Ecovyst (US:ECVT)2022-11-03 16:00Stock Repurchase Program - Ecovyst's stock repurchase program authorized the repurchase of up to $450 million of common stock over four years, with $376.3 million remaining as of September 30, 2022[133]. - The company repurchased 1,970,763 shares at an average price of $9.82 per share for a total of $19.4 million from the program's announcement through September 30, 2022[133]. - The company is monitoring the impact of the Inflation Reduction Act of 2022, which imposes a 1% excise tax on net stock repurchases starting in 2023[133]. Financial Performance - Sales increased by $65.1 million to $232.5 million, representing a 38.9% growth compared to the same period in 2021[143]. - Gross profit rose by $14.1 million to $67.7 million, a 26.3% increase, driven by higher sales volumes and favorable pricing[144]. - Operating income increased by $16.0 million to $38.5 million, reflecting a 71.1% growth due to higher gross profit and lower selling, general, and administrative expenses[145]. - Net income attributable to Ecovyst was $21.3 million for the three months ended September 30, 2022, compared to a net loss of $71.3 million in the same period of 2021[160]. - Total sales increased by $196.4 million to $637.4 million for the nine months ended September 30, 2022, primarily due to higher sales volumes and average selling prices[171]. - Gross profit increased by $53.1 million to $175.3 million for the nine months ended September 30, 2022, driven by higher sales volume and favorable pricing[172]. - Operating income increased by $45.8 million to $82.4 million for the nine months ended September 30, 2022, attributed to increased gross profit and lower selling, general and administrative expenses[173]. - Net income from continuing operations was $21.3 million for the three months ended September 30, 2022, compared to $4.7 million in the same period of 2021[164]. - Net income attributable to Ecovyst was $48.4 million for the nine months ended September 30, 2022, compared to a net loss of $165.4 million for the same period in 2021[189]. Segment Performance - Sales in the Ecoservices and Catalyst Technologies segments have grown due to high demand, recovering from lows caused by the COVID-19 pandemic and extreme weather in 2021[136]. - Ecoservices sales reached $195.7 million, an increase of $58.2 million or 42.3%, primarily due to higher average selling prices and increased sales volumes[148]. - Catalyst Technologies sales were $36.8 million, up $6.9 million or 23.1%, driven by higher sales volumes despite unfavorable foreign exchange impacts[148]. - Adjusted EBITDA for Ecoservices segment increased by $12.2 million, or 23.5%, to $64.1 million for the three months ended September 30, 2022, compared to $51.9 million in the same period of 2021[162]. - Adjusted EBITDA for Catalyst Technologies segment decreased by $6.2 million, or 24.3%, to $19.3 million for the three months ended September 30, 2022, compared to $25.5 million in the same period of 2021[162]. - Ecoservices sales increased by $184.2 million or 51.4% to $542.7 million, driven by higher average selling prices and increased sales volumes[177]. Expenses and Income - Selling, general, and administrative expenses decreased by $3.3 million to $21.5 million, mainly due to a reduction in stock-based compensation expenses[151]. - Equity in net income of affiliated companies decreased to $3.2 million from $8.8 million, a decline of $5.6 million attributed to lower earnings from the Zeolyst Joint Venture[146]. - Adjusted net income for the three months ended September 30, 2022, was $42.4 million, compared to $31.1 million in the same period of 2021[168]. - Adjusted net income for the nine months ended September 30, 2022, was $109.9 million, compared to $64.7 million for the same period in 2021, reflecting an increase of 70%[198]. Cash Flow and Liquidity - Cash and cash equivalents as of September 30, 2022, totaled $121.4 million, with an additional $77.6 million available under the asset-based lending revolving credit facility, resulting in total available liquidity of $199.0 million[200]. - Net cash provided by operating activities for the nine months ended September 30, 2022, was $109.3 million, an increase from $92.3 million in the same period of 2021, reflecting a $41.1 million increase in cash generated from operations excluding working capital changes[205]. - Cash used in investing activities was $43.6 million for the nine months ended September 30, 2022, compared to cash provided of $892.9 million during the same period in 2021, primarily due to the divestiture of the Performance Chemicals business in 2021[205]. - Net cash used in financing activities was $82.6 million for the nine months ended September 30, 2022, a significant decrease from $963.5 million used in the same period of 2021, which included substantial debt repayments and a special dividend[207]. - Total debt as of September 30, 2022, was $888.8 million, a slight decrease from $895.5 million as of December 31, 2021, with net debt amounting to $767.4 million after accounting for cash and cash equivalents[208]. Tax and Interest - The effective tax rate for the three months ended September 30, 2022, was 29.6%, down from 35.6% in the same period of 2021[159]. - The effective tax rate for the nine months ended September 30, 2022, was 31.2%, compared to (610.9)% for the same period in 2021[188]. - Interest expense, net decreased by $1.3 million to $26.9 million, attributed to lower debt balances despite rising variable interest rates[183]. Future Outlook - The company expects ongoing requirements for debt service and capital expenditures to be funded from cash flows from operations and existing cash balances[200]. - The company may pursue strategic acquisition or divestiture opportunities, which could impact future cash requirements[200]. - The company may seek opportunities to repurchase, refinance, or reprice its debt, subject to market conditions[208].