MALVERN,
Pa., May 2, 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 first
quarter ended March 31, 2024.
First Quarter 2024 Results &
Highlights
- Sales of $160.5 million, compared
to $160.9 million in the first
quarter of 2023, reflecting higher sales volume in virgin sulfuric
acid and regeneration services, offset by lower sales of advanced
silicas and lower average selling prices in Ecoservices as a result
of the pass-through of lower costs, including the lower sulfur
costs of approximately $5
million.
- Net income of $1.2 million,
compared to a net loss of $1.5
million in the year-ago quarter, with a net income margin of
0.7% and diluted net income per share of $0.01.
- Adjusted Net Income of $5.1
million with Adjusted Diluted Income per share of
$0.04.
- Adjusted EBITDA of $45.5 million,
up 6% compared to the first quarter of 2023, with an Adjusted
EBITDA margin of 24.7%.
- Strong cash generation and earnings growth provided for
reduction in the net debt to net income ratio to 10.4x and the net
debt leverage ratio to 2.9x at March 31,
2024.
"Ecovyst delivered solid results and year-over-year growth for
the first quarter of 2024, reflecting positive demand fundamentals
across the majority of our end use exposures. Ecoservices' Adjusted
EBITDA increased 13% compared to the first quarter of 2023,
benefiting from higher sales volume for both virgin sulfuric acid
and regeneration services. Order timing and residual destocking in
Advanced Silicas offset higher sales in the Zeolyst Joint Venture
for sustainable fuels applications and custom catalysts, compared
to the first quarter of 2023," said Kurt J.
Bitting, Ecovyst's Chief Executive Officer. "As a result, we
delivered first quarter 2024 Adjusted EBITDA of $45.5 million. In addition, cash generation in
the first quarter was particularly strong, providing for further
reduction in net debt leverage ratio to 2.9x. We expect that
favorable cash generation over the balance of the year will provide
flexibility for our capital allocation strategy," Bitting
added.
First Quarter 2024 Results
Sales for the quarter ended March 31,
2024 were $160.5 million,
compared to $160.9 million in the
first quarter of 2023. The change reflects higher sales volume for
virgin sulfuric acid and regeneration services within Ecoservices
and higher sales of catalysts used in the production of sustainable
fuels and sales growth in customized catalyst applications within
the Zeolyst Joint Venture. This growth was offset by lower
sales volume of advanced silicas used for the production of
polyethylene and the pricing pass-through effect on sales of lower
sulfur costs of approximately $5
million.
Net income was $1.2 million,
compared to a net loss of $1.5
million in the first quarter of 2023, with a diluted net
income per share of $0.01. Adjusted
Net Income was $5.1 million with an
Adjusted Diluted Income per share of $0.04. Adjusted EBITDA was $45.5 million, compared to $42.9 million in the first quarter of 2023, with
the increase largely driven by higher sales volume in
Ecoservices.
Review of Segment Results and Business Trends
High refinery utilization and favorable refining margins during
the first quarter of 2024 continued to support demand for our
regeneration services. In addition, sales of virgin sulfuric acid
increased compared to the first quarter of 2023, in which sales
were adversely impacted by Winter Storm
Elliott and extended turnaround activity. In the first
quarter of 2024, we also saw increased demand for catalysts used in
sustainable fuel production and growth in customized catalyst
applications, compared to the first quarter of 2023. For Advanced
Silicas, while sales of finished catalysts used to produce
polyethylene increased compared to the first quarter of 2023 on
improved demand in the U.S. and China, sales of polyethylene catalyst supports
decreased, largely due to customer order timing and limited
destocking.
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. 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. We expect that refinery
utilization will remain high in 2024, supporting demand for our
regeneration services. 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. 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.
First quarter 2024 sales were $141.6
million, compared to $137.8
million in the first quarter of 2023. The increase in sales
reflects higher sales volume for virgin sulfuric acid and
regeneration services, partially offset by the pass-through of
lower sulfur costs of approximately $5
million, as well as natural gas, electricity and other
variable costs. First quarter 2024 Adjusted EBITDA was $41.5 million, compared to $36.8 million in the first quarter of 2023. The
increase was primarily driven by higher sales volume for virgin
sulfuric acid and for regeneration services, compared to the first
quarter of 2023.
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 beginning of 2024.
