Ecovyst (ECVT) 3 Aug 232023 Q2 Earnings call transcript

Good morning. My name is Travis, and I will be your conference operator today. Welcome to the Ecovyst Second Quarter 2023 Earnings Call and Webcast. Please note today’s call is being recorded and should run approximately one hour. [Operator Instructions]

to Investor conference Relations. like Shiels, to now of Director would hand over the Gene I Please ahead, go sir.

me this Thank you, Chief Financial Quarter With Officer. Second to Executive the the Operator. Good Feehan, morning, XXXX and Officer; and Earnings Ecovyst Bitting, are Kurt morning welcome Mike Ecovyst on Ecovyst call Chief Call.

As your questions. usual following prepared our practice, our is remarks, take we’ll

speaks Any strategies, information our the subject including of release some our at that financial non-GAAP corresponding end-use This with posted of Please of information and the results risks in shared shared ecovyst.com. actual company’s operating GAAP as is the outlook. financial note be the in Investors the cause could and performance, measures section about information information to trends call date. company’s implementation in forward-looking anticipated the discussed mentioned the demand with materially. uncertainties financial this the our website of company’s that earnings to Reconciliations our forward-looking filings today can their plans and the materials in and risks in today’s are XXXX today and presentation is information SEC. These measures vary of only found

over like to turn Kurt Now I’d the to Kurt? call Bitting.

Gene Thank good you morning. and

number quarter. for regeneration our refinery higher pricing X% a with benefited services in compared we were to results are continued of factors quarter positive for up the XXXX. business, from financial adjusted our There EBITDA when our contributing to We drive results. XXXX to regeneration the pleased the second with quarter activity of for quarter utilization second second High of net services and

for refinery high year, regeneration the to our utilization of outlook services have to levels As the for a business. at positive expect we we continue balance remain

Technologies quarter, also from Catalyst business. During higher pricing our the second benefited in we

softer custom with event-driven the due momentum While the to The catalyst polyethylene quarter and year growth fuels, sales global in Zeolyst and EBITDA quarter, with in of were catalysts silica and the lack year-over-year segment. ago conjunction sales control in the lower Silica pricing in emission Technologies Catalyst of for niche sales from our business polyethylene of to growth translated sales in associated catalysts hydrocracking favorable the XX% adjusted demand, of sales Catalyst Joint into lower compared catalysts higher Venture renewable

quarter the without not challenges. was However, its

end unexpected sales the quarter at costs quarter. outage In of production the failure, minimize constraint the the an July we outage resulted the higher also second work the our The site the lasting equipment closing which in quarter, and and of This production weeks the as volume then limitation. to in replace overall and in Dominguez, plant required equipment impact our limiting of restriction California to make resulted an another premature the suffered repair. in production

costs Second share ZI principally XXXX, quarter while $XXX $XXX acid associated prices. the sales, joint of selling pass-through million the the of of sales in sulfur the due virgin this this was including the on our from proportionate were quarter to was in lower down second million, venture sulfuric

pricing to virgin and lower XXXX production EBITDA hydrocracking quarter adjusted X% Catalyst variable higher emission catalyst the sales constraint, second the to offset up acid and These and silica the fuels, control costs. higher sulfuric lower renewable the Despite catalysts. unforeseen impact of sales serve by $XX Technologies quarter was sales of fixed factors for and million, the driven second compared increased and both volume, of Ecoservices in

the Fortunately, a restriction July the Dominguez key was of site our the to of required component. aforementioned not at production until end resolved repair due

production restriction sulfuric to network. and restriction related increased anticipate repair in also costs the expect acid we quarter, sale, the and our maintenance we third the impact to For virgin other and sites

lower second late see users demand. the and demand with softening are activity we and tied customers addition, fundamentals consumer including from associated to in to expectations In more macroeconomic quarter, directly end the that demand deteriorating select destocking began specific

half our primary second end-use the expectations year, the for in result, are two demand revising of for we markets. a As

and For acid applications in virgin sulfuric grades as and acid, for light our high-purity construction used such production materials, coatings Oleum nylon sulfuric are vehicle weighting, packaging.

year. We sales weaker end on have production, demand for for of our acid expect the and will that destocking sulfuric second these virgin impact nylon global uses therefore, and half an this

on we polyethylene while pressure in positive cycle the down we continue conditions over sales year to believe expect Additionally, will remain that long-term, of of catalysts. second this now will polyethylene our the put demand half

