital |
|
1,101.3 |
|
|
|
1,091.5 |
|
Accumulated deficit |
|
(217.4 |
) |
|
|
(242.0 |
) |
Treasury stock, at cost; shares 24,480,303 and 17,385,034 on June 30, 2023 and December 31, 2022, respectively |
|
(224.5 |
) |
|
|
(149.6 |
) |
Accumulated other comprehensive income |
|
6.9 |
|
|
|
6.0 |
|
Total equity |
|
667.7 |
|
|
|
707.3 |
|
Total liabilities and equity |
$ |
1,814.0 |
|
|
$ |
1,884.6 |
|
ECOVYST INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||||
|
Six months ended June 30, |
||||||
|
|
2023 |
|
|
|
2022 |
|
Cash flows from operating activities: |
(in millions) |
||||||
Net income |
$ |
24.7 |
|
|
$ |
27.1 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
||||
Depreciation |
|
34.1 |
|
|
|
32.2 |
|
Amortization |
|
7.0 |
|
|
|
7.1 |
|
Amortization of deferred financing costs and original issue discount |
|
1.0 |
|
|
|
1.0 |
|
Foreign currency exchange (gain) loss |
|
(0.6 |
) |
|
|
1.1 |
|
Deferred income tax provision |
|
1.3 |
|
|
|
11.3 |
|
Net loss on asset disposals |
|
2.3 |
|
|
|
0.7 |
|
Stock compensation |
|
9.1 |
|
|
|
12.7 |
|
Equity in net income from affiliated companies |
|
(11.6 |
) |
|
|
(14.3 |
) |
Dividends received from affiliated companies |
|
10.0 |
|
|
|
30.0 |
|
Other, net |
|
6.2 |
|
|
|
(4.4 |
) |
Working capital changes that provided (used) cash: |
|
|
|
||||
Receivables |
|
(3.0 |
) |
|
|
(33.2 |
) |
Inventories |
|
(3.0 |
) |
|
|
(3.1 |
) |
Prepaids and other current assets |
|
(5.7 |
) |
|
|
— |
|
Accounts payable |
|
(1.5 |
) |
|
|
9.7 |
|
Accrued liabilities |
|
(29.2 |
) |
|
|
(25.1 |
) |
Net cash provided by operating activities |
|
41.1 |
|
|
|
52.8 |
|
|
|
|
|
||||
Cash flows from investing activities: |
|
|
|
||||
Purchases of property, plant and equipment |
|
(39.2 |
) |
|
|
(25.8 |
) |
Payments for business divestiture, net of cash |
|
— |
|
|
|
(3.7 |
) |
Other, net |
|
— |
|
|
|
— |
|
Net cash used in investing activities |
|
(39.2 |
) |
|
|
(29.5 |
) |
|
|
|
|
||||
Cash flows from financing activities: |
|
|
|
||||
Draw down of revolving credit facilities |
|
14.5 |
|
|
|
— |
|
Repayments of revolving credit facilities |
|
(14.5 |
) |
|
|
— |
|
Repayments of long-term debt |
|
(4.5 |
) |
|
|
(4.5 |
) |
Repurchases of common shares |
|
(73.4 |
) |
|
|
(7.1 |
) |
Tax withholdings on equity award vesting |
|
(0.9 |
) |
|
|
(0.3 |
) |
Repayment of financing obligation |
|
(1.4 |
) |
|
|
— |
|
Other, net |
|
0.3 |
|
|
|
— |
|
Net cash used in financing activities |
|
(79.9 |
) |
|
|
(11.9 |
) |
|
|
|
|
||||
Effect of exchange rate changes on cash and cash equivalents |
|
(3.7 |
) |
|
|
(1.1 |
) |
Net change in cash and cash equivalents |
|
(81.7 |
) |
|
|
10.3 |
|
Cash and cash equivalents at beginning of period |
|
110.9 |
|
|
|
140.9 |
|
Cash and cash equivalents at end of period |
$ |
29.2 |
|
|
$ |
151.2 |
|
Appendix Table A-1: Reconciliation of Net Income to Adjusted EBITDA |
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|
|
Three months ended June 30, |
|
Six months ended June 30, |
||||||||||||
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