Our future expectations for sales of advanced silicas used for the
production of polyethylene are based, in part, on the planned
expansion of our Advanced Silicas production capability at our
Kansas City, KS facility, that is
intended to support growth in demand for polyethylene production,
backed by long-term customer commitments. We expect the expansion
at our Kansas City, KS site to be
complete in late 2025. Through the Zeolyst Joint Venture, we also
supply specialty catalysts to customers for use in the production
of both traditional and sustainable fuels, petrochemicals, and
emission control systems for both on-road and non-road diesel
engines. Demand for traditional fuels remained positive and demand
for sustainable fuels has increased. Additionally, we 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 first quarter of 2024, Advanced Silicas sales were
$18.9 million, compared to
$23.1 million in the first quarter of
2023, with the change reflecting lower sales of advanced silicas
used for the production of polyethylene associated with customer
order timing and limited destocking, compared to the first quarter
of 2023. Our proportionate 50% share of first quarter sales for the
Zeolyst Joint Venture was $23.5
million, up 6.3%, compared to $22.1
million in the first quarter of 2023. The increase in
Zeolyst Joint Venture sales was due to primarily to higher sales of
catalysts used in sustainable fuel production and sales growth in
customized catalyst applications. First quarter 2024 Adjusted
EBITDA for Advanced Materials & Catalysts, which includes our
proportionate 50% share of the Zeolyst Joint Venture, was
$11.1 million, compared to
$13.0 million in the first quarter of
2023, with the change reflecting lower sales for Advanced Silicas,
partially offset by higher sales in the Zeolyst Joint Venture.
Cash Flows and Balance Sheet
Cash flows from operating activities was $36.5 million for the three months ended
March 31, 2024, compared to
$4.1 million for the three months
ended March 31, 2023. The increase
was primarily driven by the timing of dividends received from the
Zeolyst Joint Venture and lower variable employee compensation
payments. At March 31, 2024, the
Company had cash and cash equivalents of $103.1 million, total gross debt of $875.3 million and availability under the ABL
facility of $70.2 million, after
giving effect to $4.0 million of
outstanding letters of credit and no revolving credit facility
borrowings outstanding, for total available liquidity of
$173.3 million. The net debt to net
income ratio was 10.4x as of March 31,
2024 and the net debt leverage ratio was 2.9x as of
March 31, 2024.
2024 Financial Outlook
Full year 2024 guidance is as follows:
- Sales of $715 million to
$755 million
- Sales of $145 million to
$165 million for proportionate 50%
share of Zeolyst Joint Venture, which is excluded from GAAP
Sales
- Adjusted EBITDA1 of $255
million to $275 million
- Free Cash Flow1 of $85
million to $105 million
- Capital expenditures of $70
million to $80 million
- Interest expense of $45 million
to $55 million
- Depreciation & Amortization
- Ecovyst - $85 million to
$95 million
- Zeolyst J.V. - $12 million to
$14 million
- Effective tax rate in the mid 20% range
1In reliance upon the unreasonable efforts exemption
provided under Item 10(e)(1)(i)(B) of Regulation S-K, the Company
is not able to provide a reconciliation of its non-GAAP financial
guidance to the corresponding GAAP measures without unreasonable
effort because of the inherent difficulty in forecasting and
quantifying certain amounts necessary for such a reconciliation
such as certain non-cash, nonrecurring or other items that are
included in net income and EBITDA as well as the related tax
impacts of these items and asset dispositions / acquisitions and
changes in foreign currency exchange rates that are included in
cash flow, due to the uncertainty and variability of the nature and
amount of these future charges and costs. Because this information
is uncertain, the Company is unable to address the probable
significance of the unavailable information, which could be
material to future results.
Stock Repurchase Authorization
In April 2022, the Company's Board
of Directors approved a stock repurchase program authorizing the
repurchase of up to $450.0 million of
the Company's outstanding common stock over the next four years. To
date, repurchases under the program have been funded using cash on
hand and cash generated from operations, with repurchases conducted
through negotiated transactions with the Company's equity sponsors,
as well as through open market repurchases. Future repurchases may
also be conducted through negotiated transactions with an equity
sponsor, open market repurchases or other means, including through
Rule 10b-18 trading plans or through
the use of other techniques such as accelerated share
repurchases.
During the first quarter of 2023, in connection with a secondary
offering of the Company's common stock in March 2023, the Company repurchased 3,000,000
shares of its common stock sold in the offering from the
underwriter at a price of $9.95 per
share concurrently with the closing of the offering, for a total of
$29.9 million. The Company did not
repurchase any shares of its common stock during the first quarter
of 2024.