As $XX production positive result outlook $XXX as higher of full adjusted balance X worth half the for first the leverage of we the year, million are reduction of well million. of roughly $XXX a in expect repurchases guidance to as debt share XXXX year a times, our expect the costs and be key over with Ecovyst. we with to related remains end of the below with revising to ratio demand XXXX. and a for constraint year million to priority year line Ecoservices still Even EBITDA range cash net in generation in the a We softer leverage the year-end

update X outlook. for Slide our Turning an on to demand

levels, alkylate refinery perspective, low refining customers. with supported margins. in attractive refined levels still plans of alkylation balance remaining growth a see capacity still favorable inventory at demand underway products, we XXXX, by with historically and demand some for see for the at expansion high From Looking utilization we longer-term

our in be for waste treatment growth to expect regeneration expectations growth continue services contributor growth continued regeneration continuation upon our for a in demand, other disposal as alternative such injection. will business solid have deep for seen of preferred our we Likewise, we overall a and alkylate pricing Ecoservices. with methods well business our to a Based of services, favorable

handle of volumes. from our and business in Coast to higher grow demand customers invest refining expect infrastructure the to to favorable petrochemical we we With Gulf continue as expansion

our allow us the to For the issues Acid to our Virgin we at normalized to site return business, levels. expect Sulfuric production production Dominguez resolution of

Specifically, production macroeconomic more market tend nylon outlook and for sales the trends demand to destocking. be susceptible and into global with regard to the more to therefore, have as we to discussed consumer our revised nylon, in contraction previously, correlated

have build nylon fourth inventory maintenance planned seen their finished purchase customers we quarter for Historically, quarter and acid the production of product sulfuric disruptions who third in our ahead potential activity.

a have in we down current cycle nylon we quarter conditions the The are perspective, destocking. for the believe seeing demand cycle third trough rates, particularly with operating nylon in in resulted From production. conjunction customer of for conditions lower

sulfuric believe patients, acid mining large diverse we a market our to of continue sulfuric we range which serve stability. Moreover, acid. expect contributes expansion volumetric projects to customers balance we sales, for demand the virgin multiyear still For overall industrial of assay supporting for our

our for the as catalyst fuel and continues catalysts. on-going Ecoservices, out demand, cycle well to activation hydro-processing a on-going level see replacement of production high supported by as Rounding conventional business in renewable growth the hydrocracking

Turning business. market to Earlier our and softer demand catalysts Silica we polyethylene sales our Catalyst polyethylene Catalyst Technologies of in year, business. for in therefore, the anticipated

rates. However, global slower-than-anticipated resulted consumer recovery in lower and in Europe lower China and America as well weaker throughout operating North spending demand as has in

expect for In polyethylene light levels. additions, are demand global historic operating polyethylene well we rates annual benefiting of X%, where capacity approximately growth a low-cost of with we return represented demand from newer, historic will recover to of

year, believe seeing While technologies. pressure end half of in serve growth, we select portfolio sustainable longer-term two users, primarily for we remains the low-carbon the second our expanding need well particularly continue in some for we as to are positioned the and

sustainable during and demand leverage on for to on-going processes, and products products Given growth the of sustainable maintained more focus our development solutions. our quarter, we second the

we heavy-duty XX% renewable and are our During sustainability. transport. helping Today, reduce over continued fuel of quarter, innovation the catalysts growth products in sales are saw linked in that emission emissions and decarbonize directly to to catalyst control

innovator And recycling economy. processes International play circular on-going to the we a specifically recently as and a program recycling evidence we on strategic will announced a Zeolyst technologies that role of technologies of the development expect advancement our plastic Valoregen, key leading in and more future, formalized a focus sustainable have commitment advanced that of will that

we progress longer-term in delivering XXXX initiatives. sustainability are and I the you In it read commitment highlights sustainability our encourage recently published we report as our near-term to making the and addition, our report. to sustainability

discussion At turn over Mike a detailed to more quarter for call second our financial this of the time, I’ll results.