(in millions) |
||||||||||||||
Reconciliation of net income to Adjusted EBITDA |
|
|
|
|
|
|
|
|
||||||||
Net income |
|
$ |
26.1 |
|
|
$ |
19.2 |
|
|
$ |
24.7 |
|
|
$ |
27.1 |
|
Provision for income taxes |
|
|
8.8 |
|
|
|
7.3 |
|
|
|
9.7 |
|
|
|
13.0 |
|
Interest expense, net |
|
|
9.2 |
|
|
|
8.9 |
|
|
|
19.0 |
|
|
|
17.3 |
|
Depreciation and amortization |
|
|
21.0 |
|
|
|
19.7 |
|
|
|
41.2 |
|
|
|
39.2 |
|
EBITDA |
|
|
65.1 |
|
|
|
55.1 |
|
|
|
94.6 |
|
|
|
96.6 |
|
Joint venture depreciation, amortization and interest(a) |
|
|
3.2 |
|
|
|
4.0 |
|
|
|
6.8 |
|
|
|
8.1 |
|
Amortization of investment in affiliate step-up(b) |
|
|
1.6 |
|
|
|
1.6 |
|
|
|
3.2 |
|
|
|
3.2 |
|
Net loss on asset disposals(c) |
|
|
1.1 |
|
|
|
0.6 |
|
|
|
2.3 |
|
|
|
0.7 |
|
Foreign currency exchange (gain) loss(d) |
|
|
(0.4 |
) |
|
|
0.5 |
|
|
|
(1.1 |
) |
|
|
1.1 |
|
LIFO expense(e) |
|
|
1.1 |
|
|
|
0.2 |
|
|
|
2.5 |
|
|
|
0.4 |
|
Transaction and other related costs(f) |
|
|
1.2 |
|
|
|
0.8 |
|
|
|
2.6 |
|
|
|
5.1 |
|
Equity-based compensation |
|
|
5.0 |
|
|
|
5.4 |
|
|
|
9.1 |
|
|
|
12.7 |
|
Restructuring, integration and business optimization expenses(g) |
|
|
1.1 |
|
|
|
5.3 |
|
|
|
2.1 |
|
|
|
5.7 |
|
Other(h) |
|
|
0.3 |
|
|
|
(0.6 |
) |
|
|
0.1 |
|
|
|
(1.5 |
) |
Adjusted EBITDA |
|
$ |
79.3 |
|
|
$ |
72.9 |
|
|
$ |
122.2 |
|
|
$ |
132.1 |
|
Descriptions to Ecovyst Non-GAAP Reconciliations |
||
(a) | We use Adjusted EBITDA as a performance measure to evaluate our financial results. Because our Catalyst Technologies segment includes our |
|
(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 Ecoservices 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 fixed assets and 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 |
|
(e) | Represents non-cash adjustments to the Company’s LIFO reserves for certain inventories in the |
|
(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, |
||||||||||||||||||||||||||||||
|
2023 |
|
2022 |
||||||||||||||||||||||||||||
|
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 |
$ |
34.9 |
|
$ |
8.8 |
|
$ |
26.1 |
|
$ |
0.22 |
|
$ |
0.22 |
|
|
$ |
26.5 |
|
$ |
7.3 |
|
$ |
19.2 |
|
$ |
0.14 |
|
$ |
0.14 |
|
Amortization of investment in affiliate step-up(b) |
|
1.6 |
|
|
0.4 |
|
|
1.2 |
|
|
0.01 |
|
|
0.01 |
|
|
|
1.6 |
|
|
0.4 |
|
|
1.2 |
|
|
0.01 |
|
|
0.01 |
|
Net loss on asset disposals(c) |
|
1.1 |
|
|
0.3 |
|
|
0.8 |
|
|
0.01 |
|
|
0.01 |
|
|
|
0.6 |
|
|
0.2 |
|
|
0.4 |
|
|
— |
|
|
— |
|
Foreign currency exchange (gain) loss(d) |
|
(0.4 |
) |
|
(0.2 |
) |
|
(0.2 |
) |
|
— |
|
|
— |
|
|
|
0.5 |
|
|
0.1 |
|
|
0.4 |
|
|
— |
|
|
— |
|
LIFO expense(e) |
|
1.1 |
|
|
0.3 |
|
|
0.8 |
|
|
0.01 |
|
|
0.01 |
|
|
|
0.2 |
|
|
— |
|
|
0.2 |
|
|
— |
|
|
— |
|
Transaction and other related costs(f) |
|
1.2 |
|
|
0.3 |
|
|
0.9 |
|
|
0.01 |
|
|
0.01 |
|
|
|
0.8 |
|
|
0.2 |
|
|
0.6 |
|
|
— |
|
|
— |
|
Equity-based compensation |
|
5.0 |
|
|
1.0 |
|
|
4.0 |
|
|
0.03 |
|
|
0.03 |
|
|
|
5.4 |
|
|
0.7 |
|
|
4.7 |
|
|
0.03 |
|
|
0.03 |
|
Restructuring, integration and business optimization expenses(g) |
|
1.1 |
|
|
0.3 |
