Ecovyst (US:ECVT)2025-11-05 21:01Financial Performance - Sales increased by $51.0 million to $204.9 million, driven by higher average selling prices and increased volume of virgin sulfuric acid [150]. - Gross profit rose by $7.0 million to $52.1 million, primarily due to higher average selling prices and sales volume [151]. - Operating income increased by $0.8 million to $28.3 million, reflecting higher gross profit offset by increased other operating expenses [152]. - Sales for the three months ended September 30, 2025, were $204.9 million, an increase of $51.0 million, or 33.1%, compared to $153.9 million for the same period in 2024 [154]. - Gross profit for the three months ended September 30, 2025, was $52.1 million, an increase of $7.0 million, or 15.5%, compared to $45.1 million for the same period in 2024 [156]. - Adjusted EBITDA for the three months ended September 30, 2025, was $57.5 million, an increase of $8.8 million, or 18.1%, compared to $48.7 million for the same period in 2024 [166]. - Adjusted Net Income for the three months ended September 30, 2025, was $28.6 million, compared to $22.3 million for the same period in 2024, reflecting an increase of $6.3 million [169]. - Sales for the nine months ended September 30, 2025, increased by $74.7 million, or 16.6%, to $524.1 million, driven by higher average selling prices and sales volume from the acquired Waggaman location [171][174]. - Gross profit for the nine months ended September 30, 2025, decreased by $9.0 million, or 7.5%, to $111.4 million, primarily due to higher manufacturing costs and lower regeneration services volume [172][176]. - Operating income for the nine months ended September 30, 2025, decreased by $19.6 million, or 31.3%, to $43.1 million, attributed to decreased gross profit and increased other operating expenses [173]. - Adjusted EBITDA for the nine months ended September 30, 2025, was $120.7 million, a decrease of $4.2 million or 3.4% compared to $124.9 million for the same period in 2024 [191]. - Ecoservices segment reported an Adjusted EBITDA of $141.9 million for the nine months ended September 30, 2025, down $4.4 million or 3.0% from $146.3 million in 2024, primarily due to lower volumes and higher manufacturing costs [191]. Tax and Income - The effective tax rate for the three months ended September 30, 2025, was 98.2%, compared to 23.7% for the same period in 2024 [162]. - Net income from continuing operations was $0.4 million for the three months ended September 30, 2025, compared to $14.8 million for the same period in 2024 [165]. - The provision for income taxes for the nine months ended September 30, 2025, was $20.0 million, with an effective tax rate of 113.4%, compared to $8.0 million and 26.4% in 2024 [185]. - Net loss from continuing operations for the nine months ended September 30, 2025, was $2.4 million, compared to net income of $22.4 million for the same period in 2024, reflecting a significant decline [189]. - The company recorded a discrete tax expense of $15.6 million related to the revaluation of deferred tax assets and liabilities during the nine months ended September 30, 2025 [187]. Expenses and Costs - Other operating expense, net for the three months ended September 30, 2025, was $8.1 million, an increase of $5.7 million compared to $2.4 million for the same period in 2024 [159]. - Interest expense, net for the three months ended September 30, 2025, was $8.4 million, an increase of $0.5 million compared to $7.9 million for the same period in 2024 [160]. - Other operating expense, net for the nine months ended September 30, 2025, was $18.5 million, an increase of $10.6 million compared to $7.9 million in 2024, driven by losses on asset disposals and transaction costs [179]. - Interest expense, net for the nine months ended September 30, 2025, was $24.8 million, a decrease of $2.3 million from $27.1 million in 2024, due to lower variable rates and reduced outstanding debt [180]. - Higher manufacturing costs were driven by additional fixed costs from the Waggaman location, general inflation, and transportation [157]. Sales and Demand - Demand for virgin sulfuric acid remained favorable across various industrial applications, supporting high refinery utilization rates [143]. - The increase in sales volume was primarily related to the contribution from the Waggaman location and higher virgin sulfuric acid sales [155]. - The increase in sales volume was partially offset by lower regeneration services due to unplanned customer downtime and maintenance activities [175]. Cash Flow and Liquidity - Net cash provided by operating activities for continuing operations was $77.5 million for the nine months ended September 30, 2025, compared to $66.0 million in 2024 [203]. - Cash and cash equivalents at the end of the period were $99.1 million, including $82.0 million from continuing operations and $17.1 million from discontinued operations [196]. - Total available liquidity as of September 30, 2025, was $184.7 million, consisting of cash and cash equivalents and availability under the ABL Facility [196]. - Cash interest paid for the nine months ended September 30, 2025, was approximately $34.6 million, down from $37.0 million in 2024 [200]. - The company had no borrowings under its revolving credit facility as of September 30, 2025, and was in compliance with all covenants under its debt agreements [196]. - The company expects ongoing requirements for debt service and capital expenditures to be funded from cash flows from operations and existing cash balances [195]. - Net cash provided by operating activities increased to $77.5 million for the nine months ended September 30, 2025, up from $66.0 million in the same period of 2024, primarily due to higher earnings exclusive of non-cash expenses [204]. - Net cash used in investing activities rose significantly to $92.9 million for the nine months ended September 30, 2025, compared to $43.0 million during the same period in 2024, with $51.6 million allocated for capital expenditures in 2025 [206]. - Net cash used in financing activities increased to $35.1 million for the nine months ended September 30, 2025, compared to $12.7 million in the same period of 2024, primarily due to higher stock repurchases [207]. Capital Expenditures and Debt - Total debt as of September 30, 2025, was $864.3 million, a decrease from $870.8 million as of December 31, 2024, with net debt at $782.3 million after accounting for cash and cash equivalents of $82.0 million [208]. - Maintenance capital expenditures increased to $44.6 million for the nine months ended September 30, 2025, compared to $37.7 million in the same period of 2024, due to turnaround activities [210]. - Total capital expenditures for the nine months ended September 30, 2025, were $49.7 million, up from $42.5 million in 2024 [210]. Strategic Initiatives - The company entered into a definitive agreement to sell its Advanced Materials & Catalysts business for $556.0 million, expected to close in Q1 2026 [136]. - The stock repurchase program allows for the purchase of up to $450.0 million of common stock, with $202.2 million available as of September 30, 2025 [138]. - The company repurchased 3,536,364 shares at an average price of $7.74 per share for a total of $27.4 million during the nine months ended September 30, 2025 [138]. - The company may pursue strategic acquisition or divestiture opportunities, which could impact future cash requirements [196]. Accounting and Risk Management - The company did not identify any events that would likely reduce the fair value of its reporting units or intangible assets below their carrying values during the nine months ended September 30, 2025 [213]. - The company continues to evaluate its critical accounting estimates and has not identified any material changes in accounting policies from the previous year [212]. - There have been no material changes in market risk exposures, including foreign currency exchange rate risk and interest rate risk, as discussed in the previous annual report [216].