Thank you, second the $XXX our $XXX provide of performance. a of Slide including our I’ll quarter second review Joint Kurt. sales XXXX sales, in Venture Starting compared share million XX% from last the to quarter of financial million Total on X. proportionate were year. Zeolyst

a Of is to million change, XXXX. the directly of second sulfur of pass-through approximately period-over-period quarter associated compared $XX costs the with lower

was volume addition, year. quarter prior lower during the compared In to the

Kurt that catalyst to for production and silica demand catalysts. to as timing methacrylate. acid by lower was decreased sulfuric and Sales volume well production the pricing volume regeneration sales lower, services event-driven for polyethylene used Silica limitations the methyl weaker due quarter offset during custom in The of niche higher largely was for due Catalyst global for as the virgin referenced.

the sales Joint quarter the emission of higher were catalyst on year. XX%, renewable and up of Venture, production to our of second Zeolyst compared prior hydrocracking the in control Within sales fuels, used catalyst

higher was pricing as quarter sales the the repair and unplanned offset and Catalyst sales Ecoservices for of driven maintenance pricing regeneration in well higher XXXX, volume million, second This than in compared services quarter favorable quarter. EBITDA $XX Adjusted during and as X% up lower mix second higher to and costs Technologies. more the by

up the calculation. was associated in The and margin of on XXXX sulfur of to second basis compared illustrating that XX%, the margin XXX quarter impact the close changes second adjusted the nearly points year, EBITDA quarter pass-through XX% has last for in to costs the

margin Approximately higher pricing sulfur increase of balance cost. associated venture, in the both partially quarter volume by in lower XXX downtime offset with related businesses Zeolyst improvement the across is and function The of basis Ecoservices. was the higher higher pass-through largely in of the production of to the the joint points costs a

the of The prior next in year. drivers to the slide the EBITDA adjusted change illustrates compared

were average During of second significantly the of prices than the the XXXX, quarter lower prior in second quarter sulfur year.

the a for virgin sulfur pass-through. direct acid, discussed, sulfuric As the in terms cost we have is of previously price selling

reflected in pass-through quarter more by for of of sulfur price of therefore to the adjusted ratio. $XX the impact bridge price quarter on the was higher the year, the change positive neutral increase last million, variable another volume. As yet was in is resulting second quarter increases sulfur costs, lower the the during cost covering cost the higher sales the which approximately to offset The second in benefit The driven than to of quarter EBITDA adjusted EBITDA. price-to-cost impact, compared pass-through of impact exclusive of

XXXX. by XX. average The were Ecoservices $XXX sales second quarter with compared quarter the sulfur driven The higher impact for second sulfuric pricing for acid sales million in lower XXXX the to of costs. nearly to change Turning by second of in the regeneration results sales lower million Ecoservices associated on Ecoservices million quarter Slide was virgin primarily pass-through the services. in offset was for $XX volume $XXX

for as with the the Ecoservices to the second $XX volume outages production the million, during and the unchanged benefit EBITDA sales services quarter. for of of the quarter sulfuric adjusted higher lower regeneration costs XXXX offset compared ago acid for pricing quarter associated year virgin was higher largely

compared For the points sulfur and of the margin up as year Ecoservices offset from driven costs The of pass-through the basis costs primarily the was compared the variable nearly adjusted EBITDA higher second higher the by quarter XX%, XXXX. increase fixed pricing lower ago second quarter, is the XXX impact to quarter. margin to

orders $XX Catalyst $XX the Joint the year. compared Zeolyst last million sales Catalyst of the total The to sales custom up to Venture second second in by of production compared sales, sales in niche were of $XX quarter used X% second Silica polyethylene the million and second methyl quarter driven event-driven the methacrylate. for of million, catalyst of were silica quarter in lower catalyst Technologies, including catalysts decrease XXXX. quarter was XXXX the timing

mission control or $X Second of second quarter compared to sales for million renewable quarter of the $XX the and higher up on hydrocracking sales million, XXXX catalyst. Venture XX% fuels, the were Zeolyst Joint

within of EBITDA adjusted compared million, volume The XX% Catalyst quarter to year driven Venture, was Zeolyst the was the the higher quarter. Second Catalyst XX%, and to pricing, Catalyst. last year Joint sales the Technologies margin products XXX increase partially volume sales within points mix on up lower Venture. higher EBITDA a Joint by for Zeolyst favorable offset for and The of higher compared Technologies $XX Silica for sales basis by the was second margin ago quarter pricing increased higher adjusted the

liquidity. cash, Turning to our and leverage on discussion

cash conjunction strong million capital XX% nearly million capability. conversion significant repurchase have historically demonstrated business XXXX, generation $XXX our we free in of including stock offerings. discussed, flow the previously secondary allocation has of adjusted with provided for As flexibility ratio cash a With our $XXX a a cash of of in

this we flow generated We we in cash the expect remain cash the year quarter. were conversion a net above year user in while of for XX%, first significant second of the to operational cash quarter