|
|
0.8 |
|
|
0.01 |
|
|
0.01 |
|
|
|
5.3 |
|
|
1.4 |
|
|
3.9 |
|
|
0.03 |
|
|
0.03 |
|
Other(h) |
|
0.3 |
|
|
0.1 |
|
|
0.2 |
|
|
(0.01 |
) |
|
(0.01 |
) |
|
|
(0.6 |
) |
|
(0.1 |
) |
|
(0.5 |
) |
|
0.01 |
|
|
0.01 |
|
Adjusted Net Income(1) |
$ |
45.9 |
|
$ |
11.3 |
|
$ |
34.6 |
|
$ |
0.29 |
|
$ |
0.29 |
|
|
$ |
40.3 |
|
$ |
10.2 |
|
$ |
30.1 |
|
$ |
0.22 |
|
$ |
0.22 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Weighted average shares outstanding |
|
|
|
|
118,651,402 |
|
|
119,920,742 |
|
|
|
|
|
|
138,035,764 |
|
|
139,149,560 |
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
Six months ended June 30, |
||||||||||||||||||||||||||||||
|
2023 |
|
2022 |
||||||||||||||||||||||||||||
|
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 |
$ |
34.4 |
|
$ |
9.7 |
|
$ |
24.7 |
|
$ |
0.20 |
|
$ |
0.20 |
|
|
$ |
40.1 |
|
$ |
13.0 |
|
$ |
27.1 |
|
$ |
0.20 |
|
$ |
0.19 |
|
Amortization of investment in affiliate step-up(b) |
|
3.2 |
|
|
0.8 |
|
|
2.4 |
|
|
0.02 |
|
|
0.02 |
|
|
|
3.2 |
|
|
0.8 |
|
|
2.4 |
|
|
0.02 |
|
|
0.02 |
|
Net loss on asset disposals(c) |
|
2.3 |
|
|
0.6 |
|
|
1.7 |
|
|
0.01 |
|
|
0.01 |
|
|
|
0.7 |
|
|
0.2 |
|
|
0.5 |
|
|
— |
|
|
— |
|
Foreign currency exchange (gain) loss(d) |
|
(1.1 |
) |
|
(0.2 |
) |
|
(0.9 |
) |
|
(0.01 |
) |
|
(0.01 |
) |
|
|
1.1 |
|
|
0.2 |
|
|
0.9 |
|
|
0.01 |
|
|
0.01 |
|
LIFO expense(e) |
|
2.5 |
|
|
0.7 |
|
|
1.8 |
|
|
0.02 |
|
|
0.02 |
|
|
|
0.4 |
|
|
0.1 |
|
|
0.3 |
|
|
— |
|
|
— |
|
Transaction and other related costs(f) |
|
2.6 |
|
|
0.7 |
|
|
1.9 |
|
|
0.02 |
|
|
0.02 |
|
|
|
5.1 |
|
|
1.2 |
|
|
3.9 |
|
|
0.03 |
|
|
0.03 |
|
Equity-based compensation |
|
9.1 |
|
|
0.8 |
|
|
8.3 |
|
|
0.07 |
|
|
0.07 |
|
|
|
12.7 |
|
|
0.4 |
|
|
12.3 |
|
|
0.09 |
|
|
0.09 |
|
Restructuring, integration and business optimization expenses(g) |
|
2.1 |
|
|
0.6 |
|
|
1.5 |
|
|
0.01 |
|
|
0.01 |
|
|
|
5.7 |
|
|
1.5 |
|
|
4.2 |
|
|
0.03 |
|
|
0.03 |
|
Other(h) |
|
0.1 |
|
|
— |
|
|
0.1 |
|
|
0.01 |
|
|
— |
|
|
|
(1.5 |
) |
|
(0.4 |
) |
|
(1.1 |
) |
|
(0.01 |
) |
|
(0.01 |
) |
Adjusted Net Income(1) |
$ |
55.2 |
|
$ |
13.7 |
|
$ |
41.5 |
|
$ |
0.35 |
|
$ |
0.34 |
|
|
$ |
67.5 |
|
$ |
17.0 |
|
$ |
50.5 |
|
$ |
0.37 |
|
$ |
0.36 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Weighted average shares outstanding |
|
|
|
|
120,335,414 |
|
|
121,831,942 |
|
|
|
|
|
|
137,876,185 |
|
|
139,175,659 |
|
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 |
Appendix Table A-3: Sales and Adjusted EBITDA by Business Segment |
||||||||||||||||||||||
|
|
Three months ended June 30, |
|
|
|
Six months ended June 30, |
|
|
||||||||||||||
|
|
|
2023 |
|
|
|
2022 |
|
|
% Change |
|
|
2023 |
|
|
|
2022 |
|
|
% Change |
||
|
|
|
||||||||||||||||||||
Sales: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Ecoservices |
|
$ |
158.1 |
|
|
$ |
193.0 |
|
|
(18.1 |
)% |
|
$ |
295.8 |
|
|
$ |
347.0 |
|
|
(14.8 |
)% |
Silica Catalysts |
|
|
26.0 |
|
|
|
32.2 |
|
|
(19.3 |
)% |
|
|
49.2 |
|
|
|
57.9 |
|
|
(15.0 |
)% |
Total sales |
|
$ |
184.1 |
|
|
$ |
225.2 |
|
|
(18.3 |
)% |
|
$ |
345.0 |
|
|
$ |
404.9 |