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
March 31, 2024, $234.6 million was available for share
repurchases under the program.
Conference Call and Webcast Details
On Thursday, May 2, 2024, Ecovyst management will review
the first 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 ECVTQ124.
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 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,
Adjusted Income per share, 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
March
31,
|
|
|
|
|
2024
|
|
2023
|
|
%
Change
|
|
|
|
Sales
|
|
$
160.5
|
|
$
160.9
|
|
(0.2) %
|
Cost of goods
sold
|
|
121.3
|
|
124.4
|
|
(2.5) %
|
Gross
profit
|
|
39.2
|
|
36.5
|
|
7.4 %
|
Selling, general and
administrative expenses
|
|
21.6
|
|
21.1
|
|
2.4 %
|
Other operating
expense, net
|
|
3.7
|
|
6.7
|
|
(44.8) %
|
Operating
income
|
|
13.9
|
|
8.7
|
|
59.8 %
|
Equity in net (income)
from affiliated companies
|
|
(2.1)
|
|
(0.2)
|
|
NM
|
Interest expense,
net
|
|
13.4
|
|
9.9
|
|
35.4 %
|
Other expense (income),
net
|
|
0.2
|
|
(0.4)
|
|
150.0 %
|
Income (loss) before
income taxes
|
|
2.4
|
|
(0.6)
|
|
500.0 %
|
Provision for income
taxes
|
|
1.2
|
|
0.9
|
|
33.3 %
|
Effective tax
rate
|
|
49.1 %
|
|
(180.7) %
|
|
|
Net income
(loss)
|
|
$
1.2
|
|
$
(1.5)
|
|
180.0 %
|
|
|
|
|
|
|
|
Earnings (Loss) per
share:
|
|
|
|
|
|
|
Basic earnings (loss)
per share
|
|
$
0.01
|
|
$
(0.01)
|
|
|
Diluted earnings
(loss) per share
|
|
$
0.01
|
|
$
(0.01)
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding:
|
|
|
|
|
|
|
Basic
|
|
116,955,043
|
|
122,178,867
|
|
|
Diluted
|
|
117,451,149
|
|
122,178,867
|
|
|
ECOVYST INC. AND
SUBSIDIARIES
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(in millions, except
share and per share amounts)
|
|
|
March 31,
2024
|
|
December 31,
2023
|
ASSETS
|
|
|
|
Cash and cash
equivalents
|
$
103.1
|
|
$
88.4
|
Accounts receivable,
net
|
78.4
|
|
81.3
|
Inventories,
net
|
52.5
|
|
45.1
|
Derivative
assets
|
13.5
|
|
13.4
|
Prepaid and other
current assets
|
21.0
|
|
17.8
|
Total current
assets
|
268.5
|
|
246.0
|
Investments in
affiliated companies
|
413.2
|
|
440.2
|
Property, plant and
equipment, net
|
572.3
|
|
576.9
|
Goodwill
|
404.3
|
|
404.5
|
Other intangible
assets, net
|
112.9
|
|
116.6
|
Right-of-use lease
assets
|
25.8
|
|
24.3
|
Other long-term
assets
|
33.8
|
|
29.4
|
Total
assets
|
$
1,830.8
|
|
$
1,837.8
|
LIABILITIES
|
|
|
|
Current maturities of
long-term debt
|
$
9.0
|
|
$
9.0
|
Accounts
payable
|
33.5
|
|
40.2
|
Operating lease
liabilities—current
|
8.2
|
|
8.2
|
Accrued
liabilities
|
56.8
|
|
61.7
|
Total current
liabilities
|
107.5
|
|
119.1
|
Long-term debt,
excluding current portion
|
857.2
|
|
858.9
|
Deferred income
taxes
|
117.2
|
|
115.8
|
Operating lease
liabilities—noncurrent
|
17.4
|
|
16.0
|
Other long-term
liabilities
|
20.1
|
|
22.5
|
Total
liabilities
|
1,119.4
|
|
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 March 31, 2024 and December 31, 2023, respectively;
outstanding shares 117,001,446 and 116,116,895 on March 31, 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 March 31, 2024 and December 31, 2023
|
—
|
|
—
|
Additional paid-in
capital
|
1,097.0
|
|
1,102.6
|
Accumulated
deficit
|
(169.6)
|
|
(170.9)
|
Treasury stock, at
cost; shares 23,871,400 and 24,627,150 on March 31, 2024 and
December 31, 2023, respectively
|
(218.6)
|
|
(226.7)
|