$XX Cash XXXX. the from year But operations operations the Joint half first of timing the received to half million by the from Zeolyst compared million the first driven of was Venture. in lower from was of $XX cash in our dividends

first we conjunction share for million months, with On $XX six leverage, repurchases spent the offerings. in during secondary

end times at debt the the ratio for use share at during repurchases leverage compared of the to year, quarter X.X of the held of cash Given the quarter. half end our of first the as net first the second

cash balance year net ratio. to of the leverage a over will reduction expect our that generate the in for debt We provide

our we X.X XXXX. year upon further ratio debt no share leverage to ratio end and below times the line end outlook expect leverage a at in with Based assuming net current with X the of repurchases, times this

to that million to million, total target of cash like liquidity we had million. and priority X leverage ABL of a net debt end, remain X.X quarter we also availability highlight to ratio a would will key I comprised and our leverage $XX At $XX of continue times. cash under equivalents of facility $XX reduction as of

quarter, which late believe fundamentals weaker global evidence are we demand trends. influenced Kurt in we of demand more uses, has previously end cyclical second and by stated, the saw

of believe For on these will impact catalyst, by driven we demand plant sales the XXXX, polyethylene into half sales weaker global second adversely sulfuric nylon production acid of well operating demand rates. fundamentals declining and virgin as polyethylene lower as

in the adjusting our second Ecoservices this unplanned and our on guidance quarter Dominguez the to the into our are reflect quarter, downtime at well outlook. updated late the as third as carrying view With market updated operational facility we

million, We year of now associated the expect Relative full sales $XXX into average XXXX range the due sulfur still our nylon $XXX to polyethylene end decrease costs. to primarily to sales of a and of million in uses. expect with XXXX, for lower the we to approximately lower sales be pass-through expected effect volume million $XX

a basis, percentage down be be while Catalyst down the on expected mid-double-digit At expected low are segment sales double-digit level, basis. a Ecoservices are sales to Silica to percentage year-over-year on

of of sulfur cost Excluding Ecoservices to pass-through, guidance. the approximately impact are X% estimated forecasted $XX down sales million be our at the midpoint

year for fuel in the now million For range, catalyst full sales of renewable year. continued million, to our range expectations we this hydrocracking Zeolyst $XXX Joint from $XX million stronger fall prior the and reflecting expect up guidance Venture, $XXX our sales XXXX to

on year $XXX to At segment assumptions, adjusted be Taking to into we percentage XX%. Ecoservices anticipate we EBITDA full up adjusted coming high EBITDA million. be in XXXX, the range We account be double-digit off adjusted EBITDA a the basis. sales Technologies double-digit now level, prior a expanded of lower low EBITDA year, low percentage to by the to revised basis adjusted high expect where Ecoservices to Catalyst $XXX compared these expect single-digit single-digit on to to million

now the expect Corporate EBITDA, full our cash expected adjusted full range average was quarter. be $XXX for In million. year year, costs reported expectations flow in we million to are the of will the revised to light adjusted second what free $XXX in for of

spending capital due timing million, reduced, In $XX largely projects. addition, to to revised reflecting our has assumptions range capital guidance for million been $XX

expense expect million million for to have the we with to $XX be year. Lastly, caps we interest the place, interest $XX in still rate

fourth year, sulfuric relatively of given of the earnings EBITDA Ecoservices virgin in QX third to XX% half acid we expect of sales nylon into quarter compared second lower be sold expected the to and XXXX. the the XX% with the that similar market, For adjusted will quarters, down the third

will product be earnings orders. with their that year’s hydrocracking by fourth quarter third higher of timing the the in we mix the with Technologies, and quarter, expected quarter, in line catalyst third anticipate Catalyst earnings For prior generally driven