|
|
(14.8 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Zeolyst Joint Venture sales |
|
$ |
44.7 |
|
|
$ |
35.9 |
|
|
24.5 |
% |
|
$ |
66.8 |
|
|
$ |
64.9 |
|
|
2.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Ecoservices |
|
$ |
60.1 |
|
|
$ |
60.0 |
|
|
0.2 |
% |
|
$ |
96.9 |
|
|
$ |
109.3 |
|
|
(11.3 |
)% |
Catalyst Technologies |
|
|
25.4 |
|
|
|
21.4 |
|
|
18.7 |
% |
|
|
38.4 |
|
|
|
38.4 |
|
|
— |
% |
Unallocated corporate expenses |
|
|
(6.2 |
) |
|
|
(8.5 |
) |
|
(27.1 |
)% |
|
|
(13.1 |
) |
|
|
(15.6 |
) |
|
(16.0 |
)% |
Total Adjusted EBITDA |
|
$ |
79.3 |
|
|
$ |
72.9 |
|
|
8.8 |
% |
|
$ |
122.2 |
|
|
$ |
132.1 |
|
|
(7.5 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Adjusted EBITDA Margin: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Ecoservices |
|
|
38.0 |
% |
|
|
31.1 |
% |
|
|
|
|
32.8 |
% |
|
|
31.5 |
% |
|
|
||
Catalyst Technologies(1) |
|
|
35.9 |
% |
|
|
31.4 |
% |
|
|
|
|
33.1 |
% |
|
|
31.3 |
% |
|
|
||
Total Adjusted EBITDA Margin(1) |
|
|
34.7 |
% |
|
|
27.9 |
% |
|
|
|
|
29.7 |
% |
|
|
28.1 |
% |
|
|
(1) |
Adjusted EBITDA margin calculation includes proportionate |
Appendix Table A-4: Adjusted Free Cash Flow |
||||||||
|
|
Six months ended June 30, |
||||||
|
|
|
2023 |
|
|
|
2022 |
|
|
|
(in millions) |
||||||
Net cash provided by operating activities |
|
$ |
41.1 |
|
|
$ |
52.8 |
|
Less: |
|
|
|
|
||||
Purchases of property, plant and equipment(1) |
|
|
(39.2 |
) |
|
|
(25.8 |
) |
Free cash flow |
|
$ |
1.9 |
|
|
$ |
27.0 |
|
|
|
|
|
|
||||
Adjustments to free cash flow: |
|
|
|
|
||||
Cash paid for costs related to segment disposals |
|
|
— |
|
|
|
14.1 |
|
Adjusted free cash flow(2) |
|
$ |
1.9 |
|
|
$ |
41.1 |
|
|
|
|
|
|
||||
Net cash used in investing activities(3) |
|
$ |
(39.2 |
) |
|
$ |
(29.5 |
) |
Net cash used in financing activities |
|
$ |
(79.9 |
) |
|
$ |
(11.9 |
) |
(1) |
Excludes the Company’s proportionate |
|
(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, 2023 |
|
June 30, 2022 |
||
|
(in millions, except ratios) |
||||
Total debt |
$ |
882.0 |
|
$ |
891.0 |
Less: |
|
|
|
||
Cash and cash equivalents |
|
29.2 |
|
|
151.2 |
Net debt |
$ |
852.8 |
|
$ |
739.8 |
|
|
|
|
||
Trailing twelve months(1): |
|
|
|
||
Net income |
|
67.4 |
|
|
39.6 |
Adjusted EBITDA(2) |
|
266.8 |
|
|
264.7 |
|
|
|
|
||
Net debt to net income ratio |
12.7 x |
|
18.7 x |
||
Net debt leverage ratio |
3.2 x |
|
2.8 x |
___________________ | ||
(1) |
|
Calculated on a continuing operations basis. |
(2) |
|
Refer to Appendix Table A-1: Reconciliation of Net Income to Adjusted EBITDA for the reconciliation to the most comparable GAAP financial measure. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20230803360570/en/
Investor Contact:
Gene Shiels
(484) 617-1225
gene.shiels@ecovyst.com
Source: Ecovyst Inc.
FAQ
What were Ecovyst Inc.'s (NYSE: ECVT) Q2 2023 sales?
How did Ecovyst Inc.'s (NYSE: ECVT) net income perform in Q2 2023?
What was the Q2 2023 Adjusted EBITDA for Ecovyst Inc. (NYSE: ECVT)?
What factors led to the decline in sales for Ecovyst Inc. (NYSE: ECVT) in Q2 2023?