Ecovyst (ECVT) - 2025 Q2 - Quarterly Report

PART I FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Presents Ecovyst Inc.'s unaudited condensed consolidated financial statements for Q2 2025 and 2024, with detailed notes on accounting policies and segments Condensed Consolidated Statements of Income | Metric (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Sales | $200,128 | $182,820 | $362,326 | $343,357 | | Gross profit | $49,722 | $53,663 | $75,338 | $92,886 | | Operating income | $17,809 | $27,848 | $16,899 | $41,802 | | Net income | $5,986 | $8,295 | $2,389 | $9,516 | | Basic income per share | $0.05 | $0.07 | $0.02 | $0.08 | | Diluted income per share | $0.05 | $0.07 | $0.02 | $0.08 | - For the three months ended June 30, 2025, sales increased by $17.3 million (9.5%) year-over-year, while net income decreased by $2.3 million (27.7%)[11] - For the six months ended June 30, 2025, sales increased by $18.9 million (5.5%) year-over-year, but net income decreased significantly by $7.1 million (74.7%)[11] Condensed Consolidated Statements of Comprehensive Income | Metric (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Net income | $5,986 | $8,295 | $2,389 | $9,516 | | Total other comprehensive income (loss) | $6,343 | $(1,224) | $6,569 | $950 | | Comprehensive income | $12,329 | $7,071 | $8,958 | $10,466 | - Total other comprehensive income (loss) significantly improved for the three months ended June 30, 2025, reaching $6,343 thousand compared to a loss of $(1,224) thousand in the prior year, primarily driven by foreign currency translation gains[13] - For the six months ended June 30, 2025, foreign currency translation contributed $13,113 thousand to other comprehensive income, a substantial increase from a loss of $(2,363) thousand in the prior year[13] Condensed Consolidated Balance Sheets | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Total current assets | $269,413 | $303,714 | | Total assets | $1,796,398 | $1,802,321 | | Total current liabilities | $119,687 | $115,126 | | Total liabilities | $1,104,011 | $1,101,861 | | Total equity | $692,387 | $700,460 | - Cash and cash equivalents decreased from $146,013 thousand at December 31, 2024, to $69,597 thousand at June 30, 2025[15] - Total assets slightly decreased by $5,923 thousand, while total liabilities increased by $2,150 thousand from December 31, 2024, to June 30, 2025[15] Condensed Consolidated Statements of Stockholders' Equity | Metric (in thousands) | Balance, December 31, 2024 | Balance, June 30, 2025 | | :-------------------- | :------------------------- | :--------------------- | | Total Equity | $700,460 | $692,387 | | Net income (Q2 2025) | N/A | $5,986 | | Repurchases of common shares (Q2 2025) | N/A | $(21,917) | - Total equity decreased from $700,460 thousand at December 31, 2024, to $692,387 thousand at June 30, 2025[16] - The company repurchased $21,917 thousand of common shares during the three months ended June 30, 2025[16] Condensed Consolidated Statements of Cash Flows | Metric (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | | Net cash provided by operating activities | $43,293 | $46,460 | | Net cash used in investing activities | $(90,840) | $(36,849) | | Net cash used in financing activities | $(29,385) | $(14,348) | | Net change in cash and cash equivalents | $(76,416) | $(5,047) | | Cash and cash equivalents at end of period | $69,597 | $83,318 | - Net cash provided by operating activities decreased by $3,167 thousand for the six months ended June 30, 2025, compared to the same period in 2024[18] - Net cash used in investing activities significantly increased to $(90,840) thousand in 2025 from $(36,849) thousand in 2024, primarily due to business combinations[18] - Net cash used in financing activities increased to $(29,385) thousand in 2025 from $(14,348) thousand in 2024, largely due to higher repurchases of common shares[18] Notes to Condensed Consolidated Financial Statements 1. Background and Basis of Presentation - Ecovyst Inc. is a global provider of advanced materials, specialty catalysts, virgin sulfuric acid, and sulfuric acid regeneration services, operating through two segments: Ecoservices and Advanced Materials & Catalysts[21][22] - The Ecoservices segment experiences seasonal fluctuations with higher demand and working capital requirements in the second and third quarters due to increased gasoline product demand in summer months[23] 2. New Accounting