EBITDA quarter, we prior third the digits our third compared expect the be for quarter. low down Overall, year to adjusted to double

stronger up on quarter. prior fourth basis However, be double-digit our percentage with low year fourth compared will quarter the adjusted a EBITDA to expected

back Kurt now hand will some I remarks. the to for call closing

second results you, We quarter our and growth demonstrate believe Thank profitable portfolio. Mike. Ecovyst’s of underlying the strength potential

and we EBITDA. in regeneration increase sales Ecoservices a Although X% production along by year-over-year were quarter, pricing Higher the with during adjusted challenged in higher unexpected an Technology in our Catalyst pricing restriction in volume business higher services, drove

a two has businesses, While our we weaker will year our of in demand balance uses, been by demand temporary for believe for the positive. believe down which half second conditions, fundamentals remain tempered represent cycle of outlook end the the specific we outlook

for utilization at regeneration support will the continued refinery balance year, expect business. high We of the remain levels providing for our

now the sulfuric with Dominguez other virgin demand in over challenges addition, the production In end balance acid our support production acid resolved, virgin uses at should resumption normal year. for of volumes of more a site for the

we half in year a we Catalyst of the growth hydrocracking stronger sales, renewable catalyst anticipate Technologies, also second still expect continued sales. For fuel for and

from associated favorable. pricing sales for margins Catalysts and pricing Despite revised remain Technologies expect growth continue Overall, a with uses, solid XXXX and EBITDA. of lower end higher in we the resolved two select adjusted production look to half that second with year-over-year in challenges into the expected year are expect benefit to will now we

cash full XX% for generation year. cash the On with above to we conversion expect year a basis, favorable remain

times. debt net a expectation we the towards leverage strong the the leverage allocation reduction in move expect standpoint, longer-term our balance we X generation over target year our times a capital year, lower. or leverage of end Given is ratio X.X of objective as a cash From key continued for below with to

we and demand forward, sustainable positioned of low-carbon our technologies. rates as well growing growth believe more we portfolio Looking the attractive remains for for serve

of for and sales copper, sulfuric borates will to virgin growth acid. mining acid, support U.S. continue drive and our For the projects expansion increased of for these energy the the transition sulfuric we in lithium, will demand low-carbon on-going expect technologies and projects in

of the ZI through of to in catalysts and catalyst our in venture joint increasing activation through we renewable production fuels business. renewable continue in addition, sales our expanding In participate ChemXX fuels

strategic solutions initiative recently joint innovator on are our technologies plastics recycling. for pleased announced advanced leading a We to with Valoregen, of collaboration for have recycling

unique recycling plastic advanced combines quality end amount exceptional maximize of that has mechanical hybrid products. [indiscernible] advanced a that solution Valoregen oil recycled and to into recycling delivering high-value the processed be while waste can

technologies plastics believe contribute We higher recycling. for Infinity the can significantly and of improved end achievement quality economics our products deal to Opal higher yields,

In summary, markets isolated or long-term in near-term proposition. demand strategy not end-use does alter our and value weakness

opportunities We technologies, continue strong our growth our to profitable believe for that and share supply end-use long-term exposures significant positions provide and shareholder returns. our

to the the will With that, we ask questions. for open line operator

Aleksey [Operator Instructions] Our first Markets. question comes KeyBanc Yefremov, Capital from

taking guys, here. Hey Ryan is [Ph] This my you Aleksey. Thank on good for question for morning.

thing of kind of factors. So just dig guidance EBITDA different into for right? is new the out the I called You first number do to wanted year, a the

better Thanks. PE out sales guide? help you the of what impact have you just to new of have kind of You each break sulfuric virgin understand and and unplanned also volumes catalysts. outage for and are the those try us the then Can lower

Ryan. for Thanks question, Sure. the

EBITDA are the rates, follows. unplanned unfavorable Dominguez, as cost outlook period. into repair in were site and June in networking equipment that on factors networking higher costs, resulted maintenance there that at across some sales, moderated that our costs higher really our and happened late operating and carried lower that were The and lost fixed July, outage in absorption So adjusted California primary that really resulting

quarter, stalled nominations increased second some lower and in markets revised seeing for as Additionally products well global China nylon recovery polyethylene the that really resulted in really due to customer and pressure. destocking. headwinds as in customer And our end us outlook the consumer

with operating think polyethylene between like adjustment, to So thirds of the nylon the one is that. balance segment. maintenance about in higher issues and associated and costs downturn and is of magnitude terms And then we thirds the it Dominguez of two attributable of in the really the it’s to evenly split probably the

want then PE incredibly what And bit little That’s and helpful my catalysts. question, a Great. of of you there. I try next understand on to timing guys the just are

a flagging destocking of which operating of been producers and going of large a at that’s where since feel beginning like probably lower are their on I phenomenon kind of the lot been lowest. that’s -- You’re running rates, kind the year,

