Ecovyst Reports Second Quarter 2024 Results
Ecovyst Inc. (NYSE: ECVT) reported Q2 2024 results with sales of $182.8 million, down slightly from $184.1 million in Q2 2023. Net income was $8.3 million, compared to $26.1 million in the year-ago quarter. Adjusted EBITDA was $56.9 million, down 28% year-over-year. The company updated its 2024 guidance, lowering full-year Adjusted EBITDA expectations to $230-$245 million from $255-$275 million previously. Ecovyst cited softening demand in sustainable fuel production and emission control end uses, as well as a more cautious outlook for industrial demand for virgin sulfuric acid. The company repurchased 552,081 shares at an average price of $9.05 per share during Q2 2024.
Ecovyst Inc. (NYSE: ECVT) ha riportato i risultati del secondo trimestre 2024 con vendite di 182,8 milioni di dollari, in leggero calo rispetto ai 184,1 milioni di dollari del secondo trimestre 2023. L'utile netto è stato di 8,3 milioni di dollari, rispetto ai 26,1 milioni di dollari dello stesso trimestre dell'anno precedente. L'EBITDA rettificato è stato di 56,9 milioni di dollari, in diminuzione del 28% rispetto all'anno precedente. La società ha aggiornato le previsioni per il 2024, abbassando le aspettative per l'EBITDA rettificato annuale a 230-245 milioni di dollari, rispetto ai 255-275 milioni di dollari precedenti. Ecovyst ha citato una domanda in rallentamento nella produzione di combustibili sostenibili e negli utilizzi di controllo delle emissioni, così come un outlook più cauto per la domanda industriale di acido solforico vergine. Durante il secondo trimestre 2024, la società ha riacquistato 552.081 azioni a un prezzo medio di 9,05 dollari per azione.
Ecovyst Inc. (NYSE: ECVT) reportó los resultados del segundo trimestre de 2024 con ventas de 182,8 millones de dólares, una ligera disminución de los 184,1 millones de dólares en el segundo trimestre de 2023. Los ingresos netos fueron de 8,3 millones de dólares, en comparación con 26,1 millones de dólares en el mismo trimestre del año anterior. El EBITDA ajustado fue de 56,9 millones de dólares, una disminución del 28% interanual. La compañía actualizó su guía para 2024, reduciendo las expectativas de EBITDA ajustado del año completo a 230-245 millones de dólares desde 255-275 millones de dólares previamente. Ecovyst citó una demanda en enfriamiento en la producción de combustibles sostenibles y en los usos de control de emisiones, así como una perspectiva más cautelosa para la demanda industrial de ácido sulfúrico virgen. Durante el segundo trimestre de 2024, la compañía recompró 552,081 acciones a un precio promedio de 9,05 dólares por acción.
Ecovyst Inc. (NYSE: ECVT)는 2024년 2분기 실적을 발표하며 매출이 1억 8280만 달러로, 2023년 2분기의 1억 8410만 달러에서 소폭 감소했다고 밝혔습니다. 순이익은 830만 달러로, 작년 같은 분기의 2610만 달러와 비교됩니다. 조정 EBITDA는 5690만 달러로, 전년 대비 28% 감소했습니다. 회사는 2024년 가이드를 업데이트하며 연간 조정 EBITDA 기대치를 2억 3000만 달러에서 2억 4500만 달러로, 이전의 2억 5500만 달러에서 2억 7500만 달러로 하향 조정했습니다. Ecovyst는 지속 가능한 연료 생산 및 배출 제어 최종 용도의 수요가 약화되고 있으며, 버진 황산에 대한 산업 수요에 대한 보다 신중한 전망을 언급했습니다. 2024년 2분기 동안 회사는 주당 평균 9.05달러에 552,081주를 재매입했습니다.
Ecovyst Inc. (NYSE: ECVT) a annoncé les résultats du deuxième trimestre 2024 avec des ventes de 182,8 millions de dollars, en légère baisse par rapport à 184,1 millions de dollars au deuxième trimestre 2023. Le bénéfice net était de 8,3 millions de dollars, contre 26,1 millions de dollars au trimestre de l'année précédente. Le chiffre d'affaires ajusté était de 56,9 millions de dollars, en baisse de 28 % d'une année sur l'autre. L'entreprise a mis à jour ses prévisions pour 2024, en abaissant les attentes pour le chiffre d'affaires ajusté annuel entre 230 et 245 millions de dollars, contre 255 à 275 millions de dollars précédemment. Ecovyst a cité une demande en déclin dans la production de carburants durables et dans les applications de contrôle des émissions, ainsi qu'une perspective plus prudente pour la demande industrielle d'acide sulfurique vierge. Au cours du deuxième trimestre 2024, l'entreprise a racheté 552 081 actions à un prix moyen de 9,05 dollars par action.
Ecovyst Inc. (NYSE: ECVT) berichtete über die Ergebnisse des 2. Quartals 2024 mit Umsätzen von 182,8 Millionen Dollar, ein leichter Rückgang von 184,1 Millionen Dollar im 2. Quartal 2023. Der Nettogewinn betrug 8,3 Millionen Dollar, verglichen mit 26,1 Millionen Dollar im Vorjahresquartal. Das bereinigte EBITDA betrug 56,9 Millionen Dollar, ein Rückgang um 28% im Jahresvergleich. Das Unternehmen hat seine Prognose für 2024 aktualisiert und die Erwartungen für das gesamte bereinigte EBITDA auf 230-245 Millionen Dollar von zuvor 255-275 Millionen Dollar gesenkt. Ecovyst verwies auf eine nachlassende Nachfrage in der Produktion nachhaltiger Brennstoffe und in den Anwendungen zur Emissionskontrolle sowie auf eine vorsichtigere Einschätzung der industriellen Nachfrage nach jungfräulichem Schwefelsäure. Im 2. Quartal 2024 hat das Unternehmen 552.081 Aktien zu einem durchschnittlichen Preis von 9,05 Dollar pro Aktie zurückgekauft.