Standards - The Company adopted new FASB guidance for joint ventures effective January 1, 2025, requiring initial measurement of contributed net assets and liabilities at fair value[25] - New FASB guidance on reportable segment disclosures was adopted effective December 31, 2024, requiring information on significant segment expenses and interim reporting of annual segment profit/loss disclosures[26] - The Company is evaluating the impact of new FASB guidance on income tax disclosures (effective December 15, 2024) and expense presentation (effective December 15, 2026)[27][28] 3. Revenue from Contracts with Customers | Segment/End Use (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :----------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Ecoservices | | | | | | Clean fuels, emission control & other | $8,946 | $8,614 | $16,929 | $16,003 | | Regeneration and treatment services | $92,788 | $95,365 | $172,035 | $178,684 | | Industrial, mining & automotive | $74,331 | $49,979 | $130,211 | $100,873 | | Advanced Materials & Catalysts | | | | | | Polyethylene, polymers & engineered plastics | $24,063 | $28,862 | $43,151 | $47,797 | | Total segment sales | $200,128 | $182,820 | $362,326 | $343,357 | - Ecoservices segment sales increased by $22,007 thousand (14.3%) for the three months ended June 30, 2025, primarily driven by Industrial, mining & automotive applications[33] - Advanced Materials & Catalysts segment sales decreased by $4,799 thousand (16.6%) for the three months ended June 30, 2025, mainly in Polyethylene, polymers & engineered plastics[33] 4. Fair Value Measurements | Derivative Type (in thousands) | June 30, 2025 (Level 2) | December 31, 2024 (Level 2) | | :----------------------------- | :---------------------- | :-------------------------- | | Derivative assets: Interest rate caps | $4,296 | $12,500 | | Derivative liabilities: Interest rate caps | $1,628 | $710 | - The Company's interest rate caps are fair valued using Level 2 inputs, reflecting observable market data[38][41] - In July 2024, Ecovyst made a $4,500 thousand minority equity investment in Pajarito Powder LLC, recorded in other long-term assets[43][44] 5. Stockholders' Equity | AOCI Component (in thousands) | Six months ended June 30, 2025 (After-tax) | Six months ended June 30, 2024 (After-tax) | | :---------------------------- | :----------------------------------------- | :----------------------------------------- | | Defined benefit and other postretirement plans, net | $170 | $524 | | Net (loss) gain from hedging activities | $(6,714) | $2,789 | | Foreign currency translation | $13,113 | $(2,363) | | Total other comprehensive income | $6,569 | $950 | - The Company repurchased 2,926,152 shares for $21,859 thousand during the six months ended June 30, 2025, under its $450,000 thousand stock repurchase program, with $207,735 thousand remaining available[50] - Tax withholdings on equity award vesting resulted in 189,446 shares delivered to the Company for $1,477 thousand during the six months ended June 30, 2025[52] 6. Goodwill | Segment (in thousands) | Balance as of December 31, 2024 | Goodwill recognized (Note 7) | Foreign exchange impact | Balance as of June 30, 2025 | | :--------------------- | :------------------------------ | :--------------------------- | :---------------------- | :-------------------------- | | Ecoservices | $326,589 | $363 | — | $326,952 | | Advanced Materials & Catalysts | $77,513 | — | $2,284 | $79,797 | | Total | $404,102 | $363 | $2,284 | $406,749 | - Goodwill increased by $2,647 thousand to $406,749 thousand as of June 30, 2025, primarily due to the Cornerstone acquisition ($363 thousand) and foreign exchange impact ($2,284 thousand) in the Advanced Materials & Catalysts segment[53] - No impairment events were identified during the six months ended June 30, 2025, but a prolonged unfavorable outcome of the strategic review for the Advanced Materials & Catalysts segment could lead to future impairment charges[54][55] 7. Acquisition - On May 6, 2025, Ecovyst acquired sulfuric acid production assets from Cornerstone Chemical Company LLC for $41,315 thousand in cash, including a $35,000 thousand purchase price and $6,315 thousand in working capital adjustments[58] | Acquired Asset (in thousands) | Preliminary Purchase Price Allocation | | :---------------------------- | :------------------------------------ | | Accounts receivable | $9,812 | | Inventories | $3,055 | | Property, plant and equipment | $25,000 | | Other intangible assets | $2,390 | | Other long-term assets | $695 | | Goodwill | $363 | | Total assets acquired | $41,315 | - Acquisition and integration costs totaled $2,755 thousand for the six months ended June 30, 2025, recorded in other operating expense, net[63] 8. Other Operating Expense, Net | Expense Category (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------------------ | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Amortization expense | $2,655 | $2,644 | $5,298 | $5,289 | | Transaction and other related costs | $2,661 | $140 | $4,528 | $198 | | Restructuring, integration and business optimization costs | $1,030 | $159 | $1,167 | $385 | | Net loss (gain) on asset disposals | $250 | $(34) | $417 | $614 | | Other, net | $2,656 | $199 | $3,023 | $288 | | Total other operating expense, net | $9,252 | $3,108 | $14,433 | $6,774 | - Total other operating expense, net, increased significantly by $6,144 thousand (197.7%) for the three months ended June 30, 2025, and by $7,659 thousand (113.1%) for the six months ended June 30, 2025, primarily due to higher transaction costs, restructuring costs, and other expenses[65] 9. Inventories, Net | Inventory Category (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Finished products and work in process | $60,466 | $54,124 | | Raw materials | $6,434 | $3,002 | | Total inventories, net | $66,900 | $57,126 | | Valued at lower of cost or market: LIFO basis | $38,702 | $31,650 | | Valued at lower of cost and net realizable value: FIFO or average cost basis | $28,198 | $25,476 | - Total inventories, net, increased by $9,774 thousand (17.1%) from December 31, 2024, to June 30, 2025, with significant increases in both finished products and raw materials[66] 10. Investments in Affiliated Companies - Ecovyst holds 50% ownership in two equity method affiliated companies: Zeolyst International (USA) and Zeolyst C.V. (Netherlands)[68] | Metric (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Sales | $68,579 | $70,644 | $158,109 | $127,505 | | Net income | $5,076 | $4,665 | $23,727 | $12,010 | - The Company's share of net income from affiliated companies increased by $0.5 million for the three months ended June 30, 2025, and by $7.3 million for the six months ended June 30, 2025, primarily due to higher earnings from the Zeolyst Joint Venture[68][161][188] 11. Long-term Debt | Debt Component (in thousands) | June 30, 2025 | December 31, 2024 | | :---------------------------- | :------------ | :---------------- | | 2025 Term Loan Facility | $866,453 | $870,817 | | Total debt, net of original issue discount and deferred financing costs | $856,614 | $860,829 | | Total long-term debt, excluding current portion | $847,884 | $852,099 | - The Company amended its Term Loan Credit Agreement in January 2025, reducing the interest rate for SOFR term loans to Term SOFR plus 2.00% and for base rate term loans to the alternate base rate plus 1.00%[75] - The ABL Credit Agreement was amended in April 2025, extending the maturity to April 10, 2030, and reallocating European revolving loan commitments to the U.S[78] - The fair value of the Company's term loan facility was $859,954 thousand as of June 30, 2025, classified as Level 2[79] 12. Financial Instruments - Ecovyst uses interest rate cap agreements to hedge exposure to changes in interest rates on its variable-rate debt, designating them as cash flow hedges[80][83] | Financial Instrument | Number of instruments | Current notional amount (in thousands) | Annuitized premium (in thousands) | Cap rate in effect | | :------------------- | :-------------------- | :------------------------------------- | :-------------------------------- | :----------------- | | Interest rate caps | 4 | $625,000 | $35,285 | 1.00 % | - The fair value of derivative assets (interest rate caps) decreased from $12,500 thousand at December 31, 2024, to $4,296 thousand at June 30, 2025, while derivative liabilities increased from $710 thousand to $1,628 thousand[86] - An estimated $4,137 thousand of net unrealized gains in AOCI related to cash flow hedges is expected to be reclassified to income over the next twelve months[88] 13. Income Taxes | Period | Effective Income Tax Rate | | :-------------------- | :------------------------ | | Three months ended June 30, 2025 | 25.6% | | Three months ended June 30, 2024 | 27.1% | | Six months ended June 30, 2025 | 38.8% | | Six