So sift can guys. you lot Thanks us? maybe through and for that try just a

realizing surrounding some and I mean, I Ryan. stated on problem, there the view think we of headwinds. had beginning at No consumer in that cautious had also at time, year, Yes. and are there polyethylene, a we was the the -- other were that recovery we uncertainty that China

the customer approach operating the sure the back, Again, polyethylene read those of you comments happen to them thought I’m of as from citing pulling macroeconomic activity year. we we at quarter, and rates, we as beyond would those you’ve started themselves. the destock end what more beginning led said, producers And which seeing lower headwinds, had

we’re successful that I their locations So in are from out cost point happy increasing global that want these that this we been space long-term, partnered are that believe scale leaders their that really with geographic in And advantage. and and segment. we’ve that benefit do in will pricing we to

we’re it this long after confident through market in So patch. moves term that down cycle

John BMO Our Capital next question from comes Markets. McNulty,

taking for question. my Yes, Thanks good morning.

the on Virgin one side. Just acid

the virgin pricing we it forward rest for nylon weakness a you think I year and might where into some through push next of help So markets you’ve acid you’ve of markets, this as early the the to metal opportunities. mining some year? kind guess what around that can mean about mixed like but the us strength other sounds got of got it’s bag and around in

the not question. I really -- we’re and as Well, thanks we’ll you Yes. think -- for know, John,

that I’ll in the this any But for mentioned typically of in as not acid in demand I segment building anticipation experience as as Gulf -- guide what QX could maybe with impact going weather QX to in events We’re point. of we start maintenance producers inventory the strong happens Coast. at script Typically, virgin XXXX in is potential this terms anything QX. really well nylon, in those are that for planned

seeing of So rates lack and that the that consumer that is destocking. weaker China they’re kind recovery this really year market, of really and in with the segment dynamics influence reducing the

Long-term, weighting things that to customers still cost linked advantages because and it’s light Gulf we long believe in positioned run. segment continue like will and grow and our packaging highly those their are to scale Coast well with presence the and

we’ve polyethylene the With and now. right? impacted right total. point, Catalyst in being macroeconomic are strong strong regeneration our are kind the your Technologies across as To that nylon and flagged consumer global of performing outlook Other the of largely well, demand pricing, business segments very by segment sections pricing being

Good deal less volumes that are outperforming.

have you each So the would really out. have segments other washed and we segments that these those really, if up balance versus two down

we’re our is $XX almost issues. as -- really about based down So million operational guide view we -- it these to due

back the Dominguez storm dovetail that January quarter in issues. and outage us with had also that then Houston the and now winter these our hit Going to in first we

the of by the those been largely markets out have seeing down we’re outside two elsewhere. issues, So balanced operational would positivity

color. much very for Thanks the it. Got

Deutsche Begleiter, comes next Bank. from David Our question

expect you a to guidance? guess improvement improvement? And Hi, David this of baking your polyethylene talked cycle. about in Do you nylon any sequential are bottom I being and sequential at Begleiter is you the the here.

Yes.

outlook our We -- orders really really cycle not we of feel the our kind we’re year. now. again, really going this were -- -- their at -- through again, their that customer we’re we’re we’re a looking end guidance, and right the we period see is So see down as we gave on of as nominations

in year call, to it that little softer a it’s a mentioned As soft the thinking started kind started earlier for was that we this and earlier, gotten of we going it polyethylene, expected. year than be the

leading our us to guidance adjustment. our that’s guidance of -- adjust partially adjust partial So or

seeing the in again, obviously, slower is probably like of on where half China. to side the is consumer which other related adjustment, the other nylon So downturn, market recovery and we’re of our segment the really side, a

will we again, the nicely. looking So markets forward, polyethylene feel nylon recover and both that

have that And both we’re located We producers global time very customer will like, and long-term, again, from so and and benefit forth. where weighting the to, those packaging things linked obviously, grow they’re will markets because light good largest scale geographically their they’re partnerships to linked where over scale.

thanks. on second, capital about allocation. capital levels And guess, in comfortable expect in your I think second Okay, you near And do the any if you Are in right you with future? then the buybacks share leverage XXXX, now? half allocation

for as component David, -- certainly current price low believe capital so and is strategy price We Yes stock continue we having you’ve undervalued. approach. I think repurchases in us strategy, allocation see our that in balanced our share capital we’ll a allocation of from have value to still offerings, during repurchases as a the sense some we before of of we’ve talked seen share our a makes secondary and that the recent do standpoint, participate

We that are leveraging do Xs, focused a important we recognize and somewhere that and X leverage the X.X targeting said ratio that. we a very are However, we and on between component, have deleveraging in have times very and low to times. also is

So we next year. our go focus is certainly as to be and year finish going this that on into

Okay, thank you.

next from Khorsand, Our Hamed Financial. BWS comes question

morning. good Hi,

that I of Catalyst XX order given customers question months order was regards you how ahead book describe first as to your is X business, do the concerned, usually in -- So had as your time? your outlook far to your

Thanks Hamed.