Accumulated other
comprehensive income (loss)
|
1.2
|
|
(0.9)
|
Total
equity
|
711.4
|
|
705.5
|
Total liabilities and
equity
|
$
1,830.8
|
|
$
1,837.8
|
ECOVYST INC. AND
SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
Three months
ended
March
31,
|
|
2024
|
|
2023
|
Cash flows from
operating activities:
|
(in
millions)
|
Net income
(loss)
|
$
1.2
|
|
$
(1.5)
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation
|
18.4
|
|
16.7
|
Amortization
|
3.5
|
|
3.5
|
Amortization of
deferred financing costs and original issue discount
|
0.5
|
|
0.5
|
Foreign currency
exchange loss (gain)
|
0.2
|
|
(0.4)
|
Deferred income tax
provision
|
0.2
|
|
2.8
|
Net loss on asset
disposals
|
0.6
|
|
1.2
|
Stock
compensation
|
3.7
|
|
4.1
|
Equity in net income
from affiliated companies
|
(2.1)
|
|
(0.2)
|
Dividends received
from affiliated companies
|
28.0
|
|
—
|
Other, net
|
(4.3)
|
|
(4.0)
|
Working capital
changes that provided (used) cash:
|
|
|
|
Receivables
|
2.8
|
|
8.4
|
Inventories
|
(7.1)
|
|
(1.3)
|
Prepaids and other
current assets
|
(3.3)
|
|
(9.7)
|
Accounts
payable
|
(3.9)
|
|
(1.9)
|
Accrued
liabilities
|
(1.9)
|
|
(14.1)
|
Net cash provided by
operating activities
|
36.5
|
|
4.1
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
Purchases of property,
plant and equipment
|
(17.4)
|
|
(18.7)
|
Net cash used in
investing activities
|
(17.4)
|
|
(18.7)
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
Repayments of
long-term debt
|
(2.3)
|
|
(2.3)
|
Repurchases of common
shares
|
—
|
|
(29.9)
|
Tax withholdings on
equity award vesting
|
(1.2)
|
|
(0.9)
|
Repayment of financing
obligation
|
(0.7)
|
|
(0.7)
|
Other, net
|
—
|
|
0.2
|
Net cash used in
financing activities
|
(4.2)
|
|
(33.6)
|
|
|
|
|
Effect of exchange rate
changes on cash and cash equivalents
|
(0.2)
|
|
(1.1)
|
Net change in cash and
cash equivalents
|
14.7
|
|
(49.3)
|
Cash and cash
equivalents at beginning of period
|
88.4
|
|
110.9
|
Cash and cash
equivalents at end of period
|
$ 103.1
|
|
$
61.6
|
Appendix Table A-1:
Reconciliation of Net Income (Loss) to Adjusted
EBITDA
|
|
|
|
Three months
ended
March
31,
|
|
|
2024
|
|
2023
|
|
|
(in
millions)
|
Reconciliation of
net income (loss) to Adjusted EBITDA
|
|
|
|
|
Net income
(loss)
|
|
$
1.2
|
|
$
(1.5)
|
Provision for income
taxes
|
|
1.2
|
|
0.9
|
Interest expense,
net
|
|
13.4
|
|
9.9
|
Depreciation and
amortization
|
|
21.9
|
|
20.2
|
EBITDA
|
|
37.7
|
|
29.5
|
Joint venture
depreciation, amortization and interest(a)
|
|
3.3
|
|
3.6
|
Amortization of
investment in affiliate step-up(b)
|
|
1.6
|
|
1.6
|
Net loss on asset
disposals(c)
|
|
0.6
|
|
1.2
|
Foreign currency
exchange loss (gain)(d)
|
|
0.2
|
|
(0.7)
|
LIFO (benefit)
expense(e)
|
|
(1.1)
|
|
1.4
|
Transaction and other
related costs(f)
|
|
0.1
|
|
1.4
|
Equity-based
compensation
|
|
3.7
|
|
4.1
|
Restructuring,
integration and business optimization
expenses(g)
|
|
0.2
|
|
1.0
|
Other(h)
|
|
(0.8)
|
|
(0.2)
|
Adjusted
EBITDA
|
|
$
45.5
|
|
$
42.9
|
Descriptions
to Ecovyst Non-GAAP Reconciliations
|
|
|
(a)
|
We use Adjusted EBITDA
as a performance measure to evaluate our financial results. Because
our Advanced Materials & Catalysts segment includes our 50%
interest in the Zeolyst Joint Venture, we include an adjustment for
our 50% proportionate share of depreciation, amortization and
interest expense of the Zeolyst Joint Venture.