months ended June 30, 2024 | 30.9% | - The effective income tax rate for the six months ended June 30, 2025, increased to 38.8% from 30.9% in the prior year, primarily due to increased discrete tax impact relative to pre-tax book income from stock compensation shortfall, state tax law changes, and accrued penalties/interest on uncertain tax positions[89][90][91] - The Company is currently assessing the impact of the recently enacted H.R.1, the One Big Beautiful Bill Act (OBBBA), on its financial statements, with certain provisions effective in 2025 and others through 2027[92] 14. Benefit Plans | Plan Type | Three months ended June 30, 2025 (Net periodic expense (benefit)) | Three months ended June 30, 2024 (Net periodic expense (benefit)) | Six months ended June 30, 2025 (Net periodic expense (benefit)) | Six months ended June 30, 2024 (Net periodic expense (benefit)) | | :-------------------- | :-------------------------------------------------------------- | :-------------------------------------------------------------- | :-------------------------------------------------------------- | :-------------------------------------------------------------- | | Defined Benefit Pension Plans | $11 | $(25) | $24 | $(44) | | Other Postretirement Benefit Plan | $6 | $(1) | $11 | $(4) | - Net periodic expense for Defined Benefit Pension Plans shifted from a benefit of $(25) thousand in Q2 2024 to an expense of $11 thousand in Q2 2025[93] - All components of net periodic expense (benefit) are presented within other expense, net, in the condensed consolidated statements of income[94] 15. Commitments and Contingent Liabilities - The Company is subject to various legal claims and proceedings, including personal injury, product liability, waste disposal, and chemical release matters[95] - Management believes that there will be no material adverse effect on its condensed consolidated financial position, results of operations, or liquidity from these matters[95] 16. Related Party Transactions - Ecovyst has a 50/50 joint venture, Zeolyst International (the "Partnership"), with Shell Catalysts & Technologies[97] - The Partnership leases land from Ecovyst, with rental payments of $78 thousand for both the three and six months ended June 30, 2025 and 2024, included in cost of goods sold[97] - Ecovyst charged the Partnership $5,142 thousand for raw materials and manufacturing costs for the three months ended June 30, 2025, and $4,121 thousand for administrative, marketing, engineering, management, and R&D services[98][99] 17. Reportable Segments | Segment (in thousands) | Three months ended June 30, 2025 (Sales) | Three months ended June 30, 2024 (Sales) | Six months ended June 30, 2025 (Sales) | Six months ended June 30, 2024 (Sales) | | :--------------------- | :--------------------------------------- | :--------------------------------------- | :------------------------------------- | :------------------------------------- | | Ecoservices | $176,065 | $153,958 | $319,175 | $295,560 | | Advanced Materials & Catalysts | $24,063 | $28,862 | $43,151 | $47,797 | | Total Sales | $200,128 | $182,820 | $362,326 | $343,357 | | | Three months ended June 30, 2025 (Adjusted EBITDA) | Three months ended June 30, 2024 (Adjusted EBITDA) | Six months ended June 30, 2025 (Adjusted EBITDA) | Six months ended June 30, 2024 (Adjusted EBITDA) | | Ecoservices | $49,772 | $49,709 | $78,296 | $91,203 | | Advanced Materials & Catalysts | $13,717 | $14,717 | $31,221 | $25,846 | | Adjusted EBITDA from reportable segments | $63,489 | $64,426 | $109,517 | $117,049 | - Ecoservices sales increased by 14.4% for the three months and 7.9% for the six months ended June 30, 2025, driven by higher average selling prices from sulfur cost pass-through and favorable contractual pricing[103][154][181] - Advanced Materials & Catalysts sales decreased by 16.6% for the three months and 9.6% for the six months ended June 30, 2025, primarily due to the timing of niche custom catalysts sales[103][156][183] - Adjusted EBITDA for Ecoservices remained stable in Q2 2025 but decreased by 14.1% for the six-month period due to lower volumes and higher manufacturing costs[103][170][200] - Adjusted EBITDA for Advanced Materials & Catalysts decreased by 6.8% in Q2 2025 but increased by 20.9% for the six-month period, driven by higher sales volume within the Zeolyst Joint Venture[103][171][201] 18. Stock-Based Compensation - Ecovyst granted 985,551 RSUs and 