So Venture, expected Joint segment hydrocracking you is you look up overall, Catalyst ZI in mid-teens. all look segment, there’s be right? up is when fuels Technologies that if across So a renewable the XX% -- at over year we’re good having the to

across So then ZI Catalyst pricing, segment. I good sales volume whole mentioned, in the we’re Joint And in seeing Venture. the strong really as Technologies

you -- customers is to mentioned, do a longer -- orders lead a where there as time we an of see outlook that. So us give time bit of little

see as still book we order that strong. So

catalyst forward. going We sustainable being success then not expand XXXX, we’re refineries. for grow. guiding got our feel that business confident adopted that continues flexibility aviation and got hydrocracking a we’ve again, to continues marketplace soon is we of that having as side particularly renewable And lot next-generation demand to on We’ve of by mean, for the offers. right, the hydrocracking take to the catalyst but us, want I here great products; fuels continues for where fuels to about advantage be renewable -- fuels in

is do Or take need my this for regarding question maintenance equipment overall a running issue? think downtime other some And hot you failure, you was was to the business other equipment one-off Dominguez too failure and facilities?

really We equipment had failure. we’ve of a this again downtime A this downtime liked that Houston as beginning dovetailed hit really than we that boiler year, outage and perform to more good winter I had into that in and how us portion the view of storm to mean more the that opened year. attributed was what we’ve when extended one-off that the at the extensive maintenance. we up

installed one That that about rotating is gas the XX in July, the our really that kind blower, plant. equipment was of The outage Dominguez prolonged actually a restriction key equipment component resulted ago. runs main in which and was months piece of

unexpected see. don’t and So was we that premature the failure really typically

attribute winter and that’s now is to of Dominguez we the shortfall news good downtime storm again, attributed kind of million behind event. about feel and And the us. Houston that’s between the complete. being And we $XX the now So really the our

you. thank Okay,

question Jefferies. comes Laurence Alexander, from next Our

and Hello, guess, refill you from help leverage how think so through should volumes, of you terms in operating should patterns you leverage rate get above any Ecovyst normalization orders? margin that is the the on then the for those in the first, plastics how just us think customers of there incremental would at we and I kind benefit the would beyond about production get order market. in of that terms just can

Yes. question. Thanks for the

down I scalable polyethylene most proportionately So preferred kind supply now, is and to in with It’s polyethylene and due tend of lower units, been market the catalysts us, are units which what large lack specified those across still that’s market the as China long-term. and mean, and to in to that the of demand. that partner the we’ve win and is we’ve right view with X% customer for polyethylene to rate globe. tailored cycle We generally X%. grow these driven We by And largest being going producers. recovery by had higher particularly our being talking new that a

So feel as disproportionate than long-term, more win a our business. market to due market we that that new even amount to grows will of ability grow the

across we’ve a raising segment catalyst. been year Catalyst our standpoint, the prices silica including successful really From in margin all Technology this

the make tailored So to value the allows catalyst our they that customers that them for to want market. products that

rates, order say, could guess production X% you the above that? understand you year beyond any the help would to and back if could let’s see us dynamics of of little near-term me help or I pattern, with -- that just you Is X% -- bit growth. incremental reverts kind the a next benefit --

same you’ll time should up also, half pick think more advance? response -- a would time you’re do up? it you maybe of we at year you as degree production the for the you how pick the -- rates this year? back do And Or as kind of the the Or is in quarter, the of cyclical your about see at ship same you next forecasting lagged in what than refill lift to by shipments

Yes.