|
|
|
(b)
|
Represents the
amortization of the fair value adjustments associated with the
equity affiliate investment in the Zeolyst Joint Venture as a
result of the combination of the businesses of PQ Holdings Inc. and
Eco Services Operations LLC in May 2016. We determined the fair
value of the equity affiliate investment and the fair value step-up
was then attributed to the underlying assets of the Zeolyst Joint
Venture. Amortization is primarily related to the fair value
adjustments associated with intangible assets, including customer
relationships and technical know-how.
|
|
|
(c)
|
When asset disposals
occur, we remove the impact of net gain/loss of the disposed asset
because such impact primarily reflects the non-cash write-off of
long-lived assets no longer in use.
|
|
|
(d)
|
Reflects the exclusion
of the foreign currency transaction gains and losses in the
statements of income related to the non-permanent intercompany debt
denominated in local currency translated to U.S.
dollars.
|
|
|
(e)
|
Represents non-cash
adjustments to the Company's LIFO reserves for certain inventories
in the U.S. that are valued using the LIFO method, effectively
reflecting the results as if these inventories were valued using
the FIFO method, which we believe provides a means of comparison to
other companies that may not use the same basis of accounting for
inventories.
|
|
|
(f)
|
Relates to certain
transaction costs, including debt financing, due diligence and
other costs related to transactions that are completed, pending or
abandoned, that we believe are not representative of our ongoing
business operations.
|
|
|
(g)
|
Includes the impact of
restructuring, integration and business optimization expenses,
which are incremental costs that are not representative of our
ongoing business operations.
|
|
|
(h)
|
Other consists of
adjustments for items that are not core to our ongoing business
operations. These adjustments include environmental remediation and
other legal costs, expenses for capital and franchise taxes, and
defined benefit pension and postretirement plan (benefits) costs,
for which our obligations are under plans that are frozen. Also
included in this amount are adjustments to eliminate the benefit
realized in cost of goods sold of the allocation of a portion of
the contract manufacturing payments under the five-year agreement
with the buyer of the Performance Chemicals business to the
financing obligation under the failed sale-leaseback. Included in
this line-item are rounding discrepancies that may arise from
rounding from dollars (in thousands) to dollars (in
millions).
|
Appendix Table A-2:
Reconciliation of Net Income (Loss) and EPS to Adjusted Net Income
and Adjusted EPS(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
March
31,
|
|
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
(loss)
|
$ 2.4
|
$ 1.2
|
$
1.2
|
$
0.01
|
$
0.01
|
|
$
(0.6)
|
$ 0.9
|
$
(1.5)
|
$
(0.01)
|
$
(0.01)
|
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)
|
0.6
|
0.1
|
0.5
|
—
|
—
|
|
1.2
|
0.3
|
0.9
|
0.01
|
0.01
|
Foreign currency
exchange loss (gain)(d)
|
0.2
|
0.1
|
0.1
|
—
|
—
|
|
(0.7)
|
(0.1)
|
(0.6)
|
(0.01)
|
(0.01)
|
LIFO (benefit)
expense(e)
|
(1.1)
|
(0.3)
|
(0.8)
|
(0.01)
|
(0.01)
|
|
1.4
|
0.4
|
1.0
|
0.01
|
0.01
|
Transaction and other
related costs(f)
|
0.1
|
—
|
