Ecovyst (US:ECVT)2023-08-07 16:00PART I FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Ecovyst Inc.'s unaudited condensed consolidated financial statements for Q2 2023, including income, balance, equity, and cash flow statements, with detailed notes Condensed Consolidated Statements of Income Three Months Ended June 30, 2023 vs 2022 (in thousands) | Metric | 2023 | 2022 | Change ($k) | Change (%) | | :-------------------------- | :------- | :------- | :---------- | :--------- | | Sales | $184,110 | $225,172 | $(41,062) | (18.2%) | | Gross profit | $60,970 | $59,859 | $1,111 | 1.9% | | Operating income | $33,313 | $27,411 | $5,902 | 21.5% | | Net income | $26,122 | $19,245 | $6,877 | 35.7% | | Diluted income per share | $0.22 | $0.14 | $0.08 | 57.1% | Six Months Ended June 30, 2023 vs 2022 (in thousands) | Metric | 2023 | 2022 | Change ($k) | Change (%) | | :-------------------------- | :------- | :------- | :---------- | :--------- | | Sales | $344,984 | $404,886 | $(59,902) | (14.8%) | | Gross profit | $97,464 | $107,594 | $(10,130) | (9.4%) | | Operating income | $41,970 | $43,847 | $(1,877) | (4.3%) | | Net income | $24,651 | $27,120 | $(2,469) | (9.1%) | | Diluted income per share | $0.20 | $0.19 | $0.01 | 5.3% | Condensed Consolidated Statements of Comprehensive Income Three Months Ended June 30, 2023 vs 2022 (in thousands) | Metric | 2023 | 2022 | | :-------------------------------- | :------- | :------- | | Net income | $26,122 | $19,245 | | Total other comprehensive income (loss) | $6,692 | $(3,276) | | Comprehensive income | $32,814 | $15,969 | Six Months Ended June 30, 2023 vs 2022 (in thousands) | Metric | 2023 | 2022 | | :-------------------------------- | :------- | :------- | | Net income | $24,651 | $27,120 | | Total other comprehensive income (loss) | $933 | $8,102 | | Comprehensive income | $25,584 | $35,222 | Condensed Consolidated Balance Sheets As of June 30, 2023 vs December 31, 2022 (in thousands) | Metric | June 30, 2023 | Dec 31, 2022 | Change ($k) | Change (%) | | :-------------------------- | :------------ | :----------- | :---------- | :--------- | | Total current assets | $197,212 | $267,704 | $(70,492) | (26.3%) | | Total assets | $1,814,038 | $1,884,553 | $(70,515) | (3.7%) | | Total current liabilities | $103,031 | $129,403 | $(26,372) | (20.4%) | | Total liabilities | $1,146,274 | $1,177,324 | $(31,050) | (2.6%) | | Total equity | $667,764 | $707,229 | $(39,465) | (5.6%) | Condensed Consolidated Statements of Stockholders' Equity - Total equity decreased from $707,229k at December 31, 2022, to $667,764k at June 30, 2023, primarily due to common share repurchases18 Key Changes in Stockholders' Equity (Six Months Ended June 30, 2023 vs 2022, in thousands) | Item | H1 2023 | H1 2022 | | :-------------------------- | :-------- | :-------- | | Net income | $26,122 | $27,120 | | Other comprehensive income (loss) | $6,692 | $8,102 | | Repurchases of common shares | $(73,374) | $(8,842) | | Treasury stock, at cost (period end) | $(224,494) | $(21,725) | Condensed Consolidated Statements of Cash Flows Six Months Ended June 30, 2023 vs 2022 (in thousands) | Cash Flow Activity | 2023 | 2022 | Change ($k) | Change (%) | | :-------------------------------- | :------- | :------- | :---------- | :--------- | | Net cash provided by operating activities | $41,140 | $52,855 | $(11,715) | (22.2%) | | Net cash used in investing activities | $(39,227) | $(29,498) | $(9,729) | 33.0% | | Net cash used in financing activities | $(79,878) | $(11,914) | $(67,964) | 570.5% | | Net change in cash and cash equivalents | $(81,688) | $10,339 | $(92,027) | (890.1%) | | Cash and cash equivalents at end of period | $29,232 | $151,228 | $(121,996) | (80.7%) | Notes to Condensed Consolidated Financial Statements 1. Background and Basis of Presentation Ecovyst Inc. is a global specialty catalyst and services provider, operating Ecoservices and Catalyst Technologies segments, with unaudited GAAP financials - Ecovyst Inc. is a leading integrated global provider of specialty catalysts and services, focusing on environmental sustainability23 - The Company operates through two segments: Ecoservices (sulfuric acid recycling, virgin sulfuric acid) and Catalyst Technologies (silica catalysts, Zeolyst Joint Venture)24 - A presentation error in accumulated other comprehensive income (loss) was corrected, with no impact on total accumulated other comprehensive income (loss) or other consolidated financial statements27 2. New Accounting Standards Ecovyst adopted new FASB guidance for LIBOR to SOFR transition and business combination contract assets/liabilities, with no LIBOR impact - The Company amended 2021 Term Loan Facility, ABL Facility, and interest rate cap agreements in February 2023 to replace LIBOR with SOFR, with no impact on financial statements30 - New FASB guidance on recognizing contract assets and liabilities in business combinations adopted effective January 1, 2023, to be applied prospectively31 3. Revenue from Contracts with Customers Revenue disaggregated by Ecoservices and Catalyst Technologies segments; Q2 and H1 2023 sales decreased due to lower volumes and sulfur cost pass-through - Revenue disaggregated by Ecoservices and Catalyst Technologies segments and key end uses: Clean fuels, emission control & other; Polymers & engineered plastics; Regeneration and treatment services; and Industrial, mining & automotive3435 Sales by Segment and End Use (Three Months Ended June 30, in thousands) | Segment/End Use | 2023 Sales | 2022 Sales | Change ($k) | Change (%) | | :-------------------------------- | :--------- | :--------- | :---------- | :--------- | | Ecoservices | 158,065 | 192,968 | (34,903) | (18.1%) | | Clean fuels, emission control & other | 8,426 | 7,386 | 1,040 | 14.1% | | Regeneration and treatment services | 98,494 | 87,143 | 11,351