hard us based product a ship the that some to dynamics, because determine to last really really around -- supply had cost on that’s -- hard that’s for to which so of which we and additional airfreight I of lot year. logistics of money. that’s and had downside chain with think forth, We

really will look long-term, we It’s -- not The a be to should growth X% folks this again, cost market XXXX. we’re the that do expect rate. that competitive. catalysts in service project X% We can’t to more long-term our that recover. like what So I larger, tend with

they benefit upcycle the So any from obviously market. in would largely

thank you. Okay,

David Our CL next Silver, question King. comes from

in was particular. Yes morning. I guess, I going ask shortfalls, a you hi, on catalyst question, side, good about the I to the guess,

bigger time softness leading you’ve ways. as nylon come at mean, just the definitely far kind that idea one through. as comfortable of with and couple I goes, to size would the But there. nondurables given in But out export to always of that more less global. -- I me. this tied in to some opportunistic I’m cyclical, and as of of the consumer makes market much And sense a the particular, market, the is I So benefit global China much a exporting I of from think Maybe polyethylene market, pretty different more know very

would the same like just targeted is it rates, In much on the size to or the doing just at don’t not I the of is magnitude results? but garden guess, people and, destocking where variety your more magnitude, here current the lead multistep of I other whatever this? or are just you something know, could time. the impact it recession words, is Or So about the that’s reducing that talk disruption operating

Just over noncyclical the of in a time. the trying of off such compressed with period why comfortable get end polyethylene, large, relatively a Thank relatively such as you. to drop seemingly market, severity

question, the David. for Thanks Yes.

-- put bit to So it we’re down mean are in regions and slower Asia the further. in right, the better -- put operating are Europe, linked recovery really particularly a then seeing it try a little rates I maybe Europe, lack of I or I’ll obviously break that been where is think in maybe I’ll polyethylene, it. to thereof turned And rates to Asia in slower have down. way China

slowness as conjunction competitive in Obviously, competitiveness the their but -- also with well. macroeconomic of activity, cost the cost

lack -- exports of particularly that I be in our with mean, nylon as of But of Fortunately as say opportunistic that’s ship that elsewhere to creates Chinese recovery share I tends the for distortion that spoke would some where in world. you we us the products. minority maybe Asia,

well. of as be on polyethylene Some may that going in

to rates leading some as that’s world in well the maybe destocking. lower operating as elsewhere some So

for Okay. little in And switch works I selling kind you to area of appreciate practice. in if particular, wondering I’d that. bit the like talk process SAF. Thank I fuels through was could the catalyst it. renewable of a you how over maybe and to

words, off and -- the understood with renewable different people perspective to where from developed. much of lot catalysts contrasting a I’m other but have shelf, they’re the of And with they And very fuels, they are wide global time be feedstocks. in could So a different well mature capacity feedstock I work don’t at is range and from want that well needs to time. a there least say that

that met final you SAF approvals to in your are And how the certain be place? just product obviously, uniformity But talk that mean, all So volume. particular, are plan start the In then to cite emerging? or Are to Thank you there regulatory products end-market? across medium in Is customer? there about uniform really that inroads nice milestones it that unlocking other for to of or maybe or your the could say, other market? in amount for used let’s you make really final need really, be I demand to that customer stumbling words, in in fair the that a block would issues that’s in very to -- regarding how opportunity term. opinion, some you. standards Is make you a over what

backwards from that, Sure. David. Well, maybe work I’ll

to an point blending of aviation So of sustainable by for forward certain we the regulatory what from that is eventual fuels SAF, that sort and for I look the airlines commitments fuel. in the of again, I mean, milestone right, approvals percentages, think really a

have what forward. blend fuel to in going Most their want with of goals, the various goals come forth they airlines of in terms pools

on approvals then I the the that fuels think followed availability again, obviously, and of themselves. regulatory by the will depend

we’re long-term, that excited think we market. about So

and In work various their terms business, the fuel, on working them our ability to got good renewable aviation -- a fuels experience sustainable customers, with really there’s our catalysts tailor news lot of we’ve into selling is of with with and different feedstocks.

to oils largely and such. is fuels renewable know you and course, fats linked of So

also but of -- shorter are aviation them chains, sustainable aviation, also at fuels. There’s to others we that work right, together putting some and looking for we’re taking with that make carbon

fuel. the is news act really for like things as good catalyst right? ways, So a ethanol And to can our aviation both technology DLI

our to so those obviously on we’ve So based customers quickly up customers fuels we to work individual and Conshohocken that is, got produce their and in set site with pilot really work airlines. a good, the they allows those to catalysts obviously our try can get what with here units and technology with test out us tested their

thank very much. Okay, Appreciate it. you

XXXX for any no participation have Second this in disconnect conclude questions and This Call Quarter Webcast. time. your the you Earnings at does and We the you Ecovyst further queue Thank may at time.