0.1
|
—
|
—
|
|
1.4
|
0.4
|
1.0
|
0.01
|
0.01
|
Equity-based
compensation
|
3.7
|
0.5
|
3.2
|
0.03
|
0.03
|
|
4.1
|
(0.1)
|
4.2
|
0.03
|
0.03
|
Restructuring,
integration and business optimization
expenses(g)
|
0.2
|
0.1
|
0.1
|
—
|
—
|
|
1.0
|
0.1
|
0.9
|
0.01
|
0.01
|
Other(h)
|
(0.7)
|
(0.2)
|
(0.5)
|
—
|
—
|
|
(0.2)
|
0.1
|
(0.3)
|
—
|
—
|
Adjusted Net
Income(1)
|
$
7.0
|
$ 1.9
|
$
5.1
|
$
0.04
|
$
0.04
|
|
$ 9.2
|
$ 2.4
|
$
6.8
|
$
0.06
|
$
0.06
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding
|
|
|
|
116,955,043
|
117,451,149
|
|
|
|
|
122,178,867
|
122,178,867
|
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 24.6% and 25.6% for the three months ended March 31, 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
March
31,
|
|
|
|
|
2024
|
|
2023
|
|
%
Change
|
|
|
|
Sales:
|
|
|
|
|
|
|
Ecoservices
|
|
$ 141.6
|
|
$ 137.8
|
|
2.8 %
|
Advanced
Silicas
|
|
18.9
|
|
23.1
|
|
(18.2) %
|
Total
sales
|
|
$ 160.5
|
|
$ 160.9
|
|
(0.2) %
|
|
|
|
|
|
|
|
Zeolyst Joint Venture
sales
|
|
$ 23.5
|
|
$ 22.1
|
|
6.3 %
|
|
|
|
|
|
|
|
Adjusted
EBITDA:
|
|
|
|
|
|
|
Ecoservices
|
|
$ 41.5
|
|
$ 36.8
|
|
12.8 %
|
Advanced Materials
& Catalysts
|
|
11.1
|
|
13.0
|
|
(14.6) %
|
Unallocated corporate
expenses
|
|
(7.1)
|
|
(6.9)
|
|
(2.9) %
|
Total Adjusted
EBITDA
|
|
$ 45.5
|
|
$ 42.9
|
|
6.1 %
|
|
|
|
|
|
|
|
Adjusted EBITDA
Margin:
|
|
|
|
|
|
|
Ecoservices
|
|
29.3 %
|
|
26.7 %
|
|
|
Advanced Materials
& Catalysts(1)
|
|
26.2 %
|
|
28.8 %
|
|
|
Total Adjusted
EBITDA Margin(1)
|
|
24.7 %
|
|
23.4 %
|
|
|
|
|
(1)
|
Adjusted EBITDA Margin
calculation includes proportionate 50% share of sales from the
Zeolyst Joint Venture.
|
Appendix
Table A-4: Free Cash Flow
|
|
|
|
Three months
ended
March
31,
|
|
|
2024
|
|
2023
|
|
|
|
Net cash provided by
operating activities
|
|
$
36.5
|
|
$
4.1
|
Less:
|
|
|
|
|
Purchases of property,
plant and equipment(1)
|
|
(17.4)
|
|
(18.7)
|
Free Cash
Flow(2)
|
|
$
19.1
|
|
$
(14.6)
|
|
|
|
|
|
Net cash used in
investing activities(3)
|
|
$
(17.4)
|
|
$
(18.7)
|
Net cash used in
financing activities
|
|
$
(4.2)
|
|
$
(33.6)
|
|
|
(1)
|
Excludes the Company's
proportionate 50% share of capital expenditures from the Zeolyst
Joint Venture.
|
|
|
(2)
|
We define Free Cash
Flow as net cash provided by operating activities less purchases of
property, plant and equipment. 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 definition of 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.
|
|
|
(3)
|
Net cash used in
investing activities includes purchases of property, plant and
equipment, which is also included in our computation of Free Cash
Flow.
|
Appendix Table A-5:
Net Debt Leverage Ratio
|
|
|
March 31,
2024
|
|
March 31,
2023
|
|
(in millions, except
ratios)
|
Total debt
|
$
875.3
|
|
$
884.3
|
Less:
|
|
|
|
Cash and cash
equivalents
|
103.1
|
|
61.6
|
Net debt
|
$
772.2
|
|
$
822.7
|
|
|
|
|
Trailing twelve
months:
|
|
|
|
Net income
|
$
73.9
|
|
$
59.9
|
Adjusted
EBITDA(1)
|
$
262.5
|
|
$
260.5
|
|
|
|
|
Net Debt to Net Income
ratio
|
10.4 x
|
|
13.7 x
|
Net Debt Leverage
ratio
|
2.9 x
|
|
3.2 x
|
|
|
|
|
(1)
|
Refer to Appendix Table
A-1: Reconciliation of Net Income (Loss) to Adjusted EBITDA for the
reconciliation to the most comparable GAAP financial
measure.
|
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SOURCE Ecovyst Inc.