508,109 PSUs (at target) during the six months ended June 30, 2025, under its equity incentive plan[109][110] - Stock-based compensation expense was $3,395 thousand for Q2 2025 and $6,467 thousand for the six months ended June 30, 2025[117][118] - Unrecognized compensation cost as of June 30, 2025, was $11,333 thousand for RSUs (1.81 years weighted-average period) and $7,264 thousand for PSUs (1.99 years weighted-average period)[119] 19. Earnings per Share | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Net income | $5,986 | $8,295 | $2,389 | $9,516 | | Basic income per share | $0.05 | $0.07 | $0.02 | $0.08 | | Diluted income per share | $0.05 | $0.07 | $0.02 | $0.08 | - Basic and diluted EPS decreased from $0.07 to $0.05 for the three months ended June 30, 2025, and from $0.08 to $0.02 for the six months ended June 30, 2025[123] - Anti-dilutive RSUs, PSUs, and stock options totaling 1,535,776 for Q2 2025 and 1,158,741 for the six months ended June 30, 2025, were excluded from diluted EPS calculations[123] 20. Supplemental Cash Flow Information | Cash Flow Item (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :---------------------------- | :------------------------------- | :------------------------------- | | Cash paid for Income taxes, net of refunds | $8,837 | $16,439 | | Cash paid for Interest | $23,370 | $33,155 | | Capital expenditures acquired on account but unpaid | $2,135 | $784 | | Accrued excise tax on share repurchases | $151 | — | | Right-of-use assets obtained in exchange for new lease liabilities | $8,863 | $2,957 | - Cash paid for income taxes decreased by $7,602 thousand, and cash paid for interest decreased by $9,785 thousand for the six months ended June 30, 2025, compared to the prior year[125] 21. Subsequent Events - The Company has evaluated subsequent events since the balance sheet date and determined that there are no additional items to disclose[126] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management's discussion and analysis of Ecovyst's financial condition and results, covering KPIs, liquidity, and accounting policies Forward-looking Statements - The report contains forward-looking statements regarding future events, financial results, business strategy, and liquidity, which are subject to various risks and uncertainties[128][129] - Key risks include global business exposure, economic downturns, exchange rate fluctuations, competition, indebtedness, inflation, supply chain disruptions, and the outcome of the strategic review for the Advanced Materials & Catalysts segment[130][135] Overview - Ecovyst is a global provider of advanced materials, specialty catalysts, virgin sulfuric acid, and sulfuric acid regeneration services, operating through two segments: Ecoservices and Advanced Materials & Catalysts segments[132] - Ecoservices is a leading provider of sulfuric acid recycling to the North American refining industry and a producer of virgin sulfuric acid for industrial and mining applications[133] - Advanced Materials & Catalysts supplies finished silica catalysts and functionalized silicas, and includes a 50% interest in the Zeolyst Joint Venture, a supplier of specialty zeolites for sustainable fuels and emission control[134] Stock Repurchase Program - The Board approved a $450.0 million stock repurchase program on April 27, 2022, over a four-year period[135] - For the six months ended June 30, 2025, the Company repurchased 2,926,152 shares for $21.9 million at an average price of $7.47 per share[135] - As of June 30, 2025, $207.7 million remained available for share repurchases under the program[136] Key Performance Indicators - Ecovyst uses non-GAAP financial measures like Adjusted EBITDA, Adjusted Net Income, and Net Debt to evaluate operating performance and for business planning[138] - Adjusted EBITDA excludes non-operating income/expense, non-cash/nonrecurring items, and includes depreciation, amortization, and interest from the 50% share of the Zeolyst Joint Venture[138] Key Factors and Trends Affecting Operating Results and Financial Condition - Both Ecoservices and Advanced Materials & Catalysts segments benefited from positive demand trends, with strong demand for refined products supporting high refinery utilization and global polyethylene demand[141] - Approximately 90% of Ecoservices segment sales for FY2024 were under contracts with quarterly price adjustments, protecting against volatility in raw material, labor, and