- Repurchased 552,081 shares at $9.05 per share for $5.0 million in Q2 2024
- Amended and extended Term Loan, reducing interest rate spread and extending maturity to June 2031
- Higher sales volume in regeneration services, virgin sulfuric acid, and advanced silicas
- Expects virgin sulfuric acid sales to benefit from mining activity for metals and minerals in low carbon technologies
- Net income decreased to $8.3 million from $26.1 million in Q2 2023
- Adjusted EBITDA down 28% year-over-year to $56.9 million
- Lowered full-year 2024 Adjusted EBITDA guidance to $230-$245 million from $255-$275 million
- Softening demand in sustainable fuel production and emission control end uses
- More cautious outlook for industrial demand for virgin sulfuric acid in H2 2024
Insights
Ecovyst's Q2 2024 results present a mixed picture. While sales remained relatively stable at
The company's Adjusted EBITDA of
Ecovyst's updated 2024 guidance reflects a cautious outlook. The company has lowered its full-year Adjusted EBITDA guidance to
The reduction in guidance, coupled with the significant drop in net income, suggests that Ecovyst is facing headwinds in key markets. Investors should closely monitor the company's ability to navigate these challenges and maintain profitability in the coming quarters.
Ecovyst's Q2 results and revised outlook provide valuable insights into several key market trends:
- Renewable Fuels Market: The company notes a developing imbalance between production and demand for renewable diesel, impacted by lower Renewable Identification Number (RIN) values and increased feedstock costs. This suggests a potential oversupply in the market, which could lead to reduced investment in new renewable diesel units and lower catalyst sales for Ecovyst.
- Heavy-Duty Vehicle Market: The report indicates a significant downturn in heavy-duty diesel vehicle sales, with U.S. sales down
25% year-over-year in June, marking the 11th consecutive month of decline. In Europe, sales are expected to be down15-20% year-over-year. This trend is likely to negatively impact Ecovyst's emission control catalyst sales. - Industrial Demand: While virgin sulfuric acid sales increased in Q2, Ecovyst expresses caution about potential macroeconomic headwinds in the second half of 2024 that could lead to lower industrial demand. This suggests uncertainty in the broader industrial sector.
These market trends indicate challenges in key end markets for Ecovyst, particularly in sustainable fuels and heavy-duty vehicles. The company's cautious outlook and revised guidance reflect these market dynamics, suggesting a potentially challenging environment for companies operating in these sectors in the near term.
Ecovyst's Q2 results reveal some interesting dynamics in the specialty chemicals sector:
The company's Ecoservices segment, which includes regeneration services and virgin sulfuric acid production, showed resilience with increased sales volumes. This suggests continued strong demand in refining and various industrial applications. The high refinery utilization rates and favorable refining margins indicate a robust environment for Ecovyst's regeneration services.
However, the Advanced Materials & Catalysts segment faced challenges, particularly in the Zeolyst Joint Venture. The decreased sales of catalysts for sustainable fuel production and emission control applications highlight the volatility in these markets. This downturn is likely tied to broader economic factors and regulatory changes, such as the delayed implementation of Euro7 standards in Europe.
The company's investment in Pajarito Powder, for electrolyzers and fuel cells technology is a strategic move to diversify its portfolio in the growing clean energy sector. This could provide a new growth avenue as traditional markets face headwinds.
Ecovyst's ability to maintain a strong Adjusted EBITDA margin of
Second Quarter 2024 Results & Highlights
- Sales of
$182.8 million $184.1 million $3 million - Net Income of
$8.3 million $26.1 million 4.5% and diluted net income per share of$0.07 $14.1 million $0.12 - Adjusted EBITDA of
$56.9 million 28% compared to the second quarter of 2023, with an Adjusted EBITDA margin of26.8% , 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 $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
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
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
During the second quarter of 2024, Advanced Silicas sales were
Cash Flows and Balance Sheet
Cash flows from operating activities was
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,
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
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 $740 million $715 million $755 million - Sales of
$115 million $135 million $145 million $165 million 50% share of Zeolyst Joint Venture, which is excluded from GAAP Sales - Full year 2024 Adjusted EBITDA1 of
$230 million $245 million $255 million $275 million - Free Cash Flow1 of
$75 million $85 million $85 million $105 million - Capital expenditures of
$70 million $80 million - Interest expense of
$48 million $52 million $45 million $55 million - Depreciation & Amortization
- Ecovyst -
$88 million $92 million $85 million $95 million - Zeolyst J.V. -
$12 million $14 million
- Ecovyst -
- Effective tax rate in the mid
20% range - Full year 2024 Adjusted Net Income1 of
$53 million $74 million $0.45 $0.63
The Company's guidance for third quarter 2024 is as follows:
- Q3 2024 Adjusted EBITDA1 of
$58 million $65 million - Q3 2024 Adjusted Net Income1 of
$14 million $21 million $0.12 $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
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
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, 2024,
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
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, 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, | December 31, | ||
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 ( | 1.4 | 1.4 | |
Preferred stock ( | — | — | |
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, | (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 |
(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 | Tax | After-tax | Per share, | Per share, | Pre-tax | Tax | After-tax | Per share, | Per share, | ||
(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 | Tax | After-tax | Per share, | Per share, | Pre-tax | Tax | After-tax | Per share, | Per share, | ||
(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 | |
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 |
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 |
(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.
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