natural gas costs[144][145] - The regeneration services product group in Ecoservices experiences seasonal fluctuations, with higher sales and working capital requirements in the second and third quarters due to increased summer gasoline demand[147] Results of Operations Three Months Ended June 30, 2025 Compared to the Three Months Ended June 30, 2024 | Metric (in millions) | Q2 2025 | Q2 2024 | Change ($) | Change (%) | | :------------------- | :------ | :------ | :--------- | :--------- | | Sales | $200.1 | $182.8 | $17.3 | 9.5% | | Gross profit | $49.7 | $53.7 | $(4.0) | (7.4)% | | Operating income | $17.8 | $27.9 | $(10.1) | (36.2)% | | Net income | $6.0 | $8.3 | $(2.3) | (27.7)% | | Adjusted EBITDA | $55.7 | $56.9 | $(1.2) | (2.1)% | - Ecoservices sales increased by $22.1 million (14.4%) due to higher average selling prices from sulfur cost pass-through and favorable contractual pricing, partially offset by lower regeneration services volume[154][155] - Advanced Materials & Catalysts sales decreased by $4.8 million (16.6%) due to the timing of event-driven, niche custom catalysts sales[156] - Gross profit decreased by $4.0 million, primarily due to lower sales volume/mix and higher manufacturing costs, despite higher average selling prices (excluding sulfur pass-through)[157] - Other operating expense, net, increased by $6.1 million, driven by higher litigation and tax charges, restructuring costs, and transaction costs[160] - Interest expense, net, decreased by $1.8 million due to lower variable rates and reduced spread from the 2025 Term Loan refinancing[162] Six Months Ended June 30, 2025 Compared to the Six Months Ended June 30, 2024 | Metric (in millions) | H1 2025 | H1 2024 | Change ($) | Change (%) | | :------------------- | :------ | :------ | :--------- | :--------- | | Sales | $362.3 | $343.4 | $18.9 | 5.5% | | Gross profit | $75.3 | $92.9 | $(17.6) | (18.9)% |\ | Operating income | $16.9 | $41.8 | $(24.9) | (59.6)% | | Net income | $2.4 | $9.5 | $(7.1) | (74.7)% | | Adjusted EBITDA | $94.6 | $102.4 | $(7.8) | (7.6)% | - Ecoservices sales increased by $23.5 million (7.9%) due to higher average selling prices, including a $27 million pass-through of sulfur costs, partially offset by lower sales volume from customer downtime and maintenance[181][182] - Advanced Materials & Catalysts sales decreased by $4.6 million (9.6%) due to timing of niche custom catalysts sales and lower sales of advanced silicas[183] - Gross profit decreased by $17.6 million, primarily from lower sales volume ($10.2 million) and higher manufacturing costs ($12.7 million, excluding sulfur pass-through)[184] - Equity in net income of affiliated companies increased by $7.3 million, driven by higher hydrocracking and specialty catalyst sales from the Zeolyst Joint Venture[188] - Debt modification and extinguishment costs decreased by $3.6 million, with $1.0 million recorded in H1 2025 for the January 2025 Term Loan amendment[190][191] Financial Condition, Liquidity and Capital Resources - As of June 30, 2025, Ecovyst had $69.6 million in cash and cash equivalents and $82.9 million available under its ABL Facility, totaling $152.5 million in liquidity[207] - The Company was in compliance with all debt covenants under the 2025 Term Loan Facility and ABL Facility as of June 30, 2025[209] - Cash paid for interest decreased to $23.4 million for the six months ended June 30, 2025, from $33.2 million in the prior year[211] - Net cash used in investing activities significantly increased to $90.8 million, primarily due to the $41.3 million acquisition of Cornerstone's sulfuric acid production assets[216] - Net cash used in financing activities increased to $29.4 million, mainly driven by higher repurchases of common stock[217] Capital Expenditures | Capital Expenditure Type (in millions) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------------------------- | :------------------------------- | :------------------------------- | | Maintenance capital expenditures | $36.5 | $28.3 | | Growth capital expenditures | $9.4 | $5.2 | | Total capital expenditures | $45.9 | $33.5 | - Total capital expenditures increased by $12.4 million for the six months ended June 30, 2025, compared to the prior year[220] - Growth capital expenditures increased due to the planned expansion of the Kansas City, Kansas silica catalyst production facility and infrastructure upgrades at the West Orange, Texas facility[220] Critical Accounting Policies and Estimates - The Company's critical accounting policies and estimates remain consistent with those described in its Annual Report on Form 10-K[221][222] - No events or circumstances were identified during the six months ended June 30, 2025, that would reduce the fair value of reporting units or intangible assets below their carrying values[223] - The estimated fair value of the Advanced Materials & Catalysts reporting unit exceeded its carrying value by over 15% as of October 1, 2024, but a prolonged unfavorable strategic review could lead to impairment charges[224] Accounting Standards Not Yet Adopted - Refer to Note 2 of the condensed consolidated financial statements for a discussion of recently issued accounting standards and their potential effect[225] Item 3. Quantitative and Qualitative Disclosures About Market Risk Addresses Ecovyst's exposure to market risks, including foreign currency, interest rate, and credit risk, with no material changes reported - Ecovyst's primary market risk exposures are foreign currency exchange rate risk, interest rate risk, and credit risk[226] - The Company does not use financial instruments for speculative purposes and limits hedging activity to underlying economic exposure[226] - No material changes in market risks were reported compared to the Annual Report on Form 10-K[227] Item 4. Controls and Procedures Disclosure controls and procedures were not effective due to a material weakness in accounting for the Zeolyst Joint Venture, with a remediation plan underway - Ecovyst's disclosure controls and procedures were deemed not effective as of June 30, 2025, due to a material weakness in internal control over financial reporting[229] - The material weakness relates to insufficient controls to ensure complete, accurate, and timely recording of the proportionate share of earnings from the Zeolyst Joint Venture[232] - Despite the material weakness, the CEO and CFO believe the unaudited condensed consolidated financial statements are fairly stated in all material respects[230] - A plan is being developed to remediate the material weakness by designing and implementing appropriate controls for Zeolyst Joint Venture earnings[233] PART II OTHER INFORMATION Item 1. Legal Proceedings Ecovyst is subject to various legal claims, but management believes no pending litigation will materially affect its financial position or operations - The Company is subject to various legal claims and proceedings, including personal injury, product liability, waste disposal, and chemical release matters[235] - Management believes no pending litigation is likely to have a material adverse effect on the business[235] Item 1A. Risk Factors Refers to risk factors from the Annual Report on Form 10-K, with no material changes to these risks - There have been no material changes from the risk factors described in the Company's Annual Report on Form 10-K[236] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Ecovyst repurchased 2,926,152 shares for $21.9 million under its stock repurchase program in Q2 2025, with $207.7 million remaining | Period (2025) | Total shares purchased | Average price paid per share | Total shares purchased under plan | Max. dollar value remaining (in thousands) | | :------------ | :--------------------- | :--------------------------- | :-------------------------------- | :----------------------------------------- | | April | — | $— | — | $229,594 | | May | 1,982,470 | $7.28 | 1,982,470 | $215,154 | | June | 943,682 | $7.86 | 943,682 | $207,735 | | Total | 2,926,152 | | | | - The Company repurchased 2,926,152 shares for $21.9 million during Q2 2025 under its $450 million stock repurchase program[237][239] - As of June 30, 2025, $207.7 million was still available for repurchases under the program[237][239] Item 5. Other Information No directors or executive officers adopted, modified, or terminated trading arrangements during the quarter - No directors or executive officers adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2025[238] Item 6. Exhibits Lists exhibits filed as part of the Quarterly Report, including amendment agreements, CEO/CFO certifications, and Inline XBRL financial statements - Exhibits include the Fifth Amendment Agreement to the ABL Credit Agreement (Exhibit 10.1), CEO and CFO certifications (Exhibits 31.1, 31.2, 32.1, 32.2), and Inline XBRL formatted financial statements (Exhibit